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Geological storage requires good risk-based planning and time to prepare
A recurring message raised in both the 2010 and 2011 status reports remains that storage takes time and you need to start early. You also need to take a risk-based approach.
It was a message also delivered by Mark Trupp of Chevron, part of the Gorgon project. Speaking at the Institute's Members' Meeting two weeks ago, Mark said the geological work on the CCS site selection for that project started in 1998 with 19 potential locations initially under consideration. It took four years to establish a preferred site and another six to optimise the deployment design of the injectors, surveillance, and water production wells.
This timing - a decade - was with the benefit of a legacy data set in an established petroleum province. As reported in 2010, an additional AU$150 million was spent on further drilling, seismic, modelling and staffing prior to the final investment decision in 2009. Although this amount of money is minor compared to the total project investment which will exceed AU$40 billion, it is still a significant investment early in the project - even for a multinational joint venture.
Why did they look at so many options initially? Although Mark did not elaborate, this is a pretty typical approach in the petroleum sector, based on decades of experience with managing exploration risk/reward. This 'portfolio' approach keeps the options open until there is a level of comfort in the risked net present value through testing and evaluation to address the critical success factors.
Selecting a storage site is different than exploring and appraising for oil and gas fields (as the risk tolerances are different for different parameters, for example) but the same principles apply. A final storage site has to have a high level of certainty -- effectively approaching that of oil field for development. In the case of the storage site, Mark said they “designed for the low side case", meaning that they were conservative, ensuring that even the low end of expectations would meet the Gorgon project storage needs.
This knowledge of the subsurface geological risks and highly developed risk management approach borne from decades of hard won knowledge reduces the risks of an overall CCS project. It should be no surprise that the front runners in CCS have been the oil companies. As well as the exploration technology, they have the decision/risk management tools that provide the comfort to commit to significant investment early on enough options to improve their chances of a final successful selection.Keeping many options open while there is relatively low cost associated then narrowing down the options is not a foreign concept to other businesses. But oil companies do it continuously as a part of their daily work. Monte Carlo may evoke scenes from James Bond films for most of us but for an oil explorer. For the latter it immediately brings to mind the probabilistic simulation tool used to assess the risked prize in option analysis.