Carbon Capture and Storage and the Location of Industrial Facilities

1. Carbon Capture and Storage and the Location of Industrial Facilities Jeff Bielicki Research Fellow Energy Technology Innovation Project Belfer Center for Science and International Affairs Harvard University Presentation at Research Experience in Carbon Sequestration 2007 Montana State University, August 2, 2007

2. What does CCS do? • Couples industrial organization with geologic organization. • CO2 transport and storage requirements add additional costs. • CO2 transport and storage costs introduce a spatial ‘tax’. • Costs depend on the distance that CO2 must be transported. • This presentation addresses how the economies of scale for CO2 transportation interact with those of shipping coal and transmitting electricity.

3. CO2 Transport and Storage • Cost model balances CO2 pressure from storage reservoir back to source. • Includes all fixed and variable costs • Composed of: • Pipeline transportation • Compression/Pressurization • Injection

4. Existing U.S. Pipelines CO2 mass flow rate in kt/yr. Diameter in meters. Sources: Map created from data provided by US Office of Pipeline Safety (2003); CO2 pipeline data collected from Oil & Gas Journal and operator websites.

5. Pipeline CO2 Transportation • US Pipeline Construction Data • Onshore pipelines • Oil & Gas Journal, 1990-2005. Regression: $ = 1,686,630∙1.0541 YR∙D0.9685∙L0.7315 • Using CO2 Pipeline Flowrates $ = 0.3778∙1.0541YR∙m1.4685∙L0.7315 Length in km.

6. Transporting CO2 • Compression and Pressurization: • Compression from gas to liquid.1 • Pressurization as liquid. • Pressurization at source – Pressure drop = 10 MPa at storage site. • Compression/Pressurization equipment costs.2 1Assumes CO2 is an ideal gas. 2Based on IEAGHG (2003).

7. Storing CO2 • Injection: • Estimated costs to drill/equip/rework wells1 • Flow/number of wells based on parameters from In Salah and SACROC. • Injection Resistance Pressure: • Hydrostatic: Pres = (rH2O-rCO2)gh • Dynamic: 1Sources: JAS (2000), O & G Journal

8. Shipping Coal • Prices paid for 22,000+ shipments of coal in US, 79 –01.1 • Shipped from a number of basins by a variety of means: rail, barge, truck, slurry… • Analysis limited to approximately 4,000 records for single mode rail transportation in the “middle” states. • 1990 Clean Air Act Amendments made coal from Powder River Basin attractive. 1EIA (2005)

9. Note(s) on Shipping via Railroad • 1979 Staggers Act deregulated railroads. • 1980: 22 companies operating rail lines. • 2007: 5 control 95% of lines. • 1990 Clean Air Act Amendments • Congestion out of Powder River Basin.

10. Coal Shipment Costs • Four Interaction Models:1, 2 • Two functional forms • Two cost structures for distance • Powder River Basin coal significantly cheaper. 1Powder River Basin dummy variables not shown (odd-numbered coefficients). 2Distance structures differentiated by whether or not a13 and b13 are estimated.

11. Case Study: Coal to Liquids Plant • Coal gasification for synthesis gas: CO2+H2 • Fischer-Tropsch: • 2.5 bbl oil and 1.7 tonnes CO2 from 1 tonne coal.1 • Economies of scale unclear. • Assume size relative to SASOL plant (150,000 bbl/d) 1Assuming 75% efficient gasifier (Argrawal et al, 2007).

12. CTL Plant: CO2 vs. Coal • Example: • Powder River Basin coal, power model, same cost structure, SASOL-sized plant.1 Bold points indicate cost-minimized location CCS transport and storage costs relocate CTL plants… but only so much. 1 $70/MWh; 5%, 50 years.

13. Power Plant • ‘Typical’ PC Power Plant1 • Uses approximately 9.6 kg/s coal per MW • Produces approximately 4.7 kg/s CO2 per MW 1Full load, 37% efficiency

14. Power Plant: CO2 or Coal? • Should we transport CO2 or ship coal? • CCS pulls power plants away from coal mines and towards storage sites. • The tug weakens as the distance between the coal mine and the storage site decreases. • No significant impact for small distances and power plants.

15. Transmitting Electricity • Transmission lines: • Discrete voltage ratings. • Capacity degrades over distance. • Losses depend on distance, diameter, material, impedence…

16. Different line designs Electricity Transmission Costs • Model chooses minimum required design.1 • E.g. Low load requires smaller diameter/lower capacity (kV) line. But losses increase. • Hence the different slopes 1Based on IEAGHG (2003).

17. Storage Site CO2 or Electricity? • Should we transport CO2 or transmit electricity? CONCLUSION: Build power plant close to demand and transport CO2…

18. But… Part of the Grid Exists • The ‘tug’ of CCS transportation and storage depends on: • Plant size/output. • Distance between demand and storage. • Amount of grid infrastructure to be built. • Transition at about 30±10% transmission investment.

19. Economies of Scale • This presentation focused on the ‘tug’ that CCS exerts on the location of facilities: • Significant enough to make existing facilities wish they were somewhere else. • Scale of production is important. • How do the economies of scale of CO2 transportation and interact with the economies of scale of e- and CO2 co-production and capture? • Distance to storage site important.

20. Next Steps • Spatial Triangulation of Locations… • … including Spatial Optimization for Pipeline Routing: