Carbon Capture Utilization and Storage Economics in the Williston Basin

This presentation will explore the current status and policies that incentivize CCUS projects in both Saskatchewan and North Dakota and how they impact the economics of capture and transportation/storage projects and the use of CO2 in dedicated geological storage or Enhanced Oil Recovery (EOR).

Carbon Capture, Utilization and Storage is an established practice in the Williston Basin that both meaningfully reduces industrial emissions and creates the opportunity to increase oil production through CO2 EOR in the region. With longstanding CCUS projects including the Boundary Dam CCS project, the Weyburn-Midale Carbon Dioxide Project, and the Dakota Gas/Souris Valley pipeline, the Williston Basin region has been responsible for the advancement of key CCUS technologies over the last three decades.

The region is also home to numerous new and developing projects. The Denbury CO2 pipeline has delivered CO2 for EOR since 2022. Two Ethanol CCS projects began operation in North Dakota in 2022 and 2023, at Red Trail Energy’s Ethanol plant (180,000 tonnes of CO2 annually) and the Blue Flint Ethanol (220,000 tonnes annually), respectively. With Carbon Vault, Dakota Gasification Company has stored more than 1.3 million tonnes of CO2 since February 2024 at the Beulah Broom Creek Storage Facility. Whitecap Resources Southeast Saskatchewan CCUS Hub is currently in development and is expected to initially store CO2 from Federated Cooperatives Limited’s Ethanol Plant near Belle Plaine Saskatchewan.

Major incentives for CCUS projects in Saskatchewan include the federal CCUS Investment Tax Credit (ITC), and the province's royalty tax credits, specifically the Oil and Gas Processing Investment Incentive (OGPII) for capture projects and the Oil Infrastructure Investment Program (OIIP) for CO2 transportation. The CCUS-ITC offers a base rate of 50% for eligible capture equipment and 37.5% for eligible transportation, storage and use equipment. However, the CCUS-ITC reduces the proportion of expenditures eligible by the amount of CO2 used for EOR, and projects that use more than 90% of CO2 for EOR are ineligible for the CCUS ITC. The OGPII provides up to CAD $75 million (15% of project costs) for eligible capture projects that use over 50% of captured CO2 for EOR or an average of at least 25,000 tonnes of captured CO2 per year for EOR. The OIIP offers up to CAD $40 million (20%) for CO2 transportation projects.

For Projects in North Dakota, the 45Q tax credit is essentially a production tax credit and the major incentive for CCUS projects. The credit is available when the captured CO2 is injected in either dedicated formations or for EOR. For dedicated secure geologic storage of CO2, the credit is USD $85 per tonne for industry and power projects. For carbon reuse projects, the credit is USD $60 per tonne. This illustrates a perceived value of USD $25 per tonne for EOR compared to dedicated geological storage.

Emitters in determining transportation and storage options, typically seek low costs, low risk, and confidence in the efficacy of storage and transportation. If existing storage sites with sufficient injectivity and space are nearby, using that shared space will be the lowest-cost option, and similarly, sharing existing transportation infrastructure is preferred.

Recent work conducted by the International CCS Knowledge Centre explores when the use of CO2 EOR is preferable for emitters to dedicated geological storage in both Saskatchewan and North Dakota. The Knowledge Centre can estimate, for example, the kilometre distance where the benefits of selling CO2 for EOR no longer outweigh close proximity to dedicated geological storage. This matters for both the expectation of available CO2 for EOR in the Williston Basin and policy changes, particularly in Canada, that would benefit both emission reduction of industry and increase oil production in the region.