US CO2 outlook: Recent shifts in CCUS activity

When I was asked earlier this year how I see carbon capture projects impacting the merchant carbon dioxide (CO₂) market, I explained that carbon capture and sequestration (CCS) has slowed dramatically with the change in administrations.

Sequestration was a threat to close many CO2 sources, so de-emphasising CCS certainly benefits the gas industry.

I also offered another looming question in response – how quickly can or will the gas companies try to reduce their dependence on well sources like the Jackson Dome as their contracts come up for renewal? The major gas companies all have goals to reduce their emissions, of course.

The question I should perhaps have raised is, which CO2 sources here in the US could terminate their agreements to sell to gas companies, if and when sequestration momentum returns?

So many questions, so few answers – but here’s my hot take on some of those questions right now.

Projects in the pipeline

Previously, carbon capture activity from the three big pipelines planned for the midwest – Trailblazer, Summit Carbon Solutions and Navigator – was expected to negatively impact CO2 sources.

Trailblazer has now moved ahead because it was mainly the conversion of a natural gas line to CO2.

Grassroots concern over the safety and compensation to landowners (eminent domain) has thwarted the construction of the ambitious 2,100 miles of CO2 pipeline planned by Summit, while Navigator has terminated activities at the time of writing. I understand Summit is still trying to move ahead with a smaller footprint, despite strong opposition.

The impact of these three pipelines was to be felt mainly in the five western Corn Belt states of Iowa, Minnesota, Nebraska and the two Dakota’s.

Two ethanol plants in North Dakota and one in Illinois ordered CO2 plants for sequestration, as did two in Texas and Front Range Ethanol in Sterling, Colorado. However, only Front Range was selling its CO2 into the industrial gas market.

Alto Ingredients in Pekin, Illinois planned to sequester 600,000 tonnes per year (tpa) of CO2 a few miles from their plant which would have eliminated 1,000 tons per day (tpd) of CO2.  The state has blocked this effort due to concerns over the aquifer that would have to be drilled through to reach the depth required for sequestration. Alto is now considering other options to transport its CO2 further away.

New emphasis on individual wells

A number of areas boast geology favourable for CCS – and there is a notable new emphasis on individual wells in Indiana, Ohio and Michigan.

Illinois, Wyoming and North Dakota are capable of storing large volumes of CO2 which is where the three large pipelines had planned to sequester. With much of Illinois prevented from doing CCS due to the large aquifer that bisects the state,  the emphasis for ethanol companies has shifted to the eastern Corn Belt states. Indiana has two of the 18 approved Class VI wells in New Goshen and Union City, and a third is under review in Logansport.

Why ethanol plants are focused on their CI score

Ethanol plants are focused on lowering their CI (Carbon Intensity) score so that they can receive up to $1/gallon in credits.

They can achieve this by lowering the amount of carbon energy they use via several capital investments, such as solar/renewable power, or mechanical vapor recompression – or via the sequestration of their CO2 emissions.

Companies realise that even when 45Z expires, they can then start collecting the $85/tonne credit for 12 years under 45Q. Consequently, most of the CO2 sources in these states are looking closely at their CCS opportunities.

What could happen next?

So what about that question I said we should be asking – where could we yet see CO2 sources taken off the table in favour of sequestration?

Should the momentum return and those ethanol companies play the game in carbon credits, the CO2 sources which could terminate their agreements to sell to gas companies are:

• Cardinal Ethanol,  Union City, Indiana – Class VI well approved and has already ended its contract with Air Products
• The Andersons, Albion, Michigan
• Zeeland Farm Services, Riga, Michigan
• Verbio, South Bend, Indiana
• Central Indiana Ethanol,  Marion, Indiana
• POET’s four plants in Indiana/Ohio, which may continue to sell to Poet Pure and sequester the remaining CO2 vent gas, which is substantial.

This is just an indicative list of what could feasibly happen. While all of these sources will not be converted for sequestration, even if only two or three were to choose this option, it would leave a hole in the CO2 supply in this region. Well known companies such as DTE Vantage and Lapis Carbon Solutions are making headway towards developing large-scale CO₂ transportation and permanent geologic sequestration projects.