1. 1 Carbon Capture and Storage and the Location of Industrial Facilities Jeff Bielicki Research Fellow Energy Technology Innovation Project Belfer Center for Science and International Affairs Harvard University Presentation at Research Experience in Carbon Sequestration 2007 Montana State University, August 2, 2007

2. 2 What does CCS do? Couples industrial organization with geologic organization. –CO 2 transport and storage requirements add additional costs. CO 2 transport and storage costs introduce a spatial ‘tax’. –Costs depend on the distance that CO 2 must be transported. This presentation addresses how the economies of scale for CO 2 transportation interact with those of shipping coal and transmitting electricity.

3. 3 CO 2 Transport and Storage Cost model balances CO 2 pressure from storage reservoir back to source. –Includes all fixed and variable costs Composed of: –Pipeline transportation –Compression/Pressurization –Injection

4. 4 Existing U.S. Pipelines Existing CO 2 Pipelines in the United States L (mi) D (in) Capacity (MMSCFD) ROT (kt/(yr*m 2 )) Canyon Reef Carriers14016240 35,725 20300 28,580 Cortez502301000 42,341 4000 169,364 McElmo Creek40860 35,725 Bravo21820382 36,392 Transpetco/Bravo12012.75175 41,022 Sheep Mountain18420330 31,438 22424480 31,755 Central Basin14016600 89,313 261200 67,645 Este11912.00150 39,694 250 48,605 West Texas1278100 59,542 12 26,463 Llano Lateral538100 59,542 12 26,463 Sources: Map created from data provided by US Office of Pipeline Safety (2003); CO 2 pipeline data collected from Oil & Gas Journal and operator websites. CO 2 mass flow rate in kt/yr. Diameter in meters.

5. 5 Pipeline CO 2 Transportation US Pipeline Construction Data –Onshore pipelines –Oil & Gas Journal, 1990-2005. Regression: $ = 1,686,630∙1.0541 YR ∙D 0.9685 ∙L 0.7315 Using CO 2 Pipeline Flowrates $ = 0.3778∙1.0541 YR ∙m 1.4685 ∙L 0.7315 Pipeline Construction Costs: 1990-2005 CoefficientCost ($) Year – 1990 (YR) 0.0526*** (0.0040) Ln(D)0.0969*** (0.034) Ln(L0.732*** (0.012) Constant14.338*** (0.049) Obs.1052 Adj. R 2 0.87 Standard errors in parentheses: ***p<0.01 Length in km.

6. 6 Transporting CO 2 Compression and Pressurization: –Compression from gas to liquid. 1 –Pressurization as liquid. Pressurization at source – Pressure drop = 10 MPa at storage site. –Compression/Pressurization equipment costs. 2 1 Assumes CO 2 is an ideal gas. 2 Based on IEAGHG (2003).

7. 7 Storing CO 2 Injection: –Estimated costs to drill/equip/rework wells 1 –Flow/number of wells based on parameters from In Salah and SACROC. –Injection Resistance Pressure: Hydrostatic: P res = (  H2O -  CO2 )gh Dynamic: 1 Sources: JAS (2000), O & G Journal

8. 8 Shipping Coal Prices paid for 22,000 + shipments of coal in US, 79 –01. 1 –Shipped from a number of basins by a variety of means: rail, barge, truck, slurry… –Analysis limited to approximately 4,000 records for single mode rail transportation in the “middle” states. 1990 Clean Air Act Amendments made coal from Powder River Basin attractive. Mean Coal Content PDRNot PDR BTU8,938 (634.9) 12,311 (902.9) Sulfur0.4222 (0.3062) 1.352 (0.8137) Ash5.761 (1.921) 9.683 (2.235) Moisture21.54 (10.67) 6.255 (4.329) Standard deviation in parentheses. 1 EIA (2005)

9. 9 Note(s) on Shipping via Railroad 1979 Staggers Act deregulated railroads. –1980: 22 companies operating rail lines. –2007: 5 control 95% of lines. 1990 Clean Air Act Amendments –Congestion out of Powder River Basin.

10. 10 Coal Shipment Costs Four Interaction Models: 1, 2 –Two functional forms –Two cost structures for distance Powder River Basin coal significantly cheaper. 1 Powder River Basin dummy variables not shown (odd-numbered coefficients). 2 Distance structures differentiated by whether or not  13 and  13 are estimated.

11. 11 Case Study: Coal to Liquids Plant Coal gasification for synthesis gas: CO 2 +H 2 Fischer-Tropsch: 2.5 bbl oil and 1.7 tonnes CO 2 from 1 tonne coal. 1 Economies of scale unclear. –Assume size relative to SASOL plant (150,000 bbl/d) 1 Assuming 75% efficient gasifier (Argrawal et al, 2007).

12. 12 CTL Plant: CO 2 vs. Coal Example: –Powder River Basin coal, power model, same cost structure, SASOL-sized plant. 1 1 $70/MWh; 5%, 50 years. Bold points indicate cost-minimized location CCS transport and storage costs relocate CTL plants… but only so much.

13. 13 Power Plant ‘Typical’ PC Power Plant 1 –Uses approximately 9.6 kg/s coal per MW –Produces approximately 4.7 kg/s CO 2 per MW 1 Full load, 37% efficiency

14. 14 Power Plant: CO 2 or Coal? Should we transport CO 2 or ship coal? CCS pulls power plants away from coal mines and towards storage sites. The tug weakens as the distance between the coal mine and the storage site decreases. No significant impact for small distances and power plants.

15. 15 Transmitting Electricity Transmission lines: –Discrete voltage ratings. –Capacity degrades over distance. –Losses depend on distance, diameter, material, impedence…

16. 16 Electricity Transmission Costs Model chooses minimum required design. 1 E.g. Low load requires smaller diameter/lower capacity (kV) line. But losses increase. Hence the different slopes Different line designs 1 Based on IEAGHG (2003).

17. 17 CO 2 or Electricity? Should we transport CO 2 or transmit electricity? Storage Site CONCLUSION: Build power plant close to demand and transport CO 2 …

18. 18 But… Part of the Grid Exists The ‘tug’ of CCS transportation and storage depends on: –Plant size/output. –Distance between demand and storage. –Amount of grid infrastructure to be built. Transition at about 30±10% transmission investment.

19. 19 Economies of Scale This presentation focused on the ‘tug’ that CCS exerts on the location of facilities: –Significant enough to make existing facilities wish they were somewhere else. –Scale of production is important. How do the economies of scale of CO 2 transportation and interact with the economies of scale of e - and CO 2 co-production and capture? –Distance to storage site important.

20. 20 Next Steps Spatial Triangulation of Locations… … including Spatial Optimization for Pipeline Routing: