United Kingdom Carbon Capture and Storage (CCS) Project Feasibility Study

Executive Viability Abstract

This feasibility study evaluates the development of a 1.5 Mtpa carbon capture facility in the UK East Coast Cluster, leveraging North Sea storage. With a CAPEX of £600M and a base-case IRR of 11.4%, the project is deemed bankable under the UK’s Industrial Carbon Capture (ICC) business model, provided carbon prices remain above £75/tCO2.

## Executive Feasibility Thesis This study assesses the viability of a large-scale Carbon Capture and Storage (CCS) project located in the Teesside industrial cluster, United Kingdom. The project aligns with the UK Government's 'Ten Point Plan' to capture 20-30 MtCO2 per year by 2030. The thesis rests on the proximity to the North Sea saline aquifers (Endurance reservoir) and the availability of the Industrial Carbon Capture (ICC) business model, which provides 15-year revenue certainty. By de-risking the 'cross-chain' risk through government-backed subsidies, the project presents a robust case for institutional investment. ## Technical Feasibility & Operational Specifications The facility will utilize a post-combustion Chemical Absorption process using Advanced Amines (proprietary hindered amines to reduce oxidative degradation). * **Capture Capacity:** 1.5 Million tonnes of CO2 per annum (Mtpa). * **Capture Efficiency:** 95% recovery rate from flue gas streams. * **Compression:** Multi-stage centrifugal compression to 150 bar (supercritical state) for pipeline transport. * **Storage Site:** Deep saline aquifer located 2.5km below the seabed in the Southern North Sea. * **Utilization Assumption:** 88% Expected Capacity Utilization (321 days/year), accounting for solvent reclamation cycles and annual maintenance shutdowns. ## Detailed Capital Expenditure (Capex) The total estimated Capex is **£600 Million**, broken down by functional units based on 2024 UK EPC benchmarks: 1. **Amine Capture Plant (£320M):** Includes absorber towers, regenerators, and heat exchangers. Cost based on £213/tCO2 annual capacity. 2. **Compression & Dehydration Unit (£65M):** Required to prevent pipeline corrosion and ensure supercritical flow. Reasoning: Includes stainless steel internals for moisture management. 3. **Onshore/Offshore Pipeline (£125M):** 20km onshore (£1.5M/km) and 45km offshore (£2.1M/km). Higher offshore costs due to vessel chartering and subsea burial requirements. 4. **Subsea Injection Wells (£90M):** Two dedicated injection wells (£45M each). Includes specialized wellheads (X-mas trees) rated for cryogenic CO2 temperatures in event of rapid depressurization. ## Realistic Operating Expenditure (Opex) Operational costs are calculated on a per-tonne basis to ensure scalability during the ramp-up phase: * **Energy Penalty (Variable):** £19.50/tCO2. Reasoning: Steam requirements for amine regeneration and electricity for compression (assuming £95/MWh grid price). * **Chemicals & Solvents (Variable):** £4.80/tCO2. Based on a solvent loss rate of 1.2kg/tCO2 at £4,000 per tonne for advanced amine. * **Fixed Labour & Overhead:** £8.5M per annum. Staffing for a 4-shift rotation of 45 technical personnel plus site management. * **MMV (Measurement, Monitoring, Verification):** £3.2M per annum. Essential for UK regulatory compliance, including 4D seismic surveys and seabed pressure monitoring. ## Financial Model & Sensitivity Range on ROI/IRR **Financial Assumptions:** * **WACC:** 8.2% (Real). * **Market Size:** UK addressable industrial emissions of 72 MtCO2/year. * **Contract Term:** 15-year ICC Business Model (CfD-style payment). **ROI/IRR Sensitivity Analysis:** * **Base Case (IRR 11.4%):** Carbon price/subsidy at £85/tCO2; Capex at budget; 88% utilization. * **Optimistic Case (IRR 15.6%):** Carbon price rises to £110/tCO2; 92% utilization; 10% reduction in energy penalty through heat integration. * **Pessimistic Case (IRR 6.3%):** Carbon price drops to £55/tCO2; Capex overrun of 20%; Utilization falls to 75% due to solvent fouling issues. ## Regulatory & Environmental Compliance Frameworks The project must navigate a complex UK-specific regulatory landscape: * **NSTA (North Sea Transition Authority):** Responsibility for Carbon Storage Licences and permit approvals. * **Environment Agency (EA):** Responsible for onshore environmental permits (Best Available Techniques - BAT) for amine emissions and waste heat. * **UK ETS (Emissions Trading Scheme):** The project generates value by allowing the emitter to avoid purchasing UK Allowances (UKA). * **Section 36 Consent:** Required under the Electricity Act for capture components integrated with power generation. ## Strategic Takeaways 1. **Cluster Advantage:** Location within the East Coast Cluster reduces shared infrastructure costs for transport and storage (T&S), effectively lowering the T&S fee by 15% compared to standalone projects. 2. **Policy Dependency:** Profitability is highly sensitive to the UK Government's 'Track-1' and 'Track-2' sequencing timelines. Delay in T&S availability is the primary project risk. 3. **Revenue Diversification:** Future potential for Negative Emissions Credits (NECs) if the feed source shifts toward biogenic fuel, offering a secondary revenue stream beyond the ICC subsidy.