November 2021, Vol. 248, No. 11
Features
Carbon+Intel: For Carbon Capture Pipelines, the Future’s Now
By Richard Nemec, Contributing Editor
Lynn Helms, who heads the North Dakota Department of Mineral Resources and is the chief regulator of the second- or third-largest U.S. oil-producing state, has built regional and national reputations over the last quarter century overseeing what continues to be the Bakken Shale boom.
In the past decade he has held webinars each month for news media to chart the monthly production statistics in the state, during which he often has talked about new trends or developments in America’s oil patch.
In mid-September, in the midst of falling month-to-month production statistics, Helms chose to talk about capturing, using and storing carbon dioxide (CO2), the biggest part of greenhouse gas (GHG) emissions driving climate change.
It turns out that North Dakota’s geology, which has helped drive the U.S. shale boom for unconventional oil and gas drilling, is providing an excellent place for CO2 to be used in enhanced oil recovery (EOR) and stored permanently to reduce the effects of climate change.
As a result, Helms said that North Dakota’s ongoing $50 million orphan well capping program needs to be “extremely strategic” so the state’s many legacy wells can remain viable for carbon storage.
“A great deal of our carbon storage potential is in our legacy oil and gas assets in the southeast and central parts of the state [outside of the Bakken for the most part], so to store carbon and lower carbon intensity we can use these underground formations,” Helms told news media on the webinar.
On the negative side, he said these sites are “disappearing quite rapidly. We have about half as many conventional wells as we have in the Bakken [which is 96% unconventional wells].”
North Dakota is one of two states – Wyoming is the other – that have obtained “primacy” from the federal government in permitting carbon capture utilization and storage (CCUS) projects.
This summer, the state held its first CCUS permit hearings on the Red Trail project that proposes to store 180,000 tons a year of CO2 from ethanol facilities in Richardton, North Dakota, storing the CO2 on-site, a mile underground.
On that day in September, Helms noted that all of the capture modules were being manufactured in Texas, and the state Industrial Commission, headed by Gov. Doug Burgum, later approved the Class VI carbon capture and storage project at its October meeting. Helms said there are 17 more CO2 projects in the works in North Dakota.
“It is going to be an industrial boom here in using our geology for carbon storage,” Helms told news media. “The capital is really wanting to flow to those projects, and they are going to create a lot of jobs, a lot of wealth for pore space owners, and that is going to be really beneficial to the state’s economy.”
He calls this another segment of North Dakota’s already robust energy and agricultural economy. “Energy and agriculture are 75% of North Dakota’s GDP, and we’re looking to become a center for where low-carbon fuels are produced.”
Nationally, the talk is much the same as in Bismarck, North Dakota, led by an 80-member nonpartisan Carbon Capture Coalition, which has proposed legislation on incentives and other measures and are seeking widespread bipartisan support with leadership by Rep. Tim Ryan (D-OH).
There are proposals to extend the 45Q federal tax credits and change them to direct payment incentives, along with the Catch Act, which is designed to level the playing field in terms of business sector differences in the economic viability of capturing carbon emissions. The legislative proposal would provide differentiated credit values to encourage more technology advances and private sector investment.
The carbon coalition, which has an overriding mission of fostering economy-wide carbon capture deployment, has also targeted infrastructure needed to transport CO2 from source to use or permanent storage in something designated as the federal Scale Act, which would provide federal assistance to the build-out of infrastructure for CO2 pipes and saline geologic hubs. Coalition officials insist this will help create economies of scale and cut costs.
“Carbon capture technology has suffered a significant lack of federal investment compared to other support programs for clean energy technology,” said the Carbon Capture Coalition’s Madelyn Morrison, external affairs director, during a webinar in late September. Various legislative proposals include ways to beef up the infrastructure for carbon transfer and storage.
The ongoing Congressional debate surrounding the Biden administration’s infrastructure and jobs legislation includes the federal Class VI well program of the Environmental Protection Agency (EPA). It is part of the EPA’s underground injection control (UIC) standards, establishing federal minimum technical criteria to protect underground sources of drinking water.
It is under the UIC program that states request primacy status from the federal EPA. Five other states – Kansas, Maryland, Montana, Pennsylvania and Oklahoma – have joined North Dakota, Wyoming and Louisiana in a memorandum of understanding committing to creating more regional CO2 transport through an action plan.
They have articulated the need for more investment in federal Class VI permitting. In addition, the Carbon Capture Coalition has published a blueprint on federal carbon capture and storage policy.
Carbon capture is a key piece of the climate change puzzle, according to Dan Lashof, director of the World Resources Institute. Lashof focuses on the importance of carbon capture and storage taking hold in the U.S. industrial sector, which represents 23% of the nation’s total GHG emissions.
“Typically, the industrial sector gets a lot less recognition in proposed climate change legislation,” he said. “Carbon capture will play a really critical role in taking the electric generation sector down to net-zero in terms of CO2 emissions,” Lashof said. “Eventually, it is essential to get to zero emissions in the overall industrial sector.”
As the pandemic and the American economic response moved into the waning months of 2021, there was no shortage of carbon-freeing projects among oil and gas operators of all sizes, but particularly among the super majors. In the U.S. corporate world, it was an extension of the growing ESG programs (environmental-societal-governance) that are consuming evermore time of senior managements across the nation.
ExxonMobil, Chevron, BP plc, Royal Dutch Shell, Occidental Petroleum (Oxy) and many more have been talking the talk about CO2. In September, Shell decided to reduce its carbon footprint by selling its assets in the lucrative Permian Basin for $9.5 billion.
“We’ve seen unprecedented interest in carbon capture utilization and storage [CCUS] from various companies that we are working with,” said Tom Harris, Louisiana’s Secretary of Natural Resources.
He added during a September webinar that his state has three pending projects involving CCUS as either a primary or secondary focus. These include:
- Gulf Coast sequestration project, to create a carbon hub in southwest Louisiana to permanently store more than 2.7 million tons annually
- Grön Fuels complex near Baton Rouge, producing 60,000 bpd of low-carbon renewable diesel and some renewable jet fuel, using non-fossil feedstocks, such as soybean oil, and capturing up to 1 million tons of CO2 for sequestration
- A third project not yet formally announced in September that would be a large-scale green energy facility
Harris noted that Louisiana currently ranks fifth in CO2 emissions, according to EIA. Sixty percent of the state’s CO2 comes from industrial sources.
“Many of these provide low-cost, high-volume opportunities for carbon capture,” he said. “The refining and petrochemical industries have great potential for carbon capture deployment due to key industrial processes that produce relatively pure streams of CO2.”
Carbon capture and related infrastructure needs are taking root all over the nation. From the Gulf Coast to North Dakota to the Rockies and California, the climate change–driven quest to remove more carbon from the atmosphere has sparked industry, government, think tank and investment community activity.
Most projects are often unique and stand-alone, depending on the geographical location, type of industry, engineering design and economic viability. One size does not fit all when it comes to CCUS.
The Great Plains Institute’s state carbon capture work group published a white paper on infrastructure needs for carbon capture and storage in 2020, noting they are needed on a “significant scale,” rather than a project-by-project basis, to realize major decarbonization of the industrial and electric generation sectors.
“Regional scale transport infrastructure will be required to deliver captured CO2 to sites of utilization and long-term storage,” Elizabeth Abramson and Dane Mcfarlane wrote in the white paper, along with the University of Wyoming’s Jeff Brown. “The long-term benefit of ‘super-sizing’ CO2 infrastructure to enable expanded capacity in the future” is what is needed compared to doing it piecemeal, they concluded.
The white paper identified 1,517 industrial and power plant sites in the lower 48 states where CO2 emissions are large enough to qualify for the federal 45Q tax credits. Collectively, these facilities emit 2.3 billion tons of CO2 annually.
“Of those qualifying for 45Q credits, 418 facilities met additional screening criteria to determine near- and medium-term potential for carbon capture retrofit under today’s policy landscape and with conservation economic assumptions,” Abramson, Mcfarlane and Brown noted.
Currently, there are 36 publicly announced CCUS projects scattered in more than a dozen states, according to the carbon coalition’s count. Among those projects, six are in Texas and four are in Louisiana. They represent potentially permanently storing or using tens of millions of tons of CO2.
Among the lowest cost potential projects are ethanol and ammonia plants that are scattered throughout the middle of the nation. These plants have high concentrations of CO2, which makes them “low-hanging fruit” for CO2 developers, according to Jon Probst, managing director of the Summit Agricultural Group, the sponsor of one of the nation’s largest carbon capture and storage projects. The Summit Agricultural Group includes a 2,000-mile (3,219-km), 4- to 24-inch CO2 pipeline.
“By and large, there is not much pipeline infrastructure in the Midwest – only about 5,000 miles [8,047 km] of CO2 pipe nationally, most of it being around Texas, Oklahoma and Wyoming where there is oil production,” Probst said.
Using a subsidiary, Summit Carbon Solutions, Probst’s agribusiness operator and investment management company, is proposing to connect with 31 bio-refineries producing ethanol in five states to capture, transport and store permanently up to 10 million tons of CO2 starting in 2024. The $4.5 billion project is expected to create jobs and help stimulate rural economies in Iowa, Minnesota, Nebraska and the Dakotas. Storage will be in North Dakota. It is estimated the project will allow the ethanol producers to lower their carbon footprints by up to 50%.
The Summit project is an example of an undertaking that has two economic drivers – the federal 45Q tax credits paying CO2 emitters that is up for extension by Congress through the 2020s and the low-carbon emissions credits for which ethanol as a transportation fuel is eligible. “Basically, for an ethanol plant, if they sell their fuel into states like California and Oregon that have low-carbon fuel laws in place, they generate a premium for their product,” Probst said. “If the plants capture and sequester the CO2, they can draw a premium in those low-carbon fuel standard [LCFS] markets.”
In the Permian Basin, Oxy is locked into carbon capture as part of its aggressive EOR program, which claims 10% to 25% increases in production.
“In the Permian Basin, Occidental operates more CO2 floods than any other CO2 flood operator,” according to Oxy spokesperson Jennifer Brice. “Nearly three-quarters of our Permian Basin EOR business unit oil production is from fields that actively employ CO2 flooding, an EOR technique in which CO2 is injected into oil reservoirs, causing the trapped oil to flow more easily and efficiently.”
On a second-quarter earnings call, CEO Vicki Hollub noted Oxy had 2 billion barrels of resources yet to be developed through its EOR business in the Permian and in the conventional reservoirs.
“We’re excited that the low-carbon business will provide us either a very low cost or net-zero cost CO2 for those projects,” Hollub said on the earnings call. “So, it’s a key part of our low-carbon strategy and will be a key contributor and growth engine for us as we go forward beyond the implementation of our first direct air capture facilities.”
In Colorado, an Oxy unit, Oxy Low Carbon Ventures, is working with a Portland cement company plant in southern Colorado on carbon capture and storage, according to Scott Prestidge, a spokesperson for the Colorado Oil and Gas Association (COGA).
Oxy proposes to take CO2 from the Portland plant and inject it under West Texas oilfields to boost oil yields there. Denver business publication reports indicate the pilot could make both cement production and oil wells more climate-friendly, and prompt more carbon sequestration projects in other parts of Colorado and southern Wyoming.
The Oxy unit is pursuing the project along with cement-maker LafargeHolcim and two other companies, Svante Inc. and global energy giant Total, to evaluate the prospects for capturing 725,000 tons of CO2 annually.
COGA’s Prestidge indicated Colorado also has two different state agencies, the Colorado Energy Office and the Colorado Oil and Gas Conservation Commission, overseeing a larger, legislatively directed Carbon Capture & Sequestration Task Force that will be finalizing a report in December this year with recommended policy needs and next steps.
Oxy’s 2014 spinoff, California Resources Corp. (CRC), similarly is a bold advocate of EOR and carbon capture in the power generation sector. Under an increasingly aggressive ESG program, CRC is expanding its commitment to decarbonization with several low-carbon initiatives, such as CalCapture, a CCUS project that plans to capture CO2 from the CRC’s oilfield-based Elk Hills Power Plant and inject and permanently store that CO2 deep underground in formations for EOR.
In addition, CRC announced earlier this year that it has the potential to permanently store up to 1 billion metric tons of CO2 in its oil and gas reservoirs across the state through carbon capture and storage projects.
“These projects differ from our CalCapture project in that the CO2 is injected underground permanently in depleted oil and gas reservoirs (rather than productive oil and gas fields) and is not used to enhance oil production,” CRC spokesperson Richard Venn said.
CRC has applied for a permit for one of two initial permanent carbon capture and storage projects at the Elk Hills Field, which are collectively referred to as Carbon TerraVault I. The company plans to apply for a permit for the second project late this year.
With a total capacity of up to 40 million metric tons of storage, the projects are expected to be capable of injecting more than 1 million metric tons of CO2 annually, equivalent to the annual emissions of 200,000 passenger vehicles. The Carbon TerraVault projects will use existing pipelines and may require building new ones, according to Venn.
“Carbon capture technologies are real solutions for reaching and maintaining carbon neutrality, and helping California meet the emissions reduction goals under the Paris Climate Accord and contributing to the decarbonization of the state,” Venn notes.
In North Dakota, just about all of the proposed CO2 capture projects have had the benefit of working with the state’s Energy and Environmental Research Center (EERC) at the University of North Dakota.
Originally as a unit in the federal government – Bureau of Mines in the Department of Energy – focused on coal, EERC was de-federalized in 1983 by the Reagan administration and became part of the university with finding emissions controls for low-ranked coal, or lignite, as its principal mission. Since then, it has expanded into all energy platforms, according to CEO Charles Gorecki.
Gorecki is keenly interested in the public fight between energy policy advocates, saying there must be more reliability and others who want clean energy.
“I would say you don’t have to choose between having it clean or having it reliable,” Gorecki said. “With carbon capture and storage technology you can have both. Project Tundra and others like it are prime examples of the fact that we’ve already eliminated the sulfur dioxide (SOx), NOx, and particulate matter, so now you can eliminate CO2.
“EERC certainly has developed the expertise having been working on it for the past 20 years,” he said. “Since 2003, we have had more than 200 partners on our Eco projects. EERC is part of the Plains CO2 Reduction Partnership Region covering 10 states and four Canadian provinces, equaling a quarter of North America,” Gorecki said.
After outlining North Dakota’s five most prominent publicly announced CO2 projects, including Dakota Gas, Minnkota Power’s Tundra, and Rainbow Energy, Gorecki notes that Wyoming has several projects being contemplated, and EERC has a carbon-based project with the University of Wyoming near Gillette, looking at carbon capture and storage from Basin Electric’s Dry Fork power plant.
“There’s no definite plan there yet, but looking at the geology, it is highly probable,” Gorecki said.
As EERC has demonstrated, the leaders of the multibillion-dollar Summit ethanol/CO2 project are primed for growth through solid partnerships, applying proven technology and relatively simple engineering design, according to Summit’s Jon Probst.
“From our standpoint, there has definitely been strong interest from a variety of sources in the oil/gas space that want to participate in one or another, or partner with us,” Probst told P&GJ. “We haven’t gone down that path yet, but the interest is definitely there.”
Both Tiger Infrastructure Partners and John Deere have publicly announced investments in Summit Carbon Solutions.
In Wyoming, the Plano, Texas-based Denbury Resources’ 20-inch Greencore pipeline is the first CO2 pipeline it constructed in the Rocky Mountain region, and company leaders plan to use the pipeline as a trunkline in the Rockies, eventually connecting Denbury’s various CO2 sources in the region to the Cedar Creek Anticline (CCA) in eastern Montana and western North Dakota. The 232-mile (373-km) pipeline begins at the ConocoPhillips-operated Lost Cabin gas plant in Wyoming and terminates at Bell Creek Field in Montana.
After completing construction of the pipeline in 2012 and its first CO2 deliveries from the ConocoPhillips-operated Lost Cabin gas plant during 2013, the following year Denbury completed construction of an interconnect between its Greencore pipeline and an existing third-party CO2 pipeline in Wyoming, enabling the transport of CO2 from LaBarge Field to its Bell Creek Field.
The CO2 EOR development project at CCA now requires a 105-mile (169-km) extension of the Greencore CO2 pipeline between CCA and Bell Creek, and Denbury plans to extend the Greencore pipeline to CCA by the end of this year.
Further evidence for the investment community’s appetite for carbon capture and storage is found in the Dallas-based Navigator Energy Services’ partnering with units of Valero Energy Corp. and the private equity firm BlackRock Global Energy & Power Infrastructure Fund III.
They are sifting through potential third-party customer feedback in route to building a 1,200-mile (1,931-km) CO2 pipeline in five Midwest states that eventually could lead to the storage of up to 8 million metric tons. Initial operations are planned for 2024.
The Navigator project for Valero, a traditional oil refiner and ethanol producer, is a further indication of its transition “seeking a long-term competitive advantage with investments to produce lower carbon fuels,” said CEO Joe Gorder. Valero’s partners are echoing the same pronouncement that carbon capture infrastructure is a key to the nation’s climate change mitigation and energy transformation. They seem to be saying the future is now.
Richard Nemec is P&GJ’s West Coast contributing editor in Los Angeles. He can be reached at rnemec@ca.rr.com.
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