Standardization helped bring down costs for the drilling industry. Repeatable efficiency improvements drove gains in shale production.
And now, as carbon capture and storage (CCS) gains momentum, oil and gas executives say CCS could benefit from a similar approach.
CCS technologies are expected to play a key role in lowering global greenhouse-gas emissions. While CCS technologies are proven, economics such as costs associated with capturing CO2 are among barriers to scaling them up. Capture costs alone can account for about 75% of CCS projects.
Executives at Aethon Energy, Aker Solutions, Carbon Clean, Chevron and NOV shared insight on what it will take to build a commercial market for CCUS during the Gastech conference last week.
For David Reid, CTO at NOV, getting costs down may require changing mindsets. Reid described a “lifelong passion” for eliminating the engineering, procurement and construction mode of thinking. Reid called it one of the most destructive things in the industry.
“We’ve actually engineered over and over and over again the same solution in a different way,” he said.
When looking to scale CCS, the real question is how to standardize, modularize and make it into a product. With standardization, modularization and productization, “we manage to really significantly reduce cost … As we get into smaller scale, we’re finding it’s easier to get that logic of standardization.”
Standardizing capture units has been identified by the International Energy Agency (IEA) as a way to reduce capital and operating costs for CCS projects. Other potential areas include using innovative solvents, modularization and off-site manufacturing, as well as better integration with process plants and increasing the size of facilities to “exploit economies of scale and learning-by-doing benefits.”
Reid said costs can triple with custom engineering. However, standardized solutions can reduce costs, especially when it comes to automation and AI. “Once the systems are the same, it becomes really easy to implement, change and apply smart systems,” he said, using jackup rigs as an example.
Chris Powers, vice president of carbon capture, utilization and storage (CCUS) and emerging technologies for Chevron New Energies, sees analogies in the shale/tight oil business and deepwater as well.
“If we look at the deepwater, a decade ago we were building very bespoke, very complicated, super instrumented systems,” Powers said.
Then, the industry pivoted to a minimum design case approach or minimum functional objectives to get projects to market faster, ultimately generating better returns, he said.
In the early days of shale and tight oil, testing new concepts to improve efficiency, output and costs eventually lead to standardization, he said.
“You’re still having a learning curve and a competitive performance objective, but you can now crank this out pretty repeatably and efficiently and that’s what’s made that business thrive,” Powers said. “We can port those lessons, I think, into the new energy businesses as well to avoid having to learn them again.”
The IEA has described the method as knowledge and application spillovers, learning-by-doing, and learning-by-researching—all of which can bring down the cost of CO2 capture. Learning gained from applications of chemical absorption in industry and power generation, for example, can lower the cost of deploying this technology for CCUS by about 12%, according to a 2020 IEA CCUS report.
“We think that there is a lot of logic in optimizing the cost on the production line versus trying to go in and set … up [a] bespoke project at every single site,” said Aniruddha Sharma, CEO and chair, Carbon Clean.
Build now, polish later
Jonathan Minnitt, Aker Solutions’ vice president of business development, said there are some lessons to learn from industries beyond oil and gas as well. He used the wind industry as an example, specifically, the challenge of wind blades for technology developers.
“Every time they invest a huge amount of money in a new size of blades to get to a greater turbine, the market moves on and says no,” he said, asking for blades to be a little bigger and a little bigger. “They’ve not been able to recover that cost.” Many technology providers may be forced to close down if faced with the same challenges, he said.
For CCS, getting some of the basic building blocks in place is fine for now.
“We’ve got to recognize actually this industry is much early on. … Let’s just get the building blocks into place. We can talk about polishing later,” he said.
Minnitt also said that some projects can become too complex, going for too much new technology all at one resulting in high capex early on.
“Capex will come down on the technology. That efficiency will be there later. But get the first [projects] in and learn from the first of a kind,” he said. “Let’s not build an industry that’s built on multiple first-of-a-kind projects. [It’s] really key to capture learning across the industry.”
Partnerships and collaboration also have a role to play in advancing CCS, according to Gordon Huddleston, president and partner at Aethon Energy. That includes working with regulators, as Aethon is doing in Louisiana, and pointing out potential problems.
“That’s incumbent upon all participants to say how can we responsibly operate in this space,” he said. Aethon intends to build a carbon sequestration facility in Vernon and Sabine parishes.
To have a significant impact on climate change, about 1 billion tons of CO2 would need to be captured and stored annually, according to the Intergovernmental Panel on Climate Change.
Data from the Global CCS Institute show there is still a long way to go. There were 43 projects capturing about 50 million tons of CO2 per year in first-quarter 2024. At the time, the institute was tracking more than 550 projects in various development phases with a combined capacity of more than 420 million tons per year, said Poh Boon Ung, session moderator and general manager of business development for the Global CCS Institute.
“The U.S. currently dominates the CCS space. That’s no surprise there. But across the globe, we’re seeing good momentum in Europe, Middle East, China, Southeast Asia, and we’re hoping that trend continues,” Ung said. “So that’s the good news. The challenge that we have in front of us is that to be consistent with the climate math to meet our net zero goals by mid-century, we need to be hitting 1 gigatonne of capacity by 2030.”
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