Can carbon capture, use and storage fail?

Nathan Meehan, PhD, P.E., Professor, Harold Vance Department of Petroleum Engineering, Texas A&M University

Carbon capture, use and storage (CCUS) remains a critical topic in the petroleum industry but contentious outside the industry. After a long, slow start, we have many projects under development, with billions of dollars’ worth of projects approaching FID. Although vital for achieving climate goals, significant challenges and risks provide obstacles for success. In our case, success means going from current levels of CCUS of about 50 MTPA to about 100 times that level or 5 GTPA. 

CCUS encompasses various applications and industries, each presenting unique challenges and opportunities. In the current landscape, the deployment of CCUS technologies faces several significant obstacles. 

TECHNOLOGICAL CHALLENGES 

Technological challenges in CCUS include energy consumption; capture efficiency; storage integrity; transportation; and infrastructure development. The efficiency of capturing CO₂ and ensuring its safe storage without leakage are primary technological concerns. Additionally, the transportation of captured CO₂ to storage sites necessitates extensive infrastructure, often in remote locations. Energy efficiency, solvent use and loss, and other capture challenges are where most research is invested as new approaches to capturing CO₂ from natural gas or industrial streams evaluate absorption, adsorption, chemical looping, cryogenics, membranes and inherent capture methodologies.  

ECONOMICS AND FINANCIAL RISKS 

The economic feasibility of CCUS projects hinges on reducing capital and operational costs. High upfront capital investments, especially for first-of-a-kind (FOAK) projects, are significant barriers. While commercial adoption, manufacturing efficiencies, and technological improvements have dramatically reduced the costs of wind and solar power generation, the same rapid pace of cost reductions is unlikely for CCUS. 

Uncertain revenue streams pose another challenge. The absence of a global carbon pricing mechanism and the insufficiency of incentives like the US 45Q tax credits mean that financial returns on CCUS projects are often uncertain. Without stable and predictable revenue streams, securing investment becomes difficult. While the incoming administration promises to be more “oil and gas friendly,” we do not yet know how policies regarding CCS and, in particular, subsidies for CCS will evolve.  

Long-term operational costs, including maintenance, monitoring, and site remediation, further impact the economic viability of CCUS projects. Operators may seek to transfer these long-term liabilities to state or federal bodies, introducing additional financial and regulatory complexities. 

REGULATORY AND POLICY RISKS 

Regulatory uncertainty is a major risk for CCUS projects. Shifting regulatory frameworks and evolving environmental policies can undermine investor confidence and affect the long-term viability of projects. An “all carrots, no sticks” approach, where incentives are provided without stringent regulations, is not sustainable in the long run. 

Supportive policies, including carbon pricing mechanisms, tax incentives, and subsidies, are crucial for the commercial deployment of CCUS technologies. However, the absence or inadequacy of these policies can impede progress. For instance, current U.S. policy incentives are attractive, but long-term success requires more comprehensive and consistent policy support. 

ENVIRONMENTAL AND SAFETY RISKS 

Environmental and safety risks associated with CCUS include geological uncertainties and ecological impacts. Assessing and mitigating geological risks, such as potential leakage, induced seismicity, and subsurface interactions, is critical to safeguarding the environment and human health.  Most new CCUS projects target saline aquifers in approximately normally pressured reservoirs. Injecting dense-phase CO₂ into these reservoirs increases pore pressure and stress, potentially triggering seismic activity and CO₂ migration along faults or fractures. Unlike oil and gas reservoirs, saline aquifers are often less well-characterized, leading to uncertainties in reservoir behavior. Minimizing ecological impacts on terrestrial and aquatic ecosystems is also essential. Understanding the effects of CCUS projects on biodiversity, water quality, and land use helps in developing strategies to mitigate adverse impacts. 

PUBLIC PERCEPTION AND SOCIAL RISK 

Public perception poses a significant hurdle for CCUS projects. Skepticism about the motives behind CCUS, particularly the perception that it serves to extend the commercial life of fossil fuels, can hinder social acceptance. Addressing concerns about safety, environmental impacts, and reliance on fossil fuels is crucial for gaining public support. 

The Not In My Back Yard (NIMBY) and Build Absolutely Nothing Anywhere Near Anyone (BANANA) sentiments reflect widespread opposition to large-scale projects near residential areas. Engaging with local communities transparently and addressing their concerns can help secure the social license to operate. 

SOCIAL EQUITY 

Social equity concerns must be addressed to ensure that CCUS projects do not disproportionately impact vulnerable communities. Resource utilization, health impacts, safety, and economic consequences on different social groups need careful consideration. Safeguards should ensure that adverse effects are not borne by disadvantaged communities, and benefits like job creation and economic opportunities are equitably distributed. 

Community engagement must be comprehensive, providing transparent and accessible information and allowing communities to influence project outcomes. Ensuring that communities have the tools and power to participate in decision-making processes enhances the social acceptability of CCUS projects. 

STARTUP AND SCALE-UP RISKS 

The transition from FOAK to nth-of-a-kind (NOAK) facilities presents its own set of challenges. While the initial projects may face higher costs and operational uncertainties, learning from these experiences can help streamline subsequent projects. However, each facility's bespoke design requirements mean that economies of scale may not be as pronounced as in other renewable energy technologies. 

CCUS holds the promise of significantly reducing CO₂ emissions and mitigating climate change, but overcoming the numerous challenges is crucial for its success. Addressing technological, economic, regulatory, environmental, and social hurdles in a holistic manner is essential. By focusing on transparency, community engagement, and equitable solutions, the petroleum industry can unlock the full potential of CCUS technologies and contribute meaningfully to global climate goals. 

About the author

NATHAN MEEHAN is a Professor in the Harold Vance Department of Petroleum Engineering at Texas A&M University, conducting research in carbon capture, utilization, and storage (CCUS); blue hydrogen; quantifying and decreasing emissions from oil and gas operations, and monitoring and reporting; verification of GHG emissions; and enhanced recovery in unconventional wells using CO₂. He is a Senior Technology Advisor for oilfield data analytics firm Petro.ai, and a non-executive Director of Ignis H2, a geothermal energy startup. He was formerly President of CMG Petroleum Consulting, an energy advisory firm founded in 2001, President of Gaffney, Cline & Associates, and a senior executive at Baker Hughes. He served as the 2016 President of SPE. Previously he was Vice President of Engineering for Occidental Oil & Gas and General Manager, Exploration & Production Services, for Union Pacific Resources. He is a member of the National Academy of Engineering. 

Dr. Meehan holds a BSc degree in physics from the Georgia Institute of Technology, an MSc degree in petroleum engineering from the University of Oklahoma, and a Ph.D. in petroleum engineering from Stanford University. With more than 45 years of industry experience, he served as Chairman of the Board of the CMG Reservoir Simulation Foundation, as well as a director at several companies/organizations.   

Dr. Meehan’s awards and recognition include SPE Distinguished Member; SPE’s Lester C. Uren Award for Distinguished Achievement in Petroleum Engineering; the Degolyer Distinguished Service Medal; the SPE Public Service Award; SPE Honorary Member (the society’s highest award); the World Oil Lifetime Achievement Award; and Petroleum Economist’s Legacy Award. He was named 2023 Distinguished Alumni of the University of Oklahoma College of Earth and Energy.  

He serves, or has served on various academic advisory boards at University of Oklahoma, the Georgia Institute of Technology, The University of Texas-Austin, University of Houston, Penn State, and St. Frances University. He has served on the National Petroleum Council and the Interstate Oil & Gas Compact Commission. Dr. Meehan is a widely published author and a licensed professional engineer in four states.