Study Examines Economics of CCUS Projects in Conjunction With Large Offshore Gas Projects
Authors: Carpenter Chris 
Published: December 2024

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This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper SPE 219309, “The Economics of CCUS Projects in Conjunction With Large Offshore Gas Projects,” by Chresten S. Meulengracht, SPE, NRG Models, and Deddy Hasanusi, Semesta Energi Services. The paper has not been peer reviewed.

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The complete paper examines the economics of carbon capture, usage, and storage (CCUS) projects, either standalone or in conjunction with large offshore gas projects, in Denmark, Indonesia, and Australia. An analysis of the legislation in these countries reveals to what degree the frameworks are defined to support CCUS projects. Economic-robustness analyses of the projects are performed to determine under which circumstances CCUS strengthens or weakens the business cases for the operators.

Carbon Capture and Storage (CCS)/CCUS Legislation in Three Countries

Denmark.

Summary and History of Legislation.

Denmark initiated its first CCS legislation by issuing permits in 2023 for CO2 storage exploration in the Danish North Sea to three companies with exclusive exploration rights for 6 years, extendable to 30 years if suitable storage locations are found. A significant initiative is the Greensand project, aiming to store up to 8 mtpa CO2 by 2030. These efforts are part of Denmark’s goal to achieve carbon neutrality by 2045.

The second bidding round for onshore CO2 storage has been completed, and licenses will be awarded in 2024. The Danish government has proposed a plan for onshore CCS to achieve reductions of at least 3.2 million tonnes of CO2 by 2030.

CO2 Taxes.

Denmark’s government has proposed a uniform CO2 emissions tax for businesses. However, not all companies will pay the same rate, according to the proposal. The government proposal, entitled Green Tax Reform, aims to reduce CO2 emissions by 3.7 million tonnes by 2030.

The government proposes a CO2 tax of 750 kroner per tonne of emission. Companies covered by an EU quota system will receive a deduction and only will be required to pay half of the full amount. Companies in the mineralogical processing sector are to be given further discounts on the tax and only will pay 100 kroner per tonne of emissions.

CCUS Incentives.

The Danish Energy Agency has created two subsidy funds, the CCUS Fund and the Negative Emissions via CCS (NECCS) Fund, to support the deployment of CCS technology in Denmark. The CCUS Fund can support the capture of both fossil and biogenic CO2, while the NECCS Fund will exclusively support the capture of biogenic CO2.

Indonesia. Summary and History of Legislation.

Indonesia has introduced a comprehensive regulatory framework for CCS and CCUS in upstream oil and natural gas business activities. Regulation includes the rights, obligations, and liabilities of contractors to implement CCS technology in their oil and gas working areas, and the monetization of CCS projects and CCS activities closure. Indonesia aims to reach net-zero emissions by 2060, and CCS is seen as a promising means of reducing carbon emissions to achieve this goal. Furthermore, a presidential regulation allows CCS operators to set aside 30% of their storage capacity for imported CO2.