Pieridae Energy's Caroline Carbon Capture Power Complex is looking to use CCS and clean power to offset their Goldboro LNG emissions. However, Pieridae is facing a deadline that is just about three weeks away.
June 30th is the target date for an FID decision on whether to proceed with their Goldboro LNG export terminal.
LNG ON HOLD
LNG proposed facilities have waned in popularity in the past year or so. Some were put on pause like Pembina’s Jordan Cove LNG in Oregon. Others lost funding like Kitimat LNG in BC. Some are still well placed after achieving FID like LNG Canada which is now under construction and others like Woodfibre, target making FID in the third quarter of 2021 and seem likely to proceed. ,
In a recent article, RBN Energy identifies 15 Probable, Pre-FID LNG Terminals in North America- 13 in the US and just 2 in Canada. Pieridae’s Goldboro LNG would be the 16th- on the list- Placing 3rd in Canada after LNG Canada and Woodside. Interestingly enough, one of the US front runners (NextDecade) is identified as the “greenest” due to their proposed carbon capture and storage system for the terminal capable of processing and storing as much as 5 million mt/year of the CO2 produced. RBN identifies reduced environmental impact as one of the 4 biggest trends for LNG offtake agreement conditions.
ENVIRONMENTAL IMPACT- A NEW SENSE OF PURPOSE
As LNG offtake contracts focus increasingly on greener gas, LNG projects have stepped up to the plate. According to Alfred Sorensen CEO & Director of Pieridae Energy, ESG, a big part of Pieridae’s story from the beginning is now in the spotlight…..
“A year or so ago it became apparent that for us to be successful at our LNG project, we had to come up with a carbon solution. I would say if the drums in the distance were a bit loud a year ago they are probably even louder now. Europeans in particular, which are our core market, are very much looking for suppliers of LNG to be able to show how they are minimizing their impact on the environment. That was the impetus to find a solution.”29dk2902l
As reported in the Petroleum Economist, several US LNG players are also planning to decarbonize their operations under increasing pressure to reduce their GHG footprint and harmonize with Net Zero targets.
REINVIGORATING A PREVIOUS PROJECT
Pieridae was fortunate that before they purchased the Southern Foothills assets from Shell eighteen months ago, Shell had already looked at doing a carbon storage project at Caroline. Caroline has a lot of naturally good features. It is in a part of the province that has other gas plants in very close proximity. The reservoirs are structured in a way that is conducive to being a conventional gas play with the ability to re-inject CO2. There is a need for multi-stage fracking in certain gas plays, but that scenario doesn’t exist in Caroline according to Sorensen. He says it is a sizeable field and a very big opportunity.
“Our field is so big that if we were to think of it as an EOR project it would probably take at least ten years to develop before we could begin to build pressure in the reservoir. So we have a lot of good capacity and that's kind of how the magic works for us. We feel we can probably inject about 3Million tons a year which is equivalent to our LNG project carbon production. So it's a very nice solution, And we could physically show our European customers that we can be a carbon-neutral solution.”
STRATEGIC PARTNERSHIPS
Sorensen says Pieridae has been actively looking at how they can get government to play a role in the Caroline Carbon Capture Power Complex and Goldboro LNG. It's a very big project for Pieridae. Since Carbon solutions are a big part of the current governments' mandate, he says it was something that made a lot of sense to Pieridae because they can demonstrate how they can trace carbon molecules from the Caroline facility to the LNG project and show how those carbon molecules get offset by reinjecting carbon molecules into the formation. He notes that this was the reason why the power plant is part of their solution. It is to obtain a sufficient amount of carbon to make the offset make sense.
“Our CCS project has the advantage that it is concentrated in an area where we don't have to collect/transport CO2 carbon over a long distance. We have been able to utilize a power scenario because there is a need for additional power (in the area). And it is ‘clean’ power - we create blue power by sequestering the carbon created as a byproduct of the power creation. We solve two or three problems at the same time- we increase power creation in the province, we do it while minimizing the carbon footprint and by re-injecting carbon, and we also minimize the carbon footprint for our LNG project. It's a win-win-win for us in that regard.”
POWER PLANT EXPANSION
The Caroline Carbon Capture Power Complex uses gas-generated power and the current Co-Gen is capable of generating about 25 megawatts of power. The planned power plant is an extension of the existing Co-Gen and it will be roughly about a 200 MW power plant. Out of that 200 MW, 50 MW will be used internally and Pieridae will be putting 150 MW of clean power into the grid. They are hoping in the next couple of weeks to announce a significant power partner joining the project. Sorensen says they’ve had feedback that Pieridae is a company that wants to do a lot and says they are confident that with strategic partners they will be able to succeed.
BRINGING CCS INTO THE LNG VALUE PROPOSITION
With the recent decisions by Chevron and Woodside to exit the Kitimat LNG project, it seems that LNG projects in Canada can’t catch a break. LNG has fallen in popularity as a "green solution" because it's perceived by environmentalists as “just not green enough” as it involves the production of hydrocarbons. However, there are some encouraging signs from Asian countries like Japan which still considers natural gas and LNG as part of their plan to be carbon neutral by 2050. LNG when paired with CCS seems to be a winning combination with CCS increasing LNG’s environmental score. LNG paired with CCS may be the strategic partnership that can get Pieridae’s Goldboro LNG project across the finish line.
A CCS BENEFIT TO OPERATORS IN THE AREA?
Pieridae is looking to make its CCS project as efficient as possible. Sorensen notes that the Caroline complex is relatively close to three or four other big gas plants and two NGTL large compressor stations- a target carbon market. The idea is to collect CO2 from surrounding neighbours and give them carbon credits in return. This will allow Pieridae to go from capturing 100M tons of CO2 to up to 300 M tons.
AN ALBERTA CARBON MARKET?
Pieridae is focused on finding carbon solutions according to Sorensen.
“Everyone is going to have to begin to look for a solution. No producer in this province can afford to pay $150 a ton for carbon unless we get $10 natural gas prices. At $30 a ton, our carbon bill was around $9M and we are a mid-sized producer – 44K barrels /day. At $150 a ton, the carbon bill would be up to $45M. Everyone will have to come up with a carbon solution sooner or later. 2030 is not that far away.”
GETTING CARBON-NEUTRAL WCSB GAS TO THE LNG TERMINAL
Pieridae’s carbon-neutral gas will take TC Energy’s Mainline across Canada to the Portland Natural Gas Transmission System (PNGTS) connecting to the Maritimes & Northeast Pipeline (M&NP) and the planned LNG terminal location-Goldboro NS where it is intended for the European market.
Sorensen says the carbon market in Canada is nascent- you can purchase credits from certain sources, but it is still in development. The European carbon market however is very established. Pieridae has been looking to be able to trade their Canadian credits in the European carbon trading market and they are optimistic that by the time the LNG Terminal is built they will be able to.
“If you look at our Carbon project, it has three streams of revenue. A toll for the power company, the sale of carbon credits, and the cost of sequestering the carbon. Our project is big enough that we could be a really large supplier of credits and because of that, we would need a bigger market than Alberta currently is. We burn a lot of carbon in this province and many businesses are looking for a solution. If you wait for 2030, even the largest companies would have difficulty staying solvent in the market if they didn’t have an offset. And that’s the point of it all. If you find a solution, then the amount of carbon in the atmosphere will eventually come down.
Sorensen has picked some pretty substantial and strategic partners to collaborate with. Nearby gas plants and compressor operators will be needing substantial carbon offsets just as carbon-neutral energy will be needed abroad. Pieridae has the advantage that the Caroline carbon capture project is less costly to operate than say the Alberta trunkline that requires refrigeration and liquefaction of CO2 to transport it greater distances to sequestration. Pieridae is trying to stay in a smaller geographical area and avoid the greater expense and their sequestration is more permanent gas “storage” rather than EOR. The power plant helps Pieridae avoid having to go farther afield to source carbon. In addition, there are high transmission wires that run right over the Caroline plant putting it in a “sweet spot” – where ample carbon storage, natural gas supply, and high transmission wires are co-located, making it unique in the province.
As planning continues toward reaching a final investment decision by June 30th, Sorensen notes: “Pieridae takes its environmental responsibility seriously by developing a carbon solution to reduce the impact of our LNG project on the environment.” and he hopes to bring in more strategic partners to deliver that solution.