Abby L. Harvey
GHG Monitor
2/13/2015
While some have suggested that today’s low oil prices could hurt the development of carbon capture and storage technology by reducing interest in enhanced oil recovery, an energy expert said last week that CCS faces greater challenges in moving toward widespread deployment. In remarks during the Global CCS Institute’s Americas Forum, Christine Tezak, Managing Director of Research with ClearView Energy Partners LLC, highlighted increased natural gas production due to the shale gas boom, increased public concerns of induced seismicity and the high capital costs and limited success of large-scale CCS demonstrations. “Mountaineer’s system has been taken off-line and Kemper’s higher-than-expected costs do not exactly make state regulators jump up and down to approve projects that are likely to result in requests to recover additional funds and rates,” she said, citing American Electric Power’s failed Mountaineer post-combustion retrofit demonstration project and Southern Company’s new-build Kemper Energy Facility demonstration. “Carbon capture from power plants looks to remain expensive and that doesn’t even contemplate the cost of infrastructure to move into where it would be used.”
Higher Oil Prices May Not Help CCS for EOR
Tezak also noted that higher prices for oil would not necessarily mean that carbon capture for enhanced oil recovery would take off because captured CO2 remains more expensive than the naturally occurring CO2 currently being used in EOR operations regardless of oil prices. “To secure a place in the destination market as an input for CO2-based EOR, utility-based CO2 needs to be less expensive than these other sources. It’s not, it’s five-to-10 times more expensive,” she said.
Tezak said that due in part to the slow development of integrated gasification combined cycled (IGCC) plants, which held the promise of making the capture of CO2 more efficient, utilities will have difficulty recovering their investments with EOR. “It wasn’t really the oil price that conspired against investor interest in IGCC in the power sector. It was a clear policy preference for renewables at both the state and federal level and the unplanned drop in natural gas prices that arrived on the heels of the 2008 financial markets meltdown that created the largest reduction in commercial and industrial power sector demand since the conclusion of World War 2,” Tezak said.
Seismic Concerns
Yet another problem making it difficult to attract investors in CCS technology is an increased public concern of induced seismicity, not due directly to the storage of carbon underground, but tied to the fracking industry, Tezak said. “Given the growing concerns about induced seismicity associated with the disposal of produced water liquids and other liquids from fracking operations, the idea of geologic storage for exponentially larger volumes of waste CO2 looks problematic, so problematic that one of our clients told me yesterday, he’s disinclined to even contemplate it. A high oil price doesn’t compensate for the potential unquantifiable risks involved with an induced seismicity event in the current environment,” she said.
