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Can section 45Q tax credit foster decarbonization? A case study of geologic carbon storage at Acid Gas Injection wells in the Permian Basin

Journal Article · · International Journal of Greenhouse Gas Control
 [1];  [2];  [3];  [4];  [2];  [5];  [3];  [1];  [1]
  1. Sandia National Laboratories (SNL-CA), Livermore, CA (United States)
  2. University of Texas Permian Basin, Odessa, TX (United States)
  3. New Mexico Institute of Mining and Technology, Socorro, NM (United States)
  4. Univ. of Kansas, Lawrence, KS (United States); Kansas Geological Survey, Lawrence, KS (United States)
  5. Univ. of Kansas, Lawrence, KS (United States)
+ Show Author Affiliations
Carbon capture, utilization, and storage (CCUS) is an important pathway for meeting climate mitigation goals. While the economic viability of CCUS is well understood, previous studies do not evaluate the economic feasibility of carbon capture and storage (CCS) in the Permian Basin specifically regarding the new Section 45Q tax credits. We developed a technoeconomic analysis method, evaluated the economic feasibility of CCS at the acid gas injection (AGI) wells, and assessed the implication of Section 45Q tax credits for CCS at the AGIs. We find that the compressors, well depth, and the permit and monitoring costs drive the facility costs. Compressors are the predominant contributors to capital and operating expenditure driving the levelized cost of CO2 storage. Strategic cost reduction measures identified include 1) sourcing of low-cost electricity and 2) optimizing operational efficiency in well operations. In evaluating the impact of the tax credits on CCS projects, facility scale proved decisive. We found that facilities with an annual injection rate exceeding 10,000 MT storage capacity demonstrate economic viability contingent upon the procurement of inputs at the least cost. The new construction of AGI wells were found to be economically viable at a storage capacity of 100,000 MT. The basin is heavily focused on CCUS (tax credit – $$\$$$$65/MT CO2), which overshadows CCS ($$\$$$$85/MT CO2) opportunities. Balancing the dual objectives of CCS and CCUS requires planning and coordination for optimal resource and pore space utilization to attain the basin's decarbonization potential. We also found that CCS on AGI is a lower cost CCS option as compared to CCS on other industries.
Research Organization:
Sandia National Laboratories (SNL-NM), Albuquerque, NM (United States)
Sponsoring Organization:
USDOE National Nuclear Security Administration (NNSA)
Grant/Contract Number:
NA0003525
OSTI ID:
2480234
Report Number(s):
SAND--2024-16115J
Journal Information:
International Journal of Greenhouse Gas Control, Journal Name: International Journal of Greenhouse Gas Control Vol. 140; ISSN 1750-5836
Publisher:
ElsevierCopyright Statement
Country of Publication:
United States
Language:
English

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Related Subjects

29 ENERGY PLANNING, POLICY, AND ECONOMY
58 GEOSCIENCES
Carbon storage
Cost benefit analysis
Cost of carbon storage
Decarbonization
Permian Basin
Section 45Q tax credits
Technoeconomics