ERGY XX (XK) 2X Available online at wiv.scencerlect com a " . pasa ScienceDirect | Nees ‘C. ELSEVIER journal homepage: www.clsevier.com/locate/he A framework for assessing economics of blue hydrogen production from steam methane reforming using carbon capture storage & utilisation Muhammad Haider Ali Khan “, Rahman Daiyan “’, Peter Neal“, Nawshad Haque ”, Iain MacGill °"*, Rose Amal ° * School of Chemical Engineering, The University of New South Wales, Sydney, NSW 2052, Australia © csiRo Energy, Private Bag 10, Clayton, Victoria 3169, Australia * Collaboration on Energy and Environmental Markets, Schol of Electrical Engineering and Telecommunications, The University of New South Wales, Sydney, NSW 2052, Australia HIGHLIGHTS GRAPHICAL ABSTRACT ‘Spatial techno-economie frame a ‘work for assessing Blue Hydrogen Projects is proposed + Trade-offs in costs between emis: ©, Stree ©, ati sion reduction using OCS and Costof CCUS is investigated, Blue H From SMR ‘Emission utilisation via CO, elec trolysis to make value-added products is modelled, omer ond Proposed framework used to — ‘identify potential Blue Hydrogen Ibube in Australia, «Framework globally applicable and transmissible to other hydrogen technologies. ARTICLE INFO ABSTRACT Article history Hydrogen (H,) generation using Steam Methane Reforming (SMR) is at present the most Received 29 October 2020 ‘economical and preferred pathway for commercial H, generation. This process, however, Received in revised form emits a considerable amount of CO», ultimately negating the benefit of using Has a clean 14 April 2021 industeial feedstock and energy carrer. That has prompted growing interest in enabling ‘Accepted 17 April 2021 CO; capture from SMR for either storage or utilisation and producing 2ero-emission “blue Available online cx 1H." In this paper, we propose a spatial techno-economic framework for assessing blue hydrogen production SMR hubs with carbon capture, utilisation and storage (CCUS), using ‘Australia as a case study. Australia offers a unique opportunity for developing such “blue + Corresponding author. © Conesponding author Exmail addresses: daiyan@unsw.edu.au (R. Dalyan) imacgil@unsw.edu.au (L MacGil). Itpsi//doi.org/1010164}jhydene:2021.08.108 (0360-3199/0 2021 Hydrogen Energy Publications LLC, Published by Elsevier Ltd. All rights reserved. Please cite this article as: All Khan MH etal, A framework for assessing economics of Blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, Intemational Jounal of Hydrogen Energy, httpsi/doi.org/10:1016/ |jijhydene.2021,04,104ENERGY xxx (xxx) 2308 Keywords Modelling Hydrogen Levelised cost ‘Steam methane reforming CO; utilisation CO, reduction Hy hubs given its extensive natural gos resources, avaiabliy of known carbon storage reservoirs and an ambitions government tage produce clesn/zeo-emissiom Ha he cost of is released to the atmosphere and lastly blue hydrogen’, where the asso- ciated CO, emissions from fossil fuel production processes are safely mitigated [8]. Currently, nearly all global Hy demand (9794) is met using Steam Methane Reforming (SMR) due toits low cost and high efficiency [9,10]. However, this process generates ‘grey hydrogen’, with a significant amount of car bon dioxide (Co;) emissions that are emitted to the atmo- sphere (8 kg of CO, is generated for every kg of H> produced using SMR) [17]. To pur this in perspective, the total CO, from, Ha generation (using fossil fuel resources) worldwide was. estimated to be -830 Mtcor yr in 2028, equivalent to the combined CO, emissions of the UK and Indonesia in that given year [12], Such a significant volume of emissions would clearly offset the benefit of using H, in downstream processes a8 a clean fuel and industrial input. Nevertheless, analysis shows that to achieve the SDS, -1/3rd of the global hydrogen would stil have to be generated using fossil fuels [2]. As a result, there has been growing interest in capturing CO. from these SMR plants to create low emission ‘blue F,’ [2,14]. Though there are commercial CO; capture processes (such as amine solvents, membranes and absorbents [15~17), they remain, capital-ntensive and have additional operating requirements that lead to lower overall process efficiency and inevitably, result in increased cost of producing H when integrated with, the SMR, ‘There is another layer of complexity to blue H. plants as the captured CO from these SMR units will then have to be either safely stored or utilised. While there have been some Please cite this article as: All Khan Mi etal, A framework for assessing economics ofblue Ton from steam methane igen production | reforming using carbon capture storage & utilisation, International Joumal of Hydrogen Energy, httpsi/doi.org/10.1016/ j,jhydene.2021,04,104ERGY XX (XK) 2X 3 demonstration projects involving CO, capture facilities and subsequent storage in underground reservoirs (CCS) [1], they have been site and process-specifc, capital-intensive and high incurring operating costs, primarily due to reser~ voir monitoring costs to mitigate the potential safety risks of CO, leakage and groundwater contamination [19,20] ‘These factors have limited the large scale deployment of cS projects worldwide [21,22]. Alternatively, the captured CO; can be utilised as feedstock in secondary ‘manufacturing to create products such as urea and meth- ‘anol production [22,24]. Another utilisation pathway is the enhanced oil recovery (EOR) processes, albeit this is ex: pected to have limited long-term use [25]. Thus, new de- velopments in electrochemistry seemingly offer a more sustainable utilisation pathway by enabling the use of sur- plus renewable electrical energy to convert CO, streams, captured from industrial or energy-generating plants into value-added products such as formic acid, carbon monoxide and green fuels (methanol, ethanol) [25~28]. Prior work has highlighted that a carefully chosen electroreduction product (euch as formic acid, carbon monoxide or syngas) under ‘optimum operating conditions (ic. electrocatalyst, retail lectricty price and capital investment) can create profit: able business models [25]. Still, such electrochemical CO; reduction reaction (CO;RR) technology is not mature enough, to viably convert all COz emitted from a single significant, source, with the unconverted emissions still required to be safely stored. As a result, an optimal blue H, SMR unit may comprise a combination of CCS and Carbon Capture and Utilisation (CCU) to reduce the cost of Hy production (Lev- clised Cost of Hydrogen - LC) ‘Moreover, theze is also interest in improving the overall performance and efficiency of the SMR process. The improvement of SMR efficiency is a particular focus, as sig- nificant thermal energy loss is registered in the reaction furnace during operation [20-22]. One proposed pathway to address the issue is through electrification of the process where electricity ig used for heating the reformer reactor (Gnstead of conventional fossil fuels) [33]. While these tech. nologies are still at early stage small-scale development [4,35], their potential application in large-scale SMR plants will provide an opportunity to integrate renewable energy with the SMR process, reducing the consumption of fossil, fuels and allowing the development of modular reformer re- actors (up to 100 times smaller than conventional SMR re- formers) that offer a considerable economic and. environmental benefit [29,20]. Similarly, advanced configura- tions of SMR such as auto thermal reforming and sorption enhanced reforming are being explored as possible pathways, to improve SMR process emission and increase efficiency, ultimately reducing the cost of generating hydrogen [37,38], Furthermore, additional operational strategies such as mixing natural gas with biomethane from agricultural waste have been proposed as a pathway to reduce the environmental, footprint of the SMR process [29]. Though the implementation, of these technologies in the near term is expected to be limited, they could offer cost and environmental benefits in, the long term, Overall, conventional SMR with C¢S remains the most economical pathway for generating low emission hydrogen in the near term [40]. However, most literature exploring this configuration falls short of investigating the process in a broader context of jurisdictional gas price variations, indus- tuiel policies and the site-specific nature of carbon storage ‘opportunities. However, there is consensus on the importance of reducing production costs by finding viable carbon mitign- tion pathways [41]. Nevertheless, the economics of integrating 'SMR with Carbon Capture Utilisation and Storage (CCUS), ie, ‘a combination of CCS and CCU, is not well investigated in the literature. Recently, Consonni et al. suggested integrating carbonate fuel cells downstream of the SMR with carbon, capture to generate additional hydrogen and electricity that canbe retailed to increase project revenue [22]. n comparison, Andrews etal, suggested using the captured CO, by injectingit, into natural gas reservoirs at high pressure to frack natural gas and use it for hydrogen generation [23]. However, both of these analyses did not provide a costs analysis, and this pre- sents a significant knowledge gap, given such an operational strategy may presenta viable business opportunity, using the profits from CCU to offset storage costs and reduce invest= ‘ment riske associated with CCS. Our study seeks to address this gap by investigating the economics of producing blue H. by integrating CCS and/or CCU with a commercially available SMR facility within current energy markets. As such, Australia provides an interesting case study for developing such a sustainable SMR process, given the countrys extensive natural gas resources and availability of known carbon storage reservoirs. Moreover, the Australian Government’ ‘National Hydrogen Roadmap’ en- dorses widespread adoption of blue SMR projects in the country and lays down a target for generating Hi, at costs, below A$7.5 GJ ") and would require an extensive CCS infrastructure, likely to result in LG\q.>A$2.7 kg In comparison, developingan SMR facility in, Western Australia appears far more viable with an LC < ‘A$2 keg * given the significantly lower cost of natural gas, (AS# G) 9, favourable electricity pricing (A$S0 MWh’), and ower carbon storage costs. By integrating medium scale CCU, (LOMW electrolysersystem producingSOtday *of formic acid) ‘with the SMR-CCS facility, the LCj2 reduction by as much as 4-9% for each location can be attained. While this analysis, seeksto provide guidelines and strategies toassist government ‘and industry in Australia, the framework can be extended to other jurisdictions interested in assessing their opportunities, {for producing blue H,. The following sections elaborate on the applied methodology, results, and their significance. Supple- ‘mentary materials have been provided as supporting infor- ‘mation on some ofthe assumptions and calculations. Methods Process Fig. 1 depicts the flowsheet of the envisioned process as four individual blocks that include the SMR facility (1, plant and BoP), Carbon Capture system, Carbon Storage and Carbon, Utilisation systems. Block 1 consists of the SMR unit with the Hz plant and the utilities/Balance of the Plant, while Block 2, includes the carbon capture unit, where the CO, is separated from flue gases produced in the SMR plant. This captured CO, can then be either; (i) transported and injected into under ground reservoirs in Block 3 or (i) converted into formic acid using CO, electrolyser in Block 4. The combinations of these blocks will vary between the operating scenarios of the SMR, as discussed below. Process scenarios Im our analysis, we consider four possible SMR operational scenarios of increasing complexity yet improved environ- mental performance: 11 Base Case: Business as usual SMR operation with all, emissions released into the atmosphere Apollon SS rays 1 ‘Aqueous Bectroiye__t poof h---, Se] 1 ee te, ar-2anyy H, Plant ‘Carbon Capture Unit (et cnr Et T Block 2: Carbon Capture 1 Proce We i gie- anne) 1 “omengcn i ' 1 fees " ; 1 fo 1 Scones | i Ui A penny or i ook SUR Plant a-ha Se oer Fig. — Block 3: Carbon Storage Flow diagram representing different blocks considered in the SMR process and summarises the mass/energy balance. Block 1 encompasses the main H, plant, auxiliary unit and the Balance of Plant (BoP) that includes a boiler to generate high pressure (HP) steam for the reforming reaction, which is recovered as low pressure (LP steam) to generate clectricity using a turbine. Block 2 comprises an amine-based CO, capture unit 90% capture efficiency). The captured CO. is either transported and stored underground (Block 3) or utilised (Block 4), depending on the operating scenario. Block 3 contains all the equipment required to transport the CO, to the storage reservoir, including compressors, transport pipeline and injection facilities. Block 4 consists of a CO, electrolyser and product separation system powered that is powered using. electricity from the grid. Please cts this article as: All Khan Mi etal, A framework for assessing economics of blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, International Joumal of Hydrogen Energy, httpsi/doi.org/10.1016/ j,jhydene.2021,04,104ERGY XX (XK) 2X 5 2 Scenario 1: The emissions produced in the process are released to the atmosphere (no carbon capture) but taxed ‘under a jurisdictional eazbon tax. 3 Scenario 2: A hub approach in which SMR is integrated ‘with a CO; capture and storage (CCS) system with the captured emissions stored underground in suitably located natural reservoirs 4 Scenario 3: A CCUS system with both CCS and CCU is, considered at each hub. Base case ~ no CO; mitigation strategy Conventionally, small scale SMR plants have a capacity ranging between 200 and 000 Nem? hr designed to supply Hy {or onsite utilisation in chemical manufacturing facilities [25) For large-scale applications such as in refinery and fertiliser production, tubular design reformers can cater to up to 300,000 Nm hr * production capacity [26]. For this work, we consider a standalone SMR plant with a capacity of 100,000, Nm? hr ? of H as a central production hub with modelling data and process parameters adapted from the International Energy Agency (IEA) [47]. Itis expected that multiple plants of these capacities could be used to cater to local energy and feedstock H demand and create an export industry, as envi- sioned by the Australian Government [i]. The details of this, process are presented in Fig, Si. Given in current industrial practice, almost all CO, generated using is SMR is being released into the atmosphere, we model this scenario for Australia and use it as a benchmark for the additional costs, associated with blue Hy generation using SMR Seenario 1 ~ carbon taxation ‘To model this scenario, we assume no carbon capture similar to the base case but apply a jurisdictional earbon tax on the SMR unit's emissions. While Australia currently has no formal pricing regime on industrial emissions, t acknowledges the need for policies to drive future emission reductions. The Commonwealth Scientific and Industrial Research Organisa- tion (CSIRO) has proposed two carbon tax trajectories (3. S2) to attain the targets set by the Intergovernmental Panel for Climate Change (PPC) [1s]. These costs targets are tailored for restricting global average temperature rie in the next hun dred years to within 2° (stricter conditions) or 4°C (lenient conditions). To achieve the 2 °C scenario, a carbon price of £4830 toa would have to be introduced in 2020, rising to $170 tka by 2050, Similarly, for the 4°G case, a carbon price of at least A§22 toh» would have to be introduced by 2025, Increasing to AS63 too by 2050. We apply these prices as an additional operating cost per year to investigate the impact on hydrogen production costs. An ideal carbon tax regime would increase the generation coats significantly, incentvising in- vestment into carbon mitigation, Scenario 2 ~ CO» capture and storage (CCS) For this seenario, we model an SMR unit with CO, capture and subsequent storage in sites identified in each hub (discussed {in SMR Facility Hubs). Prior arin this space has identified that, the highest amount of CO, can be captured from the flue gas exiting from the reformer in an SMR unit (post-combustion) [49,50]. From an environmental footprint and certification point of view, itis of interest that the highest amounts of CO; emissions are captured from the SMR unit to ensure that the hhydrogen can be classified as ‘blue’, Thus we consider CO; capture technologies that present the highest capture rate during post-combustion. As such, we consider a mono- ethanolamine (MEA) solvent unit (detailed in Fig. $3) as our CO, capture technology owing to their high levels of com- mercial maturity {technology readiness level-TRL: 8), demonstration-seale deployment worldwide, high CO, cap: ture rate (>80%) and suitability for post-combustion capture [1.52]. Nevertheless, we provide supplementary discussion, fon the variation in costs if other capture technologies are considered. In comparison, the uncaptured emissions are assumed to be released inte the atmosphere but taxed under the proposed 4 °C carbon price trajectory. The 4 °C carbon, price trend was adopted as itis close to the levels of Australian, Carbon Credit Units (ACCUs) spot pricing as seen in auctions, by the Emission Reduction Fund [51]. The captured emissions fare compressed and transported via a pipeline to selected storage sites. Scenario 3 ~ carbon capture storage and utilisation ‘We also consider a case in which the captured CO, stream from the CCS unit is diverted and directly fed to a CO: elec~ trolyser (with different capacities ranging from 1 to $0 MV) to generate formic acid (detailed in the SI) Formic acid has pre- viously been established as a highly probable commercial, CO:RR pathway given high conversion performance and competitive retail pricing [25,29]. To model the electrolyser, wwe adopted performance data of the current state of the art bench-scale alkaline electrolyser, which show up to 80% Faradaic Efficiency (FE) at 35 V with a current density of M40 mA cm * using Sn-based catalysts [55]. We also assume a '50% conversion of CO, per pass through the electrolyser and, include a PSA system to recycle unreacted COs (to improve conversion) from the byproducts (O,/#, gas generated). The byproducts, primarily hydrogen, are retailed as an additional product. The formic acid generated leaves the electrolyser with the electrolyte and is separated using a distillation col ‘uma, Given the small amount of products produced per pass, ‘we assume a steady-state flowrate of the electrolyte to maintain a 10% volume concentration of the formic acid product in the mixture at all times, SMR facility hubs ‘To determine the optimal locations to develop the SMR facil- ities, we use specially considered “zoning filters’. In partic ular, each potential hub location was carefully chosen for its proximity to: «+ The natural gas grid: A location near the existing natural gas network avoids major pipeline construction for the ‘SMR facility. Fortunately, there are existing gas connec- tions to industrial zones around the country where an SMR facility can be developed (Fig. $4). Please cite this article az All Khan MH etal, A framework for assessing economics of Be Ton from steam methane production ‘reforming using carbon capture storage & utilisation, International Journal of Hydrogen Energy, httpsd/doi.org/10.1016/ |jijhydene.2021,04,1046 InTERWATIONAL rouRMaL oF HYDRO; ENERGY xxx (xxx) 2308 + 002 reservoir: Only suitable known CO, sedimentary ba- sins closest to the SMR hub are considered to reduce the need for extensive transport infrastructure, While there is only very limited application of CCS in Australia to date, the storage capacities of different reservoirs in different regions have been estimated [56,57]. These studies suggest ‘that the Surat, Eromanga, Gippsland, and North Perth Ba- sins were the most prospective for industrial-scale CCS projects (Pig. $5). We consider at least two injection sites ‘within a single reservoir or two different reservoir forma- tions for each hub to present a comparative analysis, + Local Water Supply: Water is an essential feedstock required for the SMR process (-57 Kk ky) [58], and this may become a long term iesue in countries like Australia that face acute water shortage [59]. Thus, we assume that the Hubs are preferably located close to existing desalina- tion plants and water recycling facilities to source the required water. For Australia, its expected that water can bbe sourced at A$0.7 kL from water recycling and ASS kL. * through desalination for hydrogen production [00]. How: ‘ever, our results (elaborated later) reveal that though water pricing is relevant, it does not significantly impact Fi pro- duction costs. Thus, water supply choice would most likely ‘bea social and operational decision instead of an economic Proximity to Ports It is expected that such large scale SMR facilities will saturate the local demand for H, in Australia, and the bulk of the produced H, will eventually have to be ‘exported [5]. As such, we consider SMR facilities in prox- lnmity to ports, Note: the infrastructure requirements to ‘transport the H, to the port and subsequent export abroad have not been considered in the scope of the analysis. Based on these factors, the hubs chosen for further anal- ysis were identified using the ‘Australia’s Hydrogen Opportu- nities (AusH)' tool developed by Geoscience Australia. The tool uses multiple spatial data sets, and user-defined con- straints can be placed on multiple local factors that would affect the probability of developing H. production facilites including SMR [st] For our analysis, we filtered the locations based on local water availabilty, proximity to @ natural gas pipeline, shipping ports, and an adequate storage ste (x. 28) In this manner, the following hubs have been established: Western Australia Hub — WA Hub For the WA Hub (Pig. 2), we propose the SMR facility could be developed in Kwinana Industrial Area, south of Perth. The location is ideal as the area has an established natural gas, infrastructure, and is close to the Perth desalination plant [62], ‘and has access to jetties that can be repurposed to export hydrogen. The storage sites for the captured CO, were chosen, in the northern Perth Basin. The wholesale pricing of natural gas and electricity in WA is currently around AS4 GJ * and ‘A350 MWh * respectively [63,64], while desalinated water cost is expected to be an average of ASS KL. * in Australia as, suggested earlier [60] New South Wales Hub — NSW Hub Similarly, for the NSW hub (Pig. 2c), we assume that the SMR facility can be developed in Kooragang Island, Newcastle, owing to its proximity to a well-established port, a planned desalination plant [65] and connection to the natural gas network. While there are various proposed storage sites in NSW, we consider the Surat Basin (short term storage capac- ity) and offshore Gippsland Basin (long term storage capacity) a the most likely tobe developed for CO, storage (ig. ) [0 ‘The local wholesale price of natural gas in NSW of AS8.5 CJ * [66], grid electricity price of A$90 MWh * [66], and desalinated water cost of ASS EL" [60] ae used to determine operating coats Victoria Hub ~ Vie Hub For the Victoria (Vic) Hub (Pig. 24), we assume that CO; will be stored in the offshore Gippaland Basin, The Gippsland basin, hhas depleting natural gas/oil reservoirs that are well-defined, with good porosity and permeability [57]. Moreover, the Gippsland reservoir is already being actively explored for developing sites for future CO, storage [56]. Here, we assume that the SMR facility can be constructed in the Kilcunda re- gion, close to the Victorian desalination plant [os] and within, ‘an industrial zone with access to an already established nat- ural gas network, Similarly, wholesale price for the Victorian, natural gas of A$8.03 G} #) [se], desalinated water of A$5 kL * [0], and electricity price of A§100 MWh * [55] for determining four operating costs, Queensland Hub ~ Qld Hub The Queensland (Qld) Hub assumes that the SMR facility is developed in Toowoomba (Fig, 2e), an industrial zone in Queensland, itis connected tothe natural gas pipeline, which can supply the natural gas feedstock and eventually be used for blending the generated, fo transport downstream ofthe SM plant, The locaton is in proximity to the Wetalla water recycling facility (5500 MI. per year capacity), which can auf- ficiently supply the 0.3 ML. of water per year required for operating the SMR facility [2]. The operating costs are eval: uated using the local natural gas price at AS7.49 G) }), grid- supplied electricity at AS76 MWh * [65] and recycled water cost of ASO7 KL. * {60}. For CO, storage for this location, we consider two sites, one in the Surat Basin (Ste #1, requiring 350 km pipeline from the SMR plant) and the other in the Eromanga asin (Site #2 requiring 1000 km pipeline from the SMR facility “The economics of developing the SMR facility at each location were investigated and compared to establish the most viable location for blue Hs production in Australia, For cach hub, we consider two potential storage sites for com- parison Itis important to note thatthe same SMR facility is, developed at each location, and it is assumed that the equip- ment costs will remain consistent throughout Australia Analysis Capital cost of equipment Block 1 — SMR unit. ‘The equipment costs (for the SMR) considered herein were in the 2017 € basis adopted from Ref. [47] (Table St). These costs are based on the Association, for Advancement of Cost Engineering (AACE) class 4 estimate, with an accuracy of +35/-15%. The estimated costs are then. converted to 2020 A$ equivalent by accounting for exchange Please cite this article as: All Khan Mi etal, A framework for assessing economics ofblue Ton from steam methane igen production | reforming using carbon capture storage & utilisation, International Joumal of Hydrogen Energy, httpsi/doi.org/10.1016/ j,jhydene.2021,04,104INTERNATIONAL JOURNAL OF HYDROGEN ENERGY Xxx (xxx) xxx 7 % ~ + sears ~ naam a Fig. 2~ The potential regions in Australia that can be developed into SMR Hubs. (a) The overall outlook of the H, production, potential of Australia is represented with identified locations for SMR, the natural gas pipeline, shipping ports and existing desalination plant (Pig. S6 represents this potential with better contrast). From these regions, the focus was narrowed down, to the following hubs: (a) Qld Hub with storage Site 1 in Surat Basin and Site 2 in the Eromanga Basin. (b) WA Hub with storage in Site 1 on the onshore part of the northern Perth Basin and Site 2 on the offshore part of the northern Perth Basin, (9 Vic Hub with storage in the offshore Gippsland Basin ~ Site 1 inshore and Site 2 in the Central Deep. (d) NSW hub with. storage Site 1is in Surat Basin and Site 2in the offshore Gippsland Basin. The blue line represents the possible CO; pipeline, ‘while the red line maps the existing natural gas grid. Note: the colour-grading from dark green to dark red shows the probability of developing a CCS storage site in each location, with dark green representing high probability and red representing the least probability. Similarly, The grey and peacock green regions represent areas designated as protected sites or forest reserves, respectively, that cannot be used to transport or store the CO,, We must acknowledge that the proposed hub locations are approximations and are assumed based on each overall reservoir's general characteristics. In practice, the exact locations for storage may vary. Copyright Commonwealth of Australia (Geoscience Australia) 2020 [61]. (or interpretation of the references to colour in this figure legend, the reader is referred to the Web version of this article.) rates (Pig. $7) and inflation using the Chemical Engineering included in the cost analysis for the total capital requirement Plant Cost index (CEPCI - Fig, $8). An installation factor of 12% fof the total equipment cost was assumed to account for freight cost to Australia and transportation to the operation, site. In this manner, the basic equipment cost (uninstalled) plus the installation cost makes up for the total plant cost, (120). For a comprehensive analysis, miscellaneous expenses such as start-up costs, site development/canstruction costs, ‘and miscellaneous costs like owner's cost and EPC (Engi- neering, Procurement and Construction), etc, were also (CAPEX.yq). These cost assumptions are summarised in Table 4 and the CAPEXaya can be calculated as follows: CAPEXan = TPC (Equipment Cost «1.12)+ “other Costs a) The equipment (ig, St) ean then be categorised into (9 He plant (which includes the pre-treatment units, the reformer, shift gas reactor and the Pressure Swing Absorption Units), (i) Please cite this article as: All Khan MH etal, A framework for assessing economics of Blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, Intemational Jounal of Hydrogen Energy, httpsi/doi.org/10:1016/ ydene.2021.04,1048 InTeRwaTionas rounwaz oF uYDROGEN Parameter Comment Total Plant Gost (7 SMR Facility with Carbon Capture Uninstall Equipment Cost Imatallation Cost Factor (7) Given in Table St ‘Adopted from IEA [7] 2 Assumed Plant Goat of SM | Carbon Capture (PCa ca) ‘Uninetlled Equipment Cost» iF Capture Storage Plant Cost of carbon Storage (Pc) Ccabon Uullsation Total CO; Hletrolyser Cost 5A Capital Gost [70,71] Distillation Column Cost (29) ‘uitin as an operating cst (Operating Cost of Equipment) 19$ 12,745 m4 of electrolyser (calculation elaborated in the St) '9$ 265,000 x (Gas flowrate per 1000 mh}? 1g 500,000 (Hectroyte Flowrate per 1000 Lh? Plas ‘Sum of Hleewaljser | Distillation Column | PSA cost Tec Poe ce + Pes + PCa Total Capital Gost (CAPEX a) Construction Cost SH of THC ‘Adopted from IEA [7] Miscelancous Cost 95% of TC Project Contingency ioe of Tc Working Capital 10% of TCR CCAPEXrumi — TRC = Construction Cast + Miscellancous Cost » Contingencies + Working Capital steam turbine, and (ii) BoP and utilities. Overall, the total CAPEX.y is estimated at A$180.3 million (Fig. 3), with A$130.4 million incurred as the TPC of the SMR with an additional, ‘A$49.9 million required to cover the costs of developing the facility (other cost). Block 2 — carbon capture, In Scenario 2, the cost of carbon, capture block (equipment and installation) is added to the ‘SMR facility, increasing the total capital cost (CAPEXsuq¢<) 10 ‘48342 million, as seen in Fig. 3 Block 3 — carbon Transport and storage (CTS). The cost of developing (equipment, construction, installation and ap- praisals) and operating (maintenance, site monitoring etc) of the carbon storage infrastructure was established as an, ‘annual tariff for “GO; transport and storage (CTS Tariff’ as AS, value per ton of CO: stored every year. The CTS tariff is dis- ccussed in greater detail in Operating Cost of Equipment. Block 4 — carbon utilisation (CU). For the utilisation scenati, ‘the cost (equipment + installation) ofthe CO, electrolyser, the {formic aid distillation column, and the PSA separation unit for recycling the unreacted CO, were added into the TPC. For the CO, electrolyser, the capital cost was established by correlating clectrolyser capacity with commercial Hy electrolyser and their currently reported equipment costs (detailed in), The PSA unit, cost was determined by scaling the reference cost of AS2.65, ‘million per 1000 mh of gas processed and scaling factor of 07 [70]. Similarly, the distillation unit's cost (required to concentrate formic acid to meet industry standard) was scaled using a reference cost of A$5.5 million per 1000 Lh * with a capacity scaling factor of 07 [25]. These costs were then added to SMR and carbon capture units plant cost to establish the total plant cost of the SMR with CCUS facility in scenatio 3. ‘The individual parameters to assess the total plant costs of each block are summarised in Table 1 Operating cost of equipment For our modelling, we consider the whole plant operational, lifespan of 25 years with a yearly capacity factor of 85% (ie. 7446 hh of full-load operation per year). We determine the required natural gas, water feedstock, and electicity requirement to calculate the variable operating costs based on, these capacity factors. As suggested earlier, these feedstocks costs vary depending on the hubs location; and this was considered to provide accurate LC, estimates and establish a comparative analysis between each hub location (elaborated in Results and Discussion). In addition to these variable operating expenses, fixed operating casts such as; () operating and maintenance (O&M) costs, i) labour costs, i) other costs, including insurance, tax and interest liabilities were also considered. Similar to the case of capital costs, each block will have its individual operating expenses that were then combined t0 calculate the facility total operating cost in each scenario (OPEX;..a), a8 shown in Equation (2). Note: The OPEX wai 7 resented in the analysis of each case reflects the first year of operations only (Le. 2024). We apply inflation over this value to simulate OPEX for the forthcoming years. OPEXrau = Jo Variable Operating Costs o + So Fixed operating Costs Block 1 — SMR unit. The bulk of the variable operating cost for the SMR facility (Hy plant and BoP) depends on natural gas, water and feedstock consumption. It should be noted that these feedstock costs are based on wholesale price derived from contractual agreements and are subject to change over ‘ime, The operation and maintenance cost (O&M) is assumed fas 15% of the TPC of the SMR for annual maintenance and '8$718,000 yr * for the replacement of the reformer catalyst Please cts this article as: All Khan Mi etal, A framework for assessing economics of blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, International Joumal of Hydrogen Energy, httpsi/doi.org/10.1016/ j,jhydene.2021,04,104ites ny ENERGY xxx (xxx) xxx 9 @ 44% (AS107.7 Millon 159% (8779 Min) 28% (AS16.4 Mion) > 13% (AS36.1 Min) Increase of 189% ‘5% (AS122 Mion) {60% (AS77.9Milion) 20% 3848.4 TPC yy: AS130.4 Milion ee TP Cups og: AS247.2 Mion o 40% (AS18.0 ition) 10% (AS34.2 Milo) TH (4813.0 Mil 716 05247 Mion 7% (48124 lon) 1% (4823.5 Mion 4% (488.5 lon uci —— 72% (ASIG04 Millon) Merease of 180% CAPEXyq: AS180.3 Million 72% AS2A.2 Mili) CAPEX sup «cc: A8342.0 Millon TD Hysrogen Plont Power Turbine Utes and BoP Carbon Capture Unit Weal Plant Cost MConstucion Cost liscelanoous Cost Working Capital Fig. 3 — (a) Comparison of total plant cost of the SMR (TPCsys) and the SMR with carbon capture (TPCs1x.c)(b) the comparion of the CAPEXsg of the SMR plant with CAPEXsyg.oc of the SMR with carbon capture. ee Seley Parameter Case 1 Case 2 with Garbon Capture ‘without Carbon Capture eet ee ‘Mass Balance Natural Gas (NG) sostnt sasth? Process Water sob aie ‘Energy Balance Energy Input (thermal ~ MW) 394 MW (LEV) 434 MW (LEV) Energy Output Thermal ~ MW) 300 MW (LAV) 300 MW (LAV) Energy Efficiency (esa) 18% ox Internal Electricity Consumption ‘Turbine Output (Hectic ~ MU) usw n7Mw Plant Consumption Electric — MW,) asaw naMw Excess Hecricity to Grid s0Mw oa uw (Nickel) preforming reactor catalyst (COMOX and Ferric oxide requirement of MEA regeneration and provide the extra elec- catalyst) and the PSA absorbent [47]. A workforce of 38 (with tricity tooperate the CO, compressor (Table 2)-These changes, an average annual salary of A$80,000, reference: Australian plus the carbon tax on the uncaptured emissions wi Fair Work Ombudsman) is considered to operate the SMR considered as the carbon capture unit's operating costs. plant. Similany, the indirect staffaccounted assumed a yearly cost of 30% of direct labour cost. These assumptions are Block 3 ~ CO2 transport and storage (CTS tarif). Additionally, consistent withthe IEAGHG Analysis [7] for the carbon capture scenario, the cost of developing and operating the infrastructure to transport and store CO. for Block 2 ~ carbon capture unt. For the cases with carbon cap- each storage location must be considered. Given that each ture, an additional workforce ofS (each at A$80 k per year) is storage site will have its unique storage capacity, porosity, assumed for the MEA units maintenance and operation. Be- permeability, and proximity to the SMR plant, the subsequent sides, the MEA units addition causes the natural gas con- storage costs will vary from case to case. These cost include sumption to increase by 10% due to the additional heating transportation pipeline, booster compressor, injection wells Please cite this article as: All Khan MH etal, A framework for assessing economics of Blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, Intemational Jounal of Hydrogen Energy, httpsi/doi.org/10:1016/ ydene.2021.04,10410 co 60 eObx9rz or 699 v0 eObx699 01699 60 vo OLX ere or x699 oy co eOLewe 01x69 (05 ace) ateod ge 290 wont $¥- 3899 pazDMUNTY so10 wow gy -2609 pezsny orp arnsseid ‘no paseq siossaidunen 136009 30 # 9 an) = dare amesaig ates (es arora) steak az san wonsaf 501800 rossaxdisog 18008 501509 ve 3 ts tm 06 ow ¢ saxo worn $y - 3809 pazarmunry s0 £0 eo zo 50 £0 ¥O 0 (a) - aeqadsd yo smourera (ore) nse) esost)——(szst) ——_(yo001) (ose) (esyoost) oon (esousyovasoysuo) 038 ose oo set 00t 05e ost 00% (9) — watuay auadig 30 1909 voy) - sone} uoRDafu pu UperedsueEN fo wD IUEIA THOL ZS «THUS CARS —CTHOUS—CAOS—CTHOUS CARS| | THOUIS an vm ‘anata anit PID ‘Qn MSN ondi9saq, smjoureseg 1809 oot cost 00 ose oot coor uno 301 oxndop ou, ‘Saanootur ou t t 1 1 t 1 smaua os poss sm wom ota, am 30 sagan ype aaiearaun erp oumsse aa Ea 6 cor sé €6 v6 rt ze ‘ae = amstond wonDo(an ot st (ean) sinesaia wopsofar ame rae paseysoq snus, 1k 1 1 t 1 1 1 jm rad, 09 Ataf, wee wee wz xz wer ast (0 Arsorea oy o ose ose oot cor e Ssauy>H9 SY (a) sug pascstuous oot oot cxot coz oot coor 29.01 omar jo wae a, (ud ue ary sroHsi0 sions ——atousii0 rors arousuo orto 39 0480 -xonsa59y 0 army says afeiong jo soumavoa Zeus TaHS ZaHS TIS TrONesou Tae ION ~rroniasou puersddig onrasay eBuew013 sronsasow 78205 ‘uondussac sours er eee ee ere Please cts this article as: All Khan Mi etal, A framework for assessing economics of blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, International Joumal of Hydrogen Energy, httpsi/doi.org/10.1016/ jjhydene.2021,04,104ote wency xxx (xxx) wer wer ww es see exe we we 900 0 we exor sr 0s oz ex ecuso Tes ose “oo «x wom SV ~ 80D AUN + YW¥O Ponts + xa4O sossandinen o wns) = ove epangg + sedin09 voneyar (01) 809 BupoxUON. ‘uous gy pazamuuy)— Ls) sossoidiue> jos 40s ~ 00 aud so 1 Jo tng (opens) v0 PeNts (@xtodwion) x20 sosseidion D8 wonDefey ue uonenodsuea o x40 1k wonan uorstuncoaq +294. jo wns)" x2aV0 s1899 210 109 Suruorssruruosog oan jon pus uoneodsuen yo x2aVD Please cite this article as: All Khan MH etal, A framework for assessing economics of Blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, Intemational Jounal of Hydrogen Energy, httpsi/doi.org/10:1016/ |jijhydene.2021,04,10412 InTERWATIONAL rouRMaL oF HYDRO; ENERGY xxx (xxx) 2308 and onshore/offshore facilities for injection equipment, and ‘the operating costs associated with periodic monitoring of the storage sites and the equipments maintenance requirements, ‘The periodic monitoring of the reservoir is of significant importance and is often carried out for several years after the last of the CO, captured is injected to ensure long term sta- bility of the reservoir and mitigate the risk of the stored CO, leaking out [44]. We assume that periodic seismic surveys and vertical seismic profiling will be conducted every five years until 10 years after decommissioning the SMR facility projec. For each storage location, a low volume of CO, will have to be stored (ie.,-054Mtyr "@85% capacity factor of SMR) over the 25 years of operational life, which would most likely restrict the area of interest for monitoring to < 1000 lam?. Except for ‘the Gippsland Basin, where well-defined rock formations with, good trapping abilities exist (50), that would significantly restrict the CO, plume movement, and a smaller area of in- terest of -200 km? can be assumed. Nevertheless, it should be noted that the actual area of interest would be subject to verification by detailed geological and reservoir simulation, ‘A comprehensive analysis for storing CO, capture and storage ftom power plants in Australia was provided by the Hlectrie Power Research Institute (ERP!) [57]. The study pro- vided a detailed breakdown of the characteristic ofthe storage sites (including those we consider) and suggested the costs, associated with developing CO: pipeline, booster compres sors, injection wells and injection facilities, and the operating costs for monitoring and maintenance. We adopted these costs asa reference to develop the COs storage costs for SMR, ‘The storage site characteristics, along with the total capital (CAPEX nae) nd operating costs (OFEXsoray) established for ‘each injection site's storage infrastructure, are summarised in, Table 3 ‘The total eapital and operating costs at each site were then levelised over the total amount of the emissions stored at each, site over the entire project life (equation (3)) to achieve an AS. ton cost. This unit cost can then be represented as an annual, tariff for CO, transporting and storing (CTS Tariff) at each site ‘and included in the total operating cost of the SMR with CCUS, facility to recover the cost of storing the CO; while the SMR facility operates. Moreover, it can be used as a simple, straightforward metric to compate the storage costs between, ‘two storage sites, rr ) Hore the CAPEXsunag: and OPEXsiyage axe determined depending on each storage case; n represents the storage project site which was assumed as 28 years, C., represents the ‘Capital Charge Rate,” ie, the rate of return on the invested capital and is calculated as 8.27% based on a nominal discount rate of 7%, a tax rate of 30% p.a., insurance rate of 2.0% pa. the nominal cost of equity of 11.5% paa. and that of 80% paa. for debt (70% of CAPEX). Emissions.., represents the volume of carbon emissions stored during each year, ie, ~0.6 Million tonnes of CO; per year (MtCO, yr *) in scenario 2. A detailed breakdown of the capital and operating costs for the storage Infrastructure are detailed in the supporting information. The reference values were provided in A§2017 basis, so they were updated to the current A$ basis by using the IHS market, Indices (Fig. $7). These indices are readily used to update the capital and operating costs of equipment used in the oil and a8 industry, which is pertinent as most of the CO, storage equipment is based on oil and gas technology. Block 4 — carbon utilisation. For the carbon utilisation block, the additional operating requirements of the electrolyser, include the electricity and water consumption of the electro- Iyser (elaborated in the SI), along with the electrolyser O&M. cost (equivalent to 5% of the cost of the electrolyser system, [p9). Similarly, from the ASPEN model used to model the distillation column, we established an O&M of AS13,060 day * per 1000 L min * of electrolyte processed. For the PSA O&M. requirement, we assume an additional 0.25 kWh is consumed per m ? of the gas processed [70]. The electricity to drive the lectrolyser and PSA unit was sourced from the grid at the prevailing wholesale market price. In contrast, the additional heating and electricity requirement for the distillation coluran, was included in the O&M costs. ‘Table 4 summarises the complete SMR facility's operating requirement including the carbon capture utilisation and storage blocks. Levelised cost of H — 1Cvo Levelised cost of hydrogen (LC) is used asthe primary metric for our analysis and was then benchmarked against the ‘Australian Government expectation of Fixed Coste Labour Cost Direct Labour ~ A$80,000 yr per emp. Indiect Labour — 30% of Direct Labour 04m cost 415% ofthe TRC of the SMR & CC unit 5% of Electolser plant cost other Costs ‘Assumed a8 10% ofthe CAPEX aot Varies from region to region [2,66] Varies from source ro eaurce [*] Varies from region to region [55] Inchuded as cost per unit stored Included as cost per unit emitted Include as the cost per processed (Based on Aspen simulation) Electricity Consumed (7) Adopted from Fair Work Ombudsman ‘Assumed frm [47 Assumed from [7] “Adopted from [25] "Note: For comparing the resulis, the operating costs herein have been represented in two ways. sly as a generic outlook of operating cost, based on average pricing of the natural gas, water and electricity feedstocks. Secondly, a individual operating costs fo each hub based onthe actual wholesale pricing ofthe feedstock, which as suggested earlier, vary between location and source Results and discussion Base case ~ business as uswal Im our base case, we do not consider any carbon mitigation technology and/or strategy to modelour LC, and assume that the SMR plants emissions are released into the atmosphere ‘The mass and energy balance of the base case SMR plant, (without carbon capture) is presented in Table 2, -20.8tuchr > of natural gas is required for the SMR unit (262 ty hr * as a feedstock in reformer and 43 tyc hr * as fuel for the SMR reformer bumers). The assumed SMR unit also generates, excess electricity by recovering waste heat from the steam, leaving the reformer, -115 MW are generated (of which 1S MWis used for internal requirements while the remainder 10 MW is retailed to the electricity grid). By accounting for Parameter Value “Technical Parameters SMR Capacity (0; Production Rate Economic Parameters Currency Basis. 100,000 Now of He hr-Y/-9 tua * 9 goo per kgs produced ‘Australian Dolla (AS) Entry Date ‘ovoy2020 Project Life () 28 Years 3 years (Construction) + 25 years operation () Nominal Discount Rate() 7% p. a assumed) Depreciation Model Modified Accelerated Cost Recovery System (MAGRS) (10 years) Inflation rate 25K pa Formic Acid Sales Price 73] ASL.O6 kg”? Excess Hecricity Sale rice Retaled at prevailing wholesale pacing at each hub these energy inflows (natural gas as feedstock and fuel) and outflows (Hp, electricity), we estimate an overall energy effi- ciency for the plant of 79%. Using this mass and energy bal- ance, we calculate the OPEXiasi to be A$ 96.9 milion (ig. 4a) uring the first year of operation. Note that the revenue generated from the excess electricity results in a postive cash flow of $7.4 million year *, assuming an average electricity cost of A$80 MWh %, slightly offsetting the operating costs (igs. 59-511). Hence, using the CAPEX of A$1803 Milion (Gig. 3) and the OPEX of AS 96.9 millon, we estimate a low LCi of AS1.75 ke ? (is, 4b) for our base-case scenario. ‘Asymmetric sensitivity analysis (Pig 4c) was then carried out with the base case LC. to identify potential parameters that affect Cuz such as natural gas costs, installation factor, plant capacity factor, discount rate, and inflation. The pa rameters were changed by 230% of the base case assump- tions (Table 4) except capacity and installation factors that changed by +15%, respectively. The sensitivity analysis highlights that the following changes strongly influence the 1Gya: natural gas pricing, followed by inflation in operating costs, the installation factor (which can be reduced by developing local supply chains for equipment, instead of import), capacity factor due to changes in operating sched: Uules, and lastly the discount rate. The disparity in the natural gas pricing between each hub is significant (as highlighted in Section 2.3), and a wide range of LCuz can be expected (ig 4-g For instance, in WA, the price of natural gasis the lowest at AS4 GJ, resulting in a very low LC of ‘$1.38 kg? (Fig 4). Similarly, for NSW that has the highest natural gas pricing in Australia (AS8.5 GJ"), high LCjz2 of £A$2.30 kg" was evaluated (Fig. 4e) It is important to note that Australian natural gas prices have shown considerable past variability, representing a significant operational un: certainty over the project lifetime. This is particularly pertinent for the Eastern Australian states (NSW, Victoria and SA) where there is growing uncertainty in future supply, as expansion in gas production is forecasted to come from currently under developed 2P (proved + probable) reserves icase cite this anicle a= All Khan Mil eral, A framework for assessing economics of Blue hydragen production from steam methane reforming using carbon capture storage & utilisation, Intemational Jounal of Hydrogen Energy, httpsi/doi.org/10:1016/ ijhydene.2021,04,10414 InTERWATIONAL rouRMaL oF HYDRO; @ 72% (A$70.1 Million) . UC = AS175 kaya eee aes at fen, vincowien Masscow Ys a 2% (AS1.5 Millon) WAyonaatncoe) asi Variable OPEX $0.03 $0.95 Natural Gas Natural Gas Consumption MlLabour Cost MTax & Interest S250 oe WORM Cost Catalyst & Che |Water Consumption $0.10 CAPEX (©) eguealuunan se Natural Gas Cost 1.35 Installation Factor 170 Capacity Factor Discount Rate Infation Rate ete 2.14 Wa + 1500% Bese Case ws -1530%, wm LC yp (AS Kio!) (@) NSW: A82.30 kguz (e) Vie: AS2.18 kg." () Qld: AS2.09 kg.g'* (a) WA: AS1.38 kayo"! ass $0.56 sea asis0 $0.04 aso asso s0.10)] as BW Aanuitizedifation (recast) $0.52 $028 $0.25 s0.04 $1.34 $1.27 $0.10 WIFixed OPEX ME VaiableOPEX Natural Gas Consumption $051 — $0.02 S118 594 $0.10 so.t0 | $0.63 acAPEX Fig. 4— The cost summary of the base case with no carbon mitigation strategy. The (a) total operating cost (OPEXram) of the ‘SMR in the first operating year (2024), (b) breakdown of the levelised cost for the generic case and (¢) the symmetric sensitivity analysis of the SMR process are represented. The reference values for the sensit ity analysis is based on the generic assumptions in Table 4; with all the considered parameters except capacity factor altered by + 20%, the capacity factor was changed by + 5%. Besides, the individual LC, for the SMR plant operated in the (€) NSW Hub, (e) Vic Hub, (9 Qld Hub and (g) WA Hub. The represented share of CAPEX and inflation in the levelised costs is shown as the annuitised cost of total capital cost and inflation accumulated over a project life of 28 years (A$ million yr [75]. Moreover, the gas market and the demand is tightly linked to international LNG markets, so the current low in- ternational oil and gas prices reduce the incentives for gas producers to invest in developing new reserves. Thus, without a domestic reservation arrangement for Eastern ‘Australia and pricing will be driven at least in part by LNG. netback pricing set by intemational prices [75]. Yet, the relatively low contribution of the SMR CAPEX on the lev- clised costs will provide room to develop these SMR facilities, in regions where low cost and long-term natural gas, contracts can be negotiated to mitigate risks around unex- pected changes in availability and pricing Overall, our results highlight thatthe current cost of pro ducing Ha using SMR without any CCS/CCU at current gas prices are close to the Australian Government target of A$2.0 kg [6]. However, releasing CO, into the atmosphere is not viable considering Australia’s commitment to reducing greenhouse gas emissions and the strict requirement from buyers in the Asia Pacific, who have emphasised that they want imported Ho tobe ftee of emissions 76. As a result itis Please cts this article as: All Khan Mi etal, A framework for assessing economics of blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, International Joumal of Hydrogen Energy, httpsi/doi.org/10.1016/ ijhydene.2021,04,10415 ERGY XX (XK) 2X necessary to design SMR plants with CCS and/or CCU and determine their feasibility for practical applications. Scenario 1 ~ carbon pricing on fugitive emissions For modelling this scenario, we investigate the impact of a potential carbon tax (applied on the emissions released fram, our SMR plant) on the LC, No carbon capture system is, considered for the SMR plant and, so all the COs emission, generated (-20teoe hr /07 MtCOs yr ") end up in the atmo- sphere. Therefore, they are taxed as an additional expense which is included in the OFEXrvui of the SMR. Note that in the absence of carbon tax in Australia, we adopt CSIRO's proposed carbon pricing (to restric the global rise in temperature to2°C and 4 °C rise by 2100), in alignment with findings from the PCC [43]. By accounting for the considered carbon tax regime (Methods), the new OPEXaye is calculated to be A$120 milion yr * under the 2°C scenario (an increase of 16% compared to the base case, Fig, 5a) and AS168 million yr-* under 4°C sce- nario (10% increase on the base case). This addition of the carbon tax is also reflected in the higher LC of NSW hub as compared to the base case (AS2.30 kg '), which increases to ) 19% (AS18.0 Millon) 47% (A$18.0 Mion) 4% (A844 Millon) 4% (AS4.4 Mion 2% (AS2.2 Millon) 2% (A822 Milion [as 107.5 Milo li | 10% (4$10.6 nition) IE rast pein cos) JY 19% (AS229 Milo) 1% (AS08N “0 CatonPce 1% (ASD. Milo 41% (AS1.4 Millon) 1% (AS1.4 Mion) 165% (AS70.1 Millon) 58% (A870. Milion) 1m care Tox Ml Texan intrest Hrs Cat Cnsmpon Process tr Conumptn El sas an Chen Bi Latour cont mouucens PY Let ASZ.60 Ko — LC yt ASZAZ Kgs? LC gt AS236 Kg LC ygs AS1.69 kg" ass00 sous ae = as200 aS ost = sa08 $0.26 $025 an % asia oa nu sary 030 asi00 soo sist S128 - st 050 : ‘i Pa sont son #8 NSW Hub- 4-6 Vie Hub - 4 Qld Hub — 400 WA Hub - Leg: AS 292 kg’ — LC yg AS 279 Kgy;? — LC yy: AS 2.78 Kha" — LC? AS1.98 kaye? $043 ~ 039 038 as280 st 078, as2u0 on 016 — 004 026 3025 02s son ssis0 008 — i 030 sie a a 125 si | . son saat son sot NSW Hu ~ 2°¢ Vie Hub - 2 (ld Hub = 2>¢ WAHub - 2°¢ ronutze tion MIFbed OPEX. Brae OPEX Marben Tx Bsr Ges Corsunon HLCAPEX Fig. 5 — Levelised cost for generating hydrogen at each hub for the 2°C and 4°C Carbon Tax regime. The influence of carbon, pricing on (a) the tatal operating cost of the SMR with both the 2 °C and 4 °C carbon price for the frst year of operation (@etalled breakdown in Table S3) is represented. The additional operating cost subsequently causes an increase in Ly. for all hubs under both the (b) 2 'C and (¢) 4 °C global scenario carbon prices. Please cite this article as: All Khan MH etal, A framework for assessing economics of Blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, Intemational Jounal of Hydrogen Energy, httpsi/doi.org/10:1016/ ijhydene.2021.04,10416 InTERWATIONAL rouRMaL oF HYDRO; ENERGY xxx (xxx) 2308 '8$2.60 kg~* and A$2.92 kg~* under the 4 °C and 2 °C sce- natios, respectively. In both cases, compared tothe base case the additional carbon tax increases the LCju by 13% (4 °C carbon price) and 27% (2°C carbon price) for NSW and around 23% (4 °C carbon price) and 44%; for WA (2 °C carbon price), respectively. Scenario 2 ~ CCS In this scenario, we consider a system where we capture CO, emissions from SMR unit, tansport and subsequently store in underground reservoirs, For our considered MEA system, we achieve a carbon capture cost of AS107 ton to achieve 2 90% capture efficiency. However, as indicated earlier, the cost can vary based on the capture technology used, For example, IEA analysis suggests that the capture cost can be reduced to ~A893 ton * (595€ ton‘) by using membrane absorption, albeit with a lower overall capture rate of -53% [47] Implementing the auggested technology will certainly reduce the additional capital and operating costs for the carbon capture system; however, the lower carbon capture rate wil lead to a higher amount of carbon emissions into the atmosphere. Our results show that by replacing the MEA system with the membrane system, there is a 23% decrease in total system capital cost and subsequently reduction in the levelised costs of hydrogen However, owing to the low capture rate, the membrane capture | SMR plant configuration will produce ~535COeq M/ of 1: significantly higher than the 36 COzuq MI of Hi limit set for blue hydrogen production as part af emerging hydrogen certification schemes [77]. In contrast, the MEA + SMR plant configuration emits 27ECOae, MI of Ha’, Which is well within this acceptable certification limit Similarly, other capture technologies such as zeolite-based absorbents have been suggested for post-combustion cap- ture as they have higher capture rates (-95%) [73]. How- ever, their higher capture costs (compared to MEA) and low TTRL entails additional RAD before commercial application at large-scale (79) ‘The second aspect of this configuration is to store the captured COs in an appropriate storage reservoir near the SMR unit. Australian sedimentary basins have formations with differing properties and thereby varying potentials for COs storage [55]. As highlighted earlier, we considered stor- age reservoirs in the Surat, Eromanga, Gippsland (offshore), and North Perth (onshore and offshore) Basins. These basins brave demonstrated storage capability and are close tomajor industrial hubs [57]. The Surat and Eromanga Basins (Qld) have significant formations and overlaying trapping layers ata shallow and medium depth that can be used to store CO, {56,60}. However, these basins are connected to the Great ‘Artesian Basin, which has active freshwater and hydrocar- bon resources affected by CO; injection activities [73]. in contrast, the North Perth (WA) Basin has depleted/depleting hydrocarbon fields in the onshore part of the basin and a deep saline aquifer offshore that can be developed for long term storage [si]. In this basin, the Lesueur Sandstone structures have been proposed asa very economical storage opportunity [57]. Similarly, the offshore Gippsland Basin (Ic) has sandstone formations that occur at shallow depths close to the shore and are expected to have good storage capacities because of their high permeability and porosity [7]. tn the following section, we compare the economics of developing these identified reservoirs into storage sites for captured emissions from the SMR plants in each respective bub. Storage case 1 ~ Qld Hub For Qld Hub, we consider CO, storage at sites in the Surat (Site) and Eromanga {Site #2) Basins, as shown in Fig, 2e ‘While we consider a relatively straight pipeline between the SMR facility (Coowoomba) and the storage sites, itis essential to note that this is an oversimplifcation, and the actual pipeline layout on the ground may vary in each case. The pipeline length between the SMR facility and the Surat and Eromanga sites was estimated at 400 km and 1000 km, respectively (Fg. 2e). We also consider a balance between the pipetine's diameter and the length to reduce the capital cost required for our modelling, Larger diameter pipelines lead to an inereased capacity and lower pressure drops, but they will have a higher capital cost (Table 54) [57] Asa result, a smaller diameter pipeline (0.3 m) was chosen for the shorter Surat pipeline and a slightly larger diameter pipeline (0.35 m) for the longer Eromanga pipeline, which presented pressure drops of 6.69 x 10°? and 2.26 x 10-* MPa km_+, respectively (Table $5). ‘To account for the potential pressure drop during operation, wwe assume that the working pressure would be maintained at 9 MPa ata times (elaborated in the SI). We consider at least 3 booster compressors on each pipeline, with the last of these booster compressors at the Eromanga site expected to in- crease the working pressure to 12 MPa to match the required injection pressures (Table 3). While at the Surat Site, we anticipate an injection pressure of 8.2 MPa, which is lower than the working pressure (9 MPa), so no injection compres- sion would be required forthis site. A deeper well is needed at the Eromanga site (1700 m) to reach the ideal reservoir structure with good permeability of 100 milidarcys (mD) and a porosity of 18%, while in the Surat site, we anticipate such structures ata shallower depth (1000 m). The depth of the well dictates the cost for driling (Table Ss), Given the assumed 1000 km? area of interest large reservoir size for both the Surat ‘and Eromanga sites, we assume high monitoring costs of £A$5.6 milion per year willbe incurred (Table 57). Accounting for all the equipment requirements, we establish a CAPEXsjef A812.3 milion yr-* and AS441 million yr "for the Surat (Site #1) and Eromanga site (annuitised over the 28-year project life). We also determine the new OFEXraut for Surat and Eromanga sites as A$5.06 and $10.73 million yr * respectively. By considering the additional CAPEX and OPEX of storage, we establish a CTS tariff of AS11.25 taba for Site #1 and A$26.61 tel for Site ¥2 (Table 3). Asa result ofthe additional CTS tariff, we estimate the LC: for the Qld SMR with CCS hub of A82.74 kg"? for storage in Surat ste (Siteé1) and A$2.88 kg_* for the Eromanga (Sitet2), respectively. Given that this location is far from the nearest port in Brisbane, @ separate analysis would have to be conducted to analyse the cost of transporting H. to the port or use by local and nearby consumers, Nevertheless, the location provides an interesting, case study to evaluate the potential of developing SMR facil ities inland, Please cite this article as: All Khan Mi etal, A framework for assessing economics ofblue Ton from steam methane igen production | reforming using carbon capture storage & utilisation, International Joumal of Hydrogen Energy, httpsi/doi.org/10.1016/ j,jhydene.2021,04,104ERGY XX (XK) 2X 7 Storage case 2 — NSW Hub For NSW hub, we consider the Queensland portion of the Surat Basin (Site #1), as well as the offshore site in the Gippsland Basin (Site #2), as they are the most likely to be developed into storage sites. The direct CO, pipeline from the assumed facility in Newcastle to the Gippsland storage site (ite #2) would be restricted by national parks and hence we assume the CO: pipeline will follow the route of existing natural gas pipeline that passes through this region (Pig. 2c). ‘The total pipeline requirement results in a larger pipeline length of -1550em (1500 km onshore and SO km offshore). As @ result, large pressure drops expected for this route, requiring additional booster compression (18 in total) at multiple points This significantly increases the CAFEXsurge for Site#2 which comes out to be A883 9 millon yr“ anda Site itis evaluated as AS14.7 milion yr * (annuitised over the 28-year project life). The OFEXaanye at Sitef2is also higher at $25.2 millon yr"! as compared to AS5.5 milli yr #at site 1. The subsequent stor- age costs are established as AS12.51 tals for Site #1 and A859.3 tebe for Site #2, leading to high LCi of A$3.00 kg” for Site #1 and A$3.42 kg for Site#2, respectively. Given, these high storage cost and wholesale gas price (currently highest in Australia), NSW may well not be a viable location to develop SMR facilities. Storage case 3 ~ Vie Hub In the Victoria Hub, the storage sites are both located offshore in the Gippsland Basin (south east of Longford) (ie. 2¢), The storage Site #1 is located near shore (25 km. offshore and 1350 m in depth) and Site #2 is located in the Central Deep part of the reservior (50 kin offshore, depth 2,000 m). Both these sites are promising given their high porosity as detailed in Table 3, Over the short distance to the reservoir at Site #1, no booster compression is required but at Site #2, intermediate compression stations are required to overcome the pressure drop. However, at Site#1 we consider a single injection compressor as contingency to ensure the working pressure to be higher than the 9.2 MPa injection, pressure, In this case we estimate a CAPEXsuraye Of 489.7 millon yr * and A$119 milion yr * (annuitised over the 28-year project, life) and OPEX;.. of A$3.3 milion yr 7 and A$7.8 million yr * for Site #1 and #2, respectively, We estimate that the storage cost for Site #1 and #2 are AS74 tole and AS16.2 cbs, which lead to 2 1Cyp of AS2.85 kg? and A$2.91 kg * respectively. Storage case 2 — WA Hub Similarly, in the WA Hub, the CO, emissions are envisioned to be stored in the onshore part of the North Perth Basin (Site¥1) land on the offshore part of the basin (Site#2) (rig. 2b). The pipeline of 50 km is assumed for Site#1 and of 880 km (740 km, onshore + 140 offshore) for Site#2, The pipeline diameter of (03 m and 0.35 m for Site #1 and #2, respectively, were assumed. For both sites, a deep well (1500-1700 m) must be drilled to reach the reservoir with good levels of porosity and, permeability (22% and >250 mb). By considering all these factors, we estimate a CAPEXsyrage of AS128 milion yr * and A$41,9 milion yr * (annuitised over the 28-year project life) and an OPEXspray Of ASS.4 milion yr * and A$12.4 milion yr * for Site W# and #2, respectively (without, inflation). These costs translate into @ CTS Taff of AS120 tae was for Site #1 and $29.5 tea for Site #2, respectively. This, way, the LCyn of the WA hub with CCS would be A$2.00 kg” for storage onshore (Ste #1) and AS215 kg if the CO is stored offshore (Site¥2). These costs are lose to the AS2 kg * production target, so developing the SMR WA hub could be the ‘ost economically viable locaton for the blue H2 production facility Collectively, our results reveal that the estimated LCy2 around the different hubs in Australia is highly dependent on operating costs such as natural gas, electricity, water, and the storage Tarif (Fig. ), We must point out that our LC» ealeu lations are scoping level estimates (AACE class 3 for SMR fa- cilty and AACE Clase S for the carbon storage) as they overly simply the complex engineering required for CO, transport from SMR hubs to storage locations. While our modeling re- sults are a theoretical estimate, they provide guidelines and directions on developing commercial SMR hubs that are cost competitive with the government target cost AS2 kg "At this stage, we conclude that Western Australia seems best suited for H, production using SMR as the expected levelised costs ae close to the A$2 kg * target. In contrast, the high cost of natural gas and relatively higher storage costsin some regions on the eastern shore results in much higher LC» than the £82 kg * Hence, significant cost reduction willbe required to match the government price targets. They may wel be better suited to green h2 production from renewables which avoids the need for CCS. For blue H2, a strategy can be by using a pattof the CO: to generate value-added products and feed stock for local consumption. In the following section, we analyse if such revenue from CCU can help offset some of the operating costs associated with CO, capture and storage and Jead to lower competitive Lj, specifically for hubs on Aus- tralia’ eastern const Scenario 3 ~ Carbon Capture and Utilisation (CCU) In this scenario, we assume conversion of captured COs to formic acid as a potential utilisation option. Consequently, a fraction of captured CO, from the SMR unit is converted to formic acid using a CO, electrolyser (Fi. 12). The remainder of the captured CO» is stored inthe identified storage sites as in Scenario 2. To evaluate the effect on the SMR process economics, we consider different utilisation rates of the captured CO, through a wide range of electrolyser capacity (1-50 Mw). Our results suggest that a medium-sized CO, electrolyser of 10 MW capacity could generate 17,000 yr * of formic acid, similar to a typical conventional small scale formic acid fa- cility. This capacity will entail an additional CAPEX of A$28 million, an OPEX of A$2.7 milion per year and sales worth A$I8 million yr * from formic acid while converting around 5% of the emissions produced in the SMR and meeting 2% of global formic acid demand (Fable S). In this manner, the LGyain WA and NSW hub can be decreased from $2.00 kg” and ‘A$3.00 kg-? (most viable CCS cases) to AS1.83 kg (WA hub) and $2.90 kg™* (NSW hub), a respective improvement of 9% and 4% (Fig, 7). Increasing the electrolyser capacity will lead to increased sales and falling H production costs (Fig. 513). ‘This way, a further reduction in LCj2 occurs by increasing the Please cite this article az All Khan MH etal, A framework for assessing economics of Be Ton from steam methane production reforming using carbon capture storage & utilisation, Intemational Jounal of Hydrogen Energy, httpsi/doi.org/10:1016/ |jijhydene.2021,04,10418 1 Wg=AB200 ig? Ly HASZ IS saw Lut AQT4AGg! Lea ABZ ow a yi. a a a ia so = $008 ‘son wat ‘so12 $0.26] j 90.12 es $130; cof $000 aco (Nsom = A soo | son] 96 i 00] an i. wo wo = [ak ase | so ‘a ge tha he — ‘ canbe Senge asap crn“ nou : Seana Stn i 1 te AS285 ig? UGA Le iow We ASSODiGg” UGq=AS342 IGT ‘age Rei oo iiae ne ws) eae 2 core ee be a ona = oe 7 storia : js te la son om Seco in ry faa baer Ps neat - pai fe wi ao sone . . Veins Veh Jerk Smet NOH th Sue coord on Seana “eon Fig. 6~ The summary outlook of SMR with CCS at different envisioned hubs in Australia. (The effect of the carbon storage costs on the operating costs of the SMR facility in each hub is shown in Table $3). Go agit aan von wht gg 4) ge 4g 3 ete 2 = 5 3. 290 4: fos a’ zn 5 ld pes] rufion® 8 5 hoes e ae HE g 2 oe 1g é amg og ‘Le Gus g of. ee 8 (eso, ena tT" § ' a 91 * 54.0, convened ipo & om | t 1h Capacity of CO, Electrolyzer (MW) Capacity of CO, Electrotyzer (MW) Fig. 7 —The summary outlook of SMR with CCUS in the each considered (with the lowest CTS tif) a) The LGye of the/SMR process is reflected asa function of increasing the electrolyse's capacity and the amount of carbon emission converted (tatio ofthe emissions converted to the emissions produced in the SMR). By matching the capacity ofa large formic acid plant(0.02 million tyr-* ~ 10 MW CO, electrolyser) the LC can be decreased by 9%. similarly, ifthe capacity is scaled up to 0.05 million tyr-* 25 MW), equivalent tothe largest existing formic acid plant, the LGya can be decreased by 22%. In future, ifthe scale reaches 0.1 million tyr * 50 MW), there is @ 43% decrease in the LCyz- Overall, a CCU system of greater than SOMW capacity -0.7 million tyr * capacity brings down the LGy, below the AS2 kg * production target (b) The scaling ofthe ‘Total Plant Cost of the Carbon Utilisation unit represented as a ratio ofthe TPCcy to the TPGccs against the increasing capacity of CO; electrolyser. For figure a), the y-axis represents the rato ofthe volume of emissions converted tothe total emissions captured at the SMR facility. Similarly, for figure (P), the y axis represents the ratio ofthe formic acid produced (Area) to the total global demand for formic acid. Both the ratios for emissions converted and the formic acid produced, increase with the increasing capacity ofthe electrolyser. Please cts this article as: All Khan Mi etal, A framework for assessing economics of blue hydrogen production fom steam methane reforming using carbon capture storage & utilisation, International Joumal of Hydrogen Energy, httpsi/doi.org/10.1016/ j,jhydene.2021,04,104ERGY XX (XK) 2X 19 electrolyser capacity; for instance, the cots can be reduced by 22% and 43% (Fi, 7a) with 25 MW and 5O MW systems in WA, respectively, and in NSW by 10% and 19% respectively. Over” all, we estimate that electrolyser capacities beyond 50 MW ‘would have to be developed to bring down the LCyz below the ‘8820 kg "target in the easter state ‘While these results demonstrate that such carbon uti lisation systems can be scaled to effectively convert all the industrial waste CO, emission, in practice, the electrolyser's capacity will be limited by the capital investment and the subsequent electricity consumption. For example, converting all the produced CO: (80 too hr ") would require an electro lyser of 212 MW capacity (ig. 70), and this will incur an additional plant cost of ASSS7 milion (le. 451% of the total capitalequirement of installing te SMR plant with no carbon mitigation facility). However, itis expected that further R&D will lead to the development of more efficient catalysts, Improving conversion efficiencies and reducing electrolyser costs; these developments would enhance the business case of using CO, electrolysers for CCUS [st Another important consideration is the limited market for formic acid (.e. 06 Mtyq year * [5), 2212 MW electrolyser produces would pro- duce 03 milion t, yf or 50% of global demand, Note that while our work focuses on formic acid to present the benefit of CCU, similar opportunities for converting CO: to other value- added chemicals with larger market size such as ethanol, ‘methanol, syngas, carbon monoxide, methane also exists [83 Another alternative utilisation pathway could be the miner- alisation of captured CO; to make construction material [2]; given the greater demand for construction material, these scenarios should be analysed in future works. Altogether, if any of these opportunities can be exploited, they will enable a ‘viable direction to make blue hydrogen competitive and offset the requirement of large-scale CO, storage. Overall, our results show that the cost of producing Hs ‘would vary between region to region and the operational configuration of the SMR facility (Fig. 8) Ifthe SMR facility is operated traditionally with all the produced emissions released to the atmosphere, the production costs would be lower than the Government's expectation (SO MW would bbe required to bringthe LG in each state close tothe AS2 kg * production cost target set by the Australian Government, albeit at higher capital cost and saturation ofthe formic acid market. Thus, future work should explore additional oppor- tunities for low cost and high-volume CO. utilisation ftom blue hydrogen hubs Declaration of competing interest ‘The authors declare that they have no known competing financial interests or personal relationships that could have appeared to influence the work reported in this paper. Acknowledgments ‘The work was supported by the ARC Training Centre for the Global Hydrogen Economy (1¢200100023), Australian Research, Council Research Hub on Integrated Energy Storage Solutions (181180100020), Australian Renewable Energy Authority (ARENA), Appendix A. Supplementary data Supplementary data to this article can be found online at hhttps//doi.org/10.1016)ihydene.2021.04.104, REFERENCES [1] stafftl 1, scamman D, Velazquez Abad A, Balcombe P, Dodds PE, kins F, etal. The role of hydrogen and fuel ces in the global energy system. Energy Environ Sei 2019;12462-91, Jnetps/doi.org/10.1039/CSEEOTISTE. [2] IEA. 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