2co energy - don valley power project - securing energy supporting growth – david mirkin - global...
DESCRIPTION
As a part of the Institute's strategic focus on assisting CCS projects through knowledge sharing, three North American roadshow events will help the industry share project experiences and knowledge about CCS. Taking place in the US and Canada, the three events include: • Austin, Texas on November 8, 2011; • Calgary, Canada on 10 November, 2011; and • Washington, D.C. on 19 January, 2012. The first roadshow focused on sharing project experiences and knowledge from the projects in North America but also brought in projects from Europe (Don valley) and Australia (Callide) so that regionally diverse experiences could be shared amongst a global audience. Attendance at the event was around 30 to 35 which allowed open and frank discussions around technical, management, and regulatory issues and how these challenges can impact on a project’s advancement and decision making processes.TRANSCRIPT
November 2011
2Co Energy – Don Valley Power Project Securing energy, supporting growth
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Heritage and Financial backing
Denbury Resources
• 1000 miles of pipelines, moving 20MT of CO2 for enhanced oil recovery
Hydrogen Energy
• Developed three advanced CCS projects – Peterhead, Abu Dhabi and California
TPG Capital
• One of the world’s largest private equity firms with almost $50bn invested
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Power with CCS is underway over here…
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We need to make it happen in Europe too
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The policy conflict
Balance sheet versus energy and climate goals
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Numerous UK and EU funding initiatives help, but aren’t enough
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1. UK Competition
• £1bn capital support
2. European Energy Programme for Recovery (EEPR)
• €180m capital support
3. EU New Entrant Reserve 300 (NER300)
• €100s of millions of operating support (possibly capital)
4. UK ‘CCS Demonstration Programme’
• Operating support
• But challenged in current climate
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5
10
15
20
25
30
35
40
45
UK N Sea Oil Produ
c1on
(Billion ba
rrels)
As in North America, EOR can bridge the divide
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25bn
8bn
3-8bn
Source: Produced, proven and probable – DECC ‘UK Oil Reserves and Estimated Ultimate Recovery 2011’. EOR estimate – Jon Gluyas, University of Durham
⇒ Revenue £150-£750bn
⇒ Deferred decommissioning £6-£24bn
⇒ 6,000 -16,000 direct jobs retained or created offshore
Already Produced
Proven and Probable Reserves
EOR
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EOR participation in the North Sea has historically been low but not for reasons of technical viability
That was then…… • IOCs led UKCS exploration when it was a
‘frontier’ region with large reserves and large capex requirements
• IOCs typically manage developments through plateau and into decline
• Independents acquire fields to better manage costs in decline
• Potential merits of CO2 EOR recognised from 1979, but securing supply non-core to IOCs and outside skill set of independents
…..this is now • North Sea in steep decline, creating issues for govt: decommissioning liability / loss of jobs • UK/EU governments investing to make large quantities of CO2 available for storage • Forward oil-price scenarios can support higher cost EOR-derived oil • Significant untapped resources remain – 15-20% increase in reserves thru EOR access • Carbon capture and storage is a UK, European, and global priority, creating new supplies
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Finding the right CO2 source
The Don Valley Power Plant at Stainforth
• Internationally important project and furthest advanced CCS project in UK
• 650MW (approx) pre-combustion capture IGCC power plant capturing up to 5mtpa CO2
• Has received planning permission (‘Section 36’)
• Major technology providers chosen
Leading project for Yorkshire/Humber cluster
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H2
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Power generation and CO2 capture process
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Coal l Gasifiers
2 units Quench
Fuel gas conditioning
Power
Air Separation
Unit
Coal preparation
Limestone Drying
2MTPA
O2
N2
CO2 Shift
Acid Gas Removal – Selexol
Combined Cycle Unit
Sulphur Recovery
Quench make-up
Slag handling
Slag Fly Ash Recycled Water
Sulphur
900MW gross 650MW net
CO2 drying and compression
Up to 5MTPA
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CO2
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CO2 transport and storage with EOR
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Oil CO2 IGCC
90km Pipeline
Compression
Pumping
Up to 5MTPA dense phase CO2
300km Pipeline
Filtering Metering
Pumping
Deh
ydra
tion
& s
epar
atio
n
Water
Fuel Gas
CO2 -> Oil onshore offshore CO2 storage reservoir
Multi-stage separation
CO2
Oil
Gas
H2O
CO
2
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EOR with the DVPP project
• More costly development than simple storage – a new platform, new injection and production wells and retrofit of the existing facilities = possibly more than £1bn capital cost
• Production of up to 150 million barrels of oil from up to 5 million tonnes CO2 per year
• More than £10 billion in incremental oil revenue, and billions in incremental taxation to government
• Extends life of oil fields by 20 years, and safeguards up to 1000 jobs in the offshore sector
• Lower cost transport and storage solution for DVPP than any alternative
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Together, the projects bridge the policy divide
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Up to 5 MT per annum CO2 capture
£3 bn capital cost for power plant and capture
Low carbon power
CO2 for EOR (tax revenue)
• FEED complete
• Awarded €180m grant under EEPR
• NER application in place
• Awaiting UK process
Central N Sea EOR
Don Valley Power Plant
CO2 Pumping
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Compelling economics
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0
20
40
60
80
100
120
140
160
180
200
Who
lesa
le
Pow
er P
rice
Ther
mal
w
ithou
t CC
S
CC
S
DVP
P ne
t of
EOR
taxe
s
Ons
hore
Win
d
Off
shor
e W
ind
Nuc
lear
Sola
r
£/M
Wh
Source: Mott Macdonald for DECC, UK Electricity Generation Costs Update June 2010
DECC 2013 cost of electricity forecasts
DVPP is a catalyst
De-risking EOR could enable subsequent projects to need no grant
DVPP is UK’s fastest route to CCS feasibility
DVPP
Financing – getting the right capital structure
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500
1000
1500
2000
2500
3000
3500 £ million
EEPR
NER (as grant)
UK Govt (Backing NER
and up to £1bn)
Govt/Official debt - EIB, ECAs, HMG
Commercial debt
Equity
14
Financing – value chain integration risks
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Key risks
• Covers several Industries
• Project on project confidence
• Completion (cost and schedule)
• Operation (availability and reliability)
• Financing
• Political
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www.donvalleypower.com www.2coenergy.com
The Don Valley CCS Project is co-financed by the European Union’s European Energy Programme for Recovery. The sole responsibility for this publication lies
with the author. The European Union is not responsible for any use that may be made of the information contained therein.