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FY2015 Study Report
Global Warming Mitigation Technology Promotion Project
Feasibility Study on CCS-EOR projects in Southern Mexico
Report
March 2016
The Japan Research Institute, Limited
Mitsubishi Heavy Industries, Ltd.
INPEX CORPORATION
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Report on the Global Warming Mitigation Technology Promotion Project
- Contents -
1 Background and Purpose of the Study .......................................................................... 1
1.1 Background of this study ............................................................................................. 1
1.1.1 Progress in Energy Reform .......................................................................................... 1
1.1.2 Response and Policy by the Mexican Government Regarding Climate Change ................ 8
1.1.3 Policies Related to CCS by the Mexican Government.................................................. 15
1.2 Purpose of This Study ............................................................................................... 20
2 Policies for Encouraging CCS Projects Aligned with the Joint Crediting Mechanism ..... 23
2.1 Alignment with the Mexican Emissions Trading System ............................................. 23
2.2 Cooperation in the Operation of the CCUS Research Center ........................................ 24
3 Project Planning for Promoting CCS .......................................................................... 25
3.1 Designing CCS-EOR Project ..................................................................................... 25
3.1.1 Structure and Stakeholder Analysis for CCS-EOR Project ........................................... 25
3.1.2 Designing Commercial CCS-EOR Project .................................................................. 28
3.1.3 CO2 Capture System ................................................................................................ 30
3.1.4 Discussion of Finance in Anticipation of CCS Project ................................................. 37
3.1.5 CCS-EOR Project in Demonstration Phase ................................................................. 40
4 Applicable Methodologies for Reducing Emissions in This Project and Their Estimated
Emission Reduction ................................................................................................. 43
4.1 Analysis of MRV Methodologies ............................................................................... 43
4.1.1 Analysis of CCS-EOR methodology adopted by the American Carbon Registry ............ 43
4.1.2 Analysis of Methodologies in Clean Development Mechanism (CDM) ......................... 44
4.1.3 Discussion on Methodologies for JCM ....................................................................... 45
4.1.4 Discussion on ISO/TC265 ......................................................................................... 45
4.2 Discussion of Methodologies for Emission reduction .................................................. 46
4.3 Estimation of Reduced Emissions .............................................................................. 62
5 Analysis of Economic Effects and Impact on Partner Country in the Event the Project is
Implemented ........................................................................................................... 65
5.1 Analysis of Impact of CO2 (Emission Credits) Price on Feasibility of Project ............... 65
5.2 Analysis of Impact of CCS-EOR Project on Oil Production in Mexico ......................... 65
5.3 Analysis of Impact of CCS-EOR Project on GHG Emissions in Mexico ....................... 67
6 Program for Promoting Understanding on the Part of Mexican Counterparts Regarding
JCM and Building a Stronger Relationship with Them ............................................... 68
6.1 Overview ................................................................................................................. 68
6.2 Details of exchange sessions and study tours .............................................................. 69
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6.3 Summary of Technical Exchange ............................................................................... 72
6.3.1 Exchange Regarding CO2 Capture System ................................................................. 72
6.3.2 Exchange Regarding CO2 Sequestration Site .............................................................. 73
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Terms
Abbreviation Standard nomenclature
CCA California Carbon Allowance
CCS Carbon Capture and Storage
CCUS Carbon Capture, Utilization, and Storage
CELs Certificados de Energías
CENACE Centro Nacional de Control de Energía
CER Certified Emission Reductions
CFE Comisión Federal de Electricidad
CNH Comisión Nacional de Hidrocarburos
CRE Comisión Reguladora de Energía
EOR Enhanced Oil Recovery
INDC Intended Nationally Determined Contribution
MMSCFD Million Standard Cubic Feet per Day
PEMEX Petróleos Mexicanos
SEMARNAT Secretaría de Medio Ambiente y Recursos Naturales
SENER Secretaría de Energía
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1 Background and Purpose of the Study
1.1 Background of this study
1.1.1 Progress in Energy Reform
Since taking office in December 2012, President Peña Nieto has been tirelessly pushing
forward with his promised energy reform. The petroleum, gas, and electric power sectors
hitherto protected by the constitution are now experiencing a major shakeup.
In a matter of a year under Peña Nieto's presidency, the reform-related legislation passed by
the Congress and states, as well as the constitutional reform in December 2013, paved the way
for market liberalization in the energy sector. As of today, the reforms are progressing
according to plan despite concern over the impact from the recent oil price slump and
resistance from CFE, PEMEX, and other vested interests that have been enjoying a monopoly
on the domestic electric power and petroleum markets.
Figure 1 Institutional Framework Involving PEMEX and CFE Before the Energy Reform
Source: CRE
Figure 2 Institutional Framework Involving PEMEX and CFE After the Energy Reform
Source: CRE
Executive Branch
Secretaries(Ministries)
SHCP(Treasury)
SENER(Energy Ministry)
CRE
CNH
Descentralized Entities
PEMEX
CFE
Symbology:Policy MakerRegulatorOperator--- Autonomous agency
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Prior to the reform, PEMEX and CFE had been classified as decentralized public entities.
Today, they are state-owned production companies with more freedom from governmental
restrictions than before.
In January 2016, SENER, Mexico's ministry of energy, announced a clear-cut proposal for
the restructuring of the CFE which had been monopolizing the country's power industry.
Although these will remain a state-owned enterprise, it will create subsidiaries without any
capital or personal ties. Some four to six of these subsidiaries in the generation segment will
lead the restructuring process to allow subsidiaries to also start providing transmission,
distribution, and other basic services1. CENACE will replace CFE to operate the grid to
prepare the way for fair competition between CFE and the new entrants in the electrical power
trading market in terms of e.g., market access and transmission cost.
Figure 3 Power Sector and Roles of CFE Before the Energy Reform
Source: CRE
Figure 4 Power Sector and Roles of CFE After the Energy Reform
Source: CRE
1 Press Release, SENER, "La Secretaría de Energía emite los Términos para la estricta separación legal de la Comisión Federal de Electricidad (CFE)"
<http://www.gob.mx/sener/prensa/la-secretaria-de-energia-emite-los-terminos-para-la-estricta-separacion-legal-de-la-comision-federal
-de-electricidad-cfe>, January 5, 2016
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At present, PEMEX has PEMEX Exploration and Production, PEMEX Gas and Basic
Petrochemicals, and other subsidiaries for different processes for production and utilization of
petroleum and gas. The new corporate structure will consist of seven subsidiaries including
PEMEX Upstream and PEMEX Industrial Transformation to boost the yield as a part of the
reform agenda. However, given the tight business conditions associated with falling oil prices,
the company has yet to fully streamline existing business or restructure business operations
aside from some efforts made in job cuts.
Figure 5 Restructuring of PEMEX Group
Source: PEMEX
Figure 6 Outline of How the Energy Reform Opens Up Petroleum and Gas Industries
Source: PEMEX
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Public bidding on oil fields has attracted particularly great attention among the other energy
reform agendas, in which Round One blocks were offered for bidding to foreign and domestic
companies whereas Round Zero blocks remained reserved for development and production by
PEMEX. In December 2014, the bid for Phase One (shallow waters) was announced by
National Hydrocarbons Commission (CNH). Thereafter, the bids and successful bidders for
Phase Two (shallow waters) and Phase Three (onshore) have already been announced.
Currently, bidding blocks (deep waters) for Phase Four have been announced.
Bidding for these oil field blocks is proceeding without any major delays. But only 2 out of
14 blocks were awarded in Phase One. The situation slightly improved in Phase Two, when 3
out of 5 blocks were awarded. Based on the production-sharing agreements signed in these
two phases, due payments from winning bidders comprised a certain share of the operating
profits, royalties, and exploratory phase contract fee. In Phase Three, a licensing agreement
model was adopted differing from the earlier model based on product-sharing agreements.
Onshore blocks offered in Phase Three, unlike those in shallow waters in Phases One and Two,
made it possible for a wide range of companies to participate in the tender. Thanks to more
relaxed conditions for bidders, all of the 25 blocks on offer were awarded in this successful
bidding. Phase Four is attracting the attention of foreign companies for the 10 blocks of
deep-water oil fields in the Gulf of Mexico in the midst of a protracted decline in the oil price.
The transparency of the bidding process for Round One blocks is ensured as relevant updates
are available on the CNH website (application and fee payments are necessary for accessing
detailed data related to these blocks).
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Figure 7 Progress in Round One
Source: Compiled by the Japan Research Institute based on "Programa Quinquenal de
Licitaciones Para la Exploración y Extracción de Hidrocarburos 2015-2019" by SENER and
CNH website
SENER plans four successive rounds between 2015 and 2019 as appropriate according to
the five-year plan for carbon exploration and extraction it announced in December 2015
(Programa Quinquenal de Licitaciones Para la Exploración y Extracción de Hidrocarburos
2015–2019). The total bidding area of 235,070 km2 (including exploration and extraction
blocks) covered the total reserve of carbon hydrate resources amounting to 104,788 million
barrels of equivalent oil equivalent (of which 65,945 million barrels were proven and 38,844
million barrels were probable).
Fist Phase(Exploration)
2nd Phase(Production)
3rd Phase(Production)
4th Phase(Exploration)
Prospective Resource(MMboe)
687 - - 10,889
Certified Reserve(MMboe)
-1P(Proved): 143
2P(Probable): 3553P(Possible): 671
1,882 -
Total Area (km2) 4,222 281 777 24,000Size of Block (km2) 116-500 42-68 7-135 1,678-3,287Number of Block 14 5Block (9Area) 25 10Location Shallow Water Shallow Water Onshore Deep Water
Type of ContractProduction-Sharing
ContractProduction-Sharing
ContractLicense Contract License Contract
Award Date 15 June 2015 30 Sep. 2015 15 Dec. 2015 -
Awarded Block Bock2, Block7 Block1、Block2、Block4 All Blocks -
Number of SuccessfulBidders
1(1 Consortium)
3(1 Company)
(2 Consortiums)
17(11 Companies)(6 Consortiums)
-
Successful Bidders
・Consortium of 3companies(Sierra Oil &Gas, Talos Energy,Premier Oil)
・Eni International・Consortium of 2companies(Pan AmericanEnergy, E&PHidrocarburos yServicios)・Consortium of 2companies(FieldwoodEnergy, Petrobal)
・Diavaz Offshore・Santa Campos Maduros・Renaissance Oil・Consortium of 2companies(Geo Estratos,Geo Estratos MxoilExploracion yProduccion) Others
-
Number of Bidders7
(3 Companies)(4 Consortiums)
9(5 Companies)
(4 Consortiums)
40(26 Companies)
(14 Consortiums)-
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Figure 8 Reserve and Area of Bidding Areas for Exploration and Extraction 2015–2019
Source: Compiled by the Japan Research Institute based on "Programa Quinquenal de
Licitaciones Para la Exploración y Extracción de Hidrocarburos 2015–2019" by SENER
Figure 9 Bidding Areas in Round One
Source: SENER, "Programa Quinquenal de Licitaciones Para la Exploración y
Extracción de Hidrocarburos 2015–2019"
RoundResource(P1 & P2)
(MMboe)
Area(km
2)
1 70,095.3 34,074.12 14,796.2 75,342.83 12,276.5 61,557.14 7,620.6 64,095.9
Total 104,788.6 235,070.0
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SENER estimates an increased daily production of 0.5 million barrels in 2018 and 1 million
barrels in 2025, which can be expected from the energy reform compared to the scenario of
continued monopoly of oil production by PEMEX. The estimate assumes an oil price of
around 100 dollars per barrel and daily production of roughly 2.5 million barrels by PEMEX.
Figure 10 Actual and Projected Crude Oil Production
Source: SENER, "Programa Quinquenal de Licitaciones Para la Exploración y
Extracción de Hidrocarburos 2015–2019"
Monopoly by PEMEX
Energy reform
Actual crude oil production
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1.1.2 Response and Policy by the Mexican Government Regarding Climate Change
(1) Greenhouse Gas Emission
Greenhouse gas (GHG) emissions in Mexico increased by 33% from 1990 to reach 748
MtCO2e (equivalent metric ton carbon dioxide) in 2010. The average annual growth of 2.6%
from 2001 to 2010 was associated with GDP growth per capita and urbanization involving
emissions increase in particular from transportation, waste, fugitive emissions, flaring, and
venting of gas. The energy segment accounts for the greatest GHG emissions among other
segments of sources, which experienced an emission increase of 58% from 1990 to 2010, with
an average annual growth of 2.3%2.
Figure 11 Change in GHG Emission
Source: National Climate Change Strategy 10-20-40 Vision
(2) Intended Nationally Determined Contribution (INDC)
In 2012, Mexico developed and promulgated the first legal framework, Ley General de
Cambio Climático (LGCC), for tackling climate change among developing countries. The law
set forth a long-term target to cut GHG emission over the period until 2050 by 50% compared
to the 2000 level. The commitment is carried over to the intended nationally determined
2 National Climate Change Strategy 10-20-40 Vision
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contribution (INDC) that the country submitted to the Secretariat of the United Nations
Framework Convention on Climate Change (UNFCCC) in preparation for COP21 held in
France in 2015. Notably, Mexico was the first developing country to submit an INDC thus
demonstrating its active commitment to address climate change. GHG Emission Reduction
Targets stated in INDC are as follows.
Figure 12 INDC by Mexico (GHG Emission Reduction Targets)
Unconditional
Reduction
25% reduction in emissions of greenhouse gases and short-lived climate
pollutants below BAU by 2030 (i.e., 22% reduction in GHGs and 51%
reduction in black carbon)
Conditional
Reduction
The 25% reduction commitment expressed above could increase by up to 40%,
provided a global agreement addressing important topics including
international carbon price, technical cooperation, access to low-cost financial
resources, and technology transfer (i.e., 36% reduction in GHGs and 70%
reduction in black carbon).
Source: Compiled by the Japan Research Institute based on materials by UNFCCC
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Figure 13 GHG Reduction Targets by 2020 and 2050
Source: SEMARNAT, "National Climate Change Strategy: 10-20-40 Vision," 2014
(3) National Climate Change Strategy (ENCC) and Climate Change Special Plan (PECC)
In 2013, President Peña Nieto announced the National Climate Change Strategy
(ENCC 10-20-40 Vision) for SEMARNAT in order to achieve the reduction targets in line
with the Climate Change Basic Act (LGCC). The long-term goals and strategies presented in
the national strategy are based on a two-pronged measure for (1) adaptation to climate change
and (2) mitigation of GHG emissions. Activities are specified for three policies for adapting to
climate change, and five policies for mitigation of GHG emissions. No numeric targets and
schedule are specified for these activities since they are mainly aimed at defining a clear
long-term direction, which in turn is reflected into respective policies.
In 2014, SEMARNAT announced its Special Program on Climate Change 2014–2018
(PECC), which sets forth 5 goals and 10 numeric targets in the near-to-mid term to be
achieved by 2018. The program was developed in accordance with the National Development
Plan (PND) and aforementioned National Climate Change Strategy. Currently, measures to
tackle climate change are being carried out to achieve the numeric targets of the program.
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Figure 14 Goals and Strategies of National Climate Change Strategy in 2013
Goal Strategy
Adaptation
to climate
change
A1: Enhance resilience and reduce vulnerability of the affected society
A2: Enhance resilience and reduce vulnerability of the affected production systems
and strategic economic infrastructure
A3: Sustainable use, protection, and conservation of ecosystem
Mitigation
of GHG
emissions
M1: Accelerate transition to clean energy
M2: Reduce energy intensity with efficient and responsible consumption schemes
M3: Shift towards models of sustainable cities with mobility systems, integrated waste
management, and low-carbon footprint buildings
M4: Promote best practices in agriculture and forestry to increase and preserve natural
carbon sinks
M5: Reduce emissions of short-lived climate pollutants (SLCPs), and promote health
and well-being
Source: Compiled by the Japan Research Institute based on the National Climate Change
Strategy: 10-20-40 Vision
Figure 15 Goals of the Special Program on Climate Change 2014
Goals
Goal 1: Reduce vulnerability of citizens and production sectors, and enhance their resilience and that
of the strategic economic infrastructure
Goal 2: Protect, restructure, and manage sustainable environment and ecosystems for adaptation to
climate change and reduced GHG emissions
Goal 3: Curb GHG emissions to achieve a competitive economy and low-emission development
Goal 4: Reduce emissions of short-lived climate pollutants (SLCPs), and promote health and
well-being
Goal 5: Establish effective measures and national policies on climate change by concerted efforts by
the states, municipalities, federal congress, and the society
Source: Compiled by the Japan Research Institute based on the National Climate Change
Strategy: 10-20-40 Vision
Notably, SENER has identified carbon capture and sequestration (CCS) as a technology to
achieve GHG reduction by 2050 as defined in the National Sustainable Energy Use Program
2014–2018. More specifically, in the target scenario until 2050, a 42% reduction in the GHG
emissions can be achieved by renewable energy, followed by increased energy efficiency
(36%), alternative fuel (19%), CCS (3%), and nuclear energy (1%).
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(4) Carbon tax
The Mexican government has levied a carbon tax since 2014 as a measure to curb climate
change. The tax was approved by the congress in 2013 as part of the fiscal reform after Peña
Nieto assumed the presidency. Mexico was the first Latin American country to introduce this
tax, one designed to encourage use of clean energy and reduce CO2 emissions from fossil fuel.
Chile is expected to follow Mexico's lead. Mexico's carbon tax covers fossil fuel sales and
imports by manufacturers, producers, and importers. The taxed amount depends on the types
of fossil fuel, although the tax rate is capped at 3% of the sales price of the fuel. The tax rate
of 5.70 USD/tCO2e initially proposed by the Mexican government was brought down later to
3.21 USD/tCO2e. At the moment, natural gas in not subject to the tax. Payment may be made
with credits (CERs: certified emission reductions) from CDM projects (only credits from
CDM projects are recognized)3.
Figure 16 Carbon Tax by Type of Fossil Fuel
Source: OECD, "Mexican fiscal reform environmental taxes," June 2014
SEMARNAT envisages a revenue of 8 billion pesos (ca. 49.6 billion yen) from the carbon
tax in fiscal year 2015 against 9 billion pesos (ca. 55.8 billion yen) from the initial year which
is about half of the revenue of 1 billion US dollars (ca. 115 billion yen) expected by the
Mexican government. Industry has not voiced disapproval of the associated cost increase of
around 0.8% against the total sales of 64.2 billion US dollars (7.383 trillion yen) by PEMEX
in 2014, which fact suggests that the tax will have only a marginal impact on industrial
competitiveness. Already two years since the introduction of the tax, the tax rate is expected to
be adjusted to the economic climate.
3 OECD, "Mexican fiscal reform environmental taxes," June 2014
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(5) Emissions Trading System
The cross-ministerial committee on climate change set up based on the LGCC has a
mandate to establish a legally binding emissions trading system. In addition, such a system is
thought to be a part of the market mechanism that the INDC requires in order to achieve
conditional reduction targets. The Mexican government has yet to announce any
implementation of a cap-and-trade scheme, which has been popularly adopted in EU-ETS and
other systems. Still, preparation is under way on various fronts to implement the scheme.
After carbon was priced for the carbon tax in 2014, the National Registry of Emission
(RENE) was introduced in 2015 for each emitter of 25,000 tCO2e per year or more to report
GHG emissions to the government. The system requires about 3,000 emitters to report
emissions of CO2, CH4, N2O, SF6, PFCs, HCFCs, NF3, and black carbon to the government as
well as to undergo verification by third parties every three years. The system can track GHG
emissions by major emitters, and these emissions can serve as reference for setting the cap for
each emitter in order to introduce a cap-and-trade scheme.
In July 2015, while mentioning the emissions trading system, Deputy Secretary Rodolfo
Lacy of SEMARNAT announced the creation of an emissions trading market in Mexico in
2017 and that the emission credits will be linked with the trading systems in the states of
California, Quebec, and Ontario. Moreover, President Peña Nieto visited Quebec in October
2015 to sign an agreement for conducting research on an emissions trading system between
the government of Mexico and Quebec.
The reason for this move by Mexico includes the paralysis of EU-ETS by an imbalance of
supply and demand and the somewhat functioning emissions trading systems being
implemented in the geographically closer states in North America. Therefore, the country is
expected to design the emissions trading system by envisaging or referring to systems in states
in North America in order to define the intended use of emission credits generated in the
country and to regulate them.
(6) Energy Transition Law
In December 2015, the Energy Transition Law (LET) was promulgated as a part of the
energy reform spearheaded by President Peña Nieto. The law is mainly intended to promote
progress towards sustainable energy use, procurement of cleaner energy, and reduction of
pollutants in order to comprehensively address climate change. Notably, the law explicitly
requires that 25% of power be generated with renewable energy by 2018, and that the share be
raised in steps to 30% in 2021, and to 35% in 2024.
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The target is ambitious considering the 18.2% share of renewable energy in the total power
generation of 301,462 GWh in 2014 throughout the country4. Steel and some other industries
are strongly opposed to this law arguing that such an ambitious target will increase electrical
power costs and undermine Mexico's industrial competitiveness. In February 2016, AHMSA
(steel) and Deacero (steel) resorted to litigation against the law. Reportedly, the national labor
union of machinery, metal, and steel industries is also preparing to file a lawsuit5.
In addition to the numeric target, the law also specifies how clean energy certificates
(CELs) should be handled in order to encourage the use of renewable energy. This marked the
beginning of the trading in high-profile CELs. The certificates have already been defined in
Articles 121 through 129 in Chapter 3 of the Power Industry Act promulgated in the official
gazette on August 11, 2014. CELs are issued by the Energy Regulatory Commission (CRE) to
power producers using clean energy according to the power output. They will be freely traded
in the wholesale power market due to open or planned to be opened at the end of January 2016.
Heavy power consumers (consumption of 5 MW or greater and annual consumption of 20
GWh) who are eligible to participate in the wholesale power market must acquire and use6
CELs corresponding to the amount exceeding a certain share of the total annual power
consumption. The mandatory acquisition and use of CELs will be in place from 2018. The
required share will be announced in the first quarter of each year for the following three years.
In March 31, 2015, SENER announced the required share of CELs from 2018 having an
overall standing of 5% in the total power supply in 2018.
The first market trading of CELs is planned in March 2016. In January 2016, CFE
announced its intention to sign a long-term contract for 15 or 20 years to purchase a set of
CELs worth 6.3 MWh for consumption of around 500 MW, and a power output of 6.3 MWh
from clean energy7. The maximum purchase price is set around 70 USD/MWh as a total of 47
USD/MWh for power generated from clean energy and 24 USD/MWh for CELs. The price
will be gradually reduced from year to year. A press report pointed out that the current
purchase price offering is about 20% lower than the international price (90 USD/MWh) and
puts some modes of photovoltaic power generation at a disadvantage due to their generation
costs exceeding 100 USD/MWh8. Contrary to the fear of no bids, 103 companies and
organizations applied for preliminary bidding qualification that started in January 2016. In
total, the applications amounted to consumption around 830 MW and CELs worth 109 MWh
and power output of 102 MWh from clean energy. These total bids exceeded the amount of
4 SENER, "Prospectiva de Energías Renovables 2015-2029," 2015, p. 54 5 Vanguardia, "Industriales del acero se amparan contra la Ley de Transición Energética"
<http://www.vanguardia.com.mx/articulo/industriales-del-acero-se-amparan-contra-la-ley-de-transicion-energetica>, February 15, 2016 6 CELs can be resold to other consumers after acquiring them in the wholesale power market. The use of CELs by a heavy consumer to fulfill its own obligation is defined as
"settlement." After the settlement, CELs can no longer be traded in the market. Unsettled CELs can be resold as many times as possible. 7 Press Release, SENER, "Nutrida participación en la fase inicial de la primera subasta de largo plazo del Mercado eléctrico"
<https://www.gob.mx/sener/prensa/nutrida-participacion-en-la-fase-inicial-de-la-primera-subasta-de-largo-plazo-del-mercado-electrico>, February 14, 2016 8 Reforma, "CFE publishes prices for long-term electricity tender," January 28, 2016
- 15 -
CELs being offered and power output. Clean energy included photovoltaic and wind power
generation. CENACE reviewed the technical competence and experience of the applicants.
Qualified bidders will move on to the bidding on March 28, whose result will be announced
on March 31. The second round of tender for CELs and clean energy is planned in the second
quarter of the current fiscal year9.
As mentioned above, heavy consumers will be required to procure 5% of the total power
consumption from clean sources of energy from 2018. In steel and other power-intensive
industries, some companies are trying to reduce the cost of acquiring CELs by investing in
their own clean energy projects to procure their own clean energy. For instance, Deacero
(steel) announced power contracts signed with eight wind power companies, three biogas
power companies, and four photovoltaic power companies. These projects will be put in effect
between 2016 and 2017. AHMSA (steel) plans to invest 136 million US dollars to introduce
three cogeneration power plants and sell any surplus power in the wholesale power market10
.
As these examples demonstrate, Mexican companies are increasingly eager to invest in clean
energy. It is still unclear to what extent the trading of CELs will lead to an increase in the
electrical power price, whether the trade will take place according to the plan, and whether a
sufficient amount of CELs will be supplied to meet the need of industries. Despite all that,
CELs are expected to increase the share of clean energy in power generation in Mexico.
1.1.3 Policies Related to CCS by the Mexican Government
In the aforementioned National Climate Change Strategy 2013 and Special Program on
Climate Change 2014, the following goals and activities have been established as the Mexican
government's CCS-related policies. CCS is acknowledged as indispensable energy for efficient
energy use. The special program indicates that carbon capture, utilization, and storage (CCUS)
will be adopted as a technology for increasing oil production in response to declining
production by PEMEX.
9 Press Release, SENER, "Nutrida participación en la fase inicial de la primera subasta de largo plazo del Mercado eléctrico"
<https://www.gob.mx/sener/prensa/nutrida-participacion-en-la-fase-inicial-de-la-primera-subasta-de-largo-plazo-del-mercado-electrico>, February 14, 2016 10 Reforma, "Steel and mining companies turn to renewable energy," December 29, 2015
- 16 -
Figure 17 CCS-related Components of National Climate Change Strategy 2013
Goal M2 Reduce energy intensity with an efficient and responsible consumption plan
Activity M2.9 <Technologies for enhancing efficiency>
Continue to consider the application of carbon capture and sequestration technologies
including enhanced recovery of carbon hydrate while keeping possible implementation
of projects in mind.
M2.10 <Transition process>
Promote energy efficient technologies, alternative fuel, industrial process designs, and
carbon dioxide recovery technologies in energy-intensive industries, such as the
cement, steel, petroleum, chemical, and petrochemical industries.
Source: Compiled by the Japan Research Industry based on National Climate Change
Strategy: 10-20-40 Vision
Figure 18 CCS-related Components of Special Program on Climate Change 2014
Strategy
3.1
Carry out activities and projects for enhancing energy efficiency
Activity 3.1.4
Proceed toward introduction of CCUS and run pilot projects for enhanced oil recovery
by PEMEX.
(Organizations in charge: SENER, PEMEX, and CFE)
Source: Compiled by the Japan Research Institute based on Programa Especial de Cambio
Climático 2014–2018
In March 2014, SENER announced the CCUS Technology Roadmap as a policy to promote
application of carbon capture and sequestration for enhanced oil recovery (CCS-EOR) in the
following 10 years. The plan is divided into six phases of incubation, public policy, planning,
EOR, power plants, and commercial application. The road map is mainly intended for running
pilot projects and conducting demonstrations in order to achieve commercial application of
CCUS-EOR by 2020. Toward this goal, the overall plan is to complete incubation (mainly
market analysis and preliminary review of the framework) and planning (analysis of candidate
sites) by 2015, public policy (including financing system) for CCUS-EOR by 2020 before
launching commercial-scale projects. A specific schedule for public policy and CCS-EOR
projects is presented below.
The specified schedule for public policy includes the establishment of a CCUS Research
Center in 2016, establishment of financing mechanisms, and discussion of incentives for the
- 17 -
private sector to introduce CCS-EOR. In addition, development of a national policy called
"CCUS Ready" is scheduled to run from 2016 to 2017 to reduce related costs for companies
that have not yet considered introduction of CCS. The necessary policies are expected to be in
place by 2020. Activities for developing human resources will be continued thereafter as well.
Figure 19 Plan for Public Policy in CCUS Technology Roadmap 2014
Source: CCUS Technology Roadmap
According to the precise schedule for EOR pilot projects, the first pilot project will be
implemented from 2015 to 2016 along with the monitoring after field selection, lab analysis,
and designing in 2015. The first pilot project will be evaluated in 2017 by analyzing the
increase in oil production after actual injection of CO2. Pilot tests of CCS-EOR will be carried
out continuously from 2015 until 2024. Aside from pilot projects, a demonstration will be
conducted from 2018 with an eye toward commercial applications. CCS-EOR plants will be
constructed from 2018 until 2020 after CCS-EOR scaling plan, CCS-EOR research, and
field-scale design are complete. Enhanced oil recovery will begin from 2021 by injecting CO2.
According to the specific schedule for pilot projects with power plants (CO2 source), the
most suitable plants were selected among coal-fired and gas-fired power plants in 2014, when
technology for carbon dioxide capture was also selected. The demonstration was designed
from 2014 until 2015. The bidding is to be completed in 2015. Construction of the plants is to
be initiated in 2016. Around 2017, the plants will start operation and data analysis will
continue until these pilot projects are completed in 2019. These plans are being pursued with
- 18 -
assistance from the World Bank's CCS Trust Fund in order to prepare for plant construction
beginning in 2016.
In parallel with pilot projects, demonstration at 20-MW power plants will be prepared from
2018 to discuss oil fields for CO2 injection tests in detail. Pipes and related facilities will be
constructed from 2020 until 2021 following the designing, environmental assessment, and
tender in 2019. In a parallel manner, monitoring with actual injection of CO2 will begin in
2022 after CO2 injection tests carried out at least at two oil fields.
Commercial-scale CCS-EOR projects are expected around 2020 after the abovementioned
pilot projects and demonstration with power plants as CO2 sources regarding EOR.
Figure 20 Plan for EOR in CCUS Technology Roadmap 2014
Source: CCUS Technology Roadmap
- 19 -
Figure 21 Plan for Power Plants in CCUS Technology Roadmap 2014
Source: CCUS Technology Roadmap
- 20 -
1.2 Purpose of This Study
As already presented in the background of this study, an environment conducive to these
plans is developing in Mexico in line with the government's CCUS Technology Roadmap as a
part of the energy reform since 2013. Since commercial-scale CCS-EOR requires a huge
source of CO2 (hence a great contribution to CO2 reduction), it is essential to capture CO2
from flue gases from reformers, gas turbines, and so forth in addition to relying on existing
sources of CO2. This study examines the possible application of CO2 capture technologies
from Mitsubishi Heavy Industries which has ample experience in delivering commercially
viable products in order to pave the way for large-scale CCS-EOR projects in Mexico. The
study is also the subject of attention in terms of the next possible stages for demonstrating the
joint crediting mechanism (JCM) and introduction of commercial plants. The activities in this
study are geared toward reliable implementation of these CCS-EOR projects and introduction
of related technologies. Furthermore, assistance provided by the INPEX CORPORATION
with its expertise in CCS-EOR applied from the beginning of this study is aimed at
strengthening ties between PEMEX and Japanese companies.
In 2014, Mexico was the world's eleventh largest oil producer. However, production has
been dropping sharply since 2004. This decline of roughly 29.5% over the past 10 years is the
result of the ageing of major oil fields and stagnant development of new oil fields (See Figure
22). Oil production is expected to halve from its peak by the late 2020s and fall short of
domestic consumption demand if the decline continues (See Figure 23). The country faces the
impending task of making a unified pull in order to restore oil production which accounts for
over 30% of national revenue and around 15% of exports. Beside the development of
ultra-deep oil fields and shale layers in the Gulf of Mexico, CCS-EOR has been given high
priority for increasing oil production. In March 2014, the government of Mexico developed
the CCUS Technology Roadmap in a drive to promote progress in CCS-EOR in a planned
manner, and for which commercial applications of CCS-EOR are planned around 2020.
Cooperation between the consortium formed for this study and PEMEX toward
commercialization of CCS-EOR provides a solution to the challenges faced by the Mexican
government and strengthens bilateral ties with Japan. Demonstration and full-fledged
implementation of CCS-EOR projects under the framework of JCM will help attain the
understanding of the Mexican government and project participants regarding the joint
crediting mechanism. This bilateral cooperation aimed at commercially viable CCS-EOR is
expected to significantly reduce GHG emissions and thereby accomplish the newly set
reduction target in Paris Agreement from COP21 at the end of 2015.
- 21 -
Figure 22 Historical Oil Production in Mexico
Source: SENER
Figure 23 Projected Oil Production in Mexico
Source: SENER
This study examined new favorable JCM-related policies in Mexico and considered the
coordinated scheme for implementing CCS-EOR projects with effective application of
Japanese CCS technologies and products, while bearing in mind the aforementioned
background and findings from the "Feasibility Study on CCS Technologies in Mexico"
(hereinafter called FS 2013) conducted as one of the Global Warming Mitigation Technology
Promotion Projects in fiscal year 2013.
- 22 -
The project scheme was considered in cooperation with PEMEX, the Mexican Government,
and relevant organizations in Mexico with regards to Cinco Presidentes oil fields and major
CO2 sources such as CPQ Cosoleacaque, a petrochemical plant where PEMEX is considering
for a CCS-EOR demonstration project. The study and analysis were conducted assuming the
implementation of JCM demonstration projects in fiscal year 2016 and thereafter, as well as
subsequent involvement in commercial CCS-EOR projects. Specific plans leading to
commercially viable CCS-EOR projects were developed by examining the CO2 capture
equipment and costs as well as conditions for commercial viability with revenue from
enhanced oil recovery (e.g., project costs and oil price), and so forth.
To help achieve JCM, the study also discussed the necessary methodology for measuring,
reporting, and validating GHG emissions reduction achieved by CCS-EOR projects. The
methodology was applied in the estimation of GHG emissions reduction and other related
analyses.
- 23 -
2 Policies for Encouraging CCS Projects Aligned with the Joint Crediting
Mechanism
2.1 Alignment with the Mexican Emissions Trading System
The government of Mexico has not expressed their intention to put a cap-and-trade
emissions trading system into place. But it is steadily making preparations for example, by
trying to integrate the Mexican emissions market with the emissions trading systems of
California, Quebec, and Ontario, and signing an agreement with Quebec regarding their
emissions trading systems in 2017.
Mexico can attract more funds and technologies through market mechanisms if their
emissions trading system, carbon taxes, CELs, and other relevant systems and policies can be
harmonized with counterparts in respective states and provinces in North America. Hence, the
government’s move is probably aimed at reducing costs for curbing GHG emissions in Mexico
and promoting advanced technologies from abroad.
Bearing the intentions and actions of the Mexican government in mind, due harmonization
efforts must be made to enable the Mexican government and project counterparts to make the
most of both the emissions trading systems and JCM so that they are encouraged to implement
projects under JCM.
More specifically, in the development process of JCM projects in Mexico, an
institutionalized procedure will be introduced to refer to MRV methodologies, guidelines, and
other rules adopted by the emissions trading systems of California, Quebec, and Ontario with
the possibility of combined applications in mind. The MRV methodologies in these North
American systems might not be fully consistent with the basic idea or application of JCM.
Mexican counterparts involved in projects can easily choose a system for generating emission
credits and the Mexican government will have wider options for making use of emissions
credits when the similarities and differences among these systems are clearly identified. This
practice also offers an advantage for Japanese counterparts to be given priorities in pursuing
project implementation in cooperation with Mexican partners since competition between JCM
and other systems can be avoided.
A unique MRV methodology could also be created and applied in projects under JCM so
that such methodology can be “exported” to the emissions trading systems of California,
Quebec, and Ontario. Considering that some Japanese companies (including investing
companies) are regulated under the emissions trading system of the state of California,
harmonization of JCM with North American systems through the Mexican emissions trading
system can potentially broaden options for Japanese companies in complying with regulations.
- 24 -
2.2 Cooperation in the Operation of the CCUS Research Center
According to the CCUS Technology Roadmap, the government of Mexico plans to establish a
CCUS Research Center in 2016. The CCUS Research Center is presumably modelled on the
National Carbon Capture Center (NCCC) of the United States.
The NCCC has been operating since 2009 under the budget of the US Department of Energy
(DOE) with the aim of promoting advanced commercially-viable CCS technologies and to bring
CO2 emissions from coal-fired power plants to virtually zero. Toward this end, the DOE
provides not only funding, but also demonstration fields and leading specialists for the center to
develop and promote CCS technologies. Today, projects organized by the NCCC attract CCS
system manufacturers from all over the world including Mitsubishi Heavy Industries, Hitachi,
and Chiyoda Corporation from Japan, in addition to American power companies such as
Southern Company, DUKE Energy, and American Electric Power. They contribute to other
projects organized by DOE and serve as a driving force for the commercialization of CCS
technologies in United States.
The government of Mexico is expected to follow the American efforts to establish power
plants and storage sites for conducting research and demonstration of CCUS, as well as a center
for boosting technical exchange among Mexican companies and CCS system manufacturers
from other countries. At the moment, with the assistance from the World Bank CCS Trust Fund,
the public offering was initiated for the concept of the CCUS Research Center and
demonstration to be conducted there. The details are gradually being worked out in detail.
Despite the assistance from the World Bank, there are still few Mexican specialists in CCS
and CCUS. The limited number of existing specialists is concentrated in PEMEX, the National
Petroleum Institute, and several other organizations, which fact suggests that the country has an
overall need for human resources for operation, research, and demonstration. In concert with
JCM, existing Japanese frameworks such as the “Infrastructure Development and Research for
Acquiring Joint Credits (Training on MRV)” can be applied to help Mexican counterparts of
JCM projects and CCUS Research Center to develop necessary human resources. For example,
CCS training can be organized in Japan at research centers operated by companies,
manufacturing plants with CO2 capture systems, and the CO2 storage demonstration site in
Tomakomai. In cooperation with the United States, Mexican trainees could be invited for the
long term to participate in training and demonstrations organized mainly through DOE
programs involving Japanese companies. The necessary funding can be pooled by collecting
some portion of the vast amount of emission credits from CCS both from the governments of
Japan and Mexico (a similar approach as with the registration fee in CDM). The joint
management of the fund can ensure sustainable activities of the center.
- 25 -
3 Project Planning for Promoting CCS
3.1 Designing CCS-EOR Project
3.1.1 Structure and Stakeholder Analysis for CCS-EOR Project
(1) Owner of CO2 Source
CPQ Cosoleacaque operated by PEMEX Petroquímica (to be restructured into PEMEX
Fertilizers) was identified as the top candidate of CO2 sources for CCS.
This petrochemical plant has an ammonia plant where highly pure CO2 (98%) can be
obtained in the shift conversion in the ammonia production process. PEMEX is planning and
discussing enhanced oil recovery (EOR) by transporting CO2 from its plant to nearby oil
fields. Given this plan, this study considered CO2 capture from flue gases of reformers of the
ammonia plant for EOR.
The states Veracruz and Tabasco near the petrochemical plant are home to numerous oil
fields that have long underpinned PEMEX’s oil production. Off the coast, there are also the
flagship oil fields of Cantarell and Ku-Maloob-Zaap. Cinco Presidentes to the east of the
plant have many candidate oil fields for EOR projects. The plan in this study was aligned
with that of PEMEX to make use of the CO2 pipeline to be constructed by PEMEX to
transport captured CO2 for EOR.
Figure 24 List of Candidate Sources of CO2
Source: PEMEX
- 26 -
(2) Entity in Charge of EOR
EOR will be performed by PEMEX Exploración y Producción (to be restructured into
PEMEX Upstream or Drilling), which explores and extracts oil. Its local office, Activo de
Producción Cinco Presidentes (APCP), is in charge of the actual development and
management of Cinco Presidentes oil fields east to CPQ Cosoleacaque. APCP is expected to
be directly in charge of EOR. The project will probably be carried out in collaboration with
staff in charge of the ammonia plant of CPQ Cosoleacaque representing CO2 sources, as well
as an asset manager, a person in charge of practical operation of the oil fields, and operators
from APCP.
Figure 25 Combination of CO2 Sources and Oil Fields Considered by PEMEX
Source: PEMEX
(3) Manufacturers of CO2 Capture Systems
PEMEX has been capturing CO2 as a part of its production process for instance by
separating out CO2 in the shift conversion in the ammonia production process. But the
company employs mostly obsolete systems and has no experience in CO2 capture from flue
gases such as those from reformers. Such limited experience and existing systems, therefore,
will have little impact on the selection of new systems. All manufacturers are expected to
compete under the same conditions to introduce new technologies and systems starting from
scratch.
In this regard, Mitsubishi Heavy Industries, a member of the consortium for this study, has
sufficient appeal. As a matter of fact, the company started to develop CO2 capture technologies
in 1990 jointly with Kansai Electric Power Company. Later it succeeded in developing the
KM-CDR process which is a world-class CO2 capture process for a wide range of flue gases
that achieves low energy consumption and absorbent combined with low susceptibility to
corrosion. Since the delivery of the first unit of a CO2 capture plant in Malaysia to capture
CO2 from flue gas for natural gas combustion for urea synthetic in 1999, the company has
- 27 -
steadily gained an impressive track record with 11 delivered units of commercial plants in
operation around the world as of 2015. In terms of project scale, Mitsubishi Heavy Industries
has constructed many world-scale plants. Examples include the CO2 capture demonstration
unit delivered to Plant Barry Power Plant (Alabama, U.S.A.) of Southern Company operating
since 2011 with a capacity of 500 tons/day and the world’s largest capture system to be
completed in 2016 for CCS-EOR operation with Unit 8 of W.A. Parish Power Plant (Texas,
U.S.A.) of Petra Nova CCS I with a capacity of 4,776 tons/day. As such, Mitsubishi Heavy
Industries was selected as the manufacturer for this project with the expectation of effective
application of JCM to further boost the company’s competitiveness.
Figure 26 Examples of CO2 Capture Systems by Mitsubishi Heavy Industries
Source: Mitsubishi Heavy Industries
1999
200 ton/ day
Malaysia
2005
330 ton/ day
Japan
2006
450 ton/ day
India
2006
450 ton/ day
India
2009
450 ton/ day
India
2009
450 ton/ day
Bahrain
2010
400 ton/ day
UAE
2010
240 ton/ day
Viet nam
2011
340 ton/ day
Pakistan
2012
450 ton/ day
India
2014
500 ton/ day
Qatar
- 28 -
Figure 27 Concept Image of One of World’s Largest CO2 Capture Systems for CCS-EOR
cooling tower
Source: Mitsubishi Heavy Industries
3.1.2 Designing Commercial CCS-EOR Project
(1) CO2 Source
PEMEX plans enhanced oil recovery at Cinco Presidentes oil fields by using a portion of
the CO2 that can be captured from four units of ammonia plants of CPQ Cosoleacaque for
CCS-EOR (4,000 out of 7,120 tons/day or 88 out of 140 MMSCFD).
In an ammonia production process, a heating furnace or the like is employed to heat a metal
catalyst to 700 to 1,000°C for steam reforming of natural gas in a primary reformer. The
reformer can serve as a CO2 source since the CO2 in the flue gas can be captured.
Figure 28 CO2 Emission from Ammonia Plants of CPQ Cosoleacaque
Source: PEMEX
Site:
- NRG WA Prish Plant
Gas source:
-Waste gas from coal
boiler
CO2 Recovery volume:
- 4,776 ton/day
CO2 Recovery rate:
- 90%
Start of operation plan:
-The fourth quarter of 2016 Cooling tower
CO2 compressor
Waste gas duct
Waste gas
Cooling tower
Recovery tower
Adsorption tower
- 29 -
Since primary reformers from one ammonia plant emit around 1,000 tons/day of CO2, the
estimated amount of recoverable CO2 from the four units was 4,000 tons/day (ca. 80
MMSCFD). According to PEMEX, the ammonia plants will continue to operate for the time
being as long as there is a stable supply of natural gas. The envisaged amount of captured CO2
was 4,000 tons/day assuming uninterrupted plant operation.
(2) CO2 Storage Site
PEMEX is choosing target oil fields for CCS-EOR operation in the short-term (less than
three years) and long-term (more than three years) depending on their conditions and distance
from CO2 sources. Short-term projects are planned with oil fields of Brillante, Rabasa, and
Los Soldados which are close to CPQ Cosoleacaque as the CO2 source. Laboratory testing is
already complete at the Brillante oil field and the preparation for the pilot test is underway.
Based on the results of this pilot test, CCS-EOR will be carried out at the Brillante oil field on
a commercial scale by supplying CO2 from CPQ Cosoleacaque with the existing pipeline, a
newly constructed pipeline, and compressors for injecting CO2. According to the plan,
CCS-EOR operation will be expanded to oil fields of Rabasa and Los Soldados by extending
the pipeline based on results from the pilot test at the Brillante oil field.
Candidates for the long-term project all belong to Cinco Presidentes oil fields or namely,
Cinco Presidentes, Roadador, and San Ramón.
- 30 -
Figure 29 Locations of CPQ Cosoleacaque and Target Oil Fields for Short-term Projects
Source: PEMEX
In the commercial phase, CCS-EOR operation is envisaged for the Cinco Presidentes oil
fields with their vast potential for enhanced oil recovery, except for the Brillante oil field
intended only for the pilot test. In the project under consideration, CO2 captured from flue
gases from reformers of CPQ Cosoleacaque will be injected into oil fields of Rabasa, Los
Soldados, Cinco Presidentes, Roadador, and San Ramón.
3.1.3 CO2 Capture System
3.1.3.1 Overview of CO2 Source and Project for Introduced System
The system will capture CO2 at a concentration of 10% from flue gases from primary
reformers in the ammonia plant of CPQ Cosoleacaque as the main source of CO2 for the
PEMEX CCS-EOR project. The captured CO2 will be transported with the CO2 pipeline
- 31 -
planned by PEMEX to reach oil fields of Cinco Presidentes for injection and EOR. The CO2
source and the CCS-EOR project are summarized as follows.
Figure 30 Overview of Project Sites
CO2 source
Operator CPQ Cosoleacaque
Owner PEMEX Petroquímica
CO2 source Flue gases from each primary reformer of the ammonia plant
CO2 concentration 10%
Annual CO2
emissions
ca. 416,100 tCO2
(1,200 tCO2 x 1 unit x 365 days x capacity utilization of 95%)
Reference: 1,387,000 tCO2 from 4 units
CCS-EOR project
EOR sites Cinco Presidentes oil fields
Distance from the
CO2 source to EOR
sites
ca. 50 to 200 km (depending on target oil fields)
Injected amount of
CO2 per year
ca. 416,100 tCO2
Expected annual oil
recovery
ca. 0.83 million barrels
GHG emissions reduction
Annual GHG
emissions reduction
ca. 254,750 tCO2
Source: Established by PEMEX and the study consortium
(2) Discussion of CO2 Capture System
Outline of CO2 Capture System
The CO2 capture system employed in the project captures CO2 from the flue gas of a
reformer. A flue gas blower introduces the flue gas from an exhaust stack through the quencher
into the CO2 capture system. The flue gas is directly released into the atmosphere from an
existing stack when the flue gas glower is shut down. The main components of the system are
presented in the list of components.
Structure of CO2 Capture System
- 32 -
This CO2 capture system comprises three process segments of 1) pre-treatment of flue gas,
2) CO2 absorption, and 3) CO2 release and absorbent regeneration (see the schematic
illustration of the process).
Figure 31 Schematic Illustration of Process in CO2 Capture System
Source: Mitsubishi Heavy Industries
1) Pre-treatment of flue gas
The flue gas quencher comprises a cylindrical stack. Hot flue gas from a primary reformer
needs to be cooled down by the flue gas quencher before it is fed into the CO2 absorption
tower in order to ensure efficient absorption and minimized loss of absorbent. The hot flue gas
is fed in from the bottom of the quencher to be cooled down in contact with circulating water
supplied from the top of the quencher. The circulating water is cooled down by the flue gas
cooler and supplied to the flue gas quencher.
2) CO2 absorption
The absorber comprises a cylindrical stack divided into the CO2 absorber at the bottom and
a washer on the top.
2)-1 Absorption unit
CO2 absorption
CO2 release and
absorbent regeneration
Pre-treatment of flue gas
- 33 -
The flue gas cooled down by the quencher is fed to the bottom part of the absorber. The CO2
gas in the flue gas is absorbed into CO2-lean absorbent supplied from the top of the absorption
unit into the packed bed when these are brought into countercurrent contact. The CO2-rich
absorbent after absorbing CO2 in the flue gas is pushed by the rich-absorbent pump toward the
regenerator through the solution heat exchanger.
2)-2 Washer
After removal of CO2 in the packed bed in the absorption, the flue gas is fed into the washer
at the top of the absorber. Countercurrent contact with circulating washing water in the washer
prompts condensation of moisture in the flue gas to maintain the balance of water throughout
the entire CO2 capture system. The washer comprises a packed bed and several demisters to
capture vapor and mist and thereby reduces the loss of amine. One of the demisters was
developed and patented by Mitsubishi Heavy Industries. This type of special demister has
been applied in numerous systems for commercial operation. The flue gas is finally released
into the atmosphere after removal of vapor and mist from the absorbent.
3) CO2 release and absorbent regeneration
The regenerator comprises a cylindrical stack. The CO2-rich absorbent at the bottom of the
absorber is sent to the solution heat exchanger before being heated by heat exchange with the
CO2-lean absorbent and then sent to the top of the regenerator. The CO2-rich absorbent fed
into the regenerator releases CO2 gas to be regenerated into CO2-lean absorbent after being
subject to the stripping effect from steam heated by low-pressure steam in the reboiler. The
CO2 gas and steam rise upwards inside and pass through the top of the regenerator to be
cooled down by the regenerator condenser.
Regenerated CO2-lean absorbent is then cooled down by the lean absorbent cooler to the
optimal temperature for CO2 absorption after the initial cooling by heat exchange with
CO2-rich absorbent in the solution heat exchanger before finally being sent back to the
absorber.
Figure 32 Main Components of CO2 Capture System
Component Number Type Note
FLUE GAS QUENCHER 1
CO2 ABSORBER 1
REGENERATOR 1
REGENERATOR REFLUX DRUM 1 Vertical
STEAM CONDENSATE DRUM 1 Vertical
- 34 -
SOLUTION STORAGE TANK 1
SOLUTION SUMP TANK 1 Pit
CAUSTIC SODA STORAGE TANK 1
RECLAIMED WASTE TANK 1
UP STREAM GUARD FILTER 1 Vertical
CARBON FILTER 1 Vertical
DOWN STREAM GUARD FILTER 1 Vertical
SOLUTION SUMP FILTER 1 Vertical
FLUE GAS COOLING WATER COOLER 2 Plate
WASH WATER COOLER 2 Plate
SOLUTION HEAT EXCHANGER 4 Plate
REGENERATOR CONDENSER 1 Shell and tube
REGENERATOR REBOILER 2 Shell and tube
LEAN SOLUTION COOLER 1 Plate
RECLAIMER 1 Shell and tube Intermittent
operation
FLUE GAS COOLING WATER PUMP 1 Centrifuge, motor
WASH WATER CIRCULATION PUMP 1 Centrifuge, motor
RICH SOLUTION PUMP 1 Centrifuge, motor
REGENERATOR REFLUX PUMP 1 Centrifuge, motor
LEAN SOLUTION PUMP 1 Centrifuge, motor
SOLUTION SUMP PUMP 1 Centrifuge, motor Intermittent
operation
STEAM CONDENSATE RETURN PUMP 1 Centrifuge, motor
RECLAIMER CAUSTIC SODA FEED
PUMP
1 Centrifuge, motor Intermittent
operation
RECLAIMED WASTE TRANSFER PUMP 1 Cavity, motor Intermittent
operation
RECLAIMED WASTE FEED PUMP 1 Cavity, motor Intermittent
operation
CO2 COMPRESSION UNIT 1 Geared
COOLING WATER TOWER 1
COOLING WATER TOWER FAN 6
CHEMICAL INJECTION UNIT FOR CW 1
COOLING WATER CIRCULATION PUMP 1 Centrifuge, motor
- 35 -
DEHYDRATION UNIT 1
PACKAGE BOILER UNIT 1
ADDITIONAL PUMP AND HEAT
EXCHANGER
Source: Mitsubishi Heavy Industries
(3) CO2 Capture System and Operational Characteristics
CO2 absorbent
In a joint effort with Kansai Electric Power Company since 1990, Mitsubishi Heavy
Industries has been conducting research and development of technologies for recovering CO2
from flue gases from power plants. Conventional technologies has disadvantages such as the
great amount of energy required for recovery, fast deterioration and great loss of absorbent,
and a high susceptibility to corrosion. As a first step, these two partners have started basic
research of absorbent and ultimately developed an energy-saving absorbent KS-1TM
having
great deterioration resistance.
Reclaiming system (intermittent operation)
During operation of the absorber, the absorbent KS-1TM
reacts with SOx, NOx, and O2 in
the flue gas and produces heat stable salts (HSSs) and degradation products. These
components need to be removed by a reclaimer since their condensation causes corrosion or
foaming of the absorbent. The reclaimer starts up when the HSS concentration in the system
reaches a certain level to condense these components by batch simple distillation.
Incinerator (optional)
An incinerator can be optionally provided for treating reclaimed waste.
(4) Cost-benefit analysis
The total cost for providing the CO2 capture system amounted to USD 135 million, which
includes equipment in the component list, designing, and other production and construction
costs. The CCS-EOR project earns revenue from the sales of crude oil from enhanced oil
production with CO2 obtained by installing the CO2 capture system. The feasibility
(cost-benefit performance) greatly depends on the amount of crude oil produced from roughly
416,100 tons of CO2 based on the source and the oil price.
The IEA anticipates an equilibrium oil price of 80 dollars per barrel around 2020 in its
middle scenario for its World Energy Outlook 2015 published in November 2015. The
possibility of a protracted price hovering around 50 dollars per barrel is suggested in the
low-price scenario. In this study, the standard scenario adopted an oil price of 80 dollars per
- 36 -
barrel along with two other scenarios of 40 and 60 dollars/barrels to evaluate the risks of a
lingering price slump.
The enhanced amount of oil produced (average) by injection of CO2 was set to 2
barrel/tCO2 with reference to the PEMEX estimate based on the laboratory tests conducted at
the Brillante oil field and the production efficiency of EOR operations in the United States.
The amount of oil production can increase or decrease depending on various factors, including
the underground structure of each oil field and the track record of production before the EOR.
Accordingly, there are two more scenarios of 1.0 and 3.0 barrel/tCO2 for evaluating the change
in increment in oil production.
The IRR from the project in the standard scenario (80 dollars/barrel and 2.0 barrel/tCO2)
was 16.2%. Generally speaking, the IRR from any oil field is expected to exceed 10%. The
revenue from the standard scenario is therefore sufficient. In contrast, the increment in oil
production by 1.0 barrel/tCO2 significantly undercuts the profitability resulting in an IRR of
4.7%. In terms of oil price, a drop from 80 dollars/barrel in the standard scenario to 60
dollars/barrel results in the IRR of 10.8%. At the moment, oil price is hovering around 40
dollar/barrel. The estimate suggests that the price needs to rise to around 60 dollars/barrel in
order for the CCS-EOR project to become feasible.
The estimate excludes costs associated with pipeline transportation of CO2 from the CO2
capture system and the costs involved in injecting CO2 to avoid a misleading estimate based
on insufficient analysis and information for precise cost estimation. The IRR will inevitably
drop if these costs are included. For this reason, an IRR of more than 15% was deemed
desirable for the CO2 capture system by allowing for a certain decline. The IRR exceeds 15%
in three scenarios including the standard scenario. The CCS-EOR project is deemed possible
in a highly productive oil field (2-3 barrel/tCO2 ) when the oil price rises.
Figure 33 Cost-Benefit Performance of CO2 Capture System (Project IRR and Sensitivity
Analysis)
Project IRR Oil price
40 USD/barrel 60 USD/barrel 80 USD/barrel
Incremental
oil
production
1.0 barrel/tCO2 -3.9% 1.0% 4.7%
2.0 barrel/tCO2 4.7% 10.8% 16.2%
3.0 barrel/tCO2 10.8% 18.7% 26.4%
Source: The study consortium
- 37 -
3.1.4 Discussion of Finance in Anticipation of CCS Project
(1) Overview of Preceding Project
In one of the preceding projects involving CCS-EOR, JX Nippon Oil & Gas Exploration
Corporation is trying to enhance oil production at an obsolete oil field in the United States by
injecting CO2 from an existing coal-fired power plant. This first large-scale CCS-EOR operation in
the world is expected to start in the fourth quarter of fiscal year 2016.
The project is an equal joint venture between JX Nippon Oil Exploration (EOR) Limited, an
indirectly owned subsidiary of JX Nippon Oil & Gas Exploration Corporation, and NRG Energy
Inc., an American independent power producer. Petra Nova Parish Holdings as the joint venture
constructs the world’s largest CCS plant for recovering CO2 from the combustion flue gas from W.
A. Parish in Texas (America’s largest coal-fired power plant owned by NRG Energy Inc.). The
recovered CO2 will be injected underground of the West Ranch oil field in Texas (approximately
130 km in the southwest of the power plant) for enhancing oil production.
Figure 34 Structure of CCS-EOR Project in the United States Lead by JX and NRG
Source: Sumitomo Mitsui Banking Corporation
CCS CAPEX: approx. 1,000M USDCCS OPEX: (not disclosed)Equity: 60%, Debt: approx. 40%
Revenue source: Oil sale from West Ranch Oil field
JX Nippon Oil & Gas Exploration(EOR)
Limited
NRG Energy Inc
(Project Company)Petra Nova Parish Holdings LLC
CCS plant
JBIC
Japanese Bank
NEXI
US Department
of Energy
W. A. Parish Power Plant
EPC contract
Equity(50%)
Subsidy167M US$CO2 Capture
4,776 t/d
(CCS site) (EOR site)(Oil Production)
500 BPD/d=>
12,000BPD/d
Debt175M US$
Debt75M US$
100% Political Risk covered
Term: 12 years
Debt
CO2 Injection4,776 t/d
Equity
JX Nippon Oil & Gas Exploration Corporation
JX Nippon Oil & Gas Exploration(U.S.A)
Limited
Equity(50%)
MHI America
Insurance
West Ranch Oil Field interest 25%
(constriction company)
TIC
West Ranch Oil Field
West Ranch Oil Field interest 25%
- 38 -
The project reduces the amount of CO2 released so far into the atmosphere by 1.60 million tons
in a year and enhances oil recovery from the current level of 500 barrel/day to 12,000 barrel/day.
Roughly 60% of the total cost is covered by JX Nippon Oil Exploration (EOR) Limited and NRG
Energy Inc. as the stakeholders. The remaining 40% is externally funded of which about 40% is
subsidized by the US Department of Energy. The rest is to be funded through project financing with
loans from JBIC and other Japanese financial institutions. Mitsubishi Heavy Industries was
awarded an order for EPC of the CO2 capture plant from two consortium partners, The Industrial
Company (TIC) and Petro Nova, through its American operating company Mitsubishi Heavy
industries America, Inc. (MHIA).
(2) Envisaged Implementation System and Finance Scheme for CCS Project
Various kinds of implementation systems and finance schemes can be anticipated for the CCS
project. At the moment, there are two envisaged models or namely: [1] a demonstration project
supported by the Japanese government; and [2] PEMEX owns the commercial CCS plant.
[1] Demonstration project supported by the Japanese government
In this model, a demonstration is conducted with the support of the Japanese, wherein PEMEX
commissions an EPC contractor to procure and install a CCS plant to use captured CO2 there for
EOR. A part of the project cost is funded by NEDO. The remaining part is funded by JBIC, loans
from megabanks and other private financial institutions guaranteed by NEXI, in addition to a
contribution from PEMEX.
One of the important issues concerning this finance scheme is allowance for major risks
anticipated for this project considering that repayment relies on PEMEX resources, which depend
on the financial standing of the company. Allowance for each type of risk needs to be discussed
with financial institutions.
- 39 -
Figure 35 Proposed Project Structure for Demonstration with Support from Japanese Government
Source: Sumitomo Mitsui Banking Corporation
[2] PEMEX owns the commercial CCS plant
In this model, PEMEX installs the CCS plant for EOR operation at the company’s own sites. For
instance, Mitsubishi Heavy Industries may supply and install a CCS plant both as the supplier and
the EPC contractor whereas PEMEX can enhance oil recovery with CO2 captured at the CCS plant.
The project is expected to be financed by PEMEX’s own funds or by borrowing from financial
institutions. In a similar manner as in the demonstration project, the repayment to financial
institutions relies on PEMEX’s cash flow from the entire projects. The repayment conditions
therefore greatly depend on the company’s financial standing. The way in which this project is to be
funded will impact the financial performance of PEMEX, and thus must also be considered.
Figure 36 Proposed Project Structure When PEMEX Owns the commercial CCS Plant
Source: Sumitomo Mitsui Banking Corporation
Japanese Government
(NEDO)
Fund for demonstration
MHI
PEMEX
PaymentCCS plant
PEMEXFertilizers
PEMEX Exploration &
Production
EOR site CO2 (CO2 Injection)(CO2 Capture)
JBIC
SMBC(Commercial
banks)
NEXI
Debt
Debt
<Buyers Credits>
Debt
EPC (CCS)
MHI
PEMEX
PaymentCCS plant
PEMEXFertilizers
PEMEX Exploration and
Production
EOR site CO2 (CO2 Injection)(CO2 Capture)
JBIC
SMBC(Commercial
banks)
NEXI
Debt
Debt
Debt
EPC(CCS)
- 40 -
(3) Points to Consider Regarding the Financial Scheme for CCS Project
Japanese companies have an advantage in CCS projects. But such projects involve vast initial
costs for the installation of facilities. Key challenges are whether public grants, JCM, and other
financial assistance can be effectively leveraged and whether necessary financial schemes can be
provided for the stakeholders. Because the CCS project in Mexico implemented with PEMEX is
designed in combination with EOR, the economic performance and feasibility of the project as a
whole is expected to be examined in detail while taking the increase in sales of oil from the EOR
operation into account.
3.1.5 CCS-EOR Project in Demonstration Phase
3.1.5.1 Possibility of demonstration
NEDO conducts Global Warming Mitigation Technology Promotion Projects (JCM
Demonstration) in member countries that have signed up for the joint crediting mechanism
(JCM). These projects effectively apply JCM to projects for reducing GHG sources along with
advanced Japanese low-carbon technologies and systems to mitigate global warming to validate
them in terms of the GHG emissions reduction, energy-saving performance, and potential as an
alternative energy to oil. The CO2 capture system considered for this project meets the
requirements for such JCM demonstration projects. Accordingly, the demonstration is
considered with application of JCM in mind.
3.1.5.2 Description of demonstration
Currently, PEMEX is planning EOR in three oil fields (for short-term projects) by using CO2
(off-gas) generated from the ammonia plant of CPQ Cosoleacaque. Because the planned amount
of injection is small in every target oil field (10 to 20 MMSCF, ca. 500 to 1,000 TPD),
additional CO2 capture with a CO2 capture system or the like is not considered necessary
according to the plan.
PEMEX on the contrary believes that CO2 generated as off-gas will be insufficient and that
additional CO2 capture is necessary for long-term EOR operation in the Cinco Presidentes oil
fields.
Accordingly, a JCM demonstration project was proposed by integrating a part of the
CCS-EOR operation planned by PEMEX in combination with smaller CCS operations in order
for PEMEX to deepen its understanding of technologies and gain necessary experience in CO2
capture systems toward commercially-viable EOR operation in the future, as well as to help
Japanese companies to build a track record with projects employing a CO2 capture system in
Mexico. The proposed demonstration project is outlined in the table below.
- 41 -
Figure 37 Overview of Demonstration Project
CO2 capture system
Operator CPQ Cosoleacaque
Owner PEMEX Petroquímica
CO2 source Flue gas from primary reformers of Unit 6 of the ammonia plant
CO2 concentration 10%
Annual CO2
emissions
ca. 86,700 tCO2
(250 tCO2 × 1 unit × 365 days × capacity utilization of 95%)
Major equipment to
be delivered
CO2 capture system, CO2 compressor, booster pump, etc.
CCS-EOR project
EOR site Rabasa oil field or Los Soldados oil field
Distance between CO2
source and EOR site
ca. 50 km
Injected amount of
CO2 per year
ca. 86,700 tCO2
Expected annual oil
recovery
ca. 173,000 barrels
GHG emissions reduction
Annual GHG
emissions reduction
ca. 63,697 tCO2
Source: Established by PEMEX and the study consortium
- 42 -
Figure 38 Position of CCS Plant (Enclosed in Red Dotted Line) in Relation to Target Ammonia
Plant (Unit 6) in Proposed Demonstration Project
Source: Prepared by the Japan Research Institute based on a Google Earth image (image data
provided by Google)
AP No.6 AP No.7
- 43 -
4 Applicable Methodologies for Reducing Emissions in This Project and Their
Estimated Emission Reduction
4.1 Analysis of MRV Methodologies
4.1.1 Analysis of CCS-EOR methodology adopted by the American Carbon Registry
In April 2015, the American Carbon Registry11
announced the “Methodology for GHG
Emission Reductions from Carbon Capture and Storage Projects, v1.0” for estimating CO2
emission reduction in CCS-EOR projects. The methodology is expected to be applied to the
emissions trading system in California.
The methodology considers CO2 leakage and CO2 emissions associated with consumption of
fossil fuel and purchased power in processes for capture, transport, and injection and storage. It
envisages emissions of CO2 from power plants, industrial processes (production of natural gas,
fertilizers, and ethanol), and poligeneration facilities, while no restriction is imposed on CO2
sources for carbon capture. All means of transportation are covered by the methodology,
including pipeline, barges, railways, and trucks. Eligible geological storage of CO2 for an EOR
project must at minimum, utilize Class II (i.e., Class II or Class VI) wells in the US and similar
well requirements in Canada. Credits can be issued for 10 years although a CCS project normally
lasts over 30 years.
CO2 leakage during injection and storage is calculated with each facility and ground surface.
Monitoring must be continued for five years with CO2 leakage from the ground surface after the
injection into geologic storage reservoirs. Monitoring must be planned in line with each project.
Any leakage needs to be counted as emissions from the project.
11
http://americancarbonregistry.org/carbon-accounting/standards-methodologies
- 44 -
Figure 39 Flow and Sources of Emissions of CO2 in CCS Project
Source: The American Carbon Registry, Methodology for GHG Emission Reductions from Carbon
Capture and Storage Project, v1.0
4.1.2 Analysis of Methodologies in Clean Development Mechanism (CDM)
The following CDM methodologies are believed applicable to CCS-EOR and CCS projects.
NM0167 (Recovery of anthropogenic CO2 from large industrial GHG emission
sources and its storage in an oil reservoir (The White Tiger Oil Field Carbon Capture
and Storage (CCS) project in Vietnam))
NM0168 (The capture of CO2 from natural gas processing plants and liquefied
natural gas (LNG) plants and its storage in underground aquifers or abandoned
oil/gas reservoirs (The capture of CO2 from the Liquefied Natural Gas (LNG)
complex and its geological storage in the aquifer located in Malaysia))
NM without assigned number (Capture of CO2 from the front-end of integrated
Gas-to-Liquid (GTL) plants, transport via pipeline and long-term containment in
appropriately selected and well-managed geological Storage Complexes.)
Methodologies NM0167 and NM0168 are similar to the one applicable to this project. These
are CDM methodologies for CCS proposed in September 2005 and January 2006. The panel
however, raised concern over insufficient consideration made for these methodologies regarding
precise tracking of leakage of stored CO2 and subsequent responsibilities over the long term.
- 45 -
More specifically, these methodologies simply assume a leakage rate of 0.7% for the crediting
period of 7 years and 1% for the crediting period of 10 years based on the IPCC CCS Special
Report, which states that “leakage is less than 1% for a probability of over 90% over the period
of both 100 years and 1,000 years.” Moreover, there are no detailed descriptions of the measured
items, frequency, and monitoring plan. These are believed to be shortcomings as pointed out by
the panel.
4.1.3 Discussion on Methodologies for JCM
In fiscal years 2012 and 2014, a total of three studies were conducted in NECO’s Global
Warming Mitigation Technology Promotion Projects regarding carbon capture and storage
involving enhanced oil recovery.
General Environmental Technos considered a CCS project in Gundih gas field in Indonesia in
its study conducted in fiscal year 2014. But as of January 2016, no report has been published.
In fiscal year 2012, a study conducted by Arabian Oil Company, Marubeni, and Mitsubishi
Research Institute data from the geologic storage reservoir of target oil field in Indonesia were
carefully examined and the amount of CO2 storage and reduction was calculated by developing a
three-dimensional model. Based on these fact-based examinations and simulations, the study
compiled useful findings regarding the method and procedure for evaluating the adequacy of
target storage sites as well as the monitoring method and frequency.
Likewise, another study conducted by Mitsubishi Heavy Industries and Mitsubishi UFJ
Morgan Stanley Securities in fiscal year 2012 developed a methodology based on the
abovementioned unapproved methodology for CDM in the specific sites in Indonesia. The
concern about leakage from the ground surface is addressed not only by applying the default
value given by IPCC, but also by providing another option to identify the amount of leakage
from the ground surface by actual measurements. While the IPCC’s default value of 1% is
adopted, it is pointed out that the adequacy of the value and the use of default value remain to be
discussed.
4.1.4 Discussion on ISO/TC265
Since 2011, discussion has been underway regarding ISO/TC265 Carbon dioxide capture,
transportation, and geological storage in order to standardize designing, construction, operation,
environmental planning and management, risk management, quantification, monitoring,
verification, and other activities involved in carbon capture and sequestration (CCS)
Six working groups have been set up for ISO/TC265, whose activities are presented below.
WG6 on EOR was set up in 2014. At the current working phase, no drafts have been published.
In this study, the discussion cannot be reflected in our methodology. In case of filing an
- 46 -
application for a methodology, the work done by WG6 will be checked and incorporated as
necessary.
WG1 (Capture)
Standardization of technologies and processes in CO2 capture systems for recovering
CO2 from sources, such as thermal power plants, steel plants, and chemical plants for
cement production, oil refinery, and so on
WG2 (Transportation)
Standardization of transportation of captured CO2 from the sources to the storage
facilities
WG3 (Storage)
Standardization of geological storage of captured CO2
WG4 (Quantification & Verification)
Standardization of quantification and verification of CO2 emission reduction achieved
by CCS
WG5 (Crosscutting issues)
Standardization of crosscutting issues across capture, transportation, and storage
involved in CCS
WG6 (CCS-EOR)
Standardization of CCS employed for enhanced oil recovery (EOR)
4.2 Discussion of Methodologies for Emission reduction
The proposed methodology for reducing emissions in this project was considered by taking the
expected conditions into account while referring to the Methodology for GHG Emission
Reductions from Carbon Capture and Storage Project, v1.0 developed by the American Carbon
Registry for determining the amount of CO2 emission reduction in CCS (including EOR) projects.
Figure 40 Process of CCS-EOR
- 47 -
Source: The American Carbon Registry, Methodology for GHG Emission Reductions from Carbon
Capture and Storage Project, v1.0
A. Title of the methodology
The capture of CO2 from industrial plants and its storage in an oil reservoir with
enhanced oil recovery in Mexico.
B. Terms and definitions
Terms Definitions
Industrial plants Industrial plants are to emit CO2. Industrial plants
include the following plants;
Fossil fuel-fired power plant
Gas processing plant
Refinery plant
Chemical plant
Enhanced oil recovery Enhanced oil recovery is the implementation of various
techniques (e.g.: CO2, water) for increasing the amount
of crude oil that can be extracted from an oil field.
C. Summary of the methodology
Items Summary
GHG emission reduction
measures
This methodology applies to the project that aims for
enhancing oil recovery by capturing CO2 from industrial
plants and injecting CO2 into the oil reservoir in Mexico, which
leads to GHG emission reductions, through the capturing CO2
by not releasing CO2 to the atmosphere.
Calculation of reference
emissions
Reference emissions are calculated with volume of CO2
inject into oil reservoir and density of CO2 at standard
condition.
Calculation of project
emissions
Project emissions are calculated with the following process.
CO2 capture
- 48 -
Leakage of CO2
Fossil fuel consumption
Electricity consumption
CO2 transport
Leakage of CO2
Fossil fuel consumption
Electricity consumption
CO2 injection and storage
Vented CO2
Leakage of CO2
Flaring of associated gas
Entrained CO2 in produced oil and gas
Fossil fuel consumption
Electricity consumption
Monitoring parameters Volume of CO2 input into CO2 capture facilities during the
period p [m3/p]
Volume of CO2 input into CO2 transport facilities during
the period p [m3/p]
Volume of CO2 input into injection-well from transport
during the period p [m3/p]
Volume of CO2 inject into oil reservoir during the period p
[m3/p]
Volume of CO2 input into injection-well from CO2
reinjection system during the period p [m3/p]
Volume of gas flared during the period p [m3/p]
Volume of produced gas during the period p [m3/p]
Weight of produced oil during the period p [kl/p]
Fossil fuel consumption by related facilities during the
period p [t,kg,m3/p]
Electricity consumption by related facilities during the
period p [MWh/p]
- 49 -
Figure 41 Project Flow and Monitoring Points (Envisaged)
Source: Japan Research Institute
D. Eligibility criteria
This methodology is applicable to projects that satisfy all of the following criteria.
Criterion 1 The project is to capture CO2 from industrial plants and inject CO2 into
the oil reservoir in Mexico.
Criterion 2 There is no law or regulation of capturing CO2 from industrial plants,
and where CO2 is released into the atmosphere in Mexico.
Criterion 3 To apply the well specification for avoiding CO2 leakage from oil
reservoir.
(e.g. complying with ClassII under US EPA or another appropriate
standard)
Criterion 4 A plan for associated storage assurance for CO2 sequestration site is
prepared.
(e.g. monitoring the variation of temperature and pressure within oil
reservoir)
Execution of the assurance plan is checked at the time of verification,
in order to confirm that CO2 from oil reservoir is not released to the
atmosphere.
Criteria for evaluating risks of CO2 leakage from geological storage reservoirs were established
with reference to Methodology for GHG Emission Reductions from Carbon Capture and Storage
Project, Version 1.0 by the American Carbon Registry, proposed methodologies for CDM, and
Source
plant
CO2
capture
system
Injection
well
Production
well
CO2
transportation
system
Gas
Separation
system
Associated
gas
remover
CO2
Reinjection
System
Crude oil
tankoil
gas
Oil reservoir
oil/gas
oil/gas
oil
gas
CO2 CO2 CO2
CO2
CO2
CO2
CO2
CO2
CO2
M
E
Measuring instrument for
gas/CO2 volume
Measuring instrument for fossil
fuels and electricity consumption
M1 M2 M3
M4
E1 E2 E3 E4
E5
E6
E7
E8
VMeasuring instrument for vented
gas volume
V1 V2
V3
V4
V5
M6
M7
- 50 -
methodologies that had been discussed for JCM in the past. Eligibility criteria 3 and 4 will be
precisely adjusted when implementation of the project is confirmed.
E. Emission Sources and GHG types
Reference emissions
Emission sources GHG types
CO2 emission from industrial plants CO2
Project emissions
Emission sources GHG types
CO2 Capture
Leakage of CO2 from CO2 capture system CO2
Fossil fuel consumption by CO2 capture facilities CO2
Electricity consumption by CO2 capture facilities CO2
CO2 Transport
Leakage of CO2 from CO2 transportation system CO2
Fossil fuel consumption by CO2 transportation facilities CO2
Electricity consumption by CO2 transportation facilities CO2
CO2 Injection and Storage
Vented CO2 at the injection well, production well and other related
facilities
CO2,CH4
Flaring of associated gas CO2,CH4,N2O
Entrained CO2 in produced oil and gas CO2
Fossil fuel consumption by CO2 Injection and Storage facilities CO2
Electricity consumption by CO2 Injection and Storage facilities CO2
Leakage of CO2 from oil reservoir CO2
GHG sources were identified for the anticipated project with reference to the GHG sources
identified in Methodology for GHG Emission Reductions from Carbon Capture and Storage Project,
Version 1.0 by the American Carbon Registry. Leakage of CO2 does not take place under normal
specifications of the oil field and geological storage reservoir. Nevertheless, the leakage ratio of 1%
was anticipated for the project period of 10 years based on the IPCC CCS Special Report which
states “leakage is less than 1% for a probability of over 90% over the periods of both 100 years and
1,000 years.”
- 51 -
Figure 42 Referenced GHG Sources
Source: The American Carbon Registry, Methodology for GHG Emission Reductions from Carbon
Capture and Storage Project, v1.0
- 52 -
F. Establishment and calculation of reference emissions
F.1. Establishment of reference emissions
Reference emissions are GHG emissions from releasing CO2 to the atmosphere from
industrial plants and calculated with volume of CO2 inject into oil reservoir and density
of CO2 at standard condition.
Net emission reductions in this methodology are achieved by including leakage of CO2 from
CO2 capture and transport process, and also setting default values of leakage of CO2 from the
oil reservoir in a conservative manner when calculating emission reductions.
The American Carbon Registry presented a projection-based baseline and a standards-based
baseline as two kinds of reference scenarios in its Methodology for GHG Emission Reductions from
Carbon Capture and Storage Project, Version 1.0. The projection-based baseline regards the
amount of CO2 captured from an industrial plant as the amount of atmospherically-released CO2.
According to the description, estimations can be made with projection-based baseline in many
projects. A standards-based baseline meanwhile is set beforehand by assigning the amount of CO2
per unit of output in the technical specifications. Such a baseline is sector-specific and thus
intended for coal-fired and gas-fired power plants.
The methodology in this study adopted the approach of a projection-based baseline in
Methodology for GHG Emission Reductions from Carbon Capture and Storage Project, Version 1.0
and a conservative reference scenario that excludes the amount of CO2 emissions from existing
facilities.
F.2. Calculation of reference emissions
RE𝑝 = ∑(𝑉𝑒𝑜𝑟_𝑐𝑜2𝑖𝑛,𝑝 − 𝑉𝑖𝑛𝑗𝑒𝑐𝑡𝑖𝑜𝑛−𝑤𝑒𝑙𝑙_𝑟𝑒𝑐𝑜2𝑖𝑛,𝑝) × 𝜌𝑐𝑜2
Where;
𝑅𝐸𝑝 : Reference emissions during the period p [tCO2/p]
𝑉𝑒𝑜𝑟_𝑐𝑜2_𝑖𝑛,𝑝 : Volume of CO2 inject into oil reservoir during the period p
[m3/p]
𝑉𝑖𝑛𝑗𝑒𝑐𝑡𝑖𝑜𝑛−𝑤𝑒𝑙𝑙_𝑟𝑒𝑐𝑜2𝑖𝑛,𝑝 : Volume of CO2 input into injection-well from CO2
reinjection system during the period p [m3/p]
𝜌𝑐𝑜2 : Density of CO2 at standard condition [tCO2/m3]
The methodology determines the amount of CO2 emissions by multiplying the density of CO2
with the measured amount of CO2 that is transported by pipeline and injected into an oil field
- 53 -
through the injection well. The American Carbon Registry in Methodology for GHG Emission
Reductions from Carbon Capture and Storage Project, Version 1.0 defines active mass as the
amount of CO2 transported from a power plants or industrial facility to a capture plant rather than
the amount of CO2 injected through an injection well. The methodology in this study follows the
approach of JCM to define the active mass as the amount of CO2 injected into an oil reservoir,
which includes the amount of leakage from the capture and transportation processes as well as
leakage from injection facilities.
G. Calculation of project emissions
The amount of emissions involved in the project is determined by adding up the amount of CO2
emissions from respective processes of capture, transport, injection, and storage according to the
method defined by the American Carbon Registry in Methodology for GHG Emission Reductions
from Carbon Capture and Storage Project, Version 1.0.
𝑃𝐸𝑝 = 𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒,𝑝 + 𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡,𝑝 + 𝑃𝐸𝑒𝑜𝑟,𝑝
Where;
𝑃𝐸𝑝 : Project emissions during the period p [tCO2/p]
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒,𝑝 : Project emissions for CO2 capture during the period p
[tCO2/p]
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡,𝑝 : Project emissions for CO2 transport during the period p
[tCO2/p]
𝑃𝐸𝑒𝑜𝑟,𝑝 : Project emissions for CO2 injection and storage during the
period p [tCO2/p]
- 54 -
Figure 43 Reference Flow and Sources of CO2 for CCS Project
Source: American Carbon Registry, Methodology for GHG Emission Reductions from Carbon
Capture and Storage Project, v1.0
Amount of CO2 emission from CO2 capture process
In the CO2 capture process, the model calculates both the amount of CO2 leakage during the
capture and transport from an industrial facility and the amount of CO2 emission associated
with the use of fossil fuel or purchased power for operating the capture system.
The amount of CO2 leakage is determined from the difference between the flow rate of CO2
accepted by a capture system and the flow rate of CO2 delivered to a transport system. Each
flow rate is multiplied by the CO2 density to convert it into the CO2 amount. These flow rates
are actual measurements with flowmeters calibrated according to international or Mexican
standards.
CO2 emissions associated with consumption of fossil fuel and purchased power are tracked by
actual measurements with instruments calibrated according to the international or Mexican
standards for fossil fuel and purchased power, which will be multiplied by the emissions
coefficients published by the Mexican government or IPCC to determine the amount.
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒,𝑝 = 𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑙𝑒𝑎𝑘,𝑝 + 𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑓𝑢𝑒𝑙,𝑝 + 𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑒𝑙𝑒𝑐,𝑝
Where;
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒,𝑝 : Project emissions for CO2 capture during the period p
[tCO2/p]
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑙𝑒𝑎𝑘,𝑝 : Project emission of leakage CO2 from CO2 capture
- 55 -
[tCO2/p]
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑓𝑢𝑒𝑙,𝑝 : Project emissions of fossil fuel consumption by CO2
capture facilities during the period p [tCO2/p]
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑒𝑙𝑒𝑐,𝑝 : Project emissions of electricity consumption by CO2
capture facilities during the period p [tCO2/p]
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑙𝑒𝑎𝑘𝑒,𝑝 = ∑(𝑉𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝐶𝑂2𝑖𝑛,𝑝 − 𝑉𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝐶𝑂2𝑖𝑛,𝑝) × 𝜌𝑐𝑜2
Where;
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑙𝑒𝑎𝑘,𝑝 : Project emission of leakage CO2 from CO2 capture
[tCO2/p]
𝑉𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝐶𝑂2𝑖𝑛,𝑝 : Volume of CO2 input into CO2 capture facilities during
the period p [m3/p]
𝑉𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝐶𝑂2𝑖𝑛,𝑝 : Volume of CO2 input into CO2 transport facilities during
the period p [m3/p]
𝜌𝑐𝑜2 : Density of CO2 at standard conditions [tCO2/m3]
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑓𝑢𝑒𝑙,𝑝 = 𝐹𝐶𝑐𝑎𝑝𝑡𝑢𝑟𝑒,𝑝 × 𝐸𝐹𝑓𝑢𝑒𝑙
Where;
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑓𝑢𝑒𝑙,𝑝 : Project emissions of fossil fuel consumption by CO2
capture facilities during the period p [tCO2/p]
𝐹𝐶𝑐𝑎𝑝𝑡𝑢𝑟𝑒,𝑝 : Fossil fuel consumption of CO2 capture facilities during
the period p [t,kg,m3/p]
𝐸𝐹𝑓𝑢𝑒𝑙 : CO2 emission factor for consumed fossil fuel
[tCO2/t,kg,m3]
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑒𝑙𝑒𝑐,𝑝 = 𝐸𝐶𝑐𝑎𝑝𝑡𝑢𝑟𝑒,𝑝 × 𝐸𝐹𝑔𝑟𝑖𝑑
Where;
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑒𝑙𝑒𝑐,𝑝 : Project emissions of electricity consumption for CO2
capture facilities during the period p [tCO2/p]
𝐸𝐶𝑐𝑎𝑝𝑡𝑢𝑟𝑒,𝑝 : Electricity consumption of CO2 capture facilities during
the period p [MWh/p]
𝐸𝐹𝑔𝑟𝑖𝑑 : CO2 emission factor for consumed grid electricity
[tCO2/MWh]
- 56 -
Amount of CO2 emissions from CO2 transport process
In the CO2 transport process, the model calculates both the amount of CO2 leakage during the
transport of CO2 from the industrial facility to a target oil field and the amount of CO2 emission
associated with the use of fossil fuel or purchased power for operating the transport system.
The amount of CO2 leakage is determined from the difference between the flow rate of CO2
accepted by a transport system and the flow rate of CO2 delivered to an injection well. Each
flow rate is multiplied by the CO2 density to convert it into the CO2 amount. These flow rates
are actual measurements with flowmeters calibrated according to international or Mexican
standards.
CO2 emissions associated with consumption of fossil fuel and purchased power are tracked by
actual measurements with instruments calibrated according to international or Mexican standards,
which will be multiplied by emissions coefficients published by the Mexican government or
IPCC to determine the amount.
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡,𝑝 = 𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑙𝑒𝑎𝑘,𝑝 + 𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑓𝑢𝑒𝑙,𝑝 + 𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑒𝑙𝑒𝑐,𝑝
Where;
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡,𝑝 : Project emissions for CO2 transport during the period p
[tCO2/p]
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑙𝑒𝑎𝑘,𝑝 : Project emission of leakage CO2 from CO2 transport
during the period p [tCO2/p]
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑓𝑢𝑒𝑙,𝑝 : Project emissions of fossil fuel consumption by CO2
transport facilities during the period p [tCO2/p]
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑒𝑙𝑒𝑐,𝑝 : Project emissions of electricity consumption by CO2
transport e facilities during the period p [tCO2/p]
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑙𝑒𝑎𝑘𝑒,𝑝 = ∑(𝑉𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝐶𝑂2𝑖𝑛,𝑝 − 𝑉𝑖𝑛𝑗𝑒𝑐𝑡𝑖𝑜𝑛−𝑤𝑒𝑙𝑙_𝐶𝑂2𝑖𝑛,𝑝) × 𝜌𝑐𝑜2
Where;
𝑃𝐸𝑐𝑎𝑝𝑡𝑢𝑟𝑒_𝑙𝑒𝑎𝑘,𝑝 : Project emission of leakage CO2 from CO2 transport
during the period p [tCO2/p]
𝑉𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝐶𝑂2𝑖𝑛,𝑝 : Volume of CO2 input into CO2 transport facilities during
the period p [m3/p]
𝑉𝑖𝑛𝑗𝑒𝑐𝑡𝑖𝑜𝑛−𝑤𝑒𝑙𝑙_𝐶𝑂2𝑖𝑛,𝑝 : Volume of CO2 input into injection-well from CO2
transport facilities during the period p [m3/p]
𝜌𝑐𝑜2 : Density of CO2 at standard conditions [tCO2/m3]
- 57 -
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑓𝑢𝑒𝑙,𝑝 = 𝐹𝐶𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡,𝑝 × 𝐸𝐹𝑓𝑢𝑒𝑙
Where;
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑓𝑢𝑒𝑙,𝑝 : Project emissions of fossil fuel consumption for CO2
transport facilities during the period p [tCO2/p]
𝐹𝐶𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡,𝑝 : Fossil fuel consumption of CO2 transport facilities during
the period p [t,kg,m3/p]
𝐸𝐹𝑓𝑢𝑒𝑙 : CO2 emission factor for consumed fossil fuel
[tCO2/t,kg,m3]
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑒𝑙𝑒𝑐,𝑝 = 𝐸𝐶𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡,𝑝 × 𝐸𝐹𝑔𝑟𝑖𝑑
Where;
𝑃𝐸𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡_𝑒𝑙𝑒𝑐,𝑝 : Project emissions of electricity consumption for CO2
transport facilities during the period p [tCO2/p]
𝐸𝐶𝑡𝑟𝑎𝑛𝑠𝑝𝑜𝑟𝑡,𝑝 : Electricity consumption of CO2 transport facilities during
the period p [MWh/p]
𝐸𝐹𝑔𝑟𝑖𝑑 : CO2 emission factor for consumed grid electricity
[tCO2/MWh]
Amount of CO2 emissions from CO2 injection and storage process
In the CO2 injection and storage process, this model calculates the following 5 kinds of CO2
emissions.
・ CO2 released from injection wells, production wells, and ground facilities
・ GHG (CO2, CH4, and N2O) from faring of associated gases
・ CO2 emission from entrained CO2 in produced oil and gas
・ CO2 emissions associated with consumption of fossil fuel or purchased power by each
facility
・ CO2 leakage from the geological storage reservoir through ground surface
An amount of CO2 released from a facility is calculated by multiplying the flow rate of carried
gas by the proportion and density of CO2 and CH4. The flow rate and proportion of CO2 and CH4
are given by actual measurements with flowmeters calibrated according to international or
Mexican standards.
CO2 emissions associated with consumption of fossil fuel and purchased power are tracked by
actual measurements with instruments calibrated according to international or Mexican standards,
- 58 -
which will be multiplied by emissions coefficients published by the Mexican government or
IPCC to determine the amount.
𝑃𝐸𝑒𝑜𝑟,𝑝 = 𝑃𝐸𝑣𝑒𝑛𝑡,𝑝 + 𝑃𝐸𝑓𝑙𝑎𝑟𝑖𝑛𝑔,𝑝 + 𝑃𝐸𝑒𝑛𝑡𝑟𝑎𝑖𝑛𝑒𝑑,𝑝 + 𝑃𝐸𝑒𝑜𝑟_𝑓𝑢𝑒𝑙,𝑝 + 𝑃𝐸𝑒𝑜𝑟_𝑒𝑙𝑒𝑐,𝑝
+ 𝑃𝐸𝑒𝑜𝑟_𝑙𝑒𝑎𝑘𝑎𝑔𝑒,𝑝
Where;
𝑃𝐸𝑒𝑜𝑟,𝑝 : Project emissions for CO2 injection and storage during the
period p [tCO2/p]
𝑃𝐸𝑣𝑒𝑛𝑡,𝑝 : Project emissions from venting of CO2 at the CO2 injection
and storage facilities during the period p [tCO2/p]
𝑃𝐸𝑓𝑙𝑎𝑟𝑖𝑛𝑔,𝑝 : Project emissions from flaring of associated gas during the
period p [tCO2/p]
𝑃𝐸𝑒𝑛𝑡𝑟𝑎𝑖𝑛𝑒𝑑,𝑝 : Project emissions from entrained CO2 in produced oil and
gas during the period p [tCO2/p]
𝑃𝐸𝑒𝑜𝑟_𝑓𝑢𝑒𝑙,𝑝 : Project emissions of fossil fuel consumption for CO2
injection and storage facilities during the period p [tCO2/p]
𝑃𝐸𝑒𝑜𝑟_𝑒𝑙𝑒𝑐,𝑝 : Project emissions of electricity consumption for CO2
injection and storage facilities during the period p [tCO2/p]
𝑃𝐸𝑒𝑜𝑟_𝑙𝑒𝑎𝑘𝑎𝑔𝑒,𝑝 : Project emissions from leakage of injected CO2 from oil
reservoir during the period p [tCO2/p]
𝑃𝐸𝑣𝑒𝑛𝑡,𝑝 = ∑(𝑉𝑣𝑒𝑛𝑡_𝑖,𝑝 × 𝑅𝐶𝑂2_𝑖,𝑝 × 𝜌𝐶𝑂2) + ∑(𝑉𝑣𝑒𝑛𝑡_𝑖,𝑝 × 𝑅𝐶𝐻4_𝑖,𝑝 × 𝜌𝐶𝐻4 × 𝐺𝑊𝑃𝐶𝐻4)
Where;
𝑃𝐸𝑣𝑒𝑛𝑡,𝑝 : Project emissions from vented CO2 at the injection well,
production well and other related facilities during the
period p [tCO2/p]
𝑉𝑣𝑒𝑛𝑡_𝑖,𝑝 : Volume of vented gas for equipment ”i” during the period
p [m3/p]
𝑅𝐶𝑂2_𝑖,𝑝 : Concentrate of CO2 for equipment ”i” during the period p
𝑅𝐶𝐻4_𝑖,𝑝 : Concentrate of CH4 for equipment ”i” during the period p
𝜌𝐶𝑂2 : Density of CO2 at standard conditions [tCO2/m3]
𝜌𝐶𝐻4 : Density of CH4 at standard conditions [tCH4/m3]
𝐺𝑊𝑃𝐶𝐻4 : Global Warming Potential of CH4
- 59 -
𝑃𝐸𝑓𝑙𝑎𝑟𝑖𝑛𝑔,𝑝
= ∑ (𝑉𝑔𝑎𝑠𝑓𝑙𝑎𝑟𝑒𝑑_𝑗,𝑝 × ∑(𝐶𝑗 × 𝑦𝑗) × 44.0123.64⁄ )
+ ∑(𝑉𝑔𝑎𝑠𝑓𝑙𝑎𝑟𝑒𝑑_𝑗,𝑝 × (1 − 𝐷𝐸) × 𝑅𝐶𝐻4_𝑗,𝑝 × 𝜌𝐶𝐻4 × 𝐺𝑊𝑃𝐶𝐻4)
+ ∑(𝑉𝑔𝑎𝑠𝑓𝑙𝑎𝑟𝑒𝑑_𝑗,𝑝 × 𝐸𝐹𝑓𝑙𝑎𝑟𝑖𝑛𝑔_𝑁2𝑂 × 𝐺𝑊𝑃𝑁2𝑂)
Where;
𝑃𝐸𝑓𝑙𝑎𝑟𝑖𝑛𝑔,𝑝 : Project emissions from flaring CO2 during the period p
[tCO2/p]
𝑉𝑔𝑎𝑠𝑓𝑙𝑎𝑟𝑒𝑑_𝑗,𝑝 : Volume of gas flared during the period p [m3/p]
𝐶𝑗 : Number of carbon atoms would be assessed based on the
chemical formula of each gas “j” (e.g., 1 for CH4, 1 for CO2,
2 for C2H6)
𝑦𝑗 : Direct measurement of the mole fractions of each
carbon-containing gas “j” in the gas mixture
44.01 : Reference value for Molecular Weight of CO2 [g/mol]
23.64 : Volume occupied by 1 mole of an ideal gas at standard
conditions of 15 Celsius and 1 atmosphere.
𝐷𝐸 : Destruction efficiency of the flare
𝑅𝐶𝐻4_𝑗,𝑝 : Concentrate of CH4 of each gas “j” during the period p
𝜌𝐶𝐻4 : Density of CH4 at standard conditions [tCH4/m3]
𝐺𝑊𝑃𝐶𝐻4 : Global Warming Potential of CH4
𝐸𝐹𝑓𝑙𝑎𝑟𝑖𝑛𝑔_𝑁2𝑂 : N2O emission factor for flaring gas [tN2O/m3]
𝐺𝑊𝑃𝑁2𝑂 : Global Warming Potential of N2O
𝑃𝐸𝑒𝑛𝑡𝑟𝑎𝑖𝑛𝑒𝑑,𝑝 = ∑(𝑉𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑𝑔𝑎𝑠,𝑝 × 𝑅𝐶𝑂2_𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑𝑔𝑎𝑠,𝑝 × 𝜌𝐶𝑂2) + ∑(𝑊𝑜𝑖𝑙.𝑝 × 𝐹𝑐𝑜2,𝑝)
Where;
𝑃𝐸𝑒𝑛𝑡𝑟𝑎𝑖𝑛𝑒𝑑,𝑝 : Project emissions from entrained CO2 in produced oil
and gas during the period p [tCO2/p]
𝑉𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑𝑔𝑎𝑠,𝑝 : Volume of produced gas during the period p [m3/p]
𝑅𝐶𝑂2_𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑑𝑔𝑎𝑠,𝑝 : Concentrate of CO2 for produced gas during the period p
𝜌𝐶𝑂2 : Density of CO2 at standard conditions [tCO2/m3]
𝑊𝑜𝑖𝑙.𝑝 : Weight of produced oil during the period p [kl/p]
𝐹𝑐𝑜2,𝑝 : Mass fraction of CO2 in produced oil during the period p
- 60 -
𝑃𝐸𝑒𝑜𝑟_𝑓𝑢𝑒𝑙,𝑝 = 𝐹𝐶𝑒𝑜𝑟,𝑝 × 𝐸𝐹𝑓𝑢𝑒𝑙
Where;
𝑃𝐸𝑒𝑜𝑟_𝑓𝑢𝑒𝑙,𝑝 : Project emissions of fossil fuel consumption for CO2
injection and storage facilities during the period p
[tCO2/p]
𝐹𝐶𝑒𝑜𝑟,𝑝 : Fossil fuel consumption by CO2 injection and storage
facilities during the period p [t,kg,m3/p]
𝐸𝐹𝑓𝑢𝑒𝑙 : CO2 emission factor for consumed fossil fuel
[tCO2/t,kg,m3]
𝑃𝐸𝑒𝑜𝑟_𝑒𝑙𝑒𝑐,𝑝 = 𝐸𝐶𝑒𝑜𝑟,𝑝 × 𝐸𝐹𝑔𝑟𝑖𝑑
Where;
𝑃𝐸𝑒𝑜𝑟_𝑒𝑙𝑒𝑐,𝑝 : Project emissions of electricity consumption for CO2
injection and storage facilities during the period p
[tCO2/p]
𝐸𝐶𝑒𝑜𝑟_𝑒𝑙𝑒𝑐,𝑝 : Electricity consumption by CO2 injection and storage
facilities during the period p [MWh/p]
𝐸𝐹𝑔𝑟𝑖𝑑 : CO2 emission factor for consumed grid electricity
[tCO2/MWh]
𝑃𝐸𝑒𝑜𝑟_𝑙𝑒𝑎𝑘𝑎𝑔𝑒,𝑝 = 𝑉𝑒𝑜𝑟_𝑐𝑜2𝑖𝑛,𝑝 × 𝑅𝑙𝑒𝑎𝑘
Where;
𝑃𝐸𝑒𝑜𝑟_𝑙𝑒𝑎𝑘𝑎𝑔𝑒,𝑝 : Project emissions from leakage of injected CO2 from oil
reservoir during the period p [tCO2/p]
𝑉𝑒𝑜𝑟_𝑐𝑜2𝑖𝑛,𝑝 : Volume of CO2 inject into oil reservoir during the period
p [m3/p]
𝑅𝑙𝑒𝑎𝑘 : Rate of CO2 leakage from oil reservoir [%]
H. Calculation of emissions reductions
𝐸𝑅𝑝 = 𝑅𝐸𝑝 − 𝑃𝐸𝑝
Where;
𝐸𝑅𝑝 : Emission reductions during the period p [tCO2/p]
- 61 -
𝑅𝐸𝑝 : Reference emissions during the period p [tCO2/p]
𝑃𝐸𝑝 : Project emissions during the period p [tCO2/p]
I. Data and parameters fixed ex ante
The source of each data and parameter fixed ex ante is listed as below.
Parameter Description of data Source
𝐸𝐹𝑓𝑢𝑒𝑙 CO2 emission factor for consumed fossil
fuel
IPCC default values
provided in table 1.4 of
Ch.1 Vol.2 of 2006 IPCC
Guidelines for National
GHG Inventories.
𝐸𝐹𝑔𝑟𝑖𝑑 CO2 emission factor for consumed grid
electricity
Updates on Grid
Electricity Emission
Factors, National
Committee on Clean
Development Mechanism,
Mexico, unless otherwise
instructed by the Joint
Committee.
𝐸𝐹𝑓𝑙𝑎𝑟𝑖𝑛𝑔_𝑁2𝑂 N2O emission factor for flaring gas Updates on Emission
Factors, National
Committee on Clean
Development Mechanism,
Mexico, unless otherwise
instructed by the Joint
Committee.
𝐺𝑊𝑃𝐶𝐻4 CH4: 25
Global Warming Potential of CH4
2006 IPCC Guidelines for
National Greenhouse Gas
Inventories
𝐺𝑊𝑃𝑁2𝑂 N2O: 298
Global Warming Potential of N2O
2006 IPCC Guidelines for
National Greenhouse Gas
Inventories
𝑅𝑙𝑒𝑎𝑘 1%
Rate of CO2 leakage from oil reservoir
The IPCC Special Report
on Carbon Dioxide Capture
and Storage
- 62 -
4.3 Estimation of Reduced Emissions
This study estimated the reduction in emissions achieved by a commercial CCS-EOR project
implemented by capturing 1,000 tons of CO2 per day from flue gas from primary reformers of an
ammonia plant (CO2 concentration of 10%) for enhanced oil recovery. According to the assumption,
the designing and construction start in 2017 before EOR is carried out for the 10 years from 2020 to
2029. The necessary amount of energy for CCS-EOR operation was evened out over the entire
project period for making the estimation.
[1] Emission reduction
The amount of emission reduction was calculated by subtracting the project emissions from the
reference emissions. The annual reduction in GHG emissions was 254,750 tCO2. The amount of
emission reduction over the entire life of the project (10 years) emission was 2,547,500 tCO2.
Figure 44 Emission reduction
Year Emission reduction
(tCO2/y)
Reference emissions
(t-CO2/y)
Project emissions
(tCO2/y)
2020 254,750 346,750 92,000
2021 254,750 346,750 92,000
2022 254,750 346,750 92,000
2023 254,750 346,750 92,000
2024 254,750 346,750 92,000
2025 254,750 346,750 92,000
2026 254,750 346,750 92,000
2027 254,750 346,750 92,000
2028 254,750 346,750 92,000
2029 254,750 346,750 92,000
* Fractions are considered during the calculation, and are later rounded off in the statement.
Source: Prepared by the Japan Research Institute
- 63 -
[2] Reference emissions
In this project, CO2 is captured from flue gas of primary reformers at an ammonia plant at CPQ
Cosoleacaque and injected into oil fields of Cinco Presidentes for CCS-EOR. The source emits
1,000 tons of CO2 daily. EOR is carried out by capturing 95% of the emissions. The reference
emissions are presented below.
Figure 45 Reference Emissions
Year Reference emissions (tCO2/y)
2020 346,750
2021 346,750
2022 346,750
2023 346,750
2024 346,750
2025 346,750
2026 346,750
2027 346,750
2028 346,750
2029 346,750
Source: Estimate and established values by the study consortium
- 64 -
[3] Project emissions
Project emissions consist of CO2 leakage, CO2 from flaring, and CO2 emissions associated with
power and heat consumed for CO2 capture and injection.
The respective emissions were obtained by applying the emissions coefficient of 0.4999
tCO2/MWh for grid power in 2013 as calculated under a Mexican voluntary emissions trading
system GEI (Gases de Efecto Invernadero), as well as the emissions coefficient of 53.66
kg-CO2/MMbtu for natural gas as established by SENER.
Figure 46 Project Emissions
Year
Power Natural gas
CO2 leakage
(tCO2/y)
Total
(t-CO2/y) Consumption
(MWh)
CO2
emission
(tCO2/y)
Consumption
(MMbtu)
CO2 emission
(tCO2/y)
2020 25,964 12,979 1,408,000 75,553 3,468 92,000
2021 25,964 12,979 1,408,000 75,553 3,468 92,000
2022 25,964 12,979 1,408,000 75,553 3,468 92,000
2023 25,964 12,979 1,408,000 75,553 3,468 92,000
2024 25,964 12,979 1,408,000 75,553 3,468 92,000
2025 25,964 12,979 1,408,000 75,553 3,468 92,000
2026 25,964 12,979 1,408,000 75,553 3,468 92,000
2027 25,964 12,979 1,408,000 75,553 3,468 92,000
2028 25,964 12,979 1,408,000 75,553 3,468 92,000
2029 25,964 12,979 1,408,000 75,553 3,468 92,000
Source: Estimated and established by the study consortium
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5 Analysis of Economic Effects and Impact on Partner Country in the Event the
Project is Implemented
5.1 Analysis of Impact of CO2 (Emission Credits) Price on Feasibility of Project
The standard case does not take into account the additional revenue from reduced CO2 emissions
(i.e., emission credit revenue). Given that neither the Mexican emissions trading system nor JCM
clearly defines emission price, a sensitivity analysis was conducted regarding carbon pricing with
reference to prices from systems involving Mexico.
The targets of the sensitivity analysis were the carbon tax price imposed by the Mexican
government (USD 3.21/tCO2); California carbon allowance (CCA), which is the emission credit
price under California’s emissions trading system (USD 13/tCO2); and the upper price limit for
clean energy certificates (CELs) (USD 48/tCO2). The estimate demonstrated that the IRR only
slightly increased by 0.3% with the carbon tax as the lowest carbon price. The rate increased by
1.3% for the CCA under the California emissions trading system, for which the Mexican
government expressed its intention to link with the domestic emissions credit market. The
feasibility is not significantly boosted since the impact is still minor compared to the impact from
oil prices or enhanced oil production. In contrast, the upper price limit of CELs increased the IRR
by 4.9%, which is comparable to an impact from a rise of oil price by 20 US dollars or enhanced oil
recovery of 0.5 barrels/t-CO2.
In the CCS-EOR project, emission credits bring only subsidiary revenue. The feasibility is
considered mainly in terms of oil revenue. Still, obtaining a credit revenue of at least the CCA price
level or higher is believed to enhance project feasibility while avoiding the risks noted from the
persistent oil price slump.
Figure 47 Impact of CO2 (Emission Credit) Price on Project Feasibility
Combination of standard case and emission credit price IRR of project Difference
Standard case 16.2% -
Standard case + Equivalent of carbon tax (USD 3.21/tCO2) 16.5% +0.3%
Standard case + Equivalent of CCA (USD 13/tCO2) 17.5% +1.3%
Standard case + Equivalent of CELs (USD 48/tCO2) 21.1% +4.9%
Source: Estimated by the Japan Research Institute based on various materials
5.2 Analysis of Impact of CCS-EOR Project on Oil Production in Mexico
Production systems of petrochemical plants operated by PEMEX in southern Mexico were
analyzed as CO2 sources to see how much CO2 can be captured and utilized for a CCS-EOR
project.
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Recoverable CO2 from the three plants of CPQ Cangrejera, CPQ Morelos, and CPQ
Cosoleacaque amounted respectively to 6,315 tCO2/day, 5,234 tCO2/day, and 8,800 tCO2/day. The
total amount of 20,349 tCO2/day translates into an annual total of 7,056,016 tCO2. In the standard
scenario for enhanced oil recovery, 2 barrels/tCO2 resulted in oil production of 40,698 barrels/day,
or 14,112,032 barrels/year. If all CO2 sources are utilized, the oil production will increase by 1.70%
since recent total oil production of Mexico is around 2.4 million barrels/day. Both the amount of
recoverable CO2 and oil production are expected to increase when a more detailed analysis is
conducted with many other CO2 sources among PEMEX’s facilities (oil refineries and gas plants)
in southern Mexico.
Figure 48 Amount of Recoverable CO2 from Petrochemical Plants in Southern Mexico and
Resulting Enhanced Oil Production
Plant Recoverable
amount of CO2
(tCO2/day)
Enhanced oil
production
(barrels/day)
Annual CO2
recovery with
capacity utilization
of 95%
(tCO2/year)
Enhanced oil
production
(barrels/year)
CPQ Cangrejera 6,315 12,630 2,189,726 4,379,453
CPQ Morelos 5,234 10,468 1,814,890 3,629,779
CPQ Cosoleacaque 8,800 17,600 3,051,400 6,102,800
Total 20,349 40,698 7,056,016 14,112,032
Source: Estimated by Mitsubishi Heavy Industries and the Japan Research Institute based on
various materials
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5.3 Analysis of Impact of CCS-EOR Project on GHG Emissions in Mexico
As presented in “5.2. Analysis of Impact of CCS-EOR Project on Oil Production in Mexico,”
the amount of recoverable CO2 from petrochemical plants in southern Mexico is 7,056,016
tCO2/year. The CO2 emission reduction amounted to 5,207,123 tCO2/year after subtracting the total
CO2 emission of 1,848,893 tCO2/year associated with energy involved for CO2 capture in the
project and leakage from the storage site of the project.
SENER predicts the GHG emissions of 748 million tons of CO2 (MtCO2e) in 2010 to increase by
212 MtCO2e to reach 960 MtCO2e in 2020. The CCS-EOR project is expected to reduce the CO2
emissions by 0.5% from the expected GHG emissions in 2020, which is 2.5% of the increase of
2.12 MtCO2e in the status quo scenario between 2010 and 2020. Similarly, to enhanced oil recovery,
an extra GHG reduction can be expected from the CCS-EOR project by including CO2 sources in
addition to the petrochemical plants in southern Mexico covered in this study.
Figure 49 Impact of CCS-EOR Project on GHG emissions in Mexico
Emission reduction by CCS-EOR project
(tCO2/year)
Reduction from
emission in 2020
Ratio to GHG increase from
2010 to 2020
Recoverable amount of CO2 7,056,016 - -
CO2 emission from project 1,848,893 - -
Reduction in CO2 emission 5,207,123 0.5% 2.5%
Source: Estimated by the Japan Research Institute based on various materials
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6 Program for Promoting Understanding on the Part of Mexican Counterparts
Regarding JCM and Building a Stronger Relationship with Them
6.1 Overview
The project intends to introduce and promote the CO2 capture system and other related
technologies by Mitsubishi Heavy Industries, which has abundant experience in their demonstration
and delivery in Japan and abroad. Today, eleven such CO2 capture systems are commercially
operated. In 2016, one of the largest systems for CCS-EOR operation in the world will be put into
service. Unfortunately, PEMEX is not very familiar with the technologies of Japanese companies in
general. Although the company has utilized products and technologies by Japanese companies in
the past, the proportion is quite marginal compared to all of the facilities and plants owned by
PEMEX. The company in particular has limited knowledge of advanced CO2 capture technologies
although it has introduced a CO2 capture system for ammonia production processes several decades
ago.
Given the circumstances, it is deemed necessary to promote an overall understanding regarding
the rich track record and reliable technologies employed for the CO2 capture system of Mitsubishi
Heavy Industries by organizing study tours at the sites employing the system and exchanging
sessions with user companies. Making the technological competence and track record of Mitsubishi
Heavy Industries known to persons in charge of PEMEX at the same timing is crucial for
promoting bilateral cooperation and developing a CCS project under JCM.
Accordingly, persons in charge from PEMEX were invited to observe a CCS site in the United
States from November 12 to November 13, 2015. The outcomes of the exchange and study tours
are summarized along with an overview of the program.
・ Purpose
Organize technical exchange (study tours and exchange sessions) for PEMEX and other
Mexican counterparts to gain an understanding regarding CCS-EOR projects, as well as
Japanese technologies and products while facilitating the study.
・ Participants from Mexico
PEMEX (state-owned petroleum company)
Ms. Paulina Serrano (Carbon Finance Manager)
Ms. Marcela Arteaga (Superintendent for Secondary and Enhance Oil Recovery)
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・ Program
Schedule and major activities
November 12-13, 2015
November 12 Departure from Mexico City International Airport - Transit at
Houston International Airport - Arrival at Mobile, Alabama,
United States
November 13 Study tour at the CCS site in Plant Barry
Departure from Mobile, Alabama, United States - Transit at
Houston International Airport – Arrival at Mexico City
International Airport
6.2 Details of exchange sessions and study tours
The program for the exchange session and study tour at each site is presented below (time, site,
hosts, and activities).
Time Site Hosts Activities
Friday, November 13, 2015
8:15-11:30 Southern Company,
Alabama Barry
Power Plant, CO2
Capture Plant
・ Mr. Joe, Southern
Company
Research Engineer
・ 5 more persons
・ Technical briefing of CCS
technologies and CO2
capture operation at Barry
Plant by Mitsubishi Heavy
Industries America
・ Observation of the CO2
capture system
12:00-13:30 Denbury, CO2
Storage Site
・ Mr. Hunter
・ 3 more persons
・ Technical briefing of the
CCS project by Denbury
・ Observation of the CO2
storage site
Study tour of Plant Barry CCS site
Study tours were organized at the CO2 capture plant of Alabama Barry Power Plant
operated by the Southern Company (American power company) and the CO2 storage site
operated by Denbury (American oil development company).
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CO2 capture plant
A demonstration plant for CO2 capture and storage was constructed next to the coal-fired
power plant owned by Southern Company with a 50% capital contribution from the
Southern Company and the remaining 50% from Mitsubishi Heavy Industries. A
demonstration test has been conducted since 2011. The plant has a capacity equivalent to
around 25 MW to capture 500 tons of CO2 per day. CO2 injection is carried out by the US
Department of Energy (DOE).
In 2001, Mitsubishi Heavy Industries began a demonstration test in Hiroshima with a
coal-fired boiler as the source of the flue gas (1 ton/day). Another one was started in 2006
in Nagasaki (10 tons/day). The plant visited here is an extension of these demonstration
projects. In 2016, operation of the world’s largest commercial CCS plant for a coal-fired
boiler with a capacity of 4,776 tons/day will begin in Texas, United States after the
construction is completed by Mitsubishi Heavy Industries (as a joint project between
NRG Energy and JX).
The plant captures 240,900 tons and injects 115,600 tons of CO2 in 13,000 hours. The
purity of the CO2 is 99.9%.
The discharge pressure of the CO2 compressor is 1,900 psi.
In the next four years, research on CO2 capture will be conducted with this demonstration
plant jointly with Mitsubishi Heavy Industries and Southern Company with funding from
DOE.
Figure 50 View of CO2 Capture Plant
Source: Mitsubishi Heavy Industries
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CO2 sequestration site
In 2012, injection of CO2 was begun, and was stopped in 2014 (total injection of 114,000
tons). Monitoring is still continued today.
CO2 is carried through the 4-inch carbon steel pipeline to the injection well 19 km away
from the plant.
The target reservoir for injection is the sandstone bed of the multi-layers located on top of
the depleted oil reservoir. The injection hole has permeability up to 4,000 mD, a porosity
of 4.4 to 26.1%, a net thickness of 60 feet, and a depth of 9,436 to 9,800 feet.
Two observation holes have been drilled about 300 m away from the CO2 injection well
for conducting monitoring with the bottom hole pressure and temperature, surface
pressure and temperature, seismic tomography between wells, PLT, pulsed neutron log,
soil flux, fluid sampling, and injection of tracer into injection gas. The results of
simulation and PLT with CMG GEM were deemed to indicate the importance of injection
of CO2 into the highly permeable layer on the top.
This CCS project is implemented as joint research with DOE (SECARB Partnership
Anthropogenic Test), which is funded by DOE. The study is conducted by Advanced
Resources using the field provided by Denbury.
Figure 51 View of CO2 sequestration site (Booster pump is seen on the right side)
Source: Photographed by the study consortium
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Figure 52 Wellhead of Injection Well
Source: Photographed by the study consortium
6.3 Summary of Technical Exchange
6.3.1 Exchange Regarding CO2 Capture System
Ms. Paulina Serrano (Carbon Finance Manager), who participated in this technical exchange, is
in charge of coordinating the GHG emission reduction projects of PEMEX. She has a deep
knowledge of CCS-EOR in which PEMEX is interested. She has participated in observation tours
in the United States in order to gain technical understanding. She has already been briefed on the
ample track record of CO2 capture systems by Mitsubishi Heavy Industries and their application on
a commercial scale. Still, her visit to the plant and exchange with employees in charge of CO2
capture at Barry Power Plant are considered quite significant for deepening her understanding of
the CO2 capture systems of Mitsubishi Heavy Industries.
Ms. Marcela Arteaga (Superintendent for Secondary and Enhance Oil Recovery) is one of the
persons in charge of discussion of CCS-EOR projects at the Cinco Presidentes oil fields. She is
another key person for project organization along with Ms. Paulina Serrano. For the time being,
PEMEX can obtain highly pure CO2 from the shift conversion of ammonia production process,
which in fact explains why some employees of oil fields have a low level of interest or a
misunderstanding of CO2 capture systems (e.g., they don’t know that systems from Mitsubishi
Heavy Industries can already be applied in CO2 capture on a commercial scale). In order to
improve the situation, the visit by Ms. Marcela Arteaga as a representative of oil field staff to
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understand the CO2 capture system of Barry Power Plant was a major step forward for promoting
an awareness of the need for demonstrating such systems to PEMEX at an early stage.
6.3.2 Exchange Regarding CO2 Sequestration Site
PEMEX has a sufficient knowledge of oil fields as CO2 storage sites. The petroleum company
has conducted pilot tests of EOR in several sites, and therefore is experienced in underground
injection of CO2. In this regard, a simple presentation about CO2 storage sites was considered
insufficient for gaining a deeper understanding by PEMEX. This study therefore introduced a site
for underground research conducted by Advanced Resources to study CO2 behavior in the field
operated by Denbury as a part of DOE program. In the past, PEMEX has experienced extremely
low productivity at the pilot test conducted in Chicontepec contrary to the envisaged underground
behavior of CO2. Hence, the company was believed to be extremely interested in research on the
underground behavior of CO2. The eagerness shown by PEMEX in exchanging ideas with hosts on
the site seems to indicate that PEMEX access to such research through Mitsubishi Heavy Industries
will facilitate implementation of any CCS-EOR projects in the future.
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