Learning from Petra Nova10 December 2020
Amidst growing international interest in carbon capture and storage (CCS) this year, an apparent high profile setback for the technology came in May, with the mothballing of NRG’s Petra Nova facility in Texas – a coal-based project that represents the world’s largest installation of CO2 capture on a power plant. Like nearly all CCS projects operating today, Petra Nova relied on using CO2 for enhanced oil recovery (EOR), and was therefore hit hard by plummeting oil prices in the wake of the Covid-induced slump in demand.
Above: The Petra Nova carbon capture installation
The closure continued to generate headlines throughout the summer, as CCS sceptics sought to interpret it as a death knell for future projects. Most notably, a report by the Institute of Energy Economics and Financial Analysis (IEEFA) – a US-based group active in campaigning against fossil fuels – labelled Petra Nova’s woes as a “red flag for investors on coal-fired CCS projects.” Firmly in IEEFA’s sights are a proposed wave of new projects in the USA, driven by the expanded 45Q tax credit, which will compensate plant owners at up to $50 per tonne of CO2 they store. While some plans are focussing on more-easily captured CO2 streams from industrial facilities such as bioethanol or ammonia plants, the US Department of Energy (DOE) has helped drive power sector interest by part-funding engineering studies for nine coal and gas plants.
Although IEEFA suggests Petra Nova has operated under a cloud of secrecy, the performance over the plant’s first three years of operation, to December 2019, was well documented in a report to the DOE earlier this year. A 16% shortfall in the total CO2 captured over this period appears worrying, but was due to unexpected shutdowns of various parts of the process chain, rather than a failure of Mitsubishi’s amine-based solvent process to meet its target of removing 90% of CO2 from the treated flue gas.
The outages attributable to the capture plant itself do not seem to flag up any show-stopping issues with the new technology, and the unplanned downtime fell steadily over the three years – with 95% of the target CO2 total achieved for 2019. The issues encountered, mostly concerning leaking heat exchangers and equipment scaling with calcium deposits, are similar to those faced by Canada’s Boundary Dam 3 – the only other full-scale CCS facility on coal power – which also overcame challenging early years to achieve consistently high availability.
It also worth remembering that Petra Nova was conceived primarily as a technology demonstration, in which any technical issues associated with dramatically scaling up a carbon capture process could be identified and resolved for the benefit of future projects. Mitsubishi has stated that the construction costs of their Advanced KM-CDR process can be reduced by 30% as a result of the experience, and have since developed an improved solvent. These claims may be put to the test at Prairie State coal power plant in Illinois – one of the DOE-backed CCS proposals – which plans to use an evolution of the Petra Nova technology.
Like other early CCS demonstration projects, Petra Nova’s financial viability relied on a rare alignment of incentives, including a DOE grant, cheap credit from Japan, and part-ownership of an oil field, which probably has limited relevance for future CCS plans under the new fiscal policy. Many of the new coal power CCS projects announced in the US are partially or completely based on storing CO2 in saline aquifers, which delivers a larger tax credit than EOR ($50/t of CO2 compared to $35/t). Plans for coal plants such as Prairie State, Milton R Young in North Dakota (Project Tundra), and Dry Fork in Wyoming will also benefit from the government-funded ‘CarbonSAFE’ initiative, which aims to characterise and obtain permits for large-scale CO2 storage sites across the country, easing a process that has often proved a significant barrier to first-mover CCS projects.
EOR was still the primary driver for CCS interest in the US before the pandemic, and it seems likely to remain relevant for new projects as the global economy recovers. Petra Nova is thought to have needed oil at $60 a barrel to break even, so had already endured the West Texas Intermediate price hovering just below this level for much of 2019. However, the International CCS Knowledge Centre has been quick to note that the EOR operator associated with Boundary Dam 3 has continued to take CO2 throughout the oil price slump, and is even actively seeking more of the greenhouse gas. This may highlight the fact that the Petra Nova venture was unusual in part-owning its West Ranch oil field, meaning neither party is tied to long-term offtake agreements. Future CCS infrastructure is much more likely to rely on two-party ‘take or pay’ arrangements, with some of the new projects focused mainly on producing pipeline-ready CO2 at the plant fence.
Petra Nova’s uncertain future may therefore not be of huge significance for the future of CCS in the USA, and the pioneering facility has perhaps already served its primary purpose in progressing the technology to its next stage. Nevertheless, it is clear that even with the revised 45Q tax credit the margins for any large-scale investment in thermal power generation will be tight, and vulnerable to declining operating hours in the face of wind and solar expansion. If CCS-equipped power plants are to be the low-carbon complement to these renewables, at least some of this new generation of projects must go the distance.