Blue Lake CO2 Pipeline – Eliminating 350,000 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 (EOR), instead of being emitted into the atmosphere.
Even though the pipeline was complete, approximately 30 million cubic feet per day of CO2 was vented to the atmosphere until October 2007, when Blue Lake was able to secure the necessary commercial and operational terms that allow the CO2 to compete effectively with the price of the alternative: CO2 that was pulled from naturally occurring underground sources, a traditional step in EOR. The Blue Lake CO2 Pipeline is a classic example of the risks and benefits inherent in investments in CCS: Blue Lake faced significant construction and commercial lead times and competition from the price of underground-sourced CO2 alternatives.Today, Blue Source has completed an agreement to sell all of the anthropogenic CO2 and will market the related greenhouse gas Verified Emission Reductions (VERs) that will be produced from the project. The sale of the project’s VERs is extremely important to Blue Lake in securing a reasonable rate of return on the pipeline investment.