Energy News Today

A magical CCUS unicorn will not save the oil industry

But it might just save the world 

North American oil and gas companies are going big on carbon capture, utilisation, and storage (CCUS). Chevron, for example, is targeting 25 mega-tonnes of CO2 (MtCO2) per year by 2030[i]. Occidental Petroleum, which has a similar target, plans to be Net Zero by 2050[ii] with the help of an ambitious rollout of direct air carbon capture (DACC) facilities. Whilst Exxon claims to have captured more CO2 than any other company[iii] and is promoting the idea of turning the Houston Ship Channel into a CCUS hub with a capacity of 100 Mtpa by 2040[iv]. The project is backed by a further 13 oil and chemicals companies but requires government support, with Exxon calling for a cool $100bn in combined investment[v].

But to what extent can CCUS reduce the emissions of oil & gas companies? CCUS faces challenges around scale, credibility, and cost. It is also important to separate out alignment – whether a company is aligned with the goal of the Paris agreement – from the financial risks posed by climate change and the energy transition. The greatest threat to the industry is collapsing demand as the world moves to Net Zero and low carbon energy; here CCUS provides little protection from the prevailing headwinds.

Planned CCUS capacity is only a fraction of the industry’s total emissions

Scale is everything. Chevron’s 2019 full life-cycle emissions (scopes 1, 2 & 3) were 697 [vi], of which their CCUS of 25 MtCO2 per annum (Mtpa) target represents less than 3.6%. Some might even question Chevron’s ability to achieve this target given its troubled flagship Gorgon CCUS project in western Australia, which has experiencedThe facility has so far failed to inject even 25% of its planned 4 Mtpa capacity[1]. Completed three and half years late, the project has sequestered an average of less than 1 Mtpa[vii].

Globally, the numbers also paint a stark picture. According to the International Energy Agency (IEA), energy-related

Figure 1: Energy related greenhouse gas emissions compared to CCUS capacity, 2021.

Source: Carbon Tracker, underlying data from IEA.

Many CCUS projects just provide cover for increasing emissions

Two-thirds of current CCUS capacity is used for ‘gas processing’[x] where naturally occurring CO2 mixed with fossil gas is stripped out during processing. This is primarily done to meet marketing specifications and to prevent damage to production facilities, but it is increasingly required for regulatory approval and to help meet companies’ emission reduction targets.

Although waste CO2 should be captured rather than vented into the atmosphere, it does not offset the CO2 released when the gas is burnt which constitutes the majority of emissions. Worse, such projects are often used to justify the development of high CO2 gas fields, under the guise of reducing emissions. But at best, they render the operational emissions comparable to those of a standard field. New gas processing CCUS…

Read More: A magical CCUS unicorn will not save the oil industry

2022-07-22 04:12:29

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