Methodology to determine the economics of CO2 storage in coal seams with enhanced coalbed methane recovery

This paper describes the methodology used to derive the economics of CO2 storage in coal with enhanced coalbed methane recovery. A significant difference between CO2 storage in coal seams and storage in saline aquifers is that the incrementally recovered natural gas constitutes an additional revenue stream. In the case of CO2 storage in coal it is necessary to distinguish between CBM (primary coalbed methane recovery), CO2-ECBM (enhanced coalbed methane recovery caused by and including the injection of CO2), and CO2 storage with incremental CBM recovery (Storage-ICBM) The methodology is demonstrated by means of a case study that evaluates the economics of carbon capture and storage with incremental CBM recovery (CCS-ICBM) at the Spring Gully CBM prospect in the Bowen Basin, QLD, Australia - Australia's most productive CBM basin. Economic analyses of the Spring Gully development show that the specific cost of CO2-ECBM is A$37/t CO2 avoided (equivalent to US$31/t at an assumed long term exchange rate of A$1.00 = US$0.85) including capture costs. However, this incorporates the benefits of the underlying CBM project and therefore underestimates the cost of CCS-ICBM. The incremental cost of CCS-ICBM is A$92/t (US$78/t) excluding these benefits. The results demonstrate the importance of using an appropriate methodology to determine and present storage economics. If no distinction between CO2-ECBM and Storage-ICBM is made, the real costs of storage will for most cases be significantly underestimated and could potentially lead to poor investment decisions and the selection of economically unviable storage sites. (C) 2011 Published by Elsevier Ltd.