Deploying carbon capture, utilisation and storage technologies

The oil and gas industry is already one of the global leaders in developing and deploying carbon capture and utilisation (CCUS) technologies. Of the

35 Mt CO2 captured today from industrial activities in large-scale CCUS facilities, nearly 80% is captured from oil and gas operations.

CCUS is a critical technology to reach the emissions trajectory of the SDS, with deployment split almost equally between the power and industry sectors (including cement, iron and steel, and refineries). Total

CO2 captured globally rises from 170 Mt CO2 in 2025 to nearly

2 400 Mt CO2 in 2040.

In the power sector, CCUS in the SDS is concentrated in a handful of countries, most notably China (for coal) and the United States (for natural gas). The use of CCUS in industrial applications is widespread, as emissions from energy-intensive sectors are typically hard to abate, and CCUS constitutes one of the few currently available technology options to achieve deep levels of decarbonisation.

As shown by the 45Q fiscal incentive in the United States, actions by governments will play an essential role in facilitating the growth in

CCUS. This can be via targeted regulatory levers, market-based frameworks, public procurement, low-carbon product incentives, tax credits or grant funding. Governments can also play a role in facilitating the growth of multi-user transport and storage networks that industrial facilities can access, and in helping to manage risks associated with ensuring stored CO2 does not leak.

If the incentives are in place to encourage investment in different components of the CCUS value chain, there are several ways to think about the role of the oil and gas industry in relation to CCUS.

•As a source of some concentrated streams of CO2 that are relatively easy and cost-effective to capture (for example in gas

processing or parts of the refining sector). Deployment of CCUS in these areas would contribute to reductions in scope 1 and 2 emissions intensities.

•As a user of CO2, primarily for injection into reservoirs as a mechanism for EOR. Depending on the source of the CO2 and the volumes being injected, this could reduce the emissions intensity of the produced oil considerably (and even, theoretically, lead to carbon-negative oil).

•As an industry that undertakes well-funded, high-level research, and that has the large-scale engineering, pipeline and subsurface, and project management capabilities to scale up CCUS. This could have positive spillover implications for many aspects of energy transitions, including for the large-scale production of low-carbon hydrogen and the decarbonisation of heavy industry.

CCUS could also play a key role in helping to achieve “negative emissions” if bioenergy is used in conjunction with carbon capture and storage (BECCS). Negative emissions could help to offset emissions from hard-to-abate sectors, such as aviation or the manufacturing of iron, steel and cement. Further, most scenarios that aim to limit the temperature rise to 1.5°C (such as those assessed in the IPCC special report, Global Warming of 1.5°C) rely heavily on BECCS to do so. In the SDS, just under 100 Mt CO2 is absorbed from the atmosphere using

BECCS in 2040.

50

Source: IEA (2018), World Energy Outlook 2018, www.iea.org/weo2018.

Gas processing

Refining

Co-generation

Hydrogen production Fluid catalytic cracker

Globally, we estimate that just over 700 Mt CO2 of scope 1 emissions from oil and gas operations could be avoided using CCUS. Many of these reductions could be realised at relatively low cost, particularly emissions from natural gas processing and refining processes that yield highly concentrated CO2 streams. Over 250 Mt CO2 emissions could be avoided at a cost of less than USD 50/t CO2.

One of the key opportunities to capture CO2 emissions from the gas value chain is during natural gas processing. Underground deposits of natural gas can contain significant quantities of naturally occurring CO2 and this must be removed to meet technical specifications before the gas can be sold or used.

CO2 removed in gas processing facilities is typically vented, and we estimate that around 150 Mt CO2 is vented globally in this way.

However, there are a number of projects that capture this CO2, such as the Sleipner projects in Norway. One key advantage of capturing CO2 from natural gas processing is that the separation process results in a very concentrated stream of CO2 that can easily be purified prior to transport and storage.

Since the CO2 content of gas that is transported as LNG has to be extremely low, liquefaction facilities are another stage along the gas value chain where highly concentrated CO2 emissions could potentially be captured.

There are two major LNG facilities in operation today that are equipped with CCUS units to capture CO2: the Gorgon project in Australia and the

Snøhvit project in Norway. At Gorgon, the natural gas flowing to this facility contains around 15% CO2, which has to be removed prior to liquefaction; the aim is to capture these CO2 emissions that would

otherwise be vented. Qatar has also announced its intention to step up

CCUS deployment in its gas operations.

Applying CCUS to refining operations will be a key mechanism to reduce emissions from the oil value chain. Refineries tend to consist of a variety of scattered CO2 emission sources across different processing units, making it difficult to capture all emissions from a plant. However, there are some units and systems that could be equipped with capture units. This includes hydrogen production units using steam methane reforming

(which are the source of around 20% of total CO2 emissions from a refinery), fluid catalytic cracking units and co-generation systems.

Refineries are one of the largest users of hydrogen today, and demand for hydrogen is set to grow as regulations on the sulphur content of final products tighten. Hydrogen production units in refineries result in highly concentrated CO2 streams, offering one of the lowest-cost opportunities to apply CCUS. Fluid catalytic cracking units also generate a flue gas containing CO2 in relatively high concentrations. The adoption of co-generation systems in refineries not only generates energy efficiency benefits but also centralises emissions sources, making CO2 capture more viable.

A number of refineries have installed units to capture CO2 emissions. For example, a large portion of the emissions from the 400 kb/d Pernis refinery in Rotterdam are captured, transported and used in nearby greenhouses, and there are a number of other demonstration CCUS projects in refineries elsewhere.