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Tuesday, January 28, 2014

LNG: lessons for CCS?

Dennis Van Puyvelde of the Global CCS Institute in Australia has written this interesting blog about the similarities, differences, and synergies between the liquefied natural gas (LNG) industry and carbon capture and storage (CCS).

The Global CCS Institute commissioned WorleyParsons (a company I had the privilege of working with in developing the Pennsylvania CCS model) to complete a study, CCS Learning from the LNG Sector, which lays out the issue succinctly:
There is an essential role for CCS to contribute to…limiting GHG concentrations in the atmosphere at levels consistent with limiting global temperature rise to less than 2°C by 2050 as recommended by the Intergovernmental Panel on Climate Change.
The challenge for development of CCS is to demonstrate and commercialise the entire value chain and to have established a framework business case for CCS that enables the market to take over from early government intervention and establishment. The rate of commercialization ramp up must then be capable of attaining the targeted emissions reductions.
As Van Puyvelde’s writes, there are significant similarities between LNG and CCS – both involve a wide range of industries from upstream oil and gas exploration and extraction, to transport via pipelines, to gas processing, and then further shipping. Both LNG and CCS require huge investment, and as he observes: 
when the economic drivers are right - industries do spend tens of billions of dollars per year over long sustained periods to meet the demand created by those economic drivers. 
The differences are also significant. LNG is well established, and has grown in response to demand. There is yet no demand driver for CCS, and regulations are still being developed. Interestingly, he writes that LNG projects are about ten times as costly as CCS projects, yet are still economic because of market conditions.

The synergies between the two may be key.  LNG processing requires removal of CO2, producing a pure stream that would be easier to handle for CCS. Oil companies are heavily involved in the development of LNG projects, and their expertise and involvement may be required to deploy CCS projects.

WorleyParsons identified these key findings:

In my view, they point to the wisdom of the Pennsylvania CCS model and the need for urgent governmental action to enact strong carbon limits, establish a price on CO2, and to stimulate the creation of business opportunities and markets for CO2 that will drive investment in CCS.

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