By John Kemp
LONDON, Sept 10 (Reuters) - Australia’s prime minister-elect Tony Abbott has pledged to repeal the country’s carbon tax to boost economic competitiveness, so it is ironic that Australia is about to host the world’s most ambitious project for capturing carbon dioxide and storing it underground.
Starting in 2014/15, Chevron will begin injecting 120 million tonnes of pressurised supercritical carbon dioxide 2.5 kilometres underground as part of its giant Gorgon LNG project.
Raw gas from the Gorgon field contains about 14 percent carbon dioxide (CO2), which must be separated out and safely disposed of before the purified methane can be liquefied and sold.
Under an ambitious programme agreed with the state and federal governments back in 2009, Chevron will inject the CO2 into a saline aquifer beneath Barrow Island off the coast of Western Australia.
Chevron is spending $2 billion on the world’s largest CO2-injection facility, which will store over 3 million tonnes per year, making it by far the world’s largest CO2 storage project, and creating a unique opportunity to study how injected CO2 behaves underground in saline aquifers.
Barrow Island is a Class A nature reserve and carbon dioxide is fatal to humans in concentrations as low as 7-15 percent. So Chevron has conducted extensive seismic surveys and drilling to estimate the aquifer’s storage capacity and ensure it will not leak.
The company has also promised to monitor the underground movement of the CO2 plume as it spreads away from the initial injection wells using 4-dimensional seismic surveys.
Together with its joint venture partners, Chevron will be responsible for any costs associated with leaks and other damage duration the lifetime of the project and for 15 years after CO2 injection ceases.
But the Commonwealth of Australia and the State of Western Australia have agreed to accept responsibility for any long-term liabilities. Commonwealth and state indemnities will protect the joint venture partners from any common law liability arising from third party claims for loss or damage, suffered after the site closes.
The indemnity will only occur after continuous monitoring and modelling of the stored carbon dioxide for at least 15 years after injection ceases, and when both state and commonwealth governments are satisfied the CO2 has been stored safely. It is not expected to become effective for at least 75 years, according to an analysis prepared by law firm Baker & McKenzie.
CO2 storage is important because the International Energy Agency (IEA) has identified carbon capture and storage (CCS) programmes as an essential part of strategies to limit climate change.
“As long as fossil fuels and carbon-intensive industries play dominant roles in our economies, carbon capture and storage (CCS) will remain a critical greenhouse gas reduction solution. With coal and other fossil fuels remaining dominant in the fuel mix, there is no climate friendly scenario in the long run without CCS,” the IEA explained earlier this year.
But apart from a handful of small-scale CO2 injection projects linked to enhanced oil recovery (EOR) schemes and pressure maintenance in petroleum reservoirs, there are still no large-scale examples of CO2 capture and storage underground.
“CCS has so far been developing at a slow pace despite some technological progress, and urgent action is now needed to accelerate its deployment,” the IEA warned (“Technology roadmap: carbon capture and storage” 2013).
Of the three elements involved in CCS projects - separation/capture, transportation and injection/storage - transportation is the most mature while separation/capture is the most problematic. The key challenge is how to separate CO2 from other gases when it is present in low concentrations without using too much energy in the process (minimising the “energy penalty”).
By contrast, storage is a moderately mature technology, not as well understood as pipelines but much more advanced than capture/separation. Oil and gas companies have been injecting CO2 to enhance oil recovery or maintain pressure since the 1970s. Five projects currently inject at least 1 million tonnes per year in locations ranging from Canada and Norway to Algeria.
But global emissions of carbon dioxide and other greenhouse gases are currently running over 30 billion tonnes of CO2-equivalent per year. The CO2 storage industry would need to be scaled up 1,000-fold to make a meaningful contribution to reducing greenhouse emissions.
Gorgon is significant because it is more than double the scale of existing projects and has demonstrated how some of the barriers to scaling up the industry might be overcome.
CO2 needs to be trapped safely underground for thousands of years. But that is much longer than the expected lifetime of most companies.
Most concerns centre around the risks to human health and the environment in the event that CO2 escapes from the underground formations into which it is injected, and who would be responsible for any associated costs.
Natural escapes from volcanic lakes in Cameroon have killed thousands of people. Moreover, if companies receive credit for underground CO2 storage under emissions trading schemes and other regulations, it is not clear who would be responsible if the CO2 started to leak out again.
“The major barrier for industry and its supporting financial community to undertaking CCS projects is the undefined and open-ended liability for any CCS project,” according to the authors of the 2012 “Global Energy Assessment.”
“Liability and related long-term stewardship issues are potentially the most significant impediments to creating a global CCS industry,” they concluded.
Member states of the European Union, Norway and some U.S. oil and gas producing states such as Texas, Louisiana, Wyoming and Montana have all introduced some sort of limitations on long-term liability to stimulate their CCS and EOR industries.
Norway’s government has taken long-term liability from Statoil for CO2 injections linked to the Sleipner gas field. The U.S. state of Illinois has accepted long-term liability for the CO2 stored as part of the FutureGen clean coal demonstration project.
Unlike most other projects, Gorgon will inject CO2 into a saline aquifer rather than a depleted oil and gas field, providing an opportunity to test how CO2 injections into a saline aquifer behave on a large scale.
The U.S. Department of Energy has identified saline aquifers as a vital storage resource if CCS is to be captured on anything like the scale that will make a difference to the climate.
In the United States alone, saline aquifers could store between 1.6 and 20 trillion tonnes of CO2, compared with just 60-120 billion tonnes in unmineable coal seams and 120 billion tonnes in depleted oil and gas fields.
Little is known about how stored CO2 behaves in saline aquifers.
But with Gorgon, Australia’s government will be sponsoring the world’s largest and most ambitious attempt to lock CO2 away safely underground, even as it tries to water down other elements of climate change policy.