Blue Lake CO2 Pipeline – Eliminating 1 million tonnes of CO2 emissions each year through carbon capture and storage
A 16-mile long carbon dioxide pipeline in South Central Colorado is a classic example of the risks and benefits associated with Carbon Capture and Storage (CCS) projects.
Blue Source began working with Blue Lake in 2005, shortly after construction of the Apple Tree natural gas processing plant, located in the northwest corner of the Raton Basin, in Huerfano County of south-central Colorado.
Blue Lake began its capital investment of $10 million during 2006 to connect the vent stack carbon dioxide source, the gas processing plant, into a pipeline that travels 16 miles to a tie-in point joining the Sheep Mountain CO2 Pipeline. The CO2 is ultimately transported to a location for use in enhanced oil recovery, instead of being emitted into the atmosphere.
Presently, about 30 million cubic feet per day of CO2 is vented to the atmosphere and will continue to be until Blue Lake can secure the necessary commercial and operational terms that allow the CO2 to compete effectively with underground sourced-CO2.
This is why the Blue Lake CO2 Pipeline is a classic example of the risks inherent in investments in CCS: significant construction and commercial lead times, competitively priced underground CO2 alternatives for enhanced oil recovery producers and CO2 source interruptions.
Blue Source recently completed an agreement to sell all of the anthropogenic CO2 and plans to market the related greenhouse gas Verified Emission Reductions (VERs) that will be produced from the project. Blue Source expects to complete the interconnect by late July 2007 with deliveries of physical CO2 shortly thereafter.
The sale of the project’s VERs is extremely important to Blue Lake in securing a reasonable rate of return on the pipeline investment.
