DOE’S FIRST LARGE-SCALE CCS PROJECT BEGINS OPERATIONS IN TEXAS

Tamar Hallerman
GHG Monitor
1/25/13

Nearly four years after Congress passed the American Recovery and Reinvestment Act and allocated nearly $3.5 billion to carbon capture and storage development, the Department of Energy has finally brought a large-scale integrated demonstration project online. Capture and storage operations recently kicked off at Air Products and Chemicals’ Port Arthur project in Texas’ Gulf Coast, DOE confirmed this week. The $430 million industrial capture retrofit onto a hydrogen production facility owned by Valero Energy Corp. is officially the first project in DOE’s CCS demonstration portfolio to begin full-scale operations, according to the Department.

Capture operations began at one of the facility’s two steam methane reformers in mid-December after Air Products retrofitted the unit with a vacuum swing adsorption system to separate the CO2 from the process gas stream, a company official said. Following compression and drying processes, the CO2 is being piped through Denbury Resources’ Green Pipeline for enhanced oil recovery operations at the company’s West Hastings oilfield southeast of Houston. Air Products’ staff is also conducting monitoring, verification and accounting work to ensure the storage of the injected CO2 in the subsurface, according to DOE. Capture at the hydrogen facility’s second steam methane reformer is expected to begin in April, and the two units together are expected to capture roughly one million metric tonnes of CO2 annually, ultimately helping produce up to three million additional barrels of oil annually for Denbury, according to DOE. The Department allocated $284 million in stimulus funding to the project. 

First Online

Port Arthur is the first of eight CCS projects within DOE’s demonstration portfolio to move into the operations phase. In a release, the Department touted the project for demonstrating the commercial viability of carbon capture, utilization and storage (CCUS) via enhanced oil recovery. “This milestone is significant because now we can start looking back at things like timelines and construction costs and begin to understand how those particular data points might apply to future CCUS endeavors,” Michael Knaggs, director of the National Energy Technology Laboratory’s Office of Major Demonstrations, said in an interview this week. “We can also start collecting actual operations information to see what it’s actually costing to capture and deliver the CO2.”

The project is one of three industrial capture projects being funded by the Department using $700 million in stimulus dollars. Archer Daniels Midland is expected to soon begin CCS operations on its $208 million retrofit project, which will capture CO2 from an ethanol plant in Decatur, Ill., for sequestration in the Mount Simon sandstone formation. The third industrial CCS endeavor, Leucadia’s $2.5 billion Lake Charles project, could achieve financial close this year. That project will build a new petroleum coke-to-chemicals gasification plant with carbon capture that will produce methanol near Lake Charles, La., before linking up to Denbury’s Green Pipeline. Knaggs said he expects the operational experience at Port Arthur to incentivize other industrial emitters—which already separate their CO2 under normal operations—to look into EOR and other forms of CO2 utilization. “We fully expect this project’s economics to show that there’s a good business case for others to do the same thing,” he said.

Industrial Projects Easier to Capture CO2

The Port Arthur project starting operations first is indicative of a larger trend in the CCS industry that has seen industrial capture projects come online far before power generation efforts. All of the CO2 used in the world’s first carbon storage projects, including Statoil’s Sleipner, Dakota Gasification’s Great Plains synfuels plant and BP’s In Salah, originated from gas processing facilities. Given that many industrial processes require CO2 to be separated in order to properly operate anyway, adding transport and storage components to the back end are often far cheaper and easier than starting a power generation capture facility from scratch. In the case of the U.S., permitting is also easier for industrial projects in some cases since most processes already separate the CO2.

On the other hand, commercializing CO2 capture for industrial operations is seen as particularly critical in the eyes of organizations like the International Energy Agency. While power generators can choose to pursue other lower-carbon options for generating electricity instead of CCS to meet emissions reduction goals, CO2 capture is considered the only path currently available for reducing emissions from industrial operations. IEA estimates that in order to limit the effects of climate change to a manageable level, 82 industrial capture projects must be in operation by 2020. But in its most recent technology report, IEA finds that while that goal is technically feasible, current investment patterns are “woefully off pace.”