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Climate Change

Published on April 19th, 2019 | by Michael Barnard

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Chevron’s Fig Leaf Part 4: Carbon Engineering’s Only Market Is Pumping More Oil

April 19th, 2019 by  


Carbon Engineering recently garnered $68 million in investment in its air-carbon capture technology from three fossil fuel majors. This is part 4 of the 5 article series assessing the technology and the value of the investment.

The first piece summarized the technology and the challenges, and did a bottoms-up assessment to give context for what Carbon Engineering is actually doing. The second piece stepped through Carbon Engineering’s actual solution in detail. The third piece returned to the insurmountable problem of scale and deals with the sheer volume of air that must be moved and the scale of machinery they have designed for the purpose. This fourth article will look at the market for air carbon capture CO2 and assess why three fossil fuel majors might be interested. The final article will address the key person behind this technology and the expert opinions of third parties.

There is zero net removal of CO2 from the atmosphere if air carbon capture is used for enhanced oil recovery.

As a reminder of what the last article found, Carbon Engineering’s solution would require 2-kilometer long, 20-meter high walls of noisy fans to capture 4 orders of magnitude less carbon than would be useful. It won’t run off otherwise unused renewable energy. It’s unclear where it would be useful. And its numbers exclude massive follow-on costs, so the $100 per ton is just the start of the cost build up.


There are few mass markets for CO2

There isn’t a lot of use for CO2 at anywhere near the scale of the problem we are facing. I did the math a couple of years ago for the largest single consumer of industrial CO2 in the USA, the enhanced oil recovery wells in the south. That massive operation consumed the output of only 13 coal plants for a year. And there were hundreds of coal plants and then hundreds more gas plants in the USA.

Want concentrated CO2? Burn some wood and work with the gases which are produced. A kilogram of wood turns into 1.9 kilograms of CO2. And the carbon in that came from the atmosphere and was concentrated naturally without a huge wall of fans over an extended period of time. The density of the CO2 is much, much higher in wood smoke than in the atmosphere; it’s already been massively concentrated by nature. Oh, and you get that waste industrial heat you need for another part of the process to reduce overall energy costs. If Carbon Engineering was using waste wood from the various lumber mills near its location in Squamish, BC, and capturing the CO2 produced by burning the wood and sequestering it, that would be something more interesting. Instead, the company is pumping a lot of fossil fuels into its process instead of leaving them in the ground.

A workup later in this article posits the criteria for air carbon capture to make sense. And it includes the use case that Carbon Engineering and its fossil fuel investors are probably thinking of.


The investors are fossil fuel companies

The BBC magic bullet article has a very telling point about Carbon Engineering:

It has now been boosted by $68m in new investment from Chevron, Occidental and coal giant BHP.

What are those? Are they all fossil fuel companies? Yes, of course. What could they want with an investment in air carbon capture of one of their products’ primary wastes, CO2? One that uses massive amounts of one of their primary products? And makes them look good on casual inspection?

Chevron had a revenue of $159 billion in 2018. Occidental made $17.8 billion. BHP made $43.6 billion. So that’s $220 billion combined annual revenue vs $68 million in ‘investment’. That’s about 0.03% of their annual revenue going to this initiative.

Let’s compare this to another recent Chevron-related headline: Chevron to buy Anadarko in $33-billion bet on shale oil and LNG — the biggest energy deal in four years. That’s from Canada’s National Post, but it’s repeated in various forms in business outlets globally. How much bigger is $33 billion than $68 million? Almost 500 times bigger. That’s 20% of Chevron’s annual revenue. That’s a real investment in real business for Chevron. The $68 million split between three companies is advertising dollars. It doesn’t even rise to the level of a side bet. You can imagine it being handled by the executive in charge of marketing, or perhaps someone’s executive assistant.

As with almost all carbon capture approaches, the only group which still thinks it has merit is the fossil fuel industry. They spend a tiny fraction of their money so that they can tout the wonders of their technology around the world while continuing to produce gigatons of CO2e annually.

In reality, this technology would use 70,000 households’ worth of natural gas in order to capture a million tons of CO2 a year. It’s more a new market for natural gas than a solution for climate change.

That’s a very thin slurry of green paint over a tailings pond.


Where could air carbon capture make sense?

Air carbon capture which is actually a climate solution makes sense under the following conditions:

  • It’s co-located with an industrial site which requires CO2.
  • The site needs tons of CO2 as feedstock per day, perhaps for concrete.
  • The site doesn’t have access to a lot of biomass because it’s already a concentrated source of carbon which you can bind with oxygen cheaply and easily. Greenhouses probably don’t need it.
  • The site generates a lot of waste industrial heat or biomass to tap for energy so that you don’t have to burn a lot of fossil fuels for processing.
  • The site has access to a lot of very cheap electricity that’s also carbon neutral to power fans.
  • A pipeline for CO2 to the site isn’t viable. CO2 is a purchasable commodity. Per one source it costs about $40 per ton to get it trucked in. If you have a pipeline, then it works out to $0.77 per ton per mile and $1.50 per ton, but with another big capital cost. That’s on top of the commodity price for industrial CO2 of $30 to $50 per ton, if memory serves. Smaller volumes are much more expensive. When you start seeing $90 per ton delivered, you can see that there might be some circumstances in which $100 per ton might be worth doing, and that if you can eliminate energy costs it becomes reasonable. That’s if the capital cost wasn’t going to be absurd; you need an awful lot of CO2 in order to justify millions in capital costs.

But even then, let’s look at that greenhouse example. For greenhouses, you only need concentrations at 3–4 times atmospheric levels. That’s pretty easy to manage with a simpler tech than the Carbon Engineering ‘magic bullet’. Just burn some biomass, probably dried waste stems, and capture the CO2 from the biomass smoke which has much more density, once again. Only one of the three CO2 capture mechanisms Carbon Engineering uses would be required. Oh, and get some waste heat for warming the place as necessary.

So what sites might actually be useful for Carbon Engineering’s solution as it’s designed? Let’s return to the 2012 paper the principals published in the Royal Society journal:

an AC facility operating on low-cost ‘stranded’ natural gas that is able to provide CO2 for enhanced oil recovery at a location without other CO2 sources might be competitive with post-combustion capture in high-cost locations such as Canadian oil sands operations.

Years ago, the principals in Carbon Engineering realized that their market was likely the fossil fuel industry. From their new investors’ perspective, this is a great technology. It uses a lot of one of their products, possibly even a reserve that they have no economic use for today. It allows them to get more of another of their products, oil, out of tapped-out wells. And it gives them a nice big marketing win in headlines that they are saving the planet from global warming.

That’s a trifecta of goodness for the fossil fuel companies. Not so much for the rest of the world. That 10% tax of emissions on the natural gas isn’t looking so good now.

What would net emissions for using CO2 for enhanced oil recovery look like? Per a high-citation 1993 study on the subject:

For every kilogramme of CO2 injected, approximately one to one quarter of a kilogramme of extra oil will be recovered.

That’s interesting. How much CO2 is created from a 0.25 kg of oil, well to wheels? Well, just burning oil produces about 3.2 times the CO2 by weight excluding processing. Processing is a 10% to 20% hit depending on the quality of the crude. So that 0.25 kg of CO2 turns into about 0.8 kg of CO2 and processing adds another chunk, bringing it perhaps to 90%. With the 10% emissions tax on the natural gas, that means that there is zero net removal of CO2 from the atmosphere if air carbon capture CO2 is used for enhanced oil recovery. And that’s at a cost of $94 to $232 for the air carbon capture portion alone. All of the negative externalities of fossil fuels persist indefinitely.


That’s part 4 of the series. Carbon Engineering’s solution is only useful in tapped-out oil wells and as greenwashing for fossil fuel companies. No wonder three fossil fuel companies invested an infinitesimal fraction of their annual revenue in it.

The fifth and final article in the five-part series looks at who is behind this increasingly odd looking non-solution to climate change, Dr. David Keith, and provides additional expert insight into carbon capture in general.


References and Links:

[1] Carbon Engineering: CO2 capture and the synthesis of clean transportation fuels

[2] Capturing Carbon Would Cost Twice The Global Annual GDP

[3] No, Magnesite Isn’t The Magic CO2 Sequestration Solution Either

[4] Air Carbon Capture’s Scale Problem: 1.1 Astrodomes For A Ton Of CO2

[5] Carbon Capture Is Expensive Because Physics

[6] Mark Z. Jacobson – Wikipedia

[7] Climate change ‘magic bullet’ gets boost

[8] Low-Emitting Electricity Production

[9] A Process for Capturing CO2 from the Atmosphere

[10] Joule

[11] Page on cbc.ca

[12] An air-liquid contactor for large-scale capture of CO2 from air

[13] Philosophical Transactions of the Royal Society A: Mathematical, Physical and Engineering Sciences

[14] Parts Sales Fill

[15] How much air, by mass, enters an average CFM56 turbofan engine cruising per minute?

[16] An air-liquid contactor for large-scale capture of CO2 from air

[17] Global Thermostat

[18] Graciela Chichilnisky – Wikipedia

[19] Earth and Environmental Sciences

[20] Europe Stores Electricity in Gas Pipes

[21] The Physical CO2 Market

[22] DigiTool Stream Gateway Error

[23] How much CO2 produced by burning one barrel of oil – Pyrolysium.org since 2011

[24] https://www.energy.ca.gov/2007pu…

  
 





 

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About the Author

is Chief Strategist with TFIE Strategy Inc. He works with startups, existing businesses and investors to identify opportunities for significant bottom line growth and cost takeout in our rapidly transforming world. He is editor of The Future is Electric, a Medium publication. He regularly publishes analyses of low-carbon technology and policy in sites including Newsweek, Slate, Forbes, Huffington Post, Quartz, CleanTechnica and RenewEconomy, and his work is regularly included in textbooks. Third-party articles on his analyses and interviews have been published in dozens of news sites globally and have reached #1 on Reddit Science. Much of his work originates on Quora.com, where Mike has been a Top Writer annually since 2012. He's available for consulting engagements, speaking engagements and Board positions.



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