Commercial CO2 Market
A reliable supply of CO2 is
needed for a WindFuels plant at any scale. The long term goal
is to separate clean CO2 from fossil
fuel burning power plants and use it for the synthesis of fuels
and organic chemicals. While the technology to separate and clean
the CO2 at coal burning power plants develops, it
is essential that we look at other viable large-scale sources
of CO2 . Fortunately,
today there already is a large market for commercial CO2 and
the infrastructure to supply it.
The large-scale commercial CO2 market today is mainly
driven by demand from the beverage industry and the oil industry
oil recovery (EOR). The beverage industry has been a consistent
purchaser of high purity CO2 for decades, with total
volumes of more than 300 million tons of purified CO2 delivered
Enhanced oil recovery (EOR) is a process that involves injecting
large amounts of pressurized, relatively clean CO2 into
largely depleted oil wells. Some of the CO2 dissolves
into the remaining
trapped oil deposits, making the oil less viscous, while the
remaining CO2 applies pressure to force the oil towards
the surface. This
allows significantly improved recovery from older oil fields,
while trapping (at least for several decades) some of the CO2 used
into formations that were once
filled with oil.
The first company in the U.S. to capture and sell CO2 for
EOR is the Dakota
Gasification Company. They began selling the
waste CO2 from their coal gasification plant almost
13 years ago, and now sell/sequester more than 6000 metric tons/day.
Most of the impurities
are removed from the gasification products and sold profitably
after forming other compounds. The CO2 is piped over
300 km to southeastern Saskatchewan for EOR. The plant was
close to bankruptcy before they began separating and selling
it now generates significant revenue from the sale of CO2 and
other products. While the fields in Saskatchewan were the first,
is expanding rapidly.
Kinder Morgan delivers ~1.3 billion ft3/day (26 million metric
tons/year) over a 1300 mile pipeline network for EOR projects.
Denbury Resources operates nearly 1000 miles of CO2 pipeline,
flooding 13 fields from their first 4 “phases” of planned extraction,
with another 5 “phases” currently in the works. Denbury
is currently the most actively expanding EOR player. In March 2011,
they announced contracts for capturing another 315 million ft3/day – in
Mississippi and Wyoming. The company is also developing 2 additional
fields in 2011 and has purchased another field to be developed
in the near future.
Source, currently contracts over 340 million ft3/day (6.8
There are several dozen other companies that have EOR operations
and are building out CO2 pipelines ranging from small
companies with only one oilfield to Occidental Oil and Gas – the world’s
largest user of CO2. As the price of oil remains over
$100/bbl and new field discoveries continue to dwindle, we expect
the depleted fields will be outfitted with EOR technology – further
pushing development of a national CO2 pipeline network.
A conversation with the management of Dakota Gasification Company
in 2007 indicated that the price of dry, pressurized 96% pure
CO2 was then contracted for ~$35/ton, and beverage-grade
CO2 was then $75/ton. In a recent (May 11, 2011)
conversation with Ray Hattenbach, VP of Blue Strategies (a spinoff
which focuses on the capture, transportation, and utilization
of CO2) we learned that the typical contract for food-grade
the plant gate is now $20-$25/ton. This is most often contracted
from a biofuels plant, but sometimes from ammonia plants. (This
gives us a very good indication of the price of the primary separation
system combined with the cost of scrubbing the critical impurities
from the CO2 to the ppm level or lower.) In a separate
conversation with staff of Kinder Morgan CO2 company,
the opinion was that the CO2 would
likely be free, or
the emitters might pay us to take the CO2. In both
cases the expressed opinion was that the primary cost would is
cost – whether
it be by liquefaction and trucking, or by compression and piping.
This gives considerable weight in Windfuels plant siting to the
local CO2availability issue. Pipelines may cost as
much as $400,000/mile for short distances. If this cost were
amortized into a 20-year financing
then that would work out to $0.77/ton/mile for a 20 MW WindFuels
The cost for compression would add ~$1.50/ton.
The energy needed for compressing the source gas (from the final
scrubbing operation, perhaps using activated charcoal absorbers)
at ~2 atm to
the desired ~130 atm required for piping works out to ~0.9 MJ/kg-CO2.
So for a 20 MW WindFuels plant, so the initial CO2 compression
is ~250 kWh/ton CO2. Every 50 miles or so
of pipeline, there would need to be
a boost compressor that adds an additional ~$0.35/ton amortized
costs and requires an additional ~50 kWh/ton CO2.
This energy may cost ~$40/MWh, as it represents a constant use
rather than a variable demand that can be scheduled only for
off-peak hours (see our energy
market discussion to understand
our projections for very low priced off-peak electricity for
our electrolyzers). The CO2 will be delivered to the
WindFuels plant in a supercritical state at not less than 110
psi) pressure. With plentiful waste heat on site available, this
CO2 could be heated prior to expansion through a turbine,
allowing a highly efficient recovery of most of the compression
plus extremely efficient conversion of the added waste heat.
So as long as the distance is not too great and waste heat is
available, the actual energy penalty for compressing the gas
can be negative. (This is basically how a gas turbine power plant
Cost of CO2 Pipeline
MW Windfuels Plant
Cost of piping CO2 for 20 MW Windfuels
Obviously, the math works out differently for different sized
WindFuels plants, as the cost for laying pipe is typically constant.
amortized price/ton for piping the CO2 will change
dramatically as plant sizes increase or decrease.
It may be more cost effective to truck the liquid CO2 from
the emitter to the WindFuels plant for smaller WindFuels facilities.
This cost ~$40/ton in amortized equipment
costs, liquefaction, and loading/unloading expenses, amortized
CO2 storage, as well as ~$0.20/mile/ton-CO2 in
trucking costs and boil-off.
For very small WindFuels plants (2-5 MW), it will likely be sufficient
and more cost effective to simply contract with a national gas
company for delivery of the needed CO2. Their contract
prices for the food industry are usually between $75-$100/ton.
The CO2 Market
The largest source of high purity CO2 for at least the next
4 decades will likely be natural gas wells. Depending on local
requirements, delivered natural gas must have CO2 concentrations
below 1-2%. However, gas that is pumped out of the ground
naturally has CO2 concentrations between 3-30%, depending
on the source. The highest CO2 concentrations are found
in shale gas and in
coal bed methane. Government
regulations require that the CO2 must
be separated. Currently, the natural
is piped from the wellhead to a natural gas processing plant,
where it is cleaned to very low contaminate levels,
and the CO2 is separated out. This clean CO2 is
then often exhausted as waste, while the natural gas is piped into
homes for clean high-efficiency heat. But that leaves hundreds
of tons of moderate-pressure CO2 being exhausted
after separation and preliminary cleaning.
The CEO of one GTL company with substantial shale-gas holdings
expects this CO2 to become available before long at
negative price at the gate from these natural gas processing
siting near one of these plants could reduce the cost of CO2 by
$20-$40/ton compared to that offered at the plant gate of a biofuels
facility or ammonia plant, as the separation and preliminary
cleaning expenses are already spent.
The growing pipeline network for CO2 that is being
built by the EOR industry represents another possible source
EOR fields will eventually become too depleted for EOR. As
dry there will be tens of thousands of miles of CO2 pipeline
that has already been built, with their large-scale compressors
boost compressors that are already installed, and separation
units that are already operating at power plants and GTL or CTL
This infrastructure will have long since been paid for
through the extraction of oil at the original EOR fields, and
will still be used to keep the pipelines pressurized for current
projects. . The WindFuels plants would likely pay only for
the marginal compressor energy required along with a hook-up
charge and a few $/ton of profit to tap into one of these underutilized
pipelines for CO2 . Siting the WindFuels plant close
to a CO2 pipeline should provide EOR-grade CO2 at
$25-35/ton. This would
then requiring further cleaning, at an additional cost of ~$10-$20/ton.
As the effects of climate change are better understood and accepted
by government officials, it is likely that CO2 emissions
may be penalized in some way. Either via carbon emissions taxation
a carbon cap and trade system, exhausting CO2 may
become a financial burden in the future economy. Consequently,
a financial opportunity for those that can re-use or recycle
***Bio-fuel initiatives, both private and public are expected
to allow the ethanol industry to continue to grow. The Energy
and Security Act of 2007 calls for biofuel production targets
increase between 1 and 2 billion gallons/year for the next
12 years, and 3 billion gallons/year thereafter. . If this is
upheld, this would equate to a supply
of between 4 and 8 million additional tons of clean ($20-$25/ton)
CO2/year until 2020, and 12 million additional tons/year of
clean CO2 thenceforth. This CO2 alone
is sufficient for 80-240 new 20 MW
WindFuels plants, each producing 2.5 million gallons of gasoline,
diesel, jet fuel, and other chemicals per year. There are also
tens of millions of tons of CO2 from fertilizer
(ammonia) production, cement production, oil refining, GTL/CTL,
and plastic/chemical production facilities that have yet to
be tapped. WindFuels plants will generate a demand for this CO2,
bringing further investment opportunities for developing the
Once all current clean sources are exploited there is the post-combustion
CO2. It seems doubtful that any power plant built
after 2018 will be built without CCS capability. At that point,
be an oversupply of CO2 in the market keeping CO2 prices
low even as WindFuels
are ramped up to the terawatt scale. Market forces at
that point will decide the prices of CO2, which may
then be a traded physical commodity.
WindFuels deployment will begin in a world with a well-developed
infrastructure for CO2 separation, capture, and
delivery. There will be a vast and growing pipeline network
that any new WindFuels
plant can connect to, and a quickly growing fungible pool of
CO2 sources that will be eager to sell their CO2.
Universal Industrial Gases
Enhance Oil Recovery
Dakota Gasification Company
Storing CO2 with Enhanced Oil Recovery, DOE/NETL-402/1312/02-07-08
EIA, Energy in Brief: Biofuels.
|The large-scale commercial
today is mainly driven by demand from the beverage industry
and by oil companies for for advanced oil recovery.
all current clean sources are exploited there is the post-combustion
CO2. It is doubtful
that any power plant built after 2018 will be built without
CCS capability. At this point, there will be an oversupply
of CO2 in the market keeping prices low, until
WindFuels can be ramped up to the terawatt scale.
|Truck delivery of liquefied CO2 with limited
onsite storage is adequate for a WindFuels plant up to a
Expansion of WindFuels to a scale that rivals
that of the petrochemical industry will require developing
infrastructure to collect and distribute CO2 through
pipelines. This requirement is often cited as a challenge
to rapid scale-up of WindFuels, but the CO2 pipeline
grid is very quickly being developed for another market.
|An emerging national infrastructure is being built to support
EOR. Blue Source, a forward thinking company, has already
financed over 3500 miles of pipeline for CO2 distribution.
They have also already contracted the delivery of more than
300 million tons of CO2.