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Carbon Capture and Storage

CCS Supply Chain Capacity Constraints

Chris Hendriks; Pieter van Breevoort, Joris Koornneef and Alexander Hulsman, Paul Noothout, Erika de Visser (Ecofys), Mohammed Abuzahra, John Gale (IEAGHG)

23 May 2011

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“Prediction is very difficult, especially about the future.“

Attributed to Niels Bohr / Mark Twain

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Consequences of supply constraints

Delayed deployment Higher prices

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Examples of supply chain constraints

Solar panel price increase in 2006-2008 Pigment colour (Japan) Rare Earth element (e.g. neodymium) Coal-fired power plants (China)

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The ETP BLUE Map Scenario

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Projects in the CCS Roadmap by 2050

Total number of installations is 3,400

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IEA Roadmap - developments of CCS in the power sector

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Development of coal-fired power capacity in the BLUE Map scenario

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Volume of oil/NG versus CO2

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Methodology

Identify ‘long-list’ main components (equipment & materials and service & skills) required for CCS operations Restricted to currently known main technologies

Construct ‘short list’ of items with potential constraints Experts interviews, literature

Assess the required capacity needed per component Construction of ‘indicators’ to assess constraints

Quantify and qualify the indicators Provide overall risk assessment

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Five indicators

Annual market growth Supplier concentration Technological maturity Resource availability Exogenous demand

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Indicators and values

Annual market growth

Supplier concentration

Technological maturity

Resource availability

Exogenous demand

<1% Open market

Commercially proven High Driver

1% - 5% Oligopoly Demonstration phase Medium Neutral

>5% Monopoly R&D phase Low Barrier

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Visualisation: Spider Diagram

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Spider Diagram (2)

Technological maturityCommercially

Demonstration phase

R&D phase

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Spider Diagram (3)

Annual market growth for CCS

Supplier concentration

Technological maturityExogenous demand

Resource availability >5% annual growth

1-5% annual

<1% annual growth

Commercially

Demonstration phase

R&D phase

Abundant

Medium

Low

Barrier

Neutra

Driver

Monopoly

Oligopol

Open

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Interpretation of the indicators

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Assessment for solvents

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1

2

3Annual market growth for CCS

Supplier concentration

Technological maturityResource availability

Exogenous demand

Indicator Annual market growth for CCS

Supplier concentration

Technological maturity Resource availability

Exogenous demand

(3) <1% Open market Commercially proven High Driver

(2) 1-5% Oligopoly Demonstration phase Medium Neutral

(1) >5% Monopoly R&D phase Low Barrier

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Patents

Over 9,000 patents identified as relevant for post combustion capture

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Key message Solvent

Medium risk: high future demand for solvents and limitations in the flexibility of the market vertical supply chain integration and

interdependency Research is also still needed to optimise the solvents

of CO2 capture

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Pipelines: pipeline market

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Pipelines

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3Annual market growth for CCS

Supplier concentration

Technological maturityResource availability

Exogenous demand

Indicator Annual market growth for CCS

Supplier concentration

Technological maturity Resource availability

Exogenous demand

(3) <1% Open market Commercially proven High Driver

(2) 1-5% Oligopoly Demonstration phase Medium Neutral

(1) >5% Monopoly R&D phase Low Barrier

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Key message pipelines

Medium to high risk: Pipe laying capacity faces competition with the oil and

gas industry The current market for very large scale pipelines is small The scale and amount of pipelines needed for CCS may

temporarily fill order books of pipeline laying companies and increase prices. This can result in major delays in pipeline projects

Pipeline laying and manufacturing for CCS is mature

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Technical personnel

Assessing storage sites will be labour intensive and requires skilled engineers

Experienced personnel will retire soon, but seniors are important

High competition from oil and gas sector

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Key messages Technical personnel

Individual reservoirs have to be assessed, drilled and monitored by, often experienced, geo-engineers and petroleum engineers

Shortages of technically skilled personnel are most likely to appear, particularly petroleum engineers and geo-engineers A substantial part of the workforce will retire in the

coming decade In Europe and the USA, the number of engineers that

graduate annually is insufficient to meet expected demand

CCS-activities will face severe competition with oil and gas extraction activities

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Main conclusions

For capture, supplier concentration is the main risk Meeting global demand for compressors and large

scale CO2 pipelines will be challenging task; long lead time and high upfront investment may impose constraints

Oil and gas extraction will compete severely with CCS activities

Supply constraints may be considerably less with strong policy commitments on CCS guaranteeing the market

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Summary

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Thank you!

Chris HendriksEcofysc.hendriks@ecofys.com