Carbon capture, utilisation and storage scenarios for the Gulf ... - Insead

Futures 44 (2012) 105–115

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Carbon capture, utilisation and storage scenarios for the Gulf Cooperation Council region: A Delphi-based foresight study Y.M. Al-Saleh *, G. Vidican, L. Natarajan, V.V. Theeyattuparampil Masdar Institute of Science and Technology, P.O. Box 54224, Abu Dhabi, United Arab Emirates

A R T I C L E I N F O

A B S T R A C T

Article history: Available online 9 September 2011

Capture, utilisation and storage of carbon dioxide resulting from combusting fossil fuels is gaining attention around the world as a means of addressing climate change. This paper aims to present a set of carbon capture, utilisation and storage (CCUS) scenarios for the hydrocarbon-rich Gulf Cooperation Council (GCC) region through to the year 2030, with the ultimate goal of stimulating constructive debate and discussion at both policy and academic levels. This will also be beneficial in terms of identifying future opportunities and threats so that better-informed policy action can be taken today. Four explorative scenarios have been developed using the Delphi technique, and they represent a joint creation of about one hundred highly-informed individuals from diverse professional backgrounds. ß 2011 Elsevier Ltd. All rights reserved.

Keywords: Carbon capture Carbon Utilisation and Storage Delphi study Foresight scenarios Gulf Cooperation Council

1. Introduction In recent times, ample revenues from exporting hydrocarbons have fuelled the apparent wealth of the members of the Gulf Cooperation Council (GCC), which is comprised of the Kingdom of Saudi Arabia (KSA), the Kingdom of Bahrain, United Arab Emirates (UAE) and the states of Kuwait, Oman and Qatar. It is notable that with ownership of approximately 40% of the world’s proven oil reserves and around 25% of natural gas reserves [1], the GCC countries contributed to approximately 8% of the world’s carbon dioxide (CO2) emissions in 2009 [2]. Over the past few years, countries in the GCC region (in particular the UAE, KSA and Qatar) have been identified as being the world’s largest per capita emitters of CO2 [3]. One of the most pressing challenges facing GCC policy-makers is the need to address a rapidly increasing demand for domestic energy – which is a direct result of swift growth in both population and industrial development – in a carbon constrained manner. To this end, the carbon capture, utilisation and storage (CCUS) technology appears to be a promising solution. The CCUS process involves the capture of CO2 from stationery sources, which is then transported via pipelines or ships for injection into either suitable rock formations (for long-term CO2 storage) or aging oilfields (to enhance the oil production, i.e. a process commonly referred to as Enhanced Oil Recovery ‘EOR’) [4]. At the moment, the GCC countries rely on natural gas in their EOR operations. By using CO2 instead, freed natural gas would then be of more value to these countries when it is either sold on international energy markets, or used as a ‘relatively clean’ fuel to meet rapidly increasing domestic energy demand. Despite the apparent benefits, CCUS activities are still in their infancy in the GCC region. For example, Qatar has recently started extensive research and development programmes, with the ultimate aim of deploying EOR-CO2 operations for the AlShaheen field. Similarly, the KSA has recently announced plans to carry out an EOR-CO2 demonstration project by the year 2013, whereby 40 million standard cubic feet will be injected per day into the Ghawar field [5]. Moreover, Abu Dhabi – the capital city of the UAE – has started the development of a large scale CCUS networks since 2007. The current plan is capture

* Corresponding author. Tel.: +971 2 8109198. E-mail address: [email protected] (Y.M. Al-Saleh). 0016-3287/$ – see front matter ß 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.futures.2011.09.002

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5 MTPA (i.e. Million Tonnes per Annum) by 2014–2017, and a total of 30 MTPA by 2030. It is perhaps worth noting here at the first EOR-CO2 pilot study was conducted at the Rumaitha field in the UAE, with the announced aim of understanding the behaviour of CO2 in the heterogeneous carbonate oil-bearing reservoirs before commencing full-scale development [6]. On the global front, four industrial-scale CCUS projects are currently in operation, namely Sleipner and Snøhvit projects (in Norway), Weyburn-Midale (in Canada) and Salah (in Algeria). Van Alphen et al. [7] documented several other projects which are still in the pilot phase, and acknowledged some of the challenges that are currently facing CCUS endeavours such as lack of financial viability and political support, non-existence of a supportive regulatory framework to oversee CCUS activities, in addition to technological challenges including energy penalties for industrial facilities when retro-fitted with CO2 capture technologies. Given the limited research on the prospects of CCUS in hydrocarbon-rich countries, this paper presents a set of plausible CCUS future development scenarios for the GGC region by means of the Delphi technique. The ultimate aims of this paper are twofold: (i) to provide food for thought and stimulate constructive discussion in both academic and policy-making circles on the factors perceived as being critical for promoting CCUS endeavours; (ii) to explore potential opportunities and challenges that could affect the future deployment of CCUS activities in the GCC region. In the next section, an overview of the Delphi methodology is provided. Following this, we discuss the design of this foresight-orientated study and the development of CCUS scenarios framework. We then explain the scenarios’ narratives (i.e. qualitative assumptions) and present their quantitative implications. The paper ends with suggestions on possible future research directions that emerge from this study. 2. Delphi-based foresight scenarios: an overview Foresight scenarios can be defined as holistic images of the future, or representations of possible alternative futures. Scenarios have been extensively used around the world as a planning tool to explore new grounds and generate new ideas, to challenge conventional views and focus on the most important uncertainties facing a particular subject of enquiry [8,9]. In the field of energy, a large number of scenarios have already been developed. Recent examples include those developed in the UK [10], Canada [11], the United States of America [12], KSA [13] and for the whole world [14,15]. Since energy infrastructure projects usually take a very long time to build, most energy scenarios tend to adopt a very long-term perspective, i.e. looking ahead at least twenty years. Developing such scenarios, which usually incorporate a narrative (i.e. storyline) element and a modelled quantitative section, involves both rational analysis and subjective judgment. In this regard, it is often recommended that the scenarios be developed by using interactive and participatory methods, where potential users of the scenarios contribute in their generation and evaluation [16]. One of the most commonly used methods to develop scenarios is known as the Delphi technique, which is a systematic and interactive method for eliciting and collating informed judgments on complex matters where precise knowledge is not available. The Delphi process usually involves circulating a series of sequential questionnaires (or Delphi rounds) to a panel of experts on the subject under consideration, with each Delphi round building on the results of the previous one [17–20]. There appear to be some concerns associated with the Delphi approach that are worth noting. First, there is lack of consensus regarding the ideal size of a Delphi panel. For example, Turoff [21] suggested a suitable panel size of between ten and fifty, whilst some scholars [e.g. 22,23] proposed an optimum panel size of twelve people, or a minimum of seven panellists [24]. The latter noted that whilst many pioneering studies used very small panels, some Delphi panels also comprised a few hundred and, in one case, several thousand people. However, assuming that ‘two heads are better than one’, one could presume that the more participants there are in the Delphi panel, the better [25]. Nonetheless, more emphasis should be placed upon the qualities, expertise and relevance of the Delphi panellists as opposed to their number, as the latter tend to be influenced by factors that are more related to the scope and resource constraints of the study in hand [26,27]. Clearly, since the outcome of the Delphi study is largely dependent upon the composition of the panel, it is essential that the expert panel be appropriately selected. Here, it is worth highlighting a second source of debate in the Delphi literature, specifically on the definition for the term ‘expert’. In this regard, Goodman [28] argued that ‘‘it would seem more appropriate to recruit individuals who have knowledge of a particular topic and who are consequently willing to engage upon it without the potentially misleading title of ‘expert’’’ (pg. 732). This is important since quite often, some Delphi panellists drop out during the study. Bearing in mind that no new experts should be invited to participate half-way through the study, an aim should be that attrition rates should be kept as low as possible [29,30]. Hence, it might be reasonable to suggest that the participants’ commitment is directly related to their interest, as well as to their potential involvement with the issue addressed in the Delphi study. In addition, one success factor for Delphi studies appears to be the heterogeneity of the panellists. It is believed that such diversity ensures a wide spectrum of opinions and judgements, thereby reducing potential sources of bias [31]. In addition, it is important to ensure the anonymity of the experts during the study in order to reduce the bias that could be introduced if the responses were influenced by peer pressure within the group [28]. 3. Delphi study design In this study, the Delphi panel was comprised of 100 highly informed members from a diverse range of backgrounds. The panel included professionals from industry and academia in addition to government officials. Therefore, the developed


107

Fig. 1. Organisations to which the Delphi panellists work for.

scenarios are not influenced by the assumptions or perspectives of any interest group or individuals (authors included). Whilst 60% of the participating experts physically work in the GCC region at present, most of the remaining 40% either worked in the past at the GCC region or have an in-depth knowledge of its energy industry. The criterion for inviting an expert to participate in this study was that he/she must either (i) be involved in the emerging CCUS sector in the GCC; or (ii) have a great deal of expertise and knowledge of the CCUS subject. Fig. 1 provides a snapshot for the organizations the Delphi panellists work for. Of course, as the panellists participated in this study in their personal capacity only, the views expressed do not reflect those of the organizations they work for. This Delphi study was conducted over a period of nine months and comprised three ‘formal’ rounds, during which the participating experts were consulted and asked to respond to sequential online questionnaires. In addition, there were times in which we engaged in ‘informal’ e-mail communications with some of the participants when the need arose for additional information or further elaboration of opinions. In the first round, the panellists were given a brief introduction to both the purpose of the study and the Delphi methodology. They were also asked to respond to a list of ‘scoping questions’, which included questions on whether the panellists believed that CCUS would have a major role to play in the GCC region by 2030. Other questions were devoted to identifying, ranking and justifying the significance of a range of factors when considering the prospects for CCUS in the GCC region. The second Delphi round reported on the results of the first round and – in addition – the panellists were encouraged to comment on, elaborate upon or modify their original opinions in a thought-provoking environment, where no view was perceived as being ‘right’ or ‘wrong’. During the second round, more detailed questions were posed regarding the potential deployment of CCUS in the GCC region. The responses collected during the first and second rounds helped to generate in-depth data and insights for developing the CCUS scenarios for the GCC region. The quantitative part of the CCUS scenarios has been compiled after an extensive review of the relevant literature as well as discussions with some of the highly informed participants. The third round configured participants’ informed views in the


108

Fig. 2. Delphi study design.

form of a prototype set of scenarios for CCUS development in the region, which were subsequently made available for panellists’ scrutiny. Throughout the study, the panellists were encouraged to express their informed opinions (e.g. whether they agreed or disagreed with the mainstream view reported) in a completely anonymous environment. Fig. 2 depicts the multi-stage process of this Delphi study, along with timeline and attrition (i.e. drop-out) rates associated with the different rounds. 4. Scenarios framework and narratives Most foresight scenario studies have adopted an approach in which a list of key factors is initially compiled. Next, two factors that are perceived by the participating experts as being both the most ‘significant’ and ‘uncertain’ factors are pointed out. These factors (or variables) then represent the main axis along which the four scenarios are defined [13]. In this Delphi study, the two factors that have been identified as being both highly significant and uncertain when considering the

Fig. 3. Analytical framework for the CCUS scenarios.


109

Table 1 Features of four CCUS scenarios for the GCC region until the year 2030.

Financial incentives/mechanisms Business environment Consumer subsidies for energy and water Environmental awareness Action on environmental protection Cost of CO2 capture CCUS deployment CO2 reduction target by 2030 Storage/EOR percentage Regional/ international collaboration/partnerships CCUS-related knowledge base and expertise Ownership and liability issues Oil prices (either due to ‘perceived’ availability of oil, political stability or energy supply and demand-related factors) Natural gas price Public perception towards CCUS

Business as Usual

Policy Pull

Technology Push

Game-changer

Absent Not attractive High Negligible Negligible High Negligible 0 N/A Weak Weak A concern Moderate

Present Attractive Low High High High Moderate 200 MTPA 60/40 Fair Weak Not a concern High

Nearly absent Neutral High Low Low Low Moderate 200 MTPA 40/60 Fair Strong A concern Moderate

Present Attractive Low High High Low High 400 MTPA 60/40 Strong Strong Not a concern High

Moderate Neutral

High Positive

Moderate Neutral

High Positive

prospects for CCUS at the GCC region are: (i) regulatory and policy environment; (ii) cost of CO2 capture (which tend to amount to an approximate 80% of the total cost of the CCUS operation [32]). Fig. 3 demonstrates an analytical framework, based on these findings, for developing four CCUS scenarios (i.e. alternative images of the future) for the GCC region. As shown in Fig. 3, the ‘Business as Usual’ scenario describes a continuation of current trends in terms of a high cost for CCUS and an unattractive regulatory and policy regime. On the other hand, the most optimistic scenario is the ‘Gamechanger’ which envisions a future in which there exists a positive policy regime that supports the widespread deployment of CCUS across the GCC region, combined with a low cost of CCUS technology. The scenarios in between these two extremes are ‘Policy Pull’ and ‘Technology Push’. The ‘Policy Pull’ scenario represents a future state where supportive policy incentives, and a supportive regulatory regime, are in place but the costs are still high. The ‘Technology Push’ scenario depicts a future where policy incentives are absent but CCUS costs have reduced considerably over the years, mainly due to technological advances. Here, it is important to recognise that, as noted by [13], developing any set of foresight scenarios would involve many assumptions and an unavoidable element of simplification. For example, scenario-building implies the assumption that some factors remain constant, and that other factors develop over time consistently in the direction of the chosen variables. In reality, this would not precisely be the case as each influencing factor (either a driver or barrier) is likely to show differing intensities and direction over this long period of time. Such simplification should, therefore, be borne in mind when examining the implications of the different scenarios, but should not detract from the utility of the analysis. Table 1 shows the distinguishing features of the different scenarios in more detail, reflecting various assumptions about how current trends and issues will play out through to the year 2030. As shown in Table 1, since the ‘Business as Usual’ scenario describes a continuation of current trends (e.g. absence of financial incentives, weak environmental awareness, lack of urgency to address environmental issues, weak regional cooperation and dispassionate public attitudes towards CCUS), no targets have been set to reduce CO2 emissions through CCUS operations. In the ‘Game-changer’, the participating experts assumed a rather optimistic CO2 emissions reduction target of 400 MTPA for the whole region. For the scenarios in between (i.e. ‘Policy Pull’ and ‘Technology Push’), it is assumed that a less optimistic target of 200 MTPA is to be achieved by the year 2030. However, for the ‘Policy Pull’ scenario, because of the assumed more environmental awareness and urgency to tackle climate change, more CO2 is to be used for storage than for EOR purposes. Here, it is perhaps worth noting that the only actual CCUS-related target announced within the GCC region appears to be the UAE’s intention to capture 30 MTPA of CO2 by the year 2030 [33]. Although these assumptions appear to be simplistic, they are considered by the overwhelming majority of the participating experts as being equally plausible future pathways that could take place from today to 2030. It should be noted, however, that since the future will most likely be a combination of various elements of the four scenarios, a comparison of scenarios in terms of likelihood is not relevant. Developing foresight-scenarios, based on the most significant and uncertain factors, makes it possible to identify extreme cases and then explore the full range of uncertainties deriving from the key factors under consideration. Moreover, it is likely that a number of influential factors (other than the two considered) could emerge over time and they could pull the fate of CCUS development in the GCC region in entirely different directions. That is why it is important to bear in mind that the developed scenarios do not represent either a prediction or a wish to be attained, as the benefit of developing contrasting foresight scenarios lies in the insight gained from highlighting possible choices and examining their implications [34,15]. 5. Quantitative implications Making only qualitative scenarios might be a useful exercise, but that alone would not convince policy makers. Some panellists suggested that, given the magnitude of uncertainty involved, an attempt to quantify future implications through to


110

Business as Usual Scenario Policy Pull & Technology Push Scenarios (200 MTPA reducon by 2030) Game-changer Scenario (400 MTPA reducon by 2030)

Annual CO2 Emissions (MTPA)

2500 2300 2100 1900 1700 1500 1300 1100 900 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

700

Fig. 4. Forecasts of CO2 reduction levels for the four CCUS scenarios.

the year 2030 is equivalent to entering what has been described as a ‘‘a bit of a mine field’’. After discussing this issue with the participating experts, the vast majority agreed that the best way forward is to make some assumptions and try to work out some quantitative values in order to add a measure of realism to the CCUS scenarios. This will allow decision makers to somehow quantify and appreciate the effect of their decisions taken today over the next 20 years. More specifically, it was decided to estimate the potential costs and benefits associated with achieving the CO2 emission reduction targets for the year 2030, which were assumed for the different CCUS scenarios. Before doing so, however, one needs to establish an understanding of the magnitude of the current CO2 emissions level in the GCC region. According to data provided by the Energy Information Administration ‘EIA’ [2], total CO2 emissions at GCC level are currently around 940 MTPA of CO2. The EIA data also indicates that over the past 5 years, CO2 emissions have grown – on average – by 5% per annum. In the ‘Business as Usual’ scenario, it was assumed that the CO2 emissions will continue to grow by 5% per annum until the year 2030. For the ‘Game-changer’ scenario, as mentioned earlier, a CO2 reduction target of 400 MTPA is to be achieved, whilst a target of 200 MTPA has been set for the ‘Policy Pull’ and ‘Technology Push’ scenario’. Fig. 4 demonstrates the annual reduction levels of CO2 emissions for the different scenarios. According this forecast, it is estimated that the total amount of CO2 to be emitted until the year 2030 for the ‘Business as Usual’ scenario is around 33.6

Table 2 Assumed breakdown of EOR/storage for the different CCUS scenarios (in MTPA of CO2). Policy Pull

Technology Push EOR

Game-changer

EOR

Storage

Storage

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80

0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 102 108 114 120

0 6 12 18 24 30 36 42 48 54 60 66 72 78 84 90 96 102 108 114 120

0 4 8 12 16 20 24 28 32 36 40 44 48 52 56 60 64 68 72 76 80

EOR 0 8 16 24 32 40 48 56 64 72 80 88 96 104 112 120 128 136 144 152 160

Storage 0 12 24 36 48 60 72 84 96 108 120 132 144 156 168 180 192 204 216 228 240

Total

844

1266

1266

844

1680

2520


111

EIA's Natural Gas Price Forecasts Natural Gas Price (USD per thousand cubic feet)

8.0 7.5 7.0 6.5 6.0

Low Price Case

5.5

High Price Case

5.0 4.5 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

4.0

Fig. 5. Natural gas price forecasts until the year 2030 (Based on [2]).

GT. In the ‘Policy Pull’ and ‘Technology Push’ scenarios the total is estimated to be 31.4 GT, whilst for the ‘Game-changer’ 29.3 GT of CO2 is estimated to be emitted until the year 2030. As assumed in Table 1, the CO2 captured will be used for both EOR and storage purposes at varying ratios in the different CCUS scenarios.1 Table 2 illustrates the EOR/storage annual split as per the suggestion of the Delphi participants. Based on the previous assumptions, we decided that for each CO2 reduction scenario we will estimate the following: The potential savings of natural gas that would have otherwise been used for EOR operations (expressed in tonnes of natural gas and their respective monetary value). The magnitude of potential enhanced-oil production through EOR-CO2 (expressed in barrels of oil and their respective monetary value). Total CCUS costs associated with each scenario.

5.1. The potential savings of natural gas Fig. 5 shows price forecasts for the natural gas provided by the EIA [35]. Assuming these forecasts become a reality, and that every 1.2 tonnes of CO2 will replace the need for 1 tonnes of natural gas in EOR operations,2 Table 3 estimates for each CCUS scenario: (i) the amount of natural gas that could be freed; and (ii) the monetary value of the potentially freed natural gas, expressed in nominal terms. It should be noted here that, as indicated earlier in Table 1, the ‘Policy Pull’ and ‘Gamechanger’ scenarios assume higher prices for natural gas. 5.2. The amount of potential enhanced-oil production According to the IEA [36], using CO2 in EOR can produce an additional 0.1–0.5 tonnes of oil per tonnes of CO2 injected. Since a metric tonnes of oil contains around seven barrels of oil, it is estimated that injecting a tonnes of CO2 into an oil field can produce an additional 0.7–3.5 barrels of oil. It should, however, be borne in mind that such an estimate varies considerably according to both the oil field’s specifics and the EOR technique used. In the case of the UAE, it has been reported in the press that every tonnes of CO2 injected could lead to an extra 2.5–3 barrels of oil [37]. For the purpose of this study, the Delphi panellists assume that EOR-CO2 can produce an additional 2.5 barrels of oil per tonnes of CO2 injected. As mentioned earlier in Table 1, oil prices are considered to be ‘moderate’ in the Business as Usual and Technology Push scenarios, and ‘high’ in the Policy Pull and Game-changer scenarios. Using the price projections of the EIA [35] for the ‘reference’ and ‘high oil price’ cases, Table 4 illustrates the amount and respective monetary value of the potential additionally produced oil, expressed in nominal terms.3

1 There seems to be no publicly available data on the exact geological storage potential of CO2 in the GCC region. However, for the whole Midde East region, the potential CO2 storage in onshore oil and gas fields is estimated to be between 105 Gt and 1000 Gt, whilst for the offshore fields it is estimated to be in the range 75–200 Gt [33]. 2 According to a highly informed study participant, the replacement ratio between CO2 and natural gas depends on the actual composition of the gas that will be replaced by CO2. At atmospheric conditions, the ratio is 1.4 tonnes of CO2 for 1 tonnes of Methane (i.e. lean gas), and the ratio gets closer to 1 the richer the gas is. For a gas composition of approximately 15% liquids, the ratio is about 1.2 tonnes of CO2 for 1 tonnes of gas. Since one must compare fluids of similar miscible effects (and bearing in mind that the gas that is currently being used for EOR purposes is rich, i.e. not lean gas), it would be fair to assume a gas to CO2 replacement ratio of 1:1.2. 3 It should be recognized that future prices of oil and natural gas represent one of the largest areas of uncertainty as they could be impacted upon by many unforeseen factors that can never be predicted with any degree of confidence.


112

Table 3 The potential savings of natural gas for the different CCUS scenarios. Policy Pull Amount (metric tonnes)

Technology Push Value (million USD)

Game-changer

Amount (metric tonnes)

Value (million USD)

Amount (metric tonnes)

Value (million USD)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

0 3 7 10 13 17 20 23 27 30 33 37 40 43 47 50 53 57 60 63 67

0 893 1916 2922 3896 5000 6039 7159 8182 9204 10,065 10,893 12,078 13,506 14,772 16,339 17,662 19,042 20,746 22,516 24,350

0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100

0 1339 2727 3653 5065 6940 8474 10,057 11,493 13,149 14,610 16,339 18,116 19,784 21,477 23,193 24,934 26,907 30,243 32,386 35,064

0 7 13 20 27 33 40 47 53 60 67 73 80 87 93 100 107 113 120 127 133

0 1786 3831 5844 7792 10,000 12,078 14,318 16,363 18,409 20,129 21,785 24,155 27,012 29,545 32,678 35,324 38,083 41,492 45,031 48,700

Total

700

227,177

1050

325,949

1400

454,355

Note: It is usually assumed that 1 tonnes of natural gas would occupy a volume of 48,700 cubic feet.

Table 4 The potential savings of enhanced oil-production for the different CCUS scenarios. Policy Pull Amount (million bbl)

Technology Push Value (million USD)

Amount (million bbl)

Game-changer Value (million USD)

Amount (million bbl)

Value (million USD)

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

0 10 20 30 40 50 60 70 80 90 100 110 120 130 140 150 160 170 180 190 200

0 650 1700 3000 4800 7250 9300 11,900 14,400 16,650 18,600 20,570 22,680 24,700 26,880 29,400 31,680 34,000 36,000 38,950 42,000

0 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 255 270 285 300

0 975 2250 3600 5400 7125 8820 10,500 12,360 14,175 16,200 18,150 19,980 21,840 23,730 25,875 27,840 30,090 32,400 34,770 37,500

0 20 40 60 80 100 120 140 160 180 200 220 240 260 280 300 320 340 360 380 400

0 1300 3400 6000 9600 14,500 18,600 23,800 28,800 33,300 37,200 41,140 45,360 49,400 53,760 58,800 63,360 68,000 72,000 77,900 84,000

Total

2110

395,110

3165

353,580

4200

790,220

5.3. Total CCUS costs associated with each scenario Various estimates for current costs (and future cost forecasts) of CCUS plants have been obtained from the literature (some of these estimates are listed in Table 5). It should be noted, however, that a direct comparison of ‘current’ CCUS costs is at best debatable and at worst misleading because most of these studies make different assumptions, or simply do not disclose their assumptions, with regard to project-specific factors including:


113

Table 5 Estimates of costs of CCUS ($2011/tCO2 avoided). Study

Current costs

Future costs (2030)

Al-Juaied and Whitmore [38] Boston Consulting Group [39] IEA [36] McKinsey and Company [40]

$100–150/tCO2 $40–90/tCO2 $30–90/tCO2 (but could be up to $160/t) $80–115/tCO2

$30–50/tCO2 $25–45/tCO2 $25/tCO2 $40–60/tCO2

Notes: Estimates rounded to nearest $5; some of the abovementioned studies do not state the basis of their current estimates and here we therefore assume all cost estimates to be $2011; an exchange rate of 1.3 USD/EUR is assumed.

Table 6 Assumed CCUS costs for the four scenarios.

Total CCUS cost (USD/ tCO2 avoided) Justification

Current in 2030

Business as Usual

Policy Pull

Technology Push

Game-changer

$150 $130 Only a very limited cost reduction to be achieved by 2030. The reasons behind this reduction include that: (i) only a few CCUS projects have been executed in some parts of the world; (ii) scientific advances in other fields that could have an impact on the cost of CCUS, e.g. material science

$150 $90 Whilst the cost of CO2 capture remains high, various policy mechanisms and financial incentives have been implemented in this scenario

$150 $70 This scenario assumes a reduction of the cost of CO2 capture process due to both CCUS technological advances and economies of scale

$150 $30 This scenario assumes both low costs of CO2 capture and having in place a favourable regulatory and policy regime

Table 7 Total costs associated with the different scenarios (expressed in million USD). Policy Pull

Technology Push

Game-changer

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

0 1462 1425 1389 1354 1320 1287 1254 1223 1192 1162 1133 1104 1076 1049 1023 997 972 947 923 900

0 1444 1390 1338 1288 1240 1193 1149 1106 1064 1025 986 950 914 880 847 815 785 755 727 700

0 2768 2554 2357 2174 2006 1851 1708 1576 1454 1342 1238 1142 1054 972 897 828 764 705 650 600

Total

23,193

20,596

28,640

(i) (ii) (iii) (iv) (v)

The type of capture technology to be employed. The purity of the CO2 and the ease of its capture which in turn depends on the specifics of the CO2 source. The scale and design of the CCUS facility. The distance and/or volumes involved in CO2 transport. The type of CO2 storage (e.g. verifying, inspecting and monitoring an offshore storage facility is likely to be more expensive than for the case of an onshore one). (vi) Whether EOR via CO2 is considered in the calculations. (vii) The scope of cost estimates, e.g. whether transport and storage costs are included in the estimates. (viii) Financial parameters assumed in the calculations, such as prices and rates of returns and inflation.

114


Table 8 Potential earnings and costs associated with the different scenarios (in million USD).

Total potential earnings Total costs

Policy Pull

Technology Push

Game-changer

622,287 23,193

679,529 20,596

1,244,575 28,640

The situation is even vaguer when considering the anticipated ‘cost forecasts’ for CCUS, as the absence of historical data makes it almost impossible to provide scientific-orientated forecasts, e.g. ones based on a learning curve approach that anticipates future cost reductions according to past history and cumulative technology production over time. One certain thing is that when considering the case of the GCC countries (as is the case with most developing nations), it should be noted that since the GCC region will most likely continue to depend on imported CCUS technologies as opposed to locally produced equipment, investment costs are expected to be higher than those reported in the literature. For the purpose of our study, it is assumed that the current price of abated CO2 via CCUS (i.e. the total cost of the whole CCUS operation from the project developer’s perspective) is $150/tCO2 and this is destined to gradually decrease to different levels in the four scenarios through to the year 2030 (as shown in Table 6). In addition, the cost of injecting CO2 is assumed to be the same whether it is used for EOR or storage purposes. Based on these cost assumptions, Table 7 illustrates the total costs that could be associated with each CCUS scenario. To sum up, the following table (Table 8) compares the potential CCUS costs as well as the total potential earnings (from EOR operations) that could be associated with the different scenarios. Despite the apparent attractiveness, it should be remembered that the above results are based on simplified calculations and long-term forecasts that could be subject to a substantial degree of error and hence are not intended to provide a definite guide to investment decisions. 6. Concluding remarks In retrospect, the oil-rich GCC countries have a unique opportunity to both reduce their CO2 emission levels and address the issue of oilfield depletion. The advantages of freeing natural gas through replacing it with CO2 – along with the potential revenues that could be generated from increased oil production through EOR-CO2 – are estimated to be enormous. It is evident that the various CCUS scenarios presented herewith indicate that the GCC countries (and indeed the whole world) stand to benefit by shifting away from the ‘Business as Usual’ scenario. Our study confirms that the potential benefits (economic and otherwise) can easily outweigh the costs associated with constructing and operating the CCUS plants. More specifically, it is estimated that the net potential earnings (expressed in million USD) are around 600,000 (Policy Pull scenario); 660,000 (Technology Push scenario) and 1,200,000 (Game-changer scenario). In addition, as suggested by the Delphi panellists, embarking upon CCUS projects could bring to the GCC region a suite of other benefits (the value of which is harder to estimate), such as potential job creation and an opportunity to improve the environmental profiles of the GCC countries, which currently have the unenviable tag of being the world’s largest per capita emitters of CO2. In the long run, it is believed that CCUS offers the GCC region an attractive transition opportunity to achieve sustainable development for this currently hydrocarbon-endowed region. On another level, the study findings suggest that successful deployment of CCUS in the GCC region is largely dependent upon the cost of CO2 capture and the existence of a supportive regulatory and policy environment. Indeed, a favourable regulatory framework to guide the CCUS-based activities in the GCC countries can positively impact on the growth of CCUS projects. In addition, sufficient financial support in the form of short-term funding and subsidies can bridge the gap for reaching market competitiveness. The absence of both of these critical factors has discouraged private firms and investors from participating in these activities. Moreover, regional and international collaboration has been identified as a crucial means of sharing the knowledge, expertise, costs, CO2 storage and risks associated with CCUS activities. Given that the subject of CCUS is under-researched within the GCC region, it is hoped that the developed CCUS scenarios will help in terms of stimulating both constructive debate and action in policy-making circles. With regard to future directions in academia, there seems to be an urgent need for further policy-orientated work in order to define suitable policy and regulatory packages for possible pathways towards CCUS development. As a final note, although this Delphi study has been conducted in an anonymous setting – and given the relatively small community of professionals currently working at the emerging CCUS field – it is likely that most of the participants are already acquainted to each other. One would expect, therefore, that discussion on the promising outcomes of this pioneering study is likely to spread quickly among their peers. After all, the strong engagement of the participating CCUS experts that has been experienced when conducting this Delphi exercise reflects keenness on their part towards collaborations and knowledge-sharing endeavours. Acknowledgements The authors would like to express their sincere gratitude to the 100 Delphi panellists for their invaluable contributions to the completion of this study. Thanks are also extended to the anonymous reviewers for their much-appreciated feedback on an earlier version of this paper.


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