CCS in Gulf Cooperation Council (GCC): Current Status and Near-term Outlook

I-Tsung TsaiMasdar Institute

GCCSI, Global Status of CCS 2014 November 5-6, 2014, Abu Dhabi

Gulf Cooperation Council (GCC)

• 6 member states– Bahrain– Kuwait– Oman– Qatar– Saudi Arabia– United Arab Emirates

• Common features– Large hydrocarbon reserves– Harsh climate– Scarce water resource– Carbon intensive industrial production

Source: The Guardian, Monday 31 January 2011

5.1% of global total

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

200

400

600

800

1000

1200

20.26 20.8 21.85 22.45 23.14 25.26 27.82 29.28 30.63 31.1 30.59408 30.24887 32.200259.5 57.46 56.23 63.44 67.87 76.72 77.31 76.18 79.83 84.87 90.10298 100.4619 105.684421.79 22.2 22.99 22.47 24.36 30.68 35.58 37.71 44.56 48.96 52.72685 53.68402 62.8528234.7 27.56 29.44 32.48 38.64

52.27 55.67 61.08 63.45 66.52 69.77288 81.4829299.16526

290.54 301.34 311.62347.26

388.76405.54 406.14 424.4

455.62 470 468.72759

551.38946582.6702

115.72 115.33 123.81127.14

133.52139.79 155.33

171.63195.85

193.43 217.6461

228.6659

234.0603

Carbon DIoxide Emissions (SOurce: EIA)

Bahrain Kuwait Oman Qatar Saudi Arabia UAE

Average Annual

Growth RateBahrain 4%Kuwait 6%Oman 11%Qatar 13%

Saudi Arabia 7%UAE 7%

AS OF 2012, GCC accounts for3.4% of Global total CO2 emissionswith 0.7% population

Current LARGE SCALE CCS projects IN GCC

Source: http://sequestration.mit.edu/tools/projects/map_projects.html (Updated Dec 6, 2013)

Taweelah + EMALType: CO2 from gas power plant + aluminum production + EORLocation: Abu Dhabi, UAELeaders: Masdar, Taweelah Asia Power Company, EMAL, ADNOCSize: 2 MT/yrCapture Technology: Post Combustion absorption Start date: 2018

UthmaniyahType: CO2 from gas power plant + EORLocation: Saudi Arabia Leader: Saudi AramcoSize: 0.8 Mt/yr Start date: 2015

ESIType: CO2 from Steel production + EORLocation: Abu Dhabi, UAE Leaders: Masdar, Emirates Steel Industries, Abu Dhabi National Oil Company (ADNOC) Size: 0.8 Mt/yr Start date: 2016

Other CCUS Activities in GCC Bahrain - Developed a project to captures flue gases from a petrochemical plant for urea and methanol

production.Kuwait - Equate will capture CO2 from its petrochemical plants for food and beverage production

Oman - Currently focus primarily on CCUS technology R&D.Qatar - Qatar Fuel Additives Company to start capture 500 tonnes per day of CO2 from its methanol

production plant to further boost methanol production by 2014. - Qatar Petroleum (QP) & Shell initiated the Qatar Carbonates and Carbon Storage Research Centre

(QCCSRC). Saudi Arabia

- Constructing the world’s largest CO2 purification and liquefaction plant in Jubail to bring 1,500 tonnes per day of CO2 from two ethylene glycol plants to three SABIC-affiliated companies for enhanced methanol and urea production.

- In the process of developing several similar CCS projects, including some pilot projects on CO2 for EOR.

- Several institutions (i.e. KACST, KFUPM, KAUST. KAPSARC) engaged in CCUS R&D- A member of both the Four Kingdoms Initiative and the CSLF

UAE - Pilot project: 2 a year CO2-EOR project completed in November 2011 at an onshore field- Dubai Integrated Energy Strategy 2030 calls for consideration of CCS-equipped coal power in the

next ten years.- Ras Al Khaimah announced feasibility studies for a CCS-equipped coal plant. - A member of CSLF.

Current Regulatory progress

• All GCC countries ratified Kyoto as ANNEX II.

• All GCC countries ratified CCS related international & regional conventions.– London, Basel, UNCLOS, MARPOL, GCC Custom Union, Kuwait, etc.

• No domestic CCUS specific regulation.

• Environmental impact assessment covered by existing laws, but lack details.

• Some areas of CO2–EOR can be governed by existing oil and gas rules.

• Lack of regulation for permanent storage.

Regulatory Gaps (x: major gap; -: minor gap; blank: no gap)

Regulatory domain Bahrain Kuwait Oman Qatar KSA UAECO2 classification X X X X X X

Ownership of surface facility - X X X -

Transboundary CO2 X X X X X X

Environmental Impact Assessment

CO2 impurity X X X X X X

CO2 capture regulation - X X X -

CO2 transportation regulation - X X X -

CO2 storage regulation* X X X X X X

Liability during the post-closure period X X X X X X

Regulation for CCS with EOR X X X X X X

Incentives - - X - - -

Note: CO2 storage regulation include regulating site selection and characterization activities; project inspections; monitoring, reporting, and verification requirements; Corrective measures and remediation measures; authorization for storage site closure; liability during the project period; Financial contributions to post-closure stewardship

Key Features of Regulatory & Institutional Environment

• Regulation

– CO2-EOR• Implicit petroleum laws• Long term oil & gas joint venture agreements

– Transboundary CCUS• Uncertain geo-political environment• Unpublicized border agreements

• Institution– Oil and Gas industry dominated by national oil companies, not explicitly regulated– Major CO2 sources are government/semi-government owned, not explicitly regulated

Uncertainty Prevails in Regional Cooperation

Year launched

Gas source Importing countries Reason for failure Source

GCC gas grid 1988 Qatar KSA, Kuwait, Bahrain, UAE Political and territorial disputes Dargin, 2008

Crescent Petroleum pipeline

2001 Iran UAE (Sharjah) Pricing disagreement. Contract nullified by Iran after pipeline built

Jafar, 2012; Carlisle, 2010; Adibi and Fesheraki, 2011

Peace Pipeline 1995 Qatar Israel Approval depended on peace settlement between Israel and Palestinians

Dargin, 2008

GCC pipeline to Pakistan and India

1995 and 2000

Qatar Pakistan, India, via Oman Pricing disagreement, competing pipeline proposals

Jafar, 2012; and Dargin, 2008

Dolphin Pipeline extension to Kuwait

2005 Qatar Kuwait Saudi refusal to grant access to territorial waters

Dargin, 2008

Table: Failed gas pipeline projects in the Gulf region

Reference: Krane J. (2013)

Are We Making Little Progress on CCS in GCC?

• Not exactly• Strategy:– Building confidence via technology R&D and pilot projects– Wait and see the results from Paris

• System is highly non-transparent, but can be very efficient when motivated

• Sources of drivers– Economic – gain from CO2-EOR– Environmental – Climate change mitigation

Economic Drivers

• UAE– Large portfolio of gas-based power & water co-generation plants– Focus is on substituting gas-EOR with CO2-EOR

– Start with CO2 capture from non-utility sectors?

• Other GCC countries– Value proposition of CCS/CCUS is less clear– Working on getting the economics right– Scope confined to non-oil & gas sectors

Energy-CCUS Nexus of Emirates steel industry (ESI)

Gas

Oil

Power

Water

StorageEnhance Oil Recovery

CO2

Direct Reduction of Iron

(integrates capture plant )

Furnace flue gases

CO2 capture plant

Electric Arc Furnace

Steel

Steel Refining Facility

Basic Oxygen Furnace

Continuous Casting

(energy recovery to produce steam for power generation and for the production of water used by industry)

CO2 capture plantQatar

Environmental Drivers

• Highly dependent on the structure of post-Kyoto agreement• KSA and UAE : committed to CCS/CCUS in UNFCCC communications • COP 21 in Paris

– Key components• Contribution (may include RE & EE targets)• Compliance measures• Financial transfer• Technology R&D and Capacity Development

– Likely a bottom-up “club” systems– CCS expected to be accepted as part of contribution

• CO2-EOR?• Mandate or CO2 price?• Domestic/club regulation & institution?

Near-term Outlook of CCUS in GCC• Current progress in rest of the world is encouraging.• GCC

– CCUS development will likely be facilitated by bottom-up post-Kyoto agreement• Cost to adjust institution and regulation is low

– Focus on domestic economic gain and contribution to national emission reduction targets

– Little interest for cross-boundary CO2 regulation/market

– Collaboration confined to technology R&D and capacity development

– Qualification of CO2-EOR for national contribution is key

– Regulation: Governed, again, with implicit rules• Need to identify new elements to regulate (Example: EU, New Zealand, etc.)

– Institution: dominated by national oil companies

– Main challenges: Optimize CCUS/RR/RE strategy to meet commitment • Getting the economics right

– Understand interactions between CCUS-power/water/energy production-industrial production to identify levelized cost by sources and by oil/gas prices

• Distribution of CCUS cost along value chains

Thank You