Mothballed Petra Nova has already proved its worth

Plummeting oil prices due to low demand during the coronavirus pandemic have had far-reaching consequences worldwide. For supporters of carbon capture, utilisation and storage (CCS) technology, an unwelcome side-effect of the slump came with the mothballing of the pioneering Petra Nova demonstration project in Texas – the largest operating installation of this CO2 mitigation technology on a power plant.

Like nearly all CCS facilities operating today, Petra Nova relied on using captured CO2 for enhanced oil recovery (EOR) at a nearby oil field to make a commercial case for the, otherwise unvalued, business of storing CO2 underground. Unsurprisingly, this kind of operation is vulnerable to low oil prices and, in May this year, the capture facility was turned off while the power plant continues to run unabated. Plant owners NRG have said that the plant can be brought back online when economics improve.

Petra Nova’s woes generated further headlines in August following a brief report from the Institute for Energy Economics and Financial Analysis (IEEFA) – a vocal anti-CCS organisation based in the USA. IEEFA have taken the situation at Petra Nova as an opportunity to draw various negative conclusions on the prospects for CCS in general, linking the project’s closure to a fundamental lack of commercial and technical viability. Despite the article being widely reported, many of its claims are tenuous and do not stand up to much scrutiny.

IEEFA’s opening accusations against the CCS project focus on a supposed lack of transparency around its performance, however, Petra Nova released a detailed account of issues encountered in planning, construction, and operation of the facility in March this year. This formed part of an agreement with the US Department of Energy (which provided a US$190 million grant to the project), following the completion of its official three-year demonstration period in December 2019. IEEFA highlight the 16% shortfall in total CO2 captured over this period, but misleadingly suggest that this points to a failure of the plant to capture 90% of CO2 in the coal flue gas it treats. A distinction must be made between the CO2 capture rate achieved by the plant when it was operating – which was actually above 90% – and shortfalls due to unexpected shutdowns of the plant. While IEEFA’s article oddly asserts that ‘no one will say’ what is behind the CO2 shortfall, the report to the DOE provides a comprehensive tally of plant downtime and the technical issues encountered.

In brief, there do not appear to have been any show-stopping problems for CCS discovered at the plant. Many of the shutdowns are related to parts of the process unrelated to the new technology, such as issues at the captive gas turbine which provides heat and power, or inability of the oil field to receive CO2 – in 2017, Hurricane Harvey apparently also led to downtime. The capture facility itself has primarily experienced problems with various heat exchangers, used in cooling the CO2-binding solvent and in CO2 compression; replacements for these components have led to slightly lower performance. Issues were also encountered with solid particles from the coal plant’s desulphurisation unit being carried into the capture plant, leading to scaling of various components. NRG comment that the CO2 capture performance of the unit can deteriorate when the coal plant operates below 50% load, due to the CO2 concentration falling below design levels. However, as these teething problems have been addressed, unexpected shutdowns of the facility have steadily decreased over the three years, with the CO2 captured in 2019 reaching 95% of the target level.

Above all, it should be remembered that Petra Nova is a technology demonstration facility, aimed at testing a specific carbon capture process (MHI’s KM-CDR technology) at a scale ten times larger than previously trialled. A fundamental goal of such demonstrations is to identify and resolve any technical issues, so that future, fully commercial facilities may benefit. In this respect, Petra Nova has already proved its worth. Based on experience at the plant, as well as development of an improved solvent, MHI have stated they can reduce construction costs of future units by 30%.

Aside from the unwarranted question mark it raises over technical issues, IEEFA’s report primarily focuses on the financial viability of the CCS plant. The group suggest that the EOR operation has not been as productive as originally projected (although output at the field has still dramatically increased), and that this has been compounded by lower-than-expected oil prices. I can’t comment on the economic performance of Petra Nova, but it should be noted that – regardless of the success of this particular EOR venture – the demand for CO2 in the US has been healthy until the economic slowdown, even spurring Occidental Petroleum to invest in several (non-power sector) carbon capture facilities. Incidentally, IEEFA’s suggestion that the income shortfall may point to captured CO2 simply not being injected is certainly not possible, given the strict monitoring and accounting required by the project.

More importantly, such attention to the fortunes of a Texas oil field again shows a misunderstanding of Petra Nova’s role in the wider development of carbon capture. Like other early CCS facilities, its business case rests on a rather cobbled-together set of factors, including the government grant, cheap credit from Japan, and maximising the oil income through part-ownership of the oil field. This kind of scenario is not expected to be, and cannot be, the model for future CCS projects with the primary goal of mitigating CO2 emissions, so it is somewhat irrelevant how this has worked out for Petra Nova.

The project has shown that the technology works, and both the cost and dispatchable nature of CCS-power have led to its inclusion in many lowest-cost pathways to decarbonisation. From there, it is the job of policy makers to create an environment in which CCS makes sense for investors; this must include some form of revenue stream to compensate for the cost of storing CO2.

EOR has proved to be a useful means of providing some kind of financial viability to early CCS projects, but it is not considered the long-term future of the technology.

In fact, IEEFA’s report is ultimately aimed at quashing enthusiasm for a recent US policy aimed to provide exactly this kind of incentive  – the 45Q tax credit which rewards CCS developers with up to $50 per tonne of CO2 stored (reduced to $35/t if the CO2 is used for EOR). This policy has been heralded as a game-changer for CCS, instigating a wave of new project proposals, including some from the power sector. Through these projects, CO2 capture technology should have an opportunity to continue the process of optimisation and cost reduction begun at demonstrations like Petra Nova, and minimise the level of policy support it requires – much as renewable technologies have over the past 20 years.

A final concern IEEFA raise for the financial viability of Petra Nova (and therefore other CCS power projects) is the supposedly low operating hours of the host coal plant, despite its capacity factor remaining steady at around 71% until this year. As deployment of intermittent renewables grows, low running hours are certainly a risk for all thermal power plants but, given that many of these generators are still needed, energy markets worldwide are having to reconsider how to value the electricity they produce. Any viable CCS policy will clearly have to ensure that clean CCS plants are prioritised ahead of unabated fossil plant. The 45Q credit may indirectly achieve this by valuing the production of CO2, but other options are possible: the UK government is currently considering a form of guaranteed electricity price with some compensation for available capacity.

Fortunately, long-term energy strategy is not dictated by what will hopefully prove to be a short-lived hit to the global economy. Bipartisan support for CCS in the US remains, and interest has gathered pace since clarifications on the tax credit were issued earlier this year. Anyone interested in reducing CO2 emissions should hope that Petra Nova returns to service soon, but the project has already played a pivotal role in the development of an essential climate change mitigation technology.