Hydroprocessing: the economics?

The data-file captures the economics of hydroprocessing at an oil refinery, such as hydrotreating or hydrocracking, to remove impurities such as sulphur, and upgrade heavier product into lighter product.

Our base case model requires a $7.5/bbl upgrade spread to earn a 10% IRR across a new unit. CO2 emissions are quantified from hydrogen production. Input assumptions are based on past projects and technical papers, including capex costs (in $M/kbpd) and hydrogen utilization (in scf/bbl).

It is possible to decarbonize hydroprocessing by using green hydrogen instead of grey hydrogen, but the result is a 3x increase in the upgrading spread required for economical running of the unit.

Water injection at oil fields: the economics?

This model captures the energy economics of a conventional waterflooding project in the oil industry, in order to maintain reservoir pressure and productivity at maturing oilfields.

Our base case calculations suggest strong economics, with 30% IRRs at $40/bbl oil on a project costing $2.5/boe in capex and $1/bbl of incremental opex.

Please download the data-file to stress-test parameters such as commodity prices, water injection rates, reservoir pressure, electricity prices and other economic assumptions.

Biomass to biochar: the economics?

This data-file captures the economics of producing biochar from waste biomass that would otherwise be likely to decompose. Other products are bio-oil and bio-gas, with the mix depending on reactor temperatures.

Biochar is a carbon negative material, according to our carbon accounting, locking as much as 0.5kg of CO2 into soils and construction materials per kg of dry biomass inputs.

It can also be highly economical, with a base case IRR of 25%. Our full model allows you to stress-test input assumptions. Our own inputs are derived from a series of technical papers, summarized in the final tab.

Seaweed aquaculture: farming kelp and CO2?

This data-file captures the economics of ocean carbon sequestration using seaweeds and kelps, which tend to generate 20T of dry biomass per acre per year, of which c10% is naturally sequestered in the deep ocean.

Revenues of $400/ton are needed for 10% IRRs, but the realization on dry kelp products is 10x more important than the CO2 price. Debatably, a $20-40/ton CO2 price could accelerate the industry by uplifting IRRs by 1-2%.

Cultivation purely for CO2 sequestration is more challenging, but could break even at $60/ton, according to our sensitivity analysis. Notes and data-points from technical papers are also tabulated in the data-file.

Uranium mining: the economics?

This simple model aims to disaggregate the marginal costs of a new uranium mine, as a function of uranium prices, ore grade, capex and opex. Our base case is a marginal cost of $60/lb for a 10% IRR. However, lower ore grades can easily require $90/lb uranium prices in order to justify investment. Cash costs range from $7-40/lb.

Mangrove restoration: what costs for carbon offsets?

This data-file calculates the economics of carbon-offsetting via mangrove restoration projects, including a full breakdown of costs. This matters as mangroves are a crucial blue carbon eco-system.

In the US, we estimate a $130/ton CO2 price is required for a 10% IRR, of which c30% is the cost of labor (to plant seedlings at $15/hour) and c30% is land leasing.

In the emerging world, a $15-35/ton CO2 price suffices for a c 10% IRR. The lower costs may be an argument for developed world countries to partner with emerging world countries to promote cost-effective carbon sequestration.

Finally, if the projects are viewed as a charitable undertaking simply required to break even (while restoring nature, offsetting CO2 and lifting local people out of poverty), then the best projects in the emerging world can have a CO2 cost as low as $3/ton.

Please download the data-file to stress-test the inputs and assumptions.

Cryogenic air separation: the economics?

This data-file calculates the economics and energy consumption of cryogenic air separation units, important in the production of industrial gases for metals, materials and medical applications. But air separation units also explain c1% of global energy use.

We estimate an oxygen price of $120/ton is required for a new air separation unit to generate a 10% IRR. You can stress-test the economic sensitivities in the data-file.

The largest cost component is electricity. Hence using air separation units flexibly to absorb intermittent renewables (note here) makes excellent sense, from both the perspectives of economics and CO2  emissions.

Onshore wind: the economics?

This data-file models the costs and the economics of constructing a new onshore wind power project, based on technical papers and a detailed line-by-line capex cost build-up.

A typical onshore wind project requires a 6.75c/kWh power price and a $50/ton CO2 price in order to generate an unlevered IRR of 10%. However, investors may be inclined to view 5-6% IRRs, lowering the incentive price to 5-6c/kWh even without a carbon price.

The main cost is capex, which varies between $1,000-3,000/kW (below). The data-file  gives a detailed  breakdown, across materials, fabrication, transport, installation and linking to our other models. Larger turbines will reduce future costs, as stress-tested in the cost tab.

Hydro electric power: the economics?

This data-file models the costs and the economics for constructing a new hydro electric power project, based on technical papers and past projects around the industry. CO2 intensity is effectively nil, even after reflecting the embedded energy of concrete, steel and construction.

A typical hydro project requires a 10c/kWh power price and a $50/ton CO2 price in order to generate an unlevered IRR of 10%. However, investors may be inclined to accept 5-6% IRRs as appropriate for infrastructure assets, lowering the incentive price to 6c/kWh. Cash opex is 2c/kWh.

The main cost is capex, which varies between $500 and $8,000/kW. Our own capex estimates are broken down below.  You can stress tests all the input assumptions in the full data-file.

 

Ethane cracking: the economics?

This data-file captures the economics of ethane-cracking in order to produce ethylene, the most basic building block of the petrochemical industry.

We estimate that a typical US Gulf Coast facility could generate 15% IRRs at typical capex cost of $1,135/Tpa and selling ethylene close to $1,000/ton.

CO2 intensity can be as high as 1.7T of CO2 per ton of ethylene, or potentially lower depending on the facility’s use of energy recovery and heat re-capture.

Please downlaod the model to stress-test sensitivities.