Oil and fossil gas companies Equinor, Shell and Total plan CO₂ storage with Norwegian government

By: Tore Braend

CO₂ has been stored in a geological formation under the seabed since 1996 in the Norwegian part of the North Sea. The CO₂ was separated from natural gas extracted from the Sleipner gas field. Its storage in the Utsira geological formation has been widely used as a proof that CO₂ storage already exists and that it will work for other types of CO₂ storage as well. This is not true. An article in Acid News No. 2 June 20181 revealed the truth behind some of the myths about this method of storage. The CO₂ from the Sleipner field is close to the storage site, and has to be separated from the natural gas anyway. This reduces the cost of the operation compared to CO₂ being transported over long distances from CCS plants on land. The separation of CO₂ from exhaust gases in power plants or industrial processes also adds to the cost, in contrast to the Sleipner plant.

A consortium of several major oil companies has a project that aims to establish a very different type of CO₂ storage under the seabed in the North Sea. This is planned to receive CO₂ by pipeline from temporary storage onshore in Norway. The aim is to receive and store CO₂ from CCS plants in Norway and in other countries. This is called the Northern Lights consortium, and consists of Equinor, Shell and Total. The area designated for storage is in a geological formation called the Johansen Formation, situated between the Troll and Oseberg oilfields off the coast of Norway.

Equinor was given permission to develop this CO₂ storage project on behalf of the Northern Lights consortium in January 2019. The permit was given based on a plan to investigate the formation and its suitability for CO₂ storage. Equinor has conducted the exploration on its own, based on the plan and the conditions set in the permit. No external or independent entity was involved in the actual exploration of the formation. Such independent scrutiny of the results will take place afterwards when the application is submitted.

The area has seen considerable oil and gas exploration and extraction activity in the past. This has led to a substantial amount of seismic data about the geological formations in the area. These data have been analysed to determine the viability of the formations for CO₂ storage. Test drilling started in November 2019, to extract cores of material for further investigations. The test cores have been studied to see if the theories about the geology based on the seismic data can be confirmed. According to the website of the Northern Lights consortium, the results from drilling have confirmed the suitability of the formation as storage for CO₂. The well will later be used as an injection well when storage becomes operational. No further test drilling is planned, according to the Norwegian Environment Agency.

On its website the Northern Lights consortium states that a permit from the Norwegian Environment Agency (NLA) is necessary before injection of CO₂ may start. According to sources in the NLA, an application from the Consortium is not due for at least a year from now. There have been consultations between the Consortium, NLA and the Norwegian Petroleum Directorate for a period of time regarding the application and its content. The responsibility for the permit is shared between the NLA and the Petroleum Directorate. If the application process runs as normal, the operation of the CO₂ storage is unlikely to start before 2023–24.

As this is essentially a government project, the progress of the project is absolutely dependent on an investment decision by the government. This has been postponed many times already. Otherwise, the NLA does not seem to see any substantial Norwegian legal or administrative barriers to the project. However, the legality of importing CO₂ from CCS plants in other countries may not be so clear. The London Protocol, which aims to stop the uncontrolled dumping of waste in the ocean, has been changed in order to allow “CO₂ sequestration in sub-seabed geological formations.” However, only six of the parties to the protocol have ratified this 2009 amendment to article 6 of the London Protocol. Twenty-nine other signatories to the protocol need to accept the amendment before it can enter into force. In the meantime, efforts have been made to get around this problem, and find a temporary solution. Until the amendment can enter into force, or a temporary solution can be found, other countries cannot export CO₂ to the storage facility without coming into conflict with the London Protocol. This may represent a major barrier to the project in addition to the problem of the essential Norwegian government financing of the storage.

The capacity of the storage reservoir will be much larger than is needed to store CO₂ from one, possibly two, CCS plants in Norway. Without additional CO₂ from other customers willing to pay a high price per ton of CO₂ sequestered, the economics of the project may not make it feasible as a commercial operation. The price for a ton of CO₂ must be at least USD 50, according to an earlier estimate by Equinor. At present the price is much lower, down to 10 percent or less of the required price for a commercial operation. The initial phase of the project will depend on massive government subsidies to get off the ground.  Subsidies are in principle forbidden within the EU Inner Market, of which Norway is also a member. But this prohibition may be lifted, if a project is deemed to be of great environmental benefit. This is the argument used by ESA, when it recently approved the government subsidies for the Northern Lights project.  (ESA is the EFTA Surveillance Authority). This was to be expected, and a permit from ESA was not considered as a major obstacle for the project earlier in the process.

In conclusion, there do not seem to be any major legal or bureaucratic obstacles to prevent the Northern Lights Consortium from getting a permit from the Norwegian authorities to build a CO₂ storage facility and receive CO₂ that can be stored there. But the project depends on massive subsidies from the Norwegian government to build and operate the facility. An investment decision has still not been made by the Norwegian government. These subsidies will only cover the cost for sequestering CO₂ from Norwegian CCS plants that may be built. This is not enough for viable commercial operation of the storage facility. Huge amounts of CO₂ from foreign sources willing to pay a cost up to USD 50 per ton are also needed. The willingness of foreign governments to cover the cost of sequestration of CO₂ from their own CCS plants may therefore be a problem. The London convention may also be a major obstacle, as there may not be a legal way to export and transport CO₂ across international borders.

Tore Braend

1. https://airclim.org/acidnews/myths-about-carbon-storage-%E2%80%93-sleipn...

In this issue

Editorial

The clock is ticking to achieve the 1.5°C goal of the Paris Agreement. To be clear right from the start: this goal deserves every effort that mankind can pull off. In the name of realism, this is the goal we must focus on now, given the current level of progress in reducing greenhouse gases. However, damage to marine ecosystems will not be avoided even if we reach this goal1. In fact, damage already occurs at current levels of warming, as evidenced by the bleaching of coral reefs2. This may be an inconvenient truth when our current goal is 1.5°C.

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