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Abu Dhabi takes on the CCS challenge

Plans for combined CO2 capture and enhanced oil recovery could help relieve the UAE's gas-supply shortfall. But making CCS profitable could take a while

ABU DHABI's Adma-Opco believes carbon capture and storage (CCS) will help ease the United Arab Emirates' (UAE) gas shortage. Like most Mideast Gulf countries (apart from Qatar), the UAE faces a growing gas-supply deficit, driven by surging electricity demand and increasing use of gas injection to enhance oil recovery (EOR).

Adma-Opco chief executive Ali al Jarwan says the state-controlled company is conducting research with one of its partners – Japan Oil Development – on how injected carbon dioxide (CO2) behaves in the large offshore Umm Shaif and Lower Zakum oilfields.

Adco, Adma-Opco's onshore counterpart, is also studying the effect of CO2 injection on oil recovery. Since late 2009, it has been working with Praxair Gulf Industrial gases, which supplies 60 tonnes a day of CO2 for injection into the Rumaitha pilot well in the Bab field. Both Adco and Adma-Opco have been encouraged by the effects of CO2 injection.

Adnoc, the parent and national oil company, is also preparing studies into CO2 capture from power and heavy industrial plants. It would be a logical solution. CO2 extracted from the emissions of gas-fired power plants would be pumped into the oilfields for EOR, freeing up gas to be piped to power plants instead. Large-scale CCS would be a first for the Gulf, but it has been established for some time around the world, with various CCS and combined CCS/EOR systems in operation (see below).

But a solution in the Gulf could take some time. Adma-Opco is working to increase oil production at Umm Shaif and Lower Zakum using EOR techniques. Output across the two fields is set to increase by 50,000 barrels a day (b/d), to 0.6m b/d, by the start of 2011, rising to 0.7m b/d by 2013. The target for 2017 is close to 1m b/d.

To achieve this it will need to inject ever-greater volumes of natural gas. In January, when it starts injecting 0.6bn cubic feet a day (cf/d) into Lower Zakum, it will be pumping 1bn cf/d into those two fields alone – half the total Abu Dhabi injects for EOR.

Of the seven Emirates, Abu Dhabi is the main oil and gas producer, but its gas output does not meet demand. And demand is forecast to grow by 10% a year – reflecting forecast industrial-sector growth of around 7% a year and the needs of the UAE's growing population.

According to Cedigaz, in 2009, Abu Dhabi's gas production was 6.1bn cf/d – over 82% of the UAE's total. Almost a third of that was reinjected into oilfields, 0.68bn cf/d was exported as liquefied natural gas (LNG) to the Asia-Pacific region under long-term contracts, and the rest was sold locally. Abu Dhabi imports 0.8bn cf/d from Qatar through the Dolphin pipeline, which is sold at heavily subsidised prices.

With demand where it is now, Abu Dhabi already faces a supply deficit of 2bn cf/d during the summer months, when consumption peaks as air conditioners rumble into overdrive.

The planned oil-production increases and the necessary rise in gas injection to achieve them will only deepen the emirate's supply deficit, so the notional CCS project makes sense – Abu Dhabi's gas for injection could, on its own, account for the summer deficit of 2bn cf/d. Making that gas available to power producers would solve the problem.

Economics and regional co-operation

Making it all profitable is another matter. But building a full-scale carbon-capture mechanism into a power station is expensive, whether the feedstock is coal or gas. The added cost to a coal plant is around 20%.

Carbon capture for a gas plant, while cheaper to build, does not add up to a healthier bottom line. Apart from gas being more expensive than coal, gas produces around 50% less CO2, so its CO2 delivery, whether monetised through carbon credits and/or EOR, balances any saving made. A post-combustion carbon-capture mechanism also reduces the efficiency of a plant by at least 30%, as it needs power to run.

But this economic obstacle is what should be spurring Abu Dhabi, and others in the region, to invest in the first generation of such plants as soon as possible. Technological advancement and experience is what will drive costs down and plant efficiency up, and these will be gained only through building capacity and working with it.

Added to that, the emirate would easily be able to make and save money from the 2bn cf/d of associated gas it is now injecting into its oilfields by using some to feed power generation and liquefying some to add to its portfolio of long-term LNG sales contracts.

One way to tame the costs of that first generation of plants would be to monetise the lowering of carbon emissions through the UN Clean Development Mechanism (CDM). The CDM incentivises emissions reduction in countries that do not have binding reduction commitments under the Kyoto Protocol by turning reduced emissions into tradable certificates. In January, Adnoc and Abu Dhabi cleantech initiative Masdar signed a framework agreement to monetise a series of projects to cut carbon emissions from oil and gas facilities through the CDM. These are not CCS projects, but efforts to reduce practices such as gas flaring at processing facilities (see below).

CCS is not integrated into the CDM and the Kyoto Protocol expires in 2012. If CCS were built into the mechanism, some of the funding could be provided for these costly projects. So confirming the eligibility of CCS is an important aspect of the next climate-change treaty.

But there is opposition in some countries, where some environmentalists fear that inclusion of CCS in the CDM could pose new dangers and/or slow the move to developing renewable-energy generation. For instance, Shell recently cancelled a CCS project in the Netherlands because of opposition from the residents of the town of Barendrecht to the storage of CO2 under their land.

In contrast, the Gulf Co-operation Council (GCC) countries could move fast on CCS development. Robin Mills, a senior economist at Emirates National Oil, points out that Gulf residents, far more so than those of northern countries, are comfortable with the oil and gas business, and are unlikely to protest against regional efforts to make hydrocarbon use more environmentally friendly.

Abu Dhabi is not the only regional producer looking at CCS options. In November, Qatar's energy minister, Abdullah bin Hamad al Attiyah, sent the UN a formal request that CCS projects be included in the CDM's remit. Qatar Petroleum is considering capturing CO2 from its Pearl GTL plant – which it will start up with its partner Shell in 2011 – and using it for EOR at the Dukhan oilfield, where production has dropped from 350,000 b/d in 2003 to 250,000 b/d.

A good way of spreading the cost of CCS would be for GCC countries to work together. Rather than every GCC country building its own very expensive demonstration plants, says Mills, the members could share research findings, costs, technical breakthroughs and even CO2-transit infrastructure. While recognising that there would be political challenges inherent in such collaboration, he says Abu Dhabi, with its Masdar carbon-capture initiative, "should at least work with the rest of the UAE, Qatar and perhaps Bahrain and Oman".

But any inter-state co-operation would be likely to stay at the research-sharing level and not include cross-border pipelines – each state would be comfortably able to source its own CO2 and the Gulf states have a history of failing to deliver cross-border pipelines.

Abu Dhabi is still at the technology-testing stage and is working hard to examine the economics. The bottom line will depend on four factors coming together: carbon capture being mastered in a cost-effective way at power plants and industrial sites; every three-to-six tonnes of CO2 injected scrubbing around 10 more barrels of oil from reservoirs; sufficient natural gas being freed-up for power generation and export; and UN carbon credits being made available for CCS operations.

If most or all of these happen, the emirate will kill the two birds of carbon emissions and gas deficit with one stone.

Large, global, integrated CCS projects

  • In Salah, Algeria – Statoil, BP, Sonatrach. Storage of CO2 in depleted gas reservoirs.
  • Sleipner, Norway – Statoil. Storage of CO2 in salt cavern above the gas reservoir.
  • Snøhvit, Norway – Statoil, Petoro, Total, GdF Suez, Norsk Hydro, Hess, RWE-DEA. Storage of CO2 in sandstone formation.
  • Weyburn-Midale, Canada – Cenovus. CO2 from coal gasification piped to oilfields for EOR.
  • Salt Creek, US – Anadarko. CO2 derived from a gasfield piped to oilfields for EOR.
  • Enid Fertilizer, US – Koch Nitrogen, Anadarko. CO2 derived from fertiliser plant piped to oilfields for EOR.
  • Sharon Ridge, US – ExxonMobil. CO2 derived from gas-processing facilities piped to a hub in West Texas for delivery to EOR markets.
  • Rangely Weber Sand Unit, US – Chevron. CO2 derived from gas-processing facilities piped to oilfields for EOR

Source: Global CCS Institute

Adnoc projects pending CDM registration

Adgas – at Das Island, gas flaring will be reduced by installing a new pipeline to recover excess fuel and flash gases, which will be reused as fuel. The project will use the flare gas as fuel, reducing CO2 emissions as well as the need for fuel.

Takreer – conservation of previously flared gas streams at the Ruwais refinery. The gases will be compressed and sent to the fuel-gas system to partially replace the natural gas imported from a nearby field.

Fertil – recovery of CO2 emissions from flue gases generated while converting ammonia into urea at the Ruwais plant.

Gasco – installation of energy-efficient seals on the ground-flare systems of gas-processing complexes at Bab, Buhasa and Asab to reduce fuel-gas consumption needed to purge the flare header and avoid air entry.

Habshan – recovery of previously flared waste gases from the gas-processing complex. The gases will partially replace imported fuel gas.

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