Xodus Group advises Dutch government on CCUS project

Source: press release, 18 September 2020

Jonathan Fuller, Xodus Group Global Head of Advisory and Energy Transition
Jonathan Fuller, Xodus Group Global Head of Advisory and Energy Transition (photo: Xodus Group)

International energy consultancy Xodus Group has delivered a review into tariffs for a landmark Carbon Capture Utilisation and Storage (CCUS) project in the Netherlands.

The review for the Dutch Ministry of Economic Affairs and Climate Policy analysed proposed fees for the transport and storage requirements of the Porthos project, a joint venture between the Port of Rotterdam Authority, Gasunie and EBN, which seeks to transport CO2 from industry in the Port of Rotterdam to empty gas fields beneath the North Sea.

The Netherlands has clear climate objectives to reduce greenhouse gases by 49% in 2030 and 95% in 2050 compared with 1990. The CO2 that will be transported and stored by Porthos, will be captured from a variety of companies, with Shell, ExxonMobil, Air Liquide and Air Products already signing joint development agreements. They will supply their CO2 to a collective pipeline running through the Rotterdam port area before being pressurised in a compressor station.

The study involved a top-down benchmarking analysis, where the project was compared to other planned CCUS developments globally with a focus on similar CCUS backbone suppliers. Xodus also recreated the Porthos design in its cost estimating software and database to arrive at an independent tariff estimate and range. The two approaches yielded similar transport and storage “best estimates”, of around EUR 50 per tonne, encouragingly close to the figures calculated by Porthos.

Jonathan Fuller, Global Head of Advisory and Energy Transition at Xodus Group says, “The Porthos project has the potential to make a significant contribution to helping the Netherlands reach its carbon reduction targets. CCUS is still relatively in its infancy, which creates uncertainty around cost models. We analysed other global projects, both planned and in operation, taking into consideration peak CO2 rates, capital and operating expenditures and relevant country taxes. The Porthos model, with multiple suppliers and a shared backbone is currently the most developed of its kind, so to ensure the review was robust we modelled the design in our cost estimating software which yielded a very similar tariff result, giving the certainty needed to move forward.”

The CO2 will be transported through an offshore pipeline to a platform in the North Sea, approximately 20km off the coast where it will be pumped into an empty gas field more than 3km beneath the sea. It is expected that in its early years, the project will be able to store approximately 2.5 million tonnes of CO2 per year with plans to be operational by 2024.

Xodus believes that more momentum is required around enabling CCUS projects if countries are to meet net zero targets.

Fuller adds, “CCUS is expected to play a vital role in decarbonisation strategies with Shell* estimating that in the EU, at least 24 million tonnes per annum of CCUS facilities are needed to be installed between 2025 and 2050, at a rate of two per month. The current pipeline falls well short of this goal. A key barrier is the lack of established business models to allow adoption of the technology at scale. Xodus is developing a roadmap for CCUS commercialisation by addressing the policy, business model structures and interactions required between public and private vehicles to achieve success.”

*Shell Responsible Investment Annual Briefing 2020, 16 April 2020.