Clara Nwachukwu
Depending on the strategy adopted, the use of carbon capture and storage (CCS) may cut more than a quarter of overall carbon emissions of liquefied natural gas (LNG) projects, according to Wood Mackenzie (WoodMac).
The research agency notes that since LNG is one of the most emissions-intensive upstream resource themes in the energy sector, the use of CCS may have a material impact on its carbon emissions.
Indeed, CCS is identified as an important strategy to reduce global CO2 emissions. According to the Intergovernmental Panel on Climate Change (IPCC), global greenhouse gas (GHG) emissions must be reduced by 50 to 80% by 2050, to avoid dramatic consequences of global warming.
UK-based, TWI also believes the CCS technology is able to capture up to 90% of CO2 emissions that are released by burning fossil fuels during electricity generation and industrial processes such as steel or cement production.
In a statement yesterday (Wednesday) obtained by Sustainable Economy, WoodMac argues that with pressure increasing on LNG players to cut emissions, significant steps are required to decarbonize portfolios.
Senior Analyst at Wood Mackenzie, Daniel Toleman, was quoted as saying: “The main options for reducing LNG emissions include CCS, carbon offsets, methane leakage reduction, electrification, and the use of renewables and batteries. CCS can have a material impact on reducing emissions of LNG projects. Depending on the CCS strategy adopted, we estimate that more than 25% of carbon emissions can be removed.”
Toleman added that “Around 40% of the total scope 1 and 2 LNG emissions are from the process of gas liquefaction. That said, not all LNG projects are created equal from an emissions perspective. Each plant has a unique emissions profile and hence the best way to reduce the carbon footprint of an Arctic LNG plant may vary significantly from one in Qatar or Australia.”
He however said the good news is that “LNG players are well placed to lead the CCS charge, with strong balance sheets, operational capability and reservoir expertise. There are also economic incentives for pursuing CCS as reducing emissions mitigates against a carbon tax, helps future-proof the asset and can offer pricing upside.”
CCS will play a significant role in reducing emissions from LNG projects as long as country-specific legislation progresses and costs can be brought down.
WoodMac also identified two main approaches to deploying CCS at LNG projects: capturing carbon dioxide (CO2) from the reservoir, and capturing post-combustion CO2.
It further listed various factors that can impact CCS project costs to include proximity of CO2 source to the injection site, onshore versus an offshore injection, project economies of scale, and availability of existing infrastructure for repurposing.
It explained that the CO2 capture approach involves capturing reservoir CO2 and holds significant cost advantages over the post-combustion capture approach versus.
Irrespective of whether reservoir CO2 is sequestered or vented, all LNG projects must remove CO2 from the feed-gas stream before liquefaction to prevent the CO2 from freezing and blocking processes, WoodMac advised.
“As such, the acid gas removal unit (AGRU) used to capture CO2 does not incur additional costs. Reservoir CCS can reduce the overall intensity of LNG projects by 25%, and in some cases up to 50%.”
In contrast, the agency said the post-combustion CCS, which involves capturing CO2 from the LNG flue gas stream, is more expensive compared to reservoir CCS. However, there are cost benefits of adding post-combustion CCS to a new-build LNG facility, due to design and location synergies.
It added that Tax credits or other policy incentives may also help improve the economics of post-combustion CCS. For example, in the US, new-build post-combustion projects can become very competitive as well with the application of the 45Q tax credit for carbon sequestration.
Toleman therefore concluded that “CCS will play a significant role in reducing emissions from LNG projects as long as country-specific legislation progresses and costs can be brought down. Low-cost reservoir CCS projects are likely to be the first to move ahead. Look out for projects in Qatar, Australia, Malaysia, and Timor Leste. LNG players in the US, who benefit from the 45Q tax credit, will likely be the first LNG players to take post-combustion CCS forward.”
