SaurEnergy Explains – CCS and CCUS: Promise or Pipe Dream in the Oil and Gas Industry?

Oil and gas companies have been leaders in CCUS (Carbon Capture, Utilisation & Storage) development. They operate five of the eight dedicated CO2 storage projects in operation and most of the existing CO2 pipelines. It’s marketed that the practice of capturing and storing carbon dioxide, rather than tackling the causes of the emissions themselves, could allow oil and gas companies to minimize their environmental impact without having to cut back on their operation.

The year 2022 was a strong year for CCUS. Over 140 new projects were announced, increasing planned storage capacity by 80 per cent, and capture capacity by 30 per cent. CCUS projects were announced in seven additional countries, in central and southern Europe, the Middle East, and Southeast Asia, bringing the total number of countries with plans to develop CCUS to 45, as per IEA data.

Oil and Gas industry majors have set their trust in and are embracing CCS and CCUS technologies as integral components of their strategies to reduce emissions and achieve carbon neutrality  by 2035, 2040 or whatever year they have picked in the future.

While the concept of carbon capture isn’t new, the process is starting to expand on an industrial scale now. While annual CCUS investment has consistently accounted for less than 0.5 per cent of global investment in clean energy and efficiency technologies, there are now projects at “advanced stages of planning” representing more than $27bn in total investment, a clear sign that the world’s energy leaders have begun to embrace CCUS. Or more importantly, matching claims with money, as we will see.

Carbon Capture Crucial for Oil & Gas

Some of the largest oil and gas firms have plans to go carbon neutral by around mid of the century. The oil and gas industry faces something of an existential question about minimising considerable environmental impacts, as its work involves pumping fossil fuels out of the Earth. Thus, many of these firms are counting on CCS or CCUS to achieve their carbon neutrality goals.

A long list of energy industry leaders has lined up to use and provide carbon capture services. Among them are BP, Exxon Mobil, Saudi Aramco, Shell, and TotalEnergies. They have been pouring billions of dollars into developing a carbon capture market estimated at a modest $2 billion in 2021.

With its worldwide database for CCUS projects, IEA reveals all CO2 capture, transport, storage, and utilisation projects that have been commissioned since the 1970s, accounting for an announced capacity of more than 100 000 tonnes per year (or 1000 t per year for direct air capture facilities), as of February 2023. Many Oil and Gas majors have announced their carbon-neutrality goals as most of these depend on the carbon storage technologies to restrict emission.

BP

BP set a net zero target in February 2020, as the firm hopes to go carbon neutral by 2050. The London-based firm plans to reduce 415 million tonnes of absolute emissions from its operations and the carbon content of its upstream production, known as Scope 1 and 2 emissions respectively. In addition, the firm also commits to cut Scope 3 emissions – in half by 2050.

BP looks to bring down its share of emissions with the help of CCS technology. With its Northern Endurance Partnership (NEP), the firm planned to build infrastructure to safely capture, transport and store millions of tonnes of CO₂ offshore in the North Sea.
The firm has a Carbon Capture and Storage project in the Northeast of England that can remove up to 23 million tonnes of CO₂ emissions a year in 2035. BP is a lead operator of NZT Power, a gas-fired power station with carbon capture technology, trapping up to two million tonnes of CO2 annually. H2Teesside, another ECC project, aims to be one of the UK’s largest blue hydrogen production facilities and has plans to capture and store up to 2 million tonnes of CO₂ a year.

Shell

Shell looks to become a net-zero emissions business by 2050 as well. The Anglo-Dutch oil giant aims to eliminate all Scope 1 and 2 emissions by 2050 “at the latest” and to reduce Scope 3 emissions by 65 per cent by 2050, with an interim target of a 30 per cent reduction by 2035.

Shell has planned carbon capture projects in the Netherlands and the UK. The firm seeks to have access to an additional 25 million tonnes a year of carbon capture and storage (CCS) capacity by 2035 – equal to 25 CCS facilities the size of its Quest site in Canada.

TotalEnergies

In 2022, the French oil major, TotalEnergies, published an outline of what its businesses might look like when the firm becomes a carbon-neutral energy company by 2050. The firm is targeting net zero across all of its operations and products – encompassing Scope 1, 2 and 3 emissions – by 2050 or sooner. Notably, the industrial mammoth has been an active investor in the clean energy spectrum.

TotalEnergies aims to eliminate the equivalent of 100 Mt/year of CO2 by developing carbon storage that would store 50 to 100 Mt/year of CO2. The net-zero strategy is heavily dependent on carbon capture technology. By 2030, the firm has a target to develop a CO2 storage capacity of over 10 million tons per year. To achieve this, the firm is building on flagship projects, particularly in the North Sea.

Saudi Aramco

Saudi Aramco, the world’s biggest exporter of oil, set a goal of reaching net-zero Scope 1 and Scope 2 greenhouse gas emissions across wholly-owned operated assets by 2050. CCS forms an important part of its plans with the Saudi Arab major aiming to co-develop a 9mn t/y carbon capture and storage (CCS) hub at the Jubail industrial city by 2027, with the company owning a share for 6mn t/y of the total.

ExxonMobil

Last year, ExxonMobil announced its ambition to achieve net zero greenhouse gas emissions for operated assets by 2050. The firm is considering CCS technology to reach its goal of neutrality. ExxonMobil proposed a Houston hub for CCS in April 2021 to capture up to 50mn MT of CO2 by 2030 and 100 MT by 2040 and urged participation from the industry and government to raise USD 100 billion to develop the required infrastructure. Following this move, 14 global companies – including Calpine, Chevron, Dow, ExxonMobil, INEOS, Linde, LyondellBasell, Marathon Petroleum, NRG Energy, Phillips 66, Valero, Shell, Air Liquide, and BASF – collaborated on the Houston CCS hub project.

A Marketing Gimmick?

The majority of carbon capture and storage projects in the world right now are undertaken by oil and gas companies, hoping to create a veil of carbon-friendly operations. The truth is CCS may not be as environmentally friendly as the oil companies are making it seem.

The carbon-neutral tag is for capturing the 10-15 per cent of Scope 1 and Scope 2 emissions during gas production or by purchasing carbon offsets. Yet nearly 90 per cent of emissions from oil and gas do not occur during production. Instead, they occur when the product is used, that is, burnt. These emissions are known as Scope 3.

Notably, the use of CCUS technologies can not be considered reliable, practical or anything close to viable just yet. Several studies point out that these technologies are not fully effective in capturing all forms of emissions, like Scope 3 emissions which contribute to a major chunk of overall carbon emissions. In addition, existing projects aren’t functioning as expected, according to a study by the Institute for Energy Economics and Financial Analysis (IEEFA). Furthermore, the report states that Around 80–90% of all captured carbon in the gas sector is used for enhanced oil recovery (EOR), which itself leads to more CO2 emissions.

This EOR leads to CO2 emissions directly and indirectly – directly when the emissions are released from the fuel used to compress and pump CO2 deep in the ground, and indirectly when the emissions are released from the burning of hydrocarbon that could not have come out without EOR (Scope 3 emissions). Today, more than 70 per cent of carbon capture projects are EOR projects, resulting in increased emissions.

Moreover, CCS projects have major financial and technological risks. About 90 per cent of the proposed CCS capacity in the power sector failed at the implementation stage or was suspended early. This includes Petra Nova and the Kemper coal gasification power plant in the US. It is also seen that most projects have failed to operate at their theoretically designed capturing rates. As a result, the 90 per cent emission reduction target generally claimed by the industry has been unreachable in practice.

Another little talked-about challenge is finding suitable storage sites and keeping them there. The trapped CO2 underground needs monitoring for centuries to ensure it does not come back into the atmosphere.

While the oil and gas companies can pretend taking carbon-neutral approach, the technology is still too complex to make it impactful in the long run. The use of CCS or CCUS becomes more tricky considering that the majority of companies in the sector depend on these technologies to meet their net-zero goals. In a scenario where these projects fail to meet intended targets, the result may be a lot of investment without much help toward emission reductions.

Thus, quite simply, if you hear or see a firm making tall promises of net zero, with a significant part of that promise resting on the use of using CCS/CCUS technologies in the future sometime, discount it with the scepticism it deserves. And worry if you see too many firms making such claims, because that will provide the relative security of a collective failure to all these firms who are making glib promises in a technology that is some way off from being proven on an issue as critical as the Earth’s future.