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Marcellus CCS Project Wins Funding from Global Oil, Gas Firms
Twelve global natural gas and oil majors are backing what could be Pennsylvania’s first carbon capture and storage (CCS) project.
Under the auspices of decarbonization investor OGCI Climate Investments (OGCI CI), the multinationals have provided funding for KeyState Natural Gas Synthesis to conduct a pre-front end engineering and design (pre-FEED) study for a project in rural West Keating Township in Clinton County.
“Geological storage of CO2 is part of Pennsylvania’s next energy revolution,” KeyState’s CEO Perry Babb told NGI.
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The integrated project would extract stranded gas from the Marcellus Shale, manufacture chemicals and permanently store carbon dioxide (CO2) underground. Within a single 7,000-acre site, the project would drill for and produce gas, transport and process the gas, and use the gas to manufacture hydrogen, ammonia and urea.
KeyState said the site’s CO2 storage capacity would be up to 300,000 tons/year.
“The entire project, from gas supply through methane reforming and manufacturing and through geological CO2 storage, takes place on this site and is therefore a closed system,” said Babb.
The gas supply would come from new wells, a new gathering system without a compressor station, and “continuous monitoring for fugitive methane. The project will therefore have verifiably some of the cleanest gas production in the world.”
OGCI CI, which did not disclose the amount of its investment, last year revised its targeted 2025 emissions goals. The coalition has advocated large-scale carbon capture use and storage (CCUS) projects to advance United Nations climate goals.
KeyState’s manufacturing facility would sit on a 220-acre site but cover an estimated footprint of less than 30 acres, Babb said. Moreover, the CO2 would remain onsite and would not “incur pipeline costs, inefficiencies or emissions.” Most of the CO2 would be stored, but a portion would be used to manufacture urea.
“Excess steam from the natural gas reforming process is expected to power the entire hydrogen, ammonia production,” Babb said. “With the exception of start-up power, all power is expected to be generated on-site to maximize efficiencies and reduce overall emissions.”
Babb said the ammonia “is currently committed to industrial and manufacturing uses” while the “transportation grade” urea would be used to make diesel exhaust treatment (DEF).
Mandated by the Environmental Protection Agency (EPA), urea-based DEF cuts diesel trucks’ nitrogen oxides and particulate matter emissions by more than 90%, he explained.
“There is also potential to provide substantial volumes of hydrogen for the mobility market,” he said, adding the pre-FEED phase would confirm that once maximum geological storage capacity is determined.
KeyState also expects to gain a better idea of the project’s cost during the pre-FEED.
Beyond The Marcellus
“KeyState has the potential to enable CCS in Pennsylvania, as well as the vertically integrated model as an example of the circular lower-carbon economy,” said OGCI CI’s technology principal Betty Pun. “Not only does the project deliver emissions reductions directly, but we also see a role for KeyState as a catalyst for CCS hub development in the region.”
Babb said the project “will demonstrate the integration of natural gas extraction and geological carbon storage in the Appalachian Basin and a low-carbon future for natural gas.”
Moreover, he noted KeyState would show that CCUS “can be widespread where most natural gas is produced in addition to very large CO2 storage hubs.”
OGCI CI said project drivers include “regional policies and incentives to encourage the responsible use of stranded natural gas, including decarbonization using CCS.”
Favorable policies for the project include EPA’s DEF requirement and Pennsylvania’s 2020 Act 66, aka Resource and Manufacturing Tax Credit, said Babb.
Under the state law, every 1 MMBtu of natural gas used in manufacturing generates 47 cents of tax credit if certain job creation numbers are reached and maintained, he explained.
Babb said the law could translate into $6 million/year of Pennsylvania corporate income tax credits, shared by KeyState and its vendors, over 25 years.
“KeyState hopes to take advantage of the 45Q CO2 storage federal tax credit,” added Babb, referencing the Internal Revenue Service tax credit that does not cap storage. “Under this program, KeyState could generate up to $15 million/year of tax credits for 12 years from the storage of 300,000 tons/year of CO2.”
Applying for government grants to support the project is a possibility but KeyState has not used such funding to date, he said.
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