Market Considerations and Opportunities for CCS/CCUS

and CO2 EOR Storage Michael E. Moore

VP Energy Commodities and Advisory ServicesFearnOil Inc. a division of Astrup-Fearnleys

Executive Director (2007-2017)North American Carbon Capture Storage Association (NACCSA 2007-2017)

2017 Taiwan-US International CCS ConferenceTaipei, Taiwan

April 18, 2017

Topics

• Market Considerations

• Fossil Fuels at Risk and Why CCUS/CCS/CCU Matters

• CCUS/CCS/CCU and Geologic Sequestration-How to Manage CCUS Projects

• The Resources

• Project Drivers and Supportive Efforts

Market Considerations

https://www.eia.gov/todayinenergy/detail.php?id=30692&src=email

Fossil Fuels at Risk and Why CCUS/CCS/CCU Matters

What does “de-carbonization of energy (fossil fuels) by 2050…..” mean?

Fossil Fuels at Risk and Why CCUS/CCS/CCU Matters

http://newsroom.unfccc.int/paris/

DOE- Presentation ICCUS Program 2016

Fossil Fuels are Critical in all Sectors

US$2.2 Trillion Fossil Fuel Assets at Risk

US Fossil Fuels at Risk

Resources

• US coal resources

• US natgas resources

• US oil

• US NGL resources (LPG, ethane, etc.)

• US petcoke

• Imports/exports

Consumers

• Power plants: coal, natgas, oil, diesel, jet, residual fuel oil, possibly ethane

• Transportation fuels: gasoline, diesel, jet fuel, ship bunkers, LNG, CNG, LPG

• Feed-stocks: natural gas, natural gas liquids, petrochemicals

• Imports

Considerations

• Keeping value in face of decarbonization• Developing carbon markets via carbon pricing• Future international issues around LCA on resource supply

and added value resources• Shareholder value preservation• Adding “low carbon” oil reserves• Making “low carbon” fossil fuels for the market• Augmenting rate base capacity to pay• Monetization of existing fossil fuels resources,

infrastructure and processes• Funding for future fossil fuels resources, infrastructure and

processes• Policy parity for all clean energy (not just renewables)• Tax credits expansion and Private Activity Bonds

CCUS/CCS/CCU Projects and How to Manage Them

CCUS/CCS/CCU Projects and How to Manage Them

• Different project opportunity areas:– Carbon capture utilization storage (CCUS)

– Carbon capture storage (CCS)

– Carbon capture utilization (CCU)

• CO2-emissions and commodity CO2

– Natural CO2-from formations like natural gas

– Anthropogenic CO2-captured from processes

– Biogenic CO2-from ethanol production

CO2 Capture Projects

Mississippi Power Kemper IGCC Projecthttp://www.mississippipower.com/kemper/docs/Q4_2013KemperProgressReport.pdf

• 582-megawatt integrated gasification combined-cycle (IGCC) power plant in Kemper County uses lignite

• ~98% complete-only commercial scale CCUS power project in the US• CO2 going for EOR and utilization• Visited on January 22nd 2015 the power block was operational and running delivering

power to the grid in Mississippi-• Both gasifiers now running in test mode

NRG/Petra Nova WA Parish Carbon Capture Utilization Project

• Company/Alliance: Petra Nova Holdings: a 50/50 partnership between NRG Energy and JX Nippon Oil & Gas Exploration Corp.

• Location: Unit 8, W.A. Parish plant, Thompsons, 60KM from Houston, Texas, USA

• Feedstock: Coal• Size: 250 MW slip stream from 610 MW unit. • Capture: 1.4 Mt of CO2 / year (90% capture)• Capture Technology: Post-combustion: KM-CDR

amine scrubbing CO2 (MHI and KEPCO)• CO2 Fate: 82 mile pipeline for onshore EOR in West

Ranch Oil Field in Jackson County, Texas • Timing: Project started at the end of 2016 Ribbon

Cutting Ceremony April 13th 2017:

www.nrg.com/sustainability/strategy/enhance-generation/carbon-capture/wa-parish-ccs-project/

Air Products Texas Carbon Capture Demonstration Project

• Port Arthur Fact Sheet: Carbon Dioxide Capture and Storage Project

• Company/Alliance: Air Products and Chemicals, Denbury Onshore LLC, University of Texas Bureau of Economic Geology and Valero Energy Corporation

• Location: Port Arthur, Texas, US• Start Date: January 2013• Original End Date: Was September

2015 Size: 1 Mt/yr. but still ongoing….• Capture Type: Post-combustion (90%

capture) using vacuum swing adsorption technology

• CO2 Source: Existing steam-methane reformers

• Storage: EOR in West Hasting's and Oyster Bayou oil fields, Texas

• https://sequestration.mit.edu/tools/projects/port_arthur.html

*In June, 2016, Air Products announced that it had successfully captured more than three million metric tons of CO2 at Port Arthur after 3 1/2 years of operation.

NETPowerwww.netpower.com / www.8rivers.com

• 50 mw pilot

• Ground breaking March 8th 2016

• Under construction

• La Porte, Texas

North Dakota Vision “EPIC”:Lignite Gasification, Power Generation and

CO2-EOR- in Shale and Conventional

*Summit’s Texas Clean Energy Project• Company/Alliance: Summit Power

Group Inc, Siemens, Fluor, Linde, R.W. Beck, Blue Source and Texas Bureau of Economic Geology –Chinese Partners TBA

• Location: Penwell, Ector County, Texas, USA

• Feedstock: Coal • Size: 400 MW Gross, 245 MW

Commercial output ( 2-3 Mt/yr captured)

• Capture Technology: Pre-Combustion: Siemens IGCC technology and Linde Rectisol acid-gas capture technology (90% CO2 capture)

• CO2 Fate: EOR in the Permian Basin • Start: TBA• Operational-TBA• http://sequestration.mit.edu/tools/p

rojects/tcep.html• http://www.texascleanenergyproject.

com/project/

• The National Risk Assessment Partnership (NRAP) — an initiative within DOE’s Office of Fossil Energy and led by the National Energy Technology Laboratory—applies DOE’s core competency in science-based prediction for engineered–natural systems to the long-term storage of carbon dioxide (CO2). The science-based prediction of engineered–natural systems is a core competency that cross cuts many of today’s energy challenges. Over decades, DOE has built a unique set of resources for predicting how these complex and heterogeneous systems behave under extreme conditions and over large ranges in time.

• Now into Phase 2https://www.netl.doe.gov/research/coal/crosscutting/national-risk-assessment-partnership

CCUS/CCS/CCU & Geologic Sequestration -How to Manage: Tools

How to Manage: Location NETL’s 2015 Carbon Storage Atlas Shows

Increase in U.S. CO2 Storage Potential

• The U.S. Department of Energy’s (DOE) National Energy Technology Laboratory (NETL) today released the fifth edition of the Carbon Storage Atlas (Atlas V), which shows prospective carbon dioxide (CO2) storage resources of at least 2,600 billion metric tons – an increase over the findings of the 2012 Atlas.

• Atlas V is a coordinated update of carbon storage resources, activities, and large-scale field projects in the United States. It showcases the progress that NETL scientists and engineers have made with their partners toward wide-scale deployment of carbon storage technologies. It also underscores the importance of the research partnerships and projects that are increasing our understanding of safe, permanent geologic storage of CO2.

• Atlas V highlights potential CO2 storage resources in saline formations, oil and natural gas reservoirs, and unmineable coal seams. This edition also presents a detailed look at the Regional Carbon Sequestration Partnership Initiative’s large-scale field projects. These large-scale field projects are uniquely tailored to address technical and non-technical challenges within their respective regions, an approach which has proved to be highly effective.

http://www.energy.gov/fe/articles/netl-s-2015-carbon-storage-atlas-shows-increase-us-co2-storage-potential

The Resources

US Conventional Oil and Gas Resources

• Source: The CO2-EOR Oil Recovery and CO2 Utilization “Prize”. Prepared for: Global Technology Exchange Session: Subsurface and EOR Task Area Challenge• Prepared By: Mr. Vello A. Kuuskraa, President, Advanced Resources International, Inc.• April 2014

CO2-EOR Operations and CO2 Sources (2014)

Residual Oil Zone (“ROZ”) Four Counties >100 billion Bbls Oil in Place

• DOE sponsored four county assessments (Dec 2014, 2016)

• > 100 billion barrels of oil in-place in the ROZ “Fairway”

• Work required to establish recoverability, economic feasibility and CO2requirements.

• Follow on study of additional 10 counties initiated.

• So far ROZ also present in: Saudi Arabia, North Sea, Wyoming.

CO2 is the key to unlocking this potential

Wyoming and US Gulf Coast

www.denbury.com/files/2014-11%20UPLOADS/2014-11-Analyst-Day-FINAL.pdf

CO2-EOR US Gulf of Mexicowww.netl.doe.gov/File%20Library/Research/Energy%20Analysis/Publications/Offshore-GOM-resource-Final.pdf Pges. 36, 49

US Coal ResourcesSource: http://pubs.usgs.gov/of/1996/of96-092/Comp/main.gif

Next Frontier for CO2-EOR –Shale Oil/Bakken---and Globally?

31Source: EERC presentations 2014

US Shale Plays - Unconventional Oil &Gas

Basins with Assessed Shale Oil and Shale Gas Formations (May 2013)

Source: Technically Re coverable Shale Oil and Shale Gas Resources: An Assessment of 137 Shale Formations in 41 Countries Outside the United States EIA June 13th 2013

Project Drivers and Supportive Efforts

Six Oil and Gas Majors Call for Carbon Pricing June 1, 2015

• Major oil and gas companies BG Group plc, BP plc, Eni S.p.A., Royal Dutch Shell plc, Statoil ASA and Total SA, today announced their call to governments around the world and to the United Nations Framework Convention on Climate Change (UNFCCC) to introduce carbon pricing systems and create clear, stable, ambitious policy frameworks that could eventually connect national systems. These would reduce uncertainty and encourage the most cost effective ways of reducing carbon emissions widely.

• The six companies set out their position in a joint letter from their chief executives to the UNFCCC Executive Secretary and the President of the COP21. This comes ahead of the UNFCCC’s COP21 climate meetings in Paris this December.

• With this unprecedented joint initiative, the companies recognise both the importance of the climate challenge and the importance of energy to human life and well-being.

• http://www.statoil.com/en/NewsAndMedia/News/2015/Pages/01Jun_carbon.aspx

Significant Carbon Events

• November 7th 2013'Unburnable' carbon fuels investment concerns-Investors group with €7.3tn of assets asks energy giants about their exposure and response to the risk of falling demand for oil and coal. http://www.theguardian.com/sustainable-business/unburnable-carbon-investment-agenda

• June 12th 2013 Obama Quietly Raises 'Carbon Price' as Costs to Climate Increase. The increase of the so-called social cost of carbon, to $38 a metric ton in 2015 from $23.80, adjusts the calculation the government uses to weigh costs and benefits of proposed regulations. The figure is meant to approximate losses from global warming such as flood damage and diminished crops. http://www.bloomberg.com/news/2013-06-12/tougher-regulations-seen-from-obama-change-in-carbon-cost.html

Norway Confirms $900bn Sovereign Wealth Fund's Major Coal Divestment

May 27th, 2015 • The decision to divest Norway’s $945m fund from coal assets was made on 27 May, when an agreement

between political parties was reached. It was formally passed by a parliamentary vote on Friday. Svein Flaatten, of the governing Conservative party, said coal investments were both a global warming risk and financial risk. A global deal to cut carbon emissions at a crunch UN summit in December could leave some fossil fuel reserves unburnable and worthless.

• Norway’s parliament has formally endorsed the move to sell off coal investments from its $900bn sovereign wealth fund, the world’s biggest.

• It is the largest fossil fuel divestment yet, affecting 122 companies across the world, and marking a new success for the fast-growing and UN-backed climate change campaign.

• A new analysis said the fund would sell off over $8bn (£5bn) of coal-related investments as a result.• The biggest single sell-off from Norway’s fund will be the UK utility SSE, in which the fund holds $956m of

shares. The fund is also set to sell its $49m stake in Drax, which runs the UK’s biggest coal-fired power station.

• Other major energy companies identified in the analysis by German and Norwegian NGOs are Germany’s E.ON ($685m) and RWE ($320m) and the Danish company Dong ($30m), which is often associated with wind energy but has a significant coal business.

• Sweden’s Vattenfall and Italy’s Enel are also set to be affected by the coal ban as are 35 groups in the US, including Duke Energy ($434m). A dozen coal-related companies on China are set to lose their Norwegian investment, as are eight in Japan and five in Australia.

• http://www.theguardian.com/environment/2015/jun/05/norways-pension-fund-to-divest-8bn-from-coal-a-new-analysis-shows

International Carbon Markets

http://newclimateeconomy.report/economics-of-change

ISO-CCS Standards for Geologic Storage (under development)

• International Organization for Standardization (ISO) Technical Committee TC-265

• Title: Carbon dioxide capture, transportation, and geological storage-includes CO2-EOR

• Acceptance of Z-741 by Standards Council of Canada and American National Standards Institute (ANSI) is “seed document” for TC-265

• 26 countries participating and NGOs

▪ International Standards Organization - 31000, 17024, 14064, 14065

▪ International Performance Assessment Centre for Geologic Storage of CO2 – Seed document

▪ Canadian Standards Association - ISO Secretariat, standards developer

▪ Bi-national agreement between USA & Canada

US Carbon Markets and CCUS/CO2-EORProtocol Framework and Storage Protocols

• PEW/C2ES CCS Protocols-released 2012

• ACR CCS CO2-EOR Offsets released April 2015

www.c2es.org/docUploads/CCS-framework.pdf

http://americancarbonregistry.org/carbon-accounting/standards-methodologies/carbon-capture-and-storage-in-oil-and-gas-reservoirs/acr-ccs-methodology-v1-0-final.pdf

CO2 Shipping and CO2 Pipelines

http://www.betterenergy.org/sites/default/files/White_Paper_21st_Century_Infrastructure_CO2_Pipelines_0.pdf

http://www.ieaghg.org/exco_docs/2017-TR1.pdf

Life Cycle Analysis of CCUS

Given 12-8-15 Midland Texas CO2 Conference Week on the “Life Cycle Analysis of CO2-EOR/CCUS

Questions & Thank You!

Michael E. Moore

• VP Energy Commodities and Advisory Services

• FearnOil Inc. (a division of Astrup-Fearnleys AS)

• www.fearnleys.com

• Executive Director 2007-2017

• North American Carbon Capture Storage Association (2007-2017)

• mmoore@fearnoil.com Tel: 281-759-0245