12 Mar Dutch CO2 storage project Porthos is already almost three times more expensive than budgeted
Dutch Newspaper ‘NRC’, March 7 2024
Porthos: The first large-scale storage of CO2 under the North Sea was budgeted at half a billion. After five years, the project already appears to cost 1.3 billion euros.
The costs of the first major CO2 storage project under the North Sea, which is being looked at with great international interest, have risen in five years to almost three times the initial estimate. This is evident from research by NRC and from conversations with those involved. The project has also been delayed due to legal proceedings. While a price of 400 to 500 million euros was still taken into account at the start of this Porthos project in 2018, the costs have now risen to 1.3 billion euros. According to the operators, the cause of this increase lies mainly in the sharp increase in inflation, which has made materials more expensive. The global energy crisis is also said to have affected Porthos. Because energy security was at risk in 2022, there was a rush on components such as pipelines, with which countries tried to secure their energy supply. The operators of Porthos are three government companies: Gasunie, Port of Rotterdam and EBN.
How heavy industry causes megatons of CO2 to disappear under the North Sea The delay was mainly due to a procedure initiated by Mobilization for the Environment (MOB). According to the environmental movement of the well-known activist Johan Vollenbroek, too much nitrogen was released during construction, endangering nature. The Council of State ruled in August last year that these concerns were unfounded, after which construction was allowed to begin. But due to the long procedure, this was only possible months later than intended. The delay further increased the cost of the project, Porthos said. It had to wait for legal clarity before ordering materials. Then products often became more expensive.
Empty gas fields
The project is being followed internationally with great attention. Porthos is one of the first projects for large-scale storage of the greenhouse gas CO2 in empty gas fields under the seabed. In this case the North Sea, where Porthos wants to inject CO2 into old gas fields about 25 kilometers from the coast. Proponents of CO2 storage see this approach as an important way to reduce CO2 emissions and thus combat dangerous climate change. At the same time, there are doubts as to whether it is technically and financially feasible on a large scale. The ins and outs of Porthos are therefore important for the development of this fledgling industry. Porthos wants to inject greenhouse gas into empty gas fields under the seabed. Commercial parties often still find storage projects too risky. That is why three state-owned companies in the Netherlands are responsible for the first test case. The government hereby issues a guarantee to the project’s customers, major emitters such as Shell and Air Liquide, that they will not suffer financially. Those customers now also pay a price for every ton of CO2 they emit, under the European emissions trading system. If that price falls below the storage rate, the government will make up the difference. Two large commercial parties, Shell and Total, are working in the background on an even larger storage project under the North Sea, together with Gasunie and EBN. That project is called Aramis. They will undoubtedly keep an eye on what happens at Porthos.
Emissions saved
The intention is that 2.5 million tons of CO2 can be pumped into the Porthos storage facilities annually, until the maximum capacity of 37.5 million tons is reached in about fifteen years. The annual injections would save 1.5 percent of Dutch emissions – that is, not dumped into the atmosphere, but ‘hidden’ underground. Construction on the project is expected to officially begin at the end of next month. CO2 could then be stored from 2026. Opponents of CO2 storage point out that this can create an incentive for polluting companies not to make their production processes more sustainable. After all, there is no longer a need to go green. Without storage options, there is no other option than to buy emission allowances. But these rights are becoming increasingly expensive, and in the long term they will even be reduced until there are none left. In that case, companies have little choice but to adjust their processes.