The Carbon Corner - Issue #2

We are out with our 2nd issue of Carbon Corner, and we’ve got some spicy updates for you this week.

Developments worldwide are advancing at breakneck speed, with several MOU and JV announcements highlighting the involvement of upstream O&G companies partnered with Asian and European heavy industries. Domestic carbon markets are morphing daily to accommodate more than a dozen capital projects which have received a ‘green light.'

In short, an exciting time to be covering this space.

CCS Carbon Offset Credits Get a Boost

Things are heating up in the carbon credit market after 12 airline companies announced plans to purchase CCS-connected carbon offset credits through partner Carbon Engineering this week.

The credit prepurchase agreement covers 400,000 metric tonnes of credits, a sum equal to <1% of the total annual CO2 sequestered in the US presently.

Though not expressly stated in the release, it seems the offset credits will be issued by 1PointFive, an affiliate of Oxy’s Low Carbon Ventures group which is working with Carbon Engineering on several projects, including a Direct Air Capture venture in West Texas.

Offset transactions in the CCS space have been limited to small volumes in demonstration projects, which makes this announcement all the more important in generating momentum in the CCS credit space.

It remains to be seen which registry protocol these airlines will ultimately adopt to ensure credits are verified properly. Prior airline efforts to purchase forestry-based carbon credits from firms like Verra came under withering scrutiny when it was revealed that carbon accounting standards in the space were subpar. Firms in the space hope the more measurable nature of removals with CCS should enhance confidence in offset markets.

CCS Expanding Beyond Ethanol

There is increasing interest in CCS projects from sectors with high purity emissions, notably hydrogen and ammonia.

KeyState Energy has announced plans to utilize the opportunities presented in the Inflation Reduction Act, by partnering with Black & Veatch to develop carbon capture technology for one of their plants. The 7,000-acre plant is located in north-central Pennsylvania and produces hydrogen, automotive grade urea, and ammonia.

The project is notable for several firsts: the first commercial-scale CCS project in the eastern United States, the first to integrate natural gas extraction and CCS, and the first to produce low-carbon Blue Hydrogen from natural gas.

The announcement highlights sectors beyond ethanol that could be significantly altered by applying carbon capture technology.

We expect to see more CCS projects announced leveraging the hydrogen and fertilizer supply chains. Due to the natural gas feedstock shortfall in Europe, production lapses seem poised to provide more incentive for the reshoring of urea and ammonia production, while domestic demand for clean-burning hydrogen coupled with IRA-based incentives may drive incremental hydrogen investment in the US.

Carbon Capture to be Deployed on Ships

To grow the efforts of carbon-capture systems for maritime use, Samsung Heavy Industries and BASF are joining to study how the “OASE blue” system, which removes CO2 from flue gas, can be used aboard a ship.

This system has been widely utilized on large point source (LPS) emitters, such as power plants. The feasibility study will focus on designing and constructing an adaptive model of this system for maritime use. It has been projected that the final product will reduce 40% of carbon intensity, which coincides with the International Maritime Organization’s (IMO) 2030 goal.

One challenge to this system is that the captures carbon dioxide is both energy intensive to capture and heavy. It can actually weigh more than the bunker fuel from which it originated; thus there remain technical problems to be solved for such point-source mobile systems.

UK Power Plant CCS Project Gets a Boost

SSE Thermal is the owner and operator Peterhead Power Station, a 1,180 MW power station located in Scotland. They began exploring CCS redevelopment plans in 2020, and have recently made progress by signing a contract with Equinor Energy AS to create and implement a carbon capture system.

The plant is projected to capture 1.5 million tonnes of CO2 each year, making it one of the larger global projects. The carbon dioxide would then be transported and stored in reservoirs under the North Sea. The project would contribute to the UK government’s goal of capturing at least 20 million tonnes of CO2 annually by 2030. For reference, the US annual capture in 2020 was approximately 40 million tonnes per year or 2x the proposed UK figure.

Chevron Spearheads Carbon Capture in Australia

Chevron has been awarded greenhouse gas (GHG) assessment permits for 7.8 acres of offshore blocks in Australia. The first two are in the Carnarvon Basin, and the third is in the Bonaparte Basin. With these permits, Chevron intends to assess the GHG storage potential and further global emission reduction.

This is yet another effort by Chevron to partner with Australia in these efforts. Last year the company spent $29 million on carbon capture-related projects in Western Australia, representing one of the more significant global investments in the technology.

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