Planning for carbon capture
An investment planning roadmap for a project incorporating carbon capture should address the scheme’s basic objectives and its viability in the market
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The management of carbon and energy security can be approached in much the same way as any other new investment project. By using an investment planning approach and applying this specifically to focus on energy security and greenhouse gas (GHG) management, the selection of the right project to meet objectives can be achieved. This article explains how an investment roadmap model can be adapted to projects tailored to energy security and carbon reduction, including location and process considerations.
The goal of investment planning is to support companies in the selection of the right project to achieve their strategic goals. This involves determining if the projects are both economically and technically feasible, ensuring the optimum use of capital and determining the most appropriate timeframe for the project.
There is a wide range of questions to be addressed when embarking on a new project, such as:
• What products are required?
• What feedstocks are available?
• What are the possible process routes?
• Is the proposed location suitable?
The best way to meet the project’s requirements is to follow a simple roadmap process (see Figure 1).
Investment planning roadmap
It is fundamentally important to define what the project aims to achieve. This can range from a simple debottleneck of a plant to achieving a carbon dioxide (CO2) emissions target for a global corporation. There may also be a number of stakeholders involved, so this stage is key in ensuring alignment between the parties involved.
This step is essential to drive the configuration of feedstock, product slate and plant towards the optimum economic solution, thus maximising the plant’s margin. Market analysis will determine product demand and price (including CO2 pricing, for example), as well as the price and availability of feedstocks.
Plant configuration studies
For most applications, linear programming (LP) is used to develop a model of the project, incorporating product yield, capital and operating cost data for each potential unit operation. The results of the market analysis are also input into the model, which is then run to determine the best performing configuration on a net present value (NPV) basis. The LP model generated can then also be used to explore rapidly a number of what-if scenarios, enabling the project’s economic sensitivity to variations in key product or feedstock prices to be understood.
The suitability of the proposed location (or locations) can be assessed by considering four key factors:
• Site: land availability, ground conditions, structures and obstructions, severe weather protection, earthquake zonal rating
• Port: already existing, dredging requirements, jetty location, existing facilities, suitability of surrounding waterways
• Infrastructure: local and national road network, heavy haul routes, rail network, regional and national airports
• Local area: towns and industry nearby, construction resources, schools and emergency services, prevalent health hazards, landfill materials, local labour.
This assessment looks at the suitability of prospective sites and enables the cost of infrastructure development, ground remediation and so on to be factored into the cost estimate.
Offsites and utilities
Scope of the utilities and offsite requirements will be based on data from process unit technology providers and from the contractor’s own data. Major equipment lists for all utilities, tankage and other offsite requirements will be identified, including intermediate tankage based on high-level shutdown philosophy and marine facility requirements.
It is crucial to consider constructability during the investment planning stage of a project in order to determine issues that could impact the design. Such issues include access routes for large or heavy equipment and the costs/benefits of modular rather than stick-built fabrication. At this stage, a high-level schedule for the full project through to start-up can be developed and the contracting strategy can be planned.
Cost estimates, based on current market data for the plant’s location, are based on stages in the investment planning process. High-level operating costs, including maintenance, insurance, labour, feedstocks, catalyst and chemical requirements are developed, along with the capital cost estimate.
Economic and financial modelling
Capital and operating cost estimates are fed into models to ensure that the plant economics are sufficiently robust and achieve the objectives specified at the beginning of the investment planning process. Assumptions within the models should reflect the company’s long-term outlook and should consider a number of scenarios. The project’s internal rate of return (IRR) should be considered, along with the NPV, in order to determine the magnitude of the reward for the estimated costs of investment.
Investment planning process conclusion
Investment planning can be an iterative process and, while changes are frequently made in later design stages, the earlier they occur in the project’s development the lower the cost of changes and iterations.
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