At the Emirates Steel Industries’ smelter in Musaffah, engineers successfully tested carbon dioxide injection last year. Sammy Dallal / The National
At the Emirates Steel Industries’ smelter in Musaffah, engineers successfully tested carbon dioxide injection last year. Sammy Dallal / The National

Economics hold up greenhouse gas project between Adnoc and Masdar



The Gulf region's first project to store greenhouse gases underground is being held up by pricing issues despite having completed technical feasibility and engineering work.

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Masdar, Abu Dhabi's clean-energy company, wants to press ahead with a 500km pipeline network to funnel industrial emissions into oilfields to force out remaining oil. But the customer to which Masdar wants to sell the carbon dioxide, Abu Dhabi National Oil Company (Adnoc), already has a source of cheaper natural gas for the same purpose.

Because the two companies have not been able to settle on a price or timetable after two years of talks, a 50km pipeline that is to be the first part of the network is being held up, reducing the time that Masdar has to meet its own targets.

"They are trying to come to some solution. What they are trying to come up with is a commercial model that works," said Paul Crooks, the manager of the pipeline project at Masdar's carbon unit. "There's no point in producing [carbon dioxide] with nobody to use it."

Masdar sees carbon-capture technology as a way to reduce carbon dioxide emissions - which many scientists say contribute to a warming of the planet - as the emirate increases power production and builds immense smelters. The bonus would be that Abu Dhabi could inject the gas - as much as 30 million tonnes a year - and potentially earn the UAE carbon credits and international prestige under a UN system to combat climate change. It would also free up more natural gas for use in power generation.

But the plans Masdar outlined in 2008 have not taken off yet because the state oil company has not agreed on a timetable or how much it will pay for the gas.

"There's a timing issue. They've got a different time schedule than we have," Mr Crooks said on the sidelines of a conference in Abu Dhabi. "They haven't scaled it down. I've always said we have done this in phases.

"We're not going to put a 500km pipeline in the ground at once. We have to match the timeline to Adnoc."

Abu Dhabi is not alone in its trouble moving carbon capture off the drawing board. Last year, one-fifth of all such projects worldwide were cancelled or delayed, according to the Global Carbon Capture and Storage Institute. That included Shell putting off a high-profile plan to bury carbon in the Netherlands after encountering resistance from the local population.

The plan Masdar sketched out in 2008 was to connect a hydrogen-fuelled power plant, aluminium and steel smelters, and other power stations, with Abu Dhabi oilfields.

Part of that original network has been in question since January, when BP pulled staff off a planned US$2 billion (Dh7.34bn) hydrogen-fuelled power plant that was to feed into the network. The problem, company officials said, was the lack of an established price for carbon.

"It's easier to pump down that natural gas than to capture carbon dioxide," said Brian Freeman, the business development manager at Integrated Environmental Solutions, an energy consultancy in Kuwait.

"With carbon dioxide you've got to capture it, which is half of the battle. Capture technology is very expensive and it just hasn't been developed. You've already got access from your existing exploration, so why not just use that?"

The only engineering completed so far on the Abu Dhabi network has been for the 50km pipeline to connect Emirates Steel Industries' smelter in Musaffah with Adnoc's Rumaitha oilfield, where engineers successfully tested carbon dioxide injection last year.

Masdar completed the engineering work last year. Mr Crooks said the pipeline was a challenge to design because of the high pressure of the compressed carbon dioxide gas and a lack of recommended practice in the relatively new field.

"We need more validated data," he said.

If Abu Dhabi can get that pipeline operating by a scheduled date in 2013, it would be in record time. Masdar hopes to solicit construction bids this year, but that hinges on the negotiations and a go-ahead from the authorities.

"We're going to start the tendering process as soon as we get the green light from the leadership," said Mr Crooks. "It's going at the speed that it is going."

Pricing has been an issue for other energy projects in Masdar, which is informally charged with meeting Abu Dhabi's goal to source 7 per cent of its electricity from renewables by 2020. Shams I, a 100 megawatt solar plant, relied on a "green payment" from the Government to allow the project to proceed.

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