Longship; Potential for Cost Reductions in the CCS Chain

Gassnova’s expertise has accumulated detailed and unique knowledge about Longship over several years – from the early phases, through FEED (Front-End Engineering and Design), to the construction phase and follow-up with Heidelberg Materials and Northern Lights.

In November 2024, the government proposed continuing Hafslund Celsio’s capture project at Klemetsrud in Oslo, with increased state support of NOK 4.4 billion (2024 currency). This came after the project had entered a cost-reduction phase and was put on hold.

Cost Reductions

Uncovering cost drivers and identifying opportunities for cost reductions in the Longship value chain, is crucial. Based on this premise, Gassnova’s experts have conducted analyses that can help establish correct priorities and directions for further research, development, and innovation in the CCS industry. The goal is to achieve more cost-effective CCS solutions.

Longship is an extensive CCS project covering the entire value chain from capture to permanent storage. The first phase will capture 400,000 tons of CO₂ annually from Heidelberg Materials’ cement production facility in Brevik. The liquid CO₂ is then transported by ship to Northern Lights’ interim storage facility in Øygarden, before being permanently stored in the North Sea, 2,500 meters below the seabed.

The project has faced economic challenges, including a 20% increase in capital expenditures (CAPEX) during the construction phase. Some contributing factors include significant global price increases, such as for essential raw materials like steel, during the COVID-19 pandemic and the war in Ukraine.

• Cost Drivers: There is substantial potential for cost reductions in several areas, particularly in improving technological maturity, regulatory readiness, and CCS-adapted industrial practices. In Longship’s CCS value chain, the largest costs are associated with capture, compression & intermediate storage, and the development of the CO₂ hub.
• Abatement Costs: These have risen by 15% since KS-2. KS-2 was the “final check” before the investment decision and the start of the project implementation. Abatement costs compare the net present value of investment and operating expenses, with the amount of CO₂ captured and stored over 25 years of operation. At KS-2, the abatement cost for Brevik CCS was calculated at NOK 842 per ton of CO₂ (2020 currency). Updated estimates for investment and operating expenses have increased this to NOK 965 per ton of CO₂ (2020 currency). Adjusted to today’s currency value (2024), this equals approximately NOK 1,150 per ton of CO₂.

Cost Drivers

In some areas, land-based industrial practices were used, often involving local contractors experienced in land-based projects. This limits the potential for further cost reductions. In other parts of the project, methodologies and standards from the offshore oil and gas industry were applied. These standards can be unnecessarily extensive for land-based industries, leading to solutions and material choices that are overly expensive. This highlights the need for a better approach to reduce costs without compromising safety and quality.

Regulations present another challenge. Current regulatory frameworks are immature from a CCS perspective, particularly regarding the storage segment. Longship’s experiences may contribute to the development of a more adapted regulatory regime, leading to cost reductions in future projects.

The use of standards and established industrial practices in Longship reveals significant variations throughout the CCS chain. Technological maturity is a critical factor, especially concerning integration with emission sources and the capture process. Several solutions are being tested at full scale for the first time, which introduces substantial uncertainty. The supplier market primarily consists of a few players with backgrounds in the oil and gas industry.
To reduce costs, it is necessary to strengthen the market with knowledge and experience from land-based industries.

Economic Viability

– Longship contributes to a deeper understanding of cost drivers in the CCS chain, and Gassnova identifies opportunities for significant cost reductions. We have pinpointed cost-intensive areas in the CCS chain and matched them with various cost drivers – where technological maturity, regulatory readiness, and CCS-adapted industrial practices stand out as areas with the greatest savings potential. With comprehensive analyses like this, Gassnova can help make CCS projects more economically viable. This is a prerequisite for achieving significant reductions in global carbon emissions, says Senior Advisor Ingrid Sørum Melaaen.

Ingrid leads the Gassnova project analysing cost-reduction measures in the CCS value chain, based on extensive data from the development of Longship. This work will continue in 2025.