READY FOR LARGE SCALE SEABORNE CO2 TRANSPORTATION

When I.M. Skaugen designed and built the last series of gas carriers, our six Somargas vessels, we had the foresight to design the cargo system to be able to handle liquid CO2 (carbon dioxide). At that time no market existed for large-scale seaborne transportation of CO2, but with the current change of climate - both environmental as well as the political one - we now see the emergence of a new market opportunity for us.

Today, there are few that doubt the impact greenhouse gases are already having and will have in the future on our climate and, therefore, the need to limit the amount released in to the atmosphere. One of these greenhouse gases and one of the major contributors to global warming is CO2. The largest source of CO2 released to the atmosphere is from the burning of fossil fuels - be it for heating, power generation or transportation.

To reduce, or at least lower the growth of, emissions of CO2 a number of avenues have to be followed: Reducing output through improved efficiency; switching to alternative energy solutions like renewable ones and nuclear energy; and the capture and storage of CO2. It is for the latter solution that seaborne CO2 transportation will have a role to play.

With this in mind we are carrying out development work that could lead to significant new revenue streams in the field of carbon capture and storage (CCS). This is a system to separate CO2 that is produced when burning fossil fuels, transporting it to a secure storage location and placing it there for long-term isolation – thereby reducing the amount of CO2 released to the atmosphere. In the same way that natural gas is liquefied to LNG, the separated CO2 will also be liquefied in order to transport it efficiently.

Our role in this process would be to take our many years of experience in liquid gas transportation and use this to provide safe, secure and efficient movement of these large volumes of liquefied CO2. This new business area would be a logical extension of our core competence in efficiently transporting liquefied gases such as ethylene, LPG and LNG (see pages 22-23).

Capture of CO2 can be achieved most effectively in industrial scenarios, including power stations, in natural gas production, petrochemical industries and refineries.

Presently, there are two main processes for CCS – sequestration and enhanced oil recovery (EOR). Sequestration stores captured CO2 - either in geological formations, old gas and oilfields, or on the deep sea floor - thereby reducing an organisation’s exposure to CO2 emission penalties. Meanwhile, EOR takes captured CO2 and injects it into oil and gas fields to increase their recovery rates.

In a future supply chain for EOR the sources of CO2 and the points of use will, in most cases, not be the same – and the distance between them could be many thousands of kilometres. Also the timeframe between the source and the use of CO2 will be different. A large power plant, for example, will work to a 25-plus years timeframe whilst the EOR user will have a CO2 need for a much shorter time period. These two factors make flexible seaborne distribution the natural choice as compared with pipelines which have neither the flexibility in time nor the economies for long-distance distribution.

The process of CO2 transportation is not, in itself, a difficult one for a company such as I.M Skaugen which has been undertaking seaborne gas movements of ethylene, LPG and the like for 15 years.

The challenge will be to seamlessly link our own activities into the entire CCS chain – whilst fulfilling the imperatives of environmentalism, safety and economics.

A major advantage we have, however, is that we had the foresight to design and build our Somargas series of vessels for use in CO2 transportation. Our fleet of six CO2-capable gas carriers is more than anyone else can offer in the market today.

We believe that the CCS industry could take anything from 10 to 15 years before it becomes a viable concern. However, this timescale could shift dramatically if, for example, new environmental legislation is forthcoming or fossil fuel prices rise significantly.

With a fleet of CO2-capable gas carriers, we are in the unique position to participate in the early stages of this industry’s development without any heavy investments.

The technologies and industry are at an early stage, but there is no doubt that transportation will be at the heart of the CCS value chain. No business models have been established yet, so we are well-placed to contribute and shape the development of this new industry. With our history of understanding, knowledge and innovation in traditional gas transportation techniques, the future of CCS and I.M. Skaugen could well be very closely entwined.