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Abu Dhabi, the Netherlands eye carbon capture projects with oil majors

14 September 2021 Cristina Brooks

Abu Dhabi's government partnered with an oil major on possible carbon capture infrastructure, as did the Netherlands' state-owned natural gas grid operator in a separate announcement last week.

State-owned international oil company Mubadala Petroleum and Italian major Eni on 7 September announced an agreement to jointly look into their carbon capture, utilization and storage (CCUS) and hydrogen business options internationally.

They plan to identify cooperation opportunities across the Middle East, North Africa, Southeast Asia, where the petroleum company has operations, as well as in Europe, where Eni is active in carbon capture demonstration projects and research.

Mubadala Petroleum is a wholly-owned subsidiary of the sovereign wealth fund of the Emirate of Abu Dhabi in the United Arab Emirates and has production operations, mostly in natural gas.

In a move that would put it on par with many European states and cities, the UAE region of Abu Dhabi is said to be considering a net-zero target.

While the UAE has not yet committed to targeting net-zero emissions, Foreign Minister Sheikh Abdullah Bin Zayed Al Nahyan said earlier this year the country aims to host the UN Climate Change Conference (COP28), set to take place in 2023. Abu Dhabi has published a target of 50% "renewable and clean" energy and 22% energy savings by 2030.

However, the non-profit initiative Climate Action Tracker called the UAE's greening efforts "highly insufficient" in 2020, which nonetheless puts it a notch above the "critically insufficient" rating for neighbor Saudi Arabia.

In line with the UAE goals, Mubadala Petroleum in August outlined its environmental, social and governance achievements, such as weighting its portfolio to gas as opposed to oil. The company reduced its GHG emissions by 25% over the last three years, it said, but stopped short of pledging a net-zero target for the future.

Meanwhile, Eni is striving to cut its absolute GHGs by 80% by 2050. Eni was the first oil and gas company to make any kind of absolute emissions pledge, according to the Grantham Research Institute on Climate Change and the Environment.

Eni is also aiming to hit a net-zero target on GHG lifecycle emissions for scopes 1, 2, and 3 by 2050 with "full decarbonization of products and operations."

In the carbon capture space, Eni studies the storage of captured carbon, and separately its utilization, at two of its research centers in Italy. The partnership will make use of Eni's proprietary technologies.

Not only is Eni studying carbon capture in its own backyard, but in the UK it gained a £33 million government grant in March for its role in the HyNet North West project. The project will capture CO2 from industry and blue hydrogen operations, potentially for storage in offshore fossil fuel fields. Eni has called the project the "first CCS infrastructure in the UK."

Other oil majors are also exploring business opportunities in carbon capture. A Chevron USA subsidiary plans to spend six months looking into US-based CCUS businesses, according to a 13 September statement.

CCUS to help the Dutch reach emissions goals

State-owned infrastructure operator Gasunie, which runs gas networks and plans to develop a Dutch national hydrogen network, will also partner up on CCUS, it said.

Gasunie, Dutch state-owned oil company EBN, Shell, and TotalEnergies agreed to work together on developing CO2 infrastructure, both for transport and offshore storage. They will study CCUS, following on from prior feasibility studies, and decide whether to invest by 2023.

The CCUS project, dubbed Aramis, would decarbonize industry sectors such as steel, chemicals, cement, refineries, and waste incinerators in the Netherlands.

The project would use coaster ships, river barges, and onshore pipelines to transport industrial CO2 to an onshore collection hub featuring a shipping terminal and compressor station and storage. Then, an offshore pipeline would transport the CO2 further afield to offshore platforms for injection into depleted gas fields.

The project aims to tie up with two existing offshore CCS projects in the Netherlands targeting local industrial clusters: Porthos and Athos. "In this way, the Aramis project would be able to realize infrastructure that can serve more industrial clusters to support their transition towards sustainable production processes," said Gasunie in the statement.

The Aramis project could help the Dutch state meet its target of a 49% CO2 emissions reduction compared with 1990 levels by 2030, aligning with its 2019 National Climate Agreement policy and the European Union's recently proposed legislative package initially proposed in its Green Deal pledge and now known by the slogan "Fit for 55."

The state has followed similar trend in Norway, where Shell and Total are working with state-owned controlled Equinor on the Longship CCS project, despite insurers noting that the risks of carbon storage have been a roadblock to widescale CCUS investment.

Growing carbon capture pipeline

IHS Markit analysts said in a recent report on carbon sequestration markets that the technology gained traction in 2021, leading to a "revival of the CCUS industry," with 26% more projects announced this August than in the same month last year.

All in all, 89 projects are operational around the world. Many of these projects were established to sequester coal and industrial emissions, although the largest projects are in the power generation and hydrogen production sectors, IHS Markit's Global CCUS project tracker shows.

Some carbon capture projects are associated with the production of blue hydrogen—hydrogen produced from gas from which CO2 has been captured for storage to reduce its climate impacts.

New revenue streams for CCUS were recently established in the US through 45Q tax credits, the California Low Carbon Fuel Standard (LCFS), and multiple emissions trading schemes. IHS Markit analysts expect the number of projects to continue to grow as more policies and subsidies develop.

Enhanced oil recovery operations are the primary end-user of captured carbon.

Posted 14 September 2021 by Cristina Brooks, Senior Journalist, Climate & Sustainability, IHS Markit

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