UK-based clean energy player Storegga Geotechnologies, lead developer of the ambitious Acorn carbon capture and storage (CCS) project in Scotland, is eyeing a final investment decision for phase one of this development in 2021, targeting start-up in 2024 and with huge growth potential in later years.
Storegga chief executive Nick Cooper told Upstream: “We hope to be the first (UK CCS project) to FID; we hope to be the first to be operational.”
However, he said the government must create the necessary fiscal and legislative conditions before any of the UK’s CCS schemes can progress.
“If the government moves with the right initiatives, you could see the UK becoming a real leader in carbon storage,” he said.
Pale Blue Dot Energy, the original operator of Acorn, was acquired by Storegga in July with support from Australia's Macquarie Group, now a Storegga investor.
Initially, Acorn will capture and store carbon dioxide emissions at the St Fergus gas complex in northeast Scotland.
From there, CO2 will be sent via an existing pipeline to the abandoned Goldeneye field in the UK North Sea, located within Pale Blue Dot's CO2 storage licence.
Cooper expressed cautious optimism that in the coming months, the UK government will approve the regulations and fiscal incentives needed to take a final investment decision on Acorn in late 2021, although sanction also depends on securing project partners.
He expects Westminster to establish a regulated model for CCS schemes, offer temporary grants for CCS projects, and put in place a contract for difference (CfD) mechanism to offer financial assistance that makes it commercially viable for “early mover emitters” to access virgin CCS infrastructure.
“The government is working out what is a fair rate of return for CCS businesses like Acorn and what tolling fees they should be charging over time,” explained Cooper.
“It is also creating a CfD mechanism for emitters to be temporarily supported by the government to be a customer of carbon storage.”
He said this is identical to what happened for UK offshore wind in its formative days, but stressed the cost of a CfD mechanism to get CCS up and running “is nowhere near the (CfD) cost that was required for offshore wind”.
“Once CCS projects are up and running, it’s a snowball effect and it becomes economically sensible – it’s just (about) giving it a jump start,” Cooper said.
Acorn's big backers
Supermajors Shell and Total, plus private equity-backed player Chrysaor, have all backed Acorn in its evolution from a concept to a near-bankable project. Cooper hopes they will become partners in a formal joint venture arrangement.
“They have been very supportive and helpful in the project so far and have brought a lot to it. We hope they do sign up, but if not, there are multiple other parties that are keen to enter this (project),” he said.
Acorn’s first stage – essentially a commissioning phase – will capture 300,000-400,000 tonnes per annum of CO2 from St Fergus, although its capacity will be 2 million tpa.
Using the existing Goldeneye pipeline, capacity can be ramped up quickly to between 5 million and 6 million tpa.
Technically, what needs to be done before CO2 capture starts is to re-purpose the 100-kilometre pipeline between St Fergus and Goldeneye, build a capture plant and associated facilities at St Fergus and drill a new offshore injection well. Costain is undertaking front-end engineering and design work.
On the commercial front, expressions of interest will be sought from CO2 emitters to secure binding agreements.
Cooper is optimistic about Acorn’s growth potential, pointing out that Pale Blue Dot's storage licence houses more than 30% of the UK's total CO2 storage capacity within 30 kilometres of the Goldeneye line.
“Within that one licence alone there are decades' worth of storage capability,” he said, adding that new pipelines could increase this capacity far beyond 20 million tpa.
According to Pale Blue Dot's website, the licence has a storage capacity of 150 million tonnes compared to the UK’s emissions of 400 million tpa.
In addition, the company highlighted in a recent webinar that known offshore locations within 50 kilometres of the St Fergus pipeline corridor have 23.8 gigatonnes of storage potential, equivalent to 65 years’ worth of UK emissions.
Future Acorn phases could be supported by CO2 shipped to Peterhead port close to St Fergus, and emissions from Scotland’s industrial belt, the rest of the UK and potentially further afield.
CCS is not Pale Blue Dot’s only goal — it is developing hydrogen production capability using Acorn’s infrastructure.
In February, the company secured UK funding for engineering studies to progress technical and commercial plans for a project that would convert some of the gas received at St Fergus into hydrogen.
The aim is to phase out gas carried by the UK National Transmission System, replacing it with clean-burning hydrogen, initially by blending.
A 200-megawatt hydrogen plant could be operational at St Fergus in 2025, with its 400,000 tpa of emissions captured and stored using Acorn’s CCS infrastructure.
Direct air capture
Independently of Acorn, Pale Blue Dot is investigating the potential of direct air capture (DAC) technology which would remove CO2 from the air.
It recently struck a deal that could see Canada-based Carbon Engineering’s DAC technology used in the UK.
Just a year old, Storegga is named after a huge subsea landslide that occurred off Norway about 8200 years ago, creating a towering tsunami that would have caused huge disruption to coastal communities around the North Atlantic.
In a sense, Storegga is also a disrupter and is an example of the role that smaller companies can play in the energy transition.
The company’s founders — Cooper, Alan Booth and Jon Taylor — are upstream veterans and most recently crossed paths in that sector at Africa-focused Ophir Energy, which was sold to Medco Energi in May 2019.
The trio saw an opportunity to apply their geological and geophysical expertise to neglected but critical areas within the energy transition market including CCS, geothermal, hydrogen storage and compressed air storage in salt caverns.