Shippers eye carbon freight market in Europe

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Monday, 18 May 2009

Shipping groups are looking into providing vessels capable of transporting carbon dioxide to offshore disposal sites as part of the European Union's push to curb greenhouse gas emissions, ship industry officials say. Carbon capture and storage (CCS) could keep up to a third of manmade carbon dioxide (CO2) out of the air by trapping and then burying emissions from fossil fuel power plants, analysts say.
The EU has an ambition to have up to 12 demonstration plants using CCS by 2015.
"In the short term shipping could well be looked at as a way to get CCS off the ground -- particularly for continental EU demonstration projects wishing to utilise distant North Sea storage," said Malcolm Ricketts, principal carbon analyst with energy consultants Wood Mackenzie.
Pipelines already in place to bring oil and gas from the North Sea to Germany, Britain and Norway were a likely longer term solution to transport greenhouse gases the other way.
Power stations, industrial sites and municipal buildings participating in the EU's Emissions Trading Scheme put out about 600 million tonnes of CO2 in 2008.
Norwegian shipping group IM Skaugen said there was commercial scope for the ship industry.
"The first CCS projects are very likely to happen in western Europe and the short distance to transportation of waste carbon dioxide will happen towards the North Sea as a kind of centre for this," said Per Arne Nilsson, VP business development CO2, with IM Skaugen.
"There are some ideas that we are aware of where in the short term CO2 that is captured in smaller scale projects -- pilot projects -- could potentially be shipped to storage locations."
STORAGE POTENTIAL
Nilsson said the group had six ships in its fleet currently used to transport ethylene and other petrochemical gases but were also internationally certified to carry CO2.
Four of the vessels are 8,500 cubic metres with two at 10,000 cubic metres.
"This is interesting as such because it actually opens in the very short-term to deploy one or two of these ships in early trials," he said.
Units of Danish oil and shipping group A.P. Moller-Maersk are also looking into the commercial potential of CCS. Maersk Tankers is focused on the transportation of CO2, while Maersk Oil is looking into the storage aspect of CCS projects.
Christian M. Ingerslev, director of gas with Maersk Tankers, said the two divisions were in talks with utility companies in Europe without giving further details.
"If we look at the North Sea alone there are good storage opportunities," he said. "There seems to be a willingness within the European Union to invest in this and to enforce new rules."
Maersk has estimated that shipping CO2 by tanker from Denmark to the North Sea would cost about $12 per tonne.
Maersk has said a ship of 20,000 to 35,000 cubic metres that can hold 25,000 tonnes of CO2 would be best suited for the job. Wood Mackenzie's Ricketts said the main storage areas in the EU were predominantly offshore, and mainly in the central and northern North Sea via saline aquifers -- which are deeply buried porous sandstones filled with salt water.
The UK -- particularly Scotland -- as well Norway had potential to store CO2 in such aquifers while the Netherlands and Germany had smaller potential to store CO2 mainly in depleted gas fields, he added.
"Using shipping for transporting CO2 may be initially competitive in terms of capital costs, but in the medium to the longer term if these projects are up and running, pipelines will be more attractive for a full scale CCS network owing to lower operating costs," he said.
The shipping sector contributes about 3 percent of the world's emissions of CO2, and environmentalists have questioned whether using vessels to ferry emissions is a positive step.
David Santillo, senior scientist with Greenpeace research laboratories at the University of Exeter, said: "The very fact that this is going to be shipped around in concentrated form in vessels on a marine environment, which is naturally a very hazardous place, gives additional cause for concern over and above the fact you are dealing with a means of transport which is relatively carbon intensive anyway."

Source: Reuters