07/06/2022 · 3 minutes read
The UK Government demonstrated its commitment to carbon capture, utilisation, and storage (CCUS) technology as a means to achieving net zero by announcing the locations of the first two UK facilities. The East Coast Cluster and HyNet North West project in Liverpool Bay are vast, interconnected onshore and offshore capture, transportation, and storage networks for captured CO2, scheduled to become operational by the mid-2020s. Two other cluster sites, yet to be announced, are expected to be up and running by the mid-2030s.
As discussed in the first part of our UK CCUS series, there are risks associated with the carbon capture process. In our second article, we consider the risks involved in the transporting of carbon, once it is captured.
By their nature, CCUS projects are large-scale and complex. As part of the UK CCUS cluster approvals process, the “cluster lead” — typically, the transport and storage operator — sets out a proposal, which must include a transport and storage network and at least two proposed initial capture projects.
The pipelines for the two currently approved clusters will run for more than 100 kilometres offshore. Some will be pre-existing pipelines that are retrofitted, while others will be new. After transportation, the captured CO2 will be stored in geological formations, at least 1 kilometre deep.
There are various risks and challenges associated with transporting CO2 through these intricate networks of pipelines that form an integral part of the CCUS chain.
The energy insurance sector has had a longstanding risk management focus on the area of corrosion. CO2 pipelines will also present this exposure. Pipeline operators will have to demonstrate appropriate risk protections for preventing both external and internal corrosion. As a risk factor for internal corrosion, the water content in the CO2 being transported will have to be carefully monitored.
Owners and operators of carbon capture plants also will need to address the risk of corrosion. In its dry, gaseous state, CO2 is not corrosive to metals and alloys. However, if it comes into contact with water, or liquids containing water, it forms carbonic acid, which can cause corrosion. If carbonic acid escapes into water sources, it can also cause local environmental liability.
The design parameters of newly built or repurposed pipeline infrastructure also need to take into account the particular physical properties of the CO2 to be conveyed. In particular, it may be that the CO2 will be transported through pipelines at high pressures as a dense or “supercritical” phase fluid. This is where carbon dioxide is held at or above its critical temperature and critical pressure. This represents a potential new risk and is an area about which the UK’s Health and Safety Executive (HSE) and wider CCUS industry experts are developing understanding as this technology evolves.
This is a carbon removal chain and, as with any chain, there are multiple interlinked parts that all need to be working correctly to ensure the chain holds together. Delay to any part of the chain — for example, a sudden and unforeseen outage at one of the CO2 emitter sites or an associated hydrogen production plant — may lead to disruption up and down the whole removal and storage process.
Depending on contractual responsibilities, it is possible that any such disruption could result in fines and penalties that are not typically insurable.
The scale and complexity of these clusters, coupled with the fact that part of the transport network will be on the seabed, means that specialist risk expertise is needed to maintain the connecting pipelines. Static infrastructure, both onshore and offshore, will require regular visual inspections. If problems do occur, the potential costs for replacement or repair of offshore segments will likely be significant because of the technicalities involved in working on structures underwater and the specialist equipment and expertise required.
The insurance market has vast experience of working with clients to transfer the risks associated with transporting and storing energy products, and the risks associated with the escape of CO2, including the potential for harm to humans, are also well documented. However, the size of these projects and the volume of CO2 to be processed and transported by them, coupled with the physical state in which the CO2 will be stored, are outside the norms seen today in the UK, according to scientists. It is vital that, as with any complex project, risk engineers are brought in at the beginning of the project design process.
While these projects are new in the UK, the global insurance market does have some specific experience of involvement in CCUS projects elsewhere in the world. Risk managers and insurers can look to valuable experience derived globally from similar projects. Insight may be garnered from previous onshore and offshore gas pipeline projects, whether those involved CO2, natural gas, or other fluids. Using the knowledge gained from previous projects, developers can ensure that management and mitigation of CO2 pipeline failures is integrated from the outset.
The next blog in the CCUS in the UK series will explore steps to mitigate risk across the CO2 removal chain.
CEO, Energy and Power, Marsh Specialty UK
Managing Director, Energy and Power, Marsh Specialty UK
Vice President, Onshore Energy, Construction, Infrastructure & Surety