THE ECONOMICS OF GEOLOGICAL STORAGE OF CO2 IN AUSTRALIA

Abstract

The economics of the storage of CO2 in underground reservoirs in Australia have been analysed as part of the Australian Petroleum Cooperative Research Centre’s GEODISC program. The economic analyses in the paper are based on cost estimates generated by a CO2 storage technical/economic model developed at the beginning of the GEODISC project. The estimates rely on data concerning the characteristics of geological reservoirs in Australia. The uncertainties involved in estimating the costs of such projects are discussed and the economics of storing CO2 for a range of CO2 sources and potential storage sites across Australia are presented.

The key elements of the CO2 storage process and the methods involved in estimating the costs of CO2 storage are described and the CO2 storage costs for a hypothetical, but representative storage project in Australia are derived. The effects of uncertainties inherent in estimating the costs of storing CO2 are shown.

The analyses show that the costs are particularly sensitive to parameters such as the CO2 flow rate, the distance between the source and the storage site, the physical properties of the reservoir and the market prices of equipment and services. Therefore, variations in any one of these inputs can lead to significant variation in the costs of CO2 storage. Allowing for reasonable variations in all the inputs together in a Monte Carlo simulation of any particular site, then a large range of total CO2 storage costs is possible. The effect of uncertainty for the hypothetical representative storage site is illustrated.

The impact of storing other gases together with CO2 is analysed. These gases include methane, hydrogen sulphide, nitrogen, nitrous oxides and oxides of sulphur, all of which potentially could be captured together with CO2. The effect on storage costs when varying quantities of other gases are injected with the CO2 is shown.

Based on the CO2 storage cost estimates and the published costs capturing CO2 from industrial processes, the economics are shown of combined capture and storage (that is, the sequestration process as a whole) for the major CO2 generation sites across Australia combined with potential compatible storage sites. Examples are shown of the volumes of CO2 that could be sequestered economically depending on the level of the carbon credit in a hypothetical carbon credit trading regime. Purely as an illustration, assuming hypothetically that a real carbon credit of US$50 per tonne applied and that the cost of capture was US$40 per tonne across the board, then preliminary indications are that, ignoring tax considerations, it would be economic to store about 180 million tonnes per year of CO2. This is equivalent to about 70% of the annual CO2 emissions from stationary sources in Australia in 2000.