Carbon capture and sequestration for enhanced oil recovery

A project to capture carbon dioxide emissions from a coal-fired power plant in Texas has captured more than 1 million tons of carbon dioxide for use in enhanced oil recovery, according to the U.S. Department of Energy.

Historically, carbon dioxide resulting from the combustion of coal and other fossil fuels has been emitted directly into the atmosphere, but global concern over climate change has led to efforts to limit carbon emissions to the atmosphere.  While many of these programs focus on reducing reliance on combustible fuels, carbon capture and sequestration technologies offer the potential to remove carbon dioxide from thermal plants' flue gas before it is emitted from their smokestacks.  The U.S. Department of Energy runs programs designed to support the development and commercial deployment of these technologies.

The Petra Nova project uses an amine solvent-based CO2-capture technology to remove carbon dioxide from the flue gas of NRG's coal-fired W.A. Parish power plant.  It is a 50/50 joint venture between NRG and JX Nippon Oil & Gas Exploration.  NRG describes Petra Nova as "the world's largest post-combustion carbon capture facility installed on an existing coal-fueled power plant."  The Department of Energy selected Petra Nova to receive $190 million as part of the Clean Coal Power Initiative Program.

The project uses a carbon capture process which was jointly developed by Mitsubishi Heavy Industries, Ltd. and the Kansai Electric Power Co.  It was designed to capture about 90 percent of the CO2 from a 240 MW slipstream of flue gas, compressing and transporting approximately 1.4 million metric tons of CO2 per year through an 80 mile pipeline to Hilcorp's operating West Ranch oil field where it is utilized for enhanced oil recovery (EOR) -- injecting the CO2 underground to help additional oil flow to a production wellbore.  According to the Department of Energy, the use of this CO2 for enhanced oil recovery has boosted the West Ranch Oil Field's oil production from 300 barrels per day to about 4,000 barrels per day.

Petra Nova began commercial operations on January 10, 2017. According to an October 23 press release, Petra Nova has now captured more than 1 million tons of CO2 for use in enhanced oil recovery. Secretary of Energy Rick Perry has said that Petra Nova's success "could become the model for future coal-fired power generation facilities," which could support CO2 pipeline infrastructure development and drive domestic enhanced oil recovery opportunities.

Obama administration releases National Climate Assessment

The Obama administration has released its third National Climate Assessment, a document designed as a public presentation of the administration's comprehensive scientific assessment of how climate change is impacting the U.S. people and economy.

A view from the Lincoln Memorial to U.S. Capitol, in Washington, D.C.

The National Climate Assessment summarizes the impacts of climate change on the United States, now and in the future.  Produced as a collaboration between over 300 experts guided by the 60-member National Climate Assessment and Development Advisory Committee, the report was extensively reviewed by the public and experts, including federal agencies and a panel of the National Academy of Sciences.

The National Climate Assessment has a broad scope, in terms of both types of impacts and regions covered.  Thematically, it analyzes impacts on seven sectors – human health, water, energy, transportation, agriculture, forests, and ecosystems – and on the bigger-picture interactions between these sectors.  Geographically, the report also assesses key impacts on all U.S. regions: Northeast, Southeast and Caribbean, Midwest, Great Plains, Southwest, Northwest, Alaska, Hawai'i and Pacific Islands, as well as a more general look at coasts and oceans.

The report states that that increased scientific scrutiny has led to "increased certainty that we are now seeing impacts associated with human-induced climate change":

While scientists continue to refine projections of the future, observations unequivocally show that climate is changing and that the warming of the past 50 years is primarily due to human-induced emissions of heat-trapping gases. These emissions come mainly from burning coal, oil, and gas, with additional contributions from forest clearing and some agricultural practices.

Outcomes predicted under possible future scenarios include continued increases in average air and water temperatures, changes in rainfall and precipitation patterns, air quality decreases, sea level rise, and ocean acidification.  These changes can disrupt systems for food production, harm human health, or damage property and risk safety through flooding.

The National Climate Assessment also summarizes options for responding to climate change.  These include mitigation: reducing the amount and speed of future climate change by reducing emissions of heat-trapping gases or removing carbon dioxide from the atmosphere.  Efforts to limit emissions or promote carbon sequestration are considered mitigation efforts.  Other possible responses focus on adaptation: preparing for and adjusting to new conditions -- for example, building levees and seawalls, or promoting farmers' growth of crops more suitable to the changing conditions.

In all, the report provides insight into the Administration’s approach to addressing climate change, and can help people and businesses both minimize risks and identify new opportunities.

The full National Climate Assessment can be explored on the government's climate change website globalchange.gov, or can be downloaded.  The entire report, downloaded in print quality resolution, clocks in at over 170 megabytes.

EPA issues draft permits for carbon sequestration

The U.S. Environmental Protection Agency has issued the first draft permits for injecting and storing carbon dioxide in underground rock formations, which could advance carbon capture and sequestration efforts.

EPA promotes carbon capture and sequestration for its expected ability to reduce greenhouse gas emissions, while enabling low-carbon electricity generation from power plants.  The process entails capturing and compressing carbon emissions at their source, piping the gas to injection wells, and injecting the gas into geologically stable rock formations capable of holding the gas for long periods of time.

EPA's simplified schematic of deep geologic carbon sequestration, available from EPA at http://www.epa.gov/climatechange/ccs/.

Under the federal Safe Drinking Water Act, EPA regulates most injections of waste and other materials into the ground.  EPA has developed a series of programs to manage such injections, including a "Class VI" geologic sequestration program.  While oil producers have long injected carbon dioxide into their wells to enhance oil recovery, EPA has not previously issued any permits under its Class VI program.  This lack of Class VI activity is largely because carbon capture and sequestration in the U.S. remains in its infancy, but some industry observers have expressed concerns that EPA's regulatory process is too restrictive to allow the technology to flourish.  The record of permit applications shows some support for these concerns: for example, Christian County Generation, LLC of Taylorville, IL withdrew its applications for two Class VI sequestration wells for the Taylorville Energy Center on July 9, 2013, and Archer Daniels Midland's applications for Class VI permits for two injection wells to store carbon emissions from its Decatur, Illinois agricultural products and biofuel production facility have remained pending since 2011.

Carbon capture and sequestration's future may be brightening, as on March 31, 2014, EPA issued four draft Class VI permits to FutureGen Industrial Alliance, Inc. for its proposed FutureGen 2.0 project.  The Alliance is a non-profit organization whose membership includes major coal producers, coal users, and coal equipment suppliers, including Alpha Natural Resources, AngloAmerican, JoyGlobal Inc., Peabody Energy, and Xstrata Coal Pty. Limited.  The FutureGen 2.0 project is designed to capture over 90 percent of the carbon emissions from a 168 megawatt power plant in Meredosia, Illinois, and to inject them into four nearby wells for deep geologic sequestration.

EPA's draft permits now face a public hearing on May 7 and public comments through May 15.

USDA announces renewable and energy efficiency funding

The United States Department of Agriculture has announced a new round of funding for assistance to agricultural producers and rural small businesses for energy efficiency and renewable energy projects.  USDA's Rural Energy for America Program (REAP) offers eligible farms and businesses incentives to improve their energy efficiency or produce energy from renewable sources.

USDA's mission includes revitalization of rural economies to create opportunities for growth and prosperity, support innovative technologies, identify new markets for agricultural producers, and make better use of natural resources. Authorized by the 2008 farm bill (formally the Food, Conservation, and Energy Act of 2008), the USDA REAP program's goals are to help agricultural producers and rural small businesses reduce energy costs and consumption and help meet the nation's critical energy needs.  Through the end of the 2012 fiscal year, REAP has funded over 6,800 renewable energy and energy efficiency projects, feasibility studies, energy audits, and renewable energy development assistance projects.

Today USDA announced that it will accept applications for three REAP program categories:

• Renewable energy system and energy efficiency improvement grant applications and combination grant and guaranteed loan applications until April 30, 2013
• Renewable energy system and energy efficiency improvement guaranteed loan only applications until July 15, 2013
• Renewable energy system feasibility study grant applications through April 30, 2013

USDA plans to make funding available despite the current federal budget sequestration, which appears to have cut REAP funding by at least $2 million in fiscal year 2013. 

Application requirements for REAP assistance vary depending on the type of assistance sought.  Those interested in applying for assistance can contact their local USDA office for more information, or consult a professional with experience working with the REAP program.

Preti Flaherty helps our clients evaluate whether REAP assistance is a good match for their businesses; I have assisted my clients in securing REAP funding for their energy projects.  Please contact us at 207-791-3000 for more information.

Federal budget sequestration's impacts on energy industry, consumers

Unless Congress enacts a plan to reduce the federal budget deficit today, a procedure known as "sequestration" will take effect immediately, cutting government spending until the budget can be resolved.  What will sequestration mean for the energy industry and consumers?

Under the Budget Control Act of 2011 (BCA), sequestration automatically kicks in unless the Joint Select Committee on Deficit Reduction proposes a plan to reduce the deficit by $1.2 trillion, and Congress subsequently enacts that plan.  For fiscal year 2013, sequestration could mean spending cuts of $85 billion over the remaining seven months of the fiscal year.  According to the federal Office of Management and Budget, nondefense program spending will be cut by about 9%.

Each federal agency's operations will be affected by the sequestration.  The OMB Report Pursuant to the Sequestration Transparency Act of 2012 (394-page PDF) details likely cuts, including reductions in funding available under the U.S. Department of Energy's High Energy Cost Grants program.  The High Energy Costs Grant program provides funding for improving and providing energy generation, transmission and distribution facilities serving communities with average home energy costs exceeding 275% of the national average.  For example, the Maine island of Monhegan's electric utility won a $420,154 grant under this program to replace the island's current switchgear, add a smaller, 40 kW generator to the power station's fleet, and add a 13 kW solar photovoltaic array to the power station's roof.

The sequestration could also slash funding for the U.S. Department of Agriculture's Rural Energy for America Program (REAP).  REAP provides assistance to agricultural producers and rural small businesses to complete energy projects, including renewable energy systems, energy efficiency improvements, renewable energy development, energy audits, and feasibility studies

Other programs affected include the DOE's Energy Efficiency and Renewable Energy program, from which $148 million could be cut.  Likewise, the Low Income Home Energy Assistance Program (LIHEAP), which helps keep families safe and healthy through initiatives that assist families with energy costs, faces $285 million in cuts.

The funding reductions will also mean cuts to DOE's energy-efficiency and cybersecurity programs.  Likewise, the processing of applications for development of oil, gas, and coal on federal lands and waters would slow down as agency employees are furloughed.  

Will Congress act to avert sequestration?  If it takes effect, how long will it be until Congress enacts a compliant deficit reduction plan?  What price will society pay?