November 2023, Vol. 250, No. 11
Features
CO2 Projects Look to Overcome Siting Opposition
By Richard Nemec, Contributing Editor, North America
(P&GJ) – In the last two years, while the Biden administration has been embracing direct-air capture (DAC) hubs, Houston-based Occidental Petroleum Corp. (Oxy) and its one-time spinoff, California Resources Corp. (CRC), have been leading increased industry interest in the transportation and storage of carbon, in the transition to a zero-emissions energy world.
And while excessive exuberance surrounds the plans to harness carbon dioxide (CO2) — causing calls for caution among some skeptics — Oxy and CRC, at the end of 2023, were boldly moving ahead on the CO2 forefront.
In mid-August, Oxy paid $1.1 billion for British Columbia-based technology supplier Carbon Engineering Ltd., to help it develop a network of carbon-capture sites it hopes will profit from tackling climate change head on. Oxy aims to build about 100 plants using DAC technology, which strips CO2 from the atmosphere to bury underground or use in making products such as concrete and aviation fuel.
In mid-2023, the United States had 5,000 miles of CO2 pipelines, with more than 3,600 miles of new lines under development in three separate major projects: Summit Carbon Solutions, Navigator CO2 Ventures and Wolf Carbon Solutions.
Two other projects are converting existing natural gas transmission pipelines to carry CO2. In this mix, safety concerns are still being worked through at federal and state regulatory levels, in the aftermath of the 2020 CO2 pipeline rupture in Satartia, Mississippi, where the town was evacuated, and 45 residents were hospitalized.
A Princeton University researcher, Jesse Jenkins, has estimated that long-term, up to 65,000 miles of CO2 pipelines could be operating in the United States. This possibility worries officials at various nonprofit pipeline safety organizations, such as the Pipeline Safety Trust.
In June this year, a Congressional Research Service (CRS) analysis indicated CO2 pipelines were “essential components” of carbon capture and storage (CCS) systems, which are proposed to reduce atmospheric emissions of man-made CO2. Several thousands of miles of pipeline already carry CO2 in the United States, primarily linking natural CO2 sources to oil fields, where CO2 is used for enhanced oil recovery (EOR).
“However, a much larger pipeline network likely will be needed, to meet national goals for greenhouse gas (GHG) reduction, and developers already are seeking permits for new CO2 pipelines,” the CRS paper indicated.
Internationally, a Wood Mackenzie (WoodMac) study concluded that a $2.7 trillion annual investment in the United States alone is required to reach net-zero emissions and head off a severe warming of global temperatures by 2050.
The world is currently on a trajectory to warm by 2.5 degrees Celsius, according to WoodMac’s Energy Transition Outlook report. Up to $1.4 trillion of the annual U.S. climate change investment needs to fund a combination of renewables, infrastructure and energy transition technologies.
“Oil and gas still have a role to play as part of a managed transition,” the report concluded. “There will be a natural depletion as low carbon supply develops, but oil and gas supply still will have to be replenished as the world moves toward net zero.”
The base case in the WoodMac analysis shows fossil fuels, worldwide, accounting for 69% of global energy use, with that falling to 53% in 2050. Carbon capture utilization and storage (CCUS) and DAC will “abate fossil fuels use while low- and zero-carbon energy supply is developed,” the report notes, projecting that CCUS/DAC capacity will rise from 100 million metric tons (mt) in 2023 to 2 billion mt in 2050.
Nationally, Biden administration officials are not bashful about what’s at stake. They see the move of going after carbon with direct-air technology as the initial salvo, in a quest to create a whole new industry that addresses the global climate change challenges confronting the 21st century world. U.S. Department of Energy (DOE) Secretary Jennifer Granholm calls the current efforts a “once-in-a-generation investment” and a start to laying the “foundation for a direct air capture industry that is crucial to tackling climate change and transforming local economies.”
Nothing short of the world’s largest investment ever in engineered carbon removal is contemplated, with new hubs removing more than 250 times more CO2 than the largest DAC facilities now operating. “This development will help inform future public and private sector investments and jump-start a new industry critical to addressing the climate crisis on a global scale,” says a DOE spokesperson.
The latest data prior to the end of 2023 — when updates were expected from the U.S. Energy Information Administration (EIA) — had CO2 emissions increasing by 7% or 325 million metric tons (MMmt) from the pandemic year of 2020, though overall emissions remained 5% (242 MMmt) below 2019 totals.
More than half of the 2021 increase came from the consumption of petroleum products in the transportation sector, according to EIA’s tracking. Electricity generation also saw a rise in emissions, but EIA noted this was “tempered by a continued long-term trend toward noncarbon [solar and wind] electricity generation.”
EIA analysts at the end of 2022 did not see the future involving more CO2 emission increases, concluding that a “combination of conditions that raised energy-related CO2 emissions in the United States in 2021 do not necessarily represent future trends.” Instead, they looked at the many changes in CO2 emissions between 2020 and 2021 as being heavily influenced by what they called “the economic effects of the pandemic.”
Under Congress’s 2021 Infrastructure Investment and Jobs Act, the EIA has been coordinating more closely with the Environmental Protection Agency (EPA), to compare each agency’s CO2 emissions data and the metrics behind their respective work. EIA emphasizes that all of its short-term forecasts and long-term projections include emissions data.
“We publish our long-term U.S. emissions projections in the ‘Annual Energy Outlook,’ which provides projections on energy-related CO2 emissions by fuel source, sector and end-use, as well as projections of other elements of energy markets through 2050,” an EIA spokesperson noted. “We also provide projections of international energy-related CO2 emissions through 2050.”
In August 2023, DOE awarded the first of about $1.2 billion in federal support for a network of U.S. DAC hub projects. It includes two commercial-scale direct air capture projects in the heart of the nation’s energy production corridors, in Texas and Louisiana, along with 19 others, spread around the energy producing regions.
According to DOE officials, the hubs are expected “to ensure meaningful community and labor engagement and contribute to President Joe Biden’s justice improvement efforts.” Collectively, the two projects in Texas and Louisiana are expected to remove more than 2 MMmt of CO2 emissions annually, DOE maintains.
DAC separates CO2 from the air, helping to reduce legacy CO2 in the atmosphere and allowing the separated CO2 to be safely and permanently stored in deep underground caverns or converted into useful carbon-containing products, such as concrete, that prevent its re-release back into the atmosphere. Widespread deployment for DAC and other, new emission capture technologies will be required to combat climate change. Granholm points out that cutting the emissions alone won’t reverse the growing impact on climate; nations need to remove the CO2 they already have put in the atmosphere.
Critics and skeptics will say that a net-zero global economy by 2050 is overreach and pie in the sky. Nevertheless, Biden and Granholm are all in behind what others consider to be overly ambitious plans for a U.S. net-zero emissions economy, even though their own DOE number-crunchers indicate this will require between 400 million and 1.8 billion metric tons of CO2 removal and capture annually by 2050.
They are counting on the three new projects — Cypress in Calcasieu Parish, LA, South Texas DAC Hub in Kleberg County, TX, and the Sweetwater Carbon Storage Hub in southwest Wyoming — to demonstrate that these goals are feasible.
Columbus, Ohio-based Battelle Labs researchers are working with clean energy technology experts from Climeworks Corp. and Heirloom Carbon Technologies Inc. on Project Cypress, to create a hub for capturing more than 1 MMmt of existing CO2 annually, and relying on Gulf Coast sequestration for offtake and geologic storage.
They expect to create about 2,300 jobs in the process. Similarly, in Texas, the South Texas DAC hub is expecting up to 2,500 added construction, operations and maintenance jobs from the creation of Oxy’s 1PointFive unit and its partners at Carbon Engineering Ltd., as well as the global engineering firm in energy, chemicals and resources, Worley. Texas-based Frontier Carbon Solutions, Inc. and the University of Wyoming are developing the Wyoming project at Granger.
In late summer, state regulatory commission members in North Dakota denied a siting permit to the backers of the Summit Carbon Solutions project, after receiving extensive negative reactions from community members, during public hearings earlier in 2023. Among the concerns cited were eminent domain, safety, permanent storage policies, setback distances and potential harm to underground drain tile systems and property values.
However, in mid-September, the three-member Public Service Commission (PSC) did agree to reconsider its earlier rejection, based on a petition for reconsideration from the Summit sponsors. As of early October, the PSC had yet to take any action on the rehearing.
North Dakota regulators questioned Summit's proposed route in the state, citing multiple issues that they indicated Summit didn't appropriately address, such as cultural resource impacts, geologic instability and landowner concerns. Covering five upper Midwest farming states, Summit’s project proposes to build a $5.5 billion, 2,000-mile pipeline network for carrying CO2 from 34 ethanol plants in five states to North Dakota, for storage deep underground — a project involving carbon capture technology, which has attracted both interest and skepticism nationally.
Summit is one of three projects — the other two being Navigator CO2 Ventures and Archer Daniel Midlands Co., partnering with Wolf Carbon Solutions — seeking to build pipelines that will be used to move carbon dioxide captured from ethanol, fertilizer and other agricultural industrial plants.
The state of Iowa’s regulators are reviewing all three projects. In September, the state’s chief oil and gas regulator, Lynn Helms, director of the Department of Mineral Resources (DMR), notes that that the PSC has the chief oversight of the Summit proposal, but his department is tracking it closely, because if it is permitted by the PSC and eventually constructed, “we will be ones [at DMR] to amalgamate, permit and regulate their storage facilities.”
He noted that DMR engineers have had some initial conversations and reviewed some draft storage applications, in consultation with state health department officials.
Specific statistics and projections for current and future CO2-related infrastructure are not tracked by the federal government. DOE’s National Energy Technology Laboratory (NETL) is the source of some relevant information, but EIA spokesperson Morgan Butterfield notes that the build-out of carbon capture sites and associated pipelines are mostly a result of cost minimization, based on specific economic assumption, as opposed to stated plans for pipelines around the nation.
EIA has a “capture, transport, utilization, and storage” (CTUS) submodule as part of its National Energy Modeling System (NEMS). And NEMS does create some projections of carbon capture and storage for the EIA Annual Energy Outlook, Butterfield told P&GJ. “These projections are based on the physical characteristics of potential carbon capture locations and assumptions on pipeline costs, sourced by NETL.”
Late in the summer, San Diego-based Sempra’s infrastructure subsidiary forged an agreement with a Japanese consortium, comprised of Tokyo Gas Company Ltd., Osaka Gas Company Ltd., Toho Gas Company Ltd. and Mitsubishi Corp., to jointly evaluate a proposed project for producing synthetic gas from CO2 and renewable hydrogen (“e-natural gas,” or e-NG).
Sempra executives view this as a form of “carbon recycling” for the U.S. Gulf Coast. “It could be the first link of an international supply chain of liquified e-natural gas,” they have stated in announcing the project.
Sempra Infrastructure CEO Justin Bird said this project could end up allowing existing gas infrastructure — including the global LNG supply chain Sempra is a part of — to become part of the “backbone for the delivery of a long-term, carbon-neutral fuel.” The four substantial Japanese corporate energy giants emphasized the ideal geographic location for the project, which is provided along the Gulf coast.
Making use of Mitsubishi’s existing tolling capacity at the Sempra Cameron LNG terminal in southwest Louisiana, the joint venture project expects to produce 130,000 tons of e-natural gas, annually, for liquefaction at the export facility. As part of the project, green hydrogen will be produced and/or purchased, and facilities will be constructed to produce e-NG. Japan’s Ministry of Economy, Trade and Industry and the U.S. DOE are operating under a current Memorandum of Cooperation involving carbon capture, utilization and storage (CCUS).
In California, CRC saw its plans for a DAC hub advance, with U.S. DOE funding of $11.8 million. Through its Carbon TerraVault Holdings (CTV) subsidiary, CRC is expecting to develop and operate California’s first full-scale direct air hub — what it calls “DAC + S.”
Everyone — from California Gov. Gavin Newsom to local and state elected officials — has embraced the project. DOE funding will initially support the completion of front end engineering design (FEED) studies in 2024, for the proposed facilities that are slated to be built in oil and agriculture-rich Kern County. With the DOE funding and potential construction beginning in 2025, CRC’s hub is also eligible for funding from the California Energy Commission.
A unit of CTV has formed a consortium including local community college and national energy research interests. In total, some 40 industry, community, tribal, government, technology, academic and labor organizations are participating.
This consortium eventually intends to create a network of DAC hubs throughout California, as part of the federal DOE’s $3.5 billion effort to accelerate commercialization of atmospheric CO2 removal via integrating its capture, processing, transport, and permanent storage. State officials emphasize that the Kern County hub will not use any of the captured CO2 will be used for enhanced oil recovery (EOR).
Supporters of CO2 transportation projects — including Republican presidential candidate and North Dakota Gov. Doug Burgum — view these projects as a weapon against climate change. However, opponents question whether CCS technology is proven at scale and whether it is economic, compared to other lower-cost alternatives such as solar and wind power — all at a time when they want to phase out all fossil fuels. The opponents accuse oil and gas companies of using CO2 projects to avoid having to significantly change their operations.
At the same time, new federal tax incentives have made carbon capture an attractive enterprise. The technology has the support of the Biden administration, with billions of dollars approved by Congress for various carbon capture efforts. In 2022, oil billionaire and CEO of Continental Resources Corp., Harold Hamm, provided $250 million to the Summit project.
In the meantime, state regulators in Minnesota, Nebraska and South Dakota — along with Iowa and North Dakota — are all busy examining the Summit proposal, which, if it is built, could be a huge boon to oil production in North Dakota, where Hamm’s Continental Resources is a dominant player as the largest producer and leaseholder.
Writing in the June 2 Congressional Research Service assessment of CO2 pipelines, energy specialist Paul Parfomak indicated that “economic and regulatory challenges to CO2 pipelines may limit the development of CCS.”
In particular, he called out siting opposition due to safety concerns as possibly “preventing CO2 pipeline development in some localities and increasing their development time and costs in others.” Parfomak noted that Congress should monitor the progress of CO2 pipeline development and the impact of the incentives it has provided.
Richard Nemec is P&GJ’s contributing editor based in Los Angeles. He can be reached at: rnemec@ca.rr.com
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