Potential for CO2 sequestration and enhanced coalbed methane production in the Netherlands (2006)

This study investigated the technical and economic feasibility of using CO2 for the enhanced production of coal bed methane (ECBM) in the Netherlands. This concept could lead to both CO2 storage by adsorbing CO2 in deep coal layers that are not suitable for mining, as well as production of methane. For every two molecules of CO2 injected, roughly one molecule of methane is produced. The work included an investigation of the potential CBM reserves in the Dutch underground and the related CO2 storage potential in deep coal layers. The latter was also supported by laboratory experiments on the adsorption capacity of coal. Furthermore, an economic evaluation of ECBM recovery was made by analysing the costs of capturing CO2 from major stationary sources and CO2 transport, modelling the production of ECBM using CO2 injection with reservoir simulations and system analyses to investigate the costs (and it's sensitivities) of gas production. Furthermore, the costs of on-site hydrogen and power production (including on site CO2 removal and injection) were evaluated. CO2 sources in the Netherlands have been inventoried. Annually 3.4 Mtonne CO2 can be captured from chemical installations and transported to sequestration locations at 15 /tonne. Another 55 Mtonne from power generating facilities can be delivered at 40 to 80 /tonne. The technical potential of CBM in the Dutch underground is significant: a maximum reserve of about 60 EJ is stored in coal layers up to a depth of 2000 m. This figure should be compared to the current annual energy consumption of the Netherlands (about 3 EJ) or the known reserves of natural gas in the Netherlands (about 70 EJ in 1994). These reserves are concentrated in four main areas in the Netherlands: Zuid Limburg, the Peel area, the Achterhoek area and Zeeland. The CO2 storage potential could be about 8 Gtonne. This storage potential should be compared to the annual CO2 emissions of the Netherlands: about 180 Mtonne. This means, theoretically, that the total CO2 emissions of the Netherlands could be stored in coal layers for over 40 years and that CBM could meet the total national energy demand of the Netherlands for 20 years. However, it is still uncertain to what extent these reserves can be accessed. With conservative assumptions regarding the potential completion and recovery rate of CBM from coal layers by means of drilling and CO2 injection, as well as by limiting the ECBM recovery to a depth range of 500 -- 1500 metres, the 'proven' reserves could be limited to 0.3 EJ and the 'possible' reserves up to about 3.9 EJ. The accompanying CO2 that can be sequestrated than lays between 54 Mtonne and 0.6 Gtonne. Although those figures are far more modest than the 'theoretical' potential, they are still significant. In case the 'possible' reserves can be accessed, ECBM could supply 5% of the current national energy use on a more than carbon neutral basis for over 25 years. Given the Kyoto targets for 2010, or the national targets for renewable energy, this is a very significant amount. Without any subsidies or carbon taxes, the cost levels for ECBM recovery ranges from 3.5 to 6.5 /GJ methane produced. These costs levels come close to the projected natural gas prices in Europe in a timeframe of 10 to 20 years, which are projected to be between 2.5 and 3.2 /GJ. Inclusion of a carbon tax (or bonus) of 25 /tonne CO2 sequestrated, lowers the price of ECBM to a competitive 1.5 to 4 ?/GJ. The cost level of CO2 sequestration through ECBM is comparable with projected cost levels for CO2 storage in aquifer traps(Steinberg and Cheng 1989) in case the CBM would be sold for current natural gas prices. If the produced CBM is used for electricity or hydrogen production on top of the CBM field, the resulting CO2 can be injected in the coal directly (thereby eliminating CO2 transport costs). CO2 removal from a gas engine or a combined cycle is currently more expensive when compared to CO2 from industrial processes that must be transported to the CBM field. But a (SOFC) fuel cell produces a pure and therefore much cheaper CO2 stream. Although SOFC fuel cells are not fully commercially available and have high capital costs, they could lead to somewhat lower costs of electricity. Without CO2 bonus, on site power generation is more expensive than grid prices for the systems considered. But when a CO2 bonus of 25 /tonne CO2 is assumed, power generation costs are reduced below 3 cent/kWh, which is lower than the current average 3.2 cent/kWh. On the longer term, when SOFC fuel cells could become cheaper, on site power generation could become a (very) attractive alternative. On site (smaller scale) hydrogen production gives similar results. Capital costs for smaller scale on site hydrogen production are relatively high, but with a CO2 bonus of 25 /tonne, hydrogen costs could be lower than current production costs from coal and comparable to production costs from natural gas. Overall, the results of the economic evaluation indicate that CBM by means of enhanced recovery by CO2 injection in deep coal layers can be performed at competitive cost levels when the right system configurations are chosen. A, relatively modest, carbon tax (or 'bonus') of 25 /tonne could easily tick the balance in favour of ECBM recovery in Dutch conditions on short term already. However, a number of important (geo) technical and geological factors play a key role in whether these cost levels can be obtained or not. The dominating factors in the costs are the drilling costs. In case the costs per wellhead appear to be higher than assumed here, the economic performance of the system deteriorates. On the other hand innovations in drilling techniques, gaining more experience with the required drilling methods over time and obtaining 'economies of scale' by drilling relatively large numbers of wells in a short time to exploit larger CBM fields may bring drilling costs (and thus CBM production costs) down considerably. Regarding to the geology, the CBM potential and the actual accessibility of the, theoretical, coal reserves and the predicted presence of producable CBM gas in the coal layers is subject to broad ranges. More detailed surveys of the Dutch underground are needed to reduce uncertainties about CBM gas reserves. This can be obtained by seismic research and obtaining more and better samples of the Dutch underground. Such research is absolutely essential before ECBM is developed in the Netherlands on a significant scale. In conclusion, this study showed that ECBM is likely to become an economically feasible option for the Netherlands on relatively short term. It could at least play a significant (and potentially very large) role in reducing greenhouse gas emission levels for a time period of about 50 years. Although the estimates of energy reserves in the form of CBM are uncertain, they are potentially very significant (varying from 6 -- 60 EJ). The potential CO2 storage capacity is (very) large as well (1-8 Gtonne of CO2). Given the fact that CO2 binds well to the coal matrix, that deep coal layers are unlikely to be accessed for mining or other activities in the future and that CO2 storage with ECBM delivers a clean fossil fuel as a by-product, coal layers may be a preferable CO2 storage medium when compared to (saline) aquifers, empty gas fields or in deep oceans. Therefore, this option deserves further development and study. A mix of more detailed geological surveys combined with getting good quality samples, laboratory experiments, system studies on implementation scenarios and a pilot project (with a special focus on drilling techniques) is recommended.