FY 2014 Budget Rollout Presentation
The Role of Coal in an “All of the Above” Energy Strategy CSIS Workshop: Revisiting the Role of Coal Dec. 17th, 2014, Washington, DC
Dr. S. Julio Friedmann Deputy Assistant Secretary Office of Clean Coal and Carbon Management
This is a time of fossil energy abundance
Once in a generation opportunity to build 2
3
Future of US Fossil Energy Demand and Generation • Fossil fuel will account for 75% of global primary energy in 2035 • Even with robust natural gas growth, coal remains a major fuel • Fossil Energy remains dominant share (68%) of United States electricity generation in 2040
Source: IEA 2013 World Energy Outlook
• With this continued use and growth is a need to address CO2 emissions
Source: EIA 2014 Annual Energy Outlook
4
Coal Use Growing Overall and Important in Many Economies Continued recent growth • China • Europe • India, Japan
Increased trade and exports Energy security • China • Eastern Europe
Increased CO2 emissions EIA Energy Outlook 20135
CCS/CCUS is the key technology for this era of fossil energy abundance Policy drivers • President’s Climate Action Plan • EPA 111(b) and 111(d) drafts: compliance option • State actions (AB32 etc.)
Technical findings (2008-present) • IPCC WG1 report: must read policy summary! • Continued GHG accumulations • Resilience challenges
Investors speak
A $6B climate mitigation program at DOE 6
CO2 is captured and concentrated from large sources; then injected deep underground Capture: Power plants and industrial sources • • •
Pre-combustion Post-combustion Oxyfired combustion
Storage: > 1km depth • • •
Porous & permeable units Large capacity Good seals and cap rock
Two main targets • •
Saline formations (~2200 Gtons capacity in N. Am.) Enhanced oil recovery (~100 B bbls addl. recovery)
7
Because of abundant fossil energy, clean coal technology remains a critical option “All of the above” required
CCS
Nuclear Power generation efficiency Renewables End-use fuel switching CCS End-use fuel & elec. efficiency
8% 3% 21% 12% 14% 42% 8
Clean coal, with CCUS, will be the cheapest option in many markets
Because coal will be used, CCUS required
IPCC WG3
Courtesy David Victor, UCSD
10
60
140
50
120 100
40
80
30
60
20
40
Operate
Execute
Define
Evaluate
2022
2020
2019
2018
2017
2016
2015
2014
2013
2010
2008
2004
2000
1996
0
1986
0
1982
20 1972
10
Volume CO2 (mtpa)
Number of Projects
Large Scale Integrated Projects World Wide
Cum. Volume Data from Global CCS Institute
11
Boundary Dam, : 1.1M tons/y CO2 Saskpower, Saskatchewan
Operational Oct. 1st 12
DOE CCUS Demonstration Projects Hydrogen Energy California IGCC with EOR $408 Million - DOE $4.0 Billion - Total
Archer Daniels Midland CO2 Capture from Ethanol w/ saline storage $141 Million - DOE $208 Million - Total FutureGen 2.0 Oxy-combustion with CO2 capture and saline storage $1.0 Billion - DOE $1.3 Billion - Total
Summit Texas Clean Energy IGCC with EOR $450 Million - DOE $1.7 Billion - Total
NRG Energy Post Combustion with CO2 Capture with EOR $167 Million – DOE $339 Million - Total
Southern Company Services IGCC-Transport Gasifier w/CO2 pipeline $270 Million - DOE $2.67 Billion - Total
Air Products CO2 Capture from Steam Methane Reformers with EOR $284 Million - DOE $431 Million - Total
Leucadia CO2 Capture from Methanol with EOR $261 Million - DOE $436 Million - Total
FutureGen CCPI ICCS (Area I)
Projects are sources of innovation: Technology, business, and policy
13
Kemper County, MS Southern Co., 2013 (Anticipated start late 2014 or early 2015)
14
W.A. Parrish, TX NRG/PetraNova project
Broke Ground Last Week!!
15
Skyonic “Skymine” project, San Antonio, TX Operational !!
75,000 tons/y CO2 captured >200,000 tons avoided
16
DOE’s top CCS priorities Success of US commercial demonstration projects • Bring into operation 2013-2019 • A deep and rich set of public learning Reimagining the coal and CCS RD&D portfolio International Partnerships • China • Japan, Middle East • Other key partnerships
A $6B climate mitigation program at DOE 17
Clean Coal deployment: urgent and important Not just about cost • Costs are higher than plants without CCS • Costs are lower than many clean energy alternatives
Not just about technology • Many technologies are well demonstrated • Improvement potential is very large
Policy Issue: could finance many ways • Rate recovery; feed-in tariffs; direct grants • Clean energy portfolios; tax-free debt financing; others
Financing is the priority action 18
Loan Program Office: $8 billion for clean fossil LPO Advanced Fossil Energy Solicitation CARBON CAPTURE • From traditional coal or NG generation • Saline formations or EOR
ADVANCED RESOURCE DEVELOPMENT • ECBM, UCG, novel oil and gas drilling • Use of co-produced waste gases vs. flaring
LOW CARBON POWER SYSTEMS • Oxycombustion, chemical looping • Syngas-, H2, or NG-based fuel cells
EFFICIENCY IMPROVEMENTS • CHP and waste-heat recovery • High-T or high-efficiency cycles
19
Cost, policy, and parity
20
Coal as CO2 supply for EOR: • Many 10’s of billions bbls US • 100’s of billions bbls worldwide • Provide revenues: break even for capital retrofit costs in 7-8 years!
>25B tons CO2 storage potential with EOR = ½ the US coal fleet for ~20 years Projected revenues Texas Clean Energy Project
Urea CO2 Power
21
CO2-EOR: Opportunities in power sector policy • EPA’s proposed NSPS under 111(b) sets CO2 limits for new natural gas and coal power plants • Compliance can be achieved using combined cycle technology in new natural gas power plants, or with CCS technology in new coal power plants
• Treatment of CCS technology in EPA’s proposed rule on CO2 from existing power plants (111(d)) is flexible • The proposal doesn’t require CCS technology per se, but states may have the flexibility to choose to comply using CCS
• Successfully building even a few CCS-EOR projects could have significant implications • Some coal retirements could be avoided • Emissions reduction, cost and fuel diversity benefits could be significant • Increasing domestic crude oil production could reduce dependence on foreign oil
Deliberative draft—Not for distribution
22
Huge potential for Residual Oil Zones • 121 wells in 4 Partition 1 counties Partition 2 • 109 B OOIP (!) Russell So. ODC Cedar Lake Havemeyer • 20-30% est. Hanford Partition 5 N GMK & GMK So. recovery W. Seminole Seminole • 60-100B tons Partition 3 Homann CO2 storage Seminole E Black Watch Residual Oil Zone (Rpotential OZ”) S Lower San Andres Shelf Margin
Partition 4 Jenkins
Robertson
Central Basin Platform
Adair TLOC
•
Current “quick look” indicates that over 100 billion barrels of oil may be in-place in the ROZ “Fairway”. Carm-Ann • So far current work in just four counties 0 in Texas indicate 1b0 billion b ls…. work is required to establish its recoverability, economic feasibility and CO2 requirements. (Study should be out this fall) •
So far ROZ also present in: Saudi Arabia, North Sea, Wyoming..
23
Coal, CO2, and Negative C oil One can claim GHG reductions either from the source (e.g., power plant) OR from the produced oil. While both can’t be counted, one must be. • Conventional EOR uses 6000-7000 scf CO2/barrel • On molecular and mass-balance basis, this = 82-95% of C
• At roughly 7500-8000 scf/bbl, this is carbon neutral • Some EOR today uses >9000 scf/bbl: NEGATIVE C
• ROZ production requires 10,000-15,000 scf/bbl: NEGATIVE C
Viable feedstock for low-carbon fuel standards 24
International partnerships required Many platforms (APEC; G7; Boao; UNFCCC; WEC) CSLF: Multinational platform
11th CSLF Ministerial Nov. 2013
– 22 countries + E.C. – 11 years in practice – Productive technical and policy working groups
Partnerships in Commerce – Joint ventures – International investment – “Showcase” projects
Minister’s visit to Kemper project Nov. 2013
Accelerated deployment – Data sharing – International Science Projects
25
Changing International Landscape US-China Accord – Includes large CCS project – Includes enhanced water recovery projects
New EU accord – Policy Parity for CCUS and nuclear (also UNECE) – Innovation funds
New actors – UK: White Rose + – KSA and UAE: EOR + coal – Mexico: growing interest 26
China is the main event: for technology testing and project development • Coal use immense – – – –
67.5% of primary energy near 4B tons/y today ~6B tons CO2 from coal use Continued growth
• Substantial govt. interest – – – –
Pollution helps drive outcomes Chiefly interested in CO2 utilization Active under CCWG New investment in CCS & EOR
• Going for the gold – On technology, finance, construction
27
Counterfacing projects under CCWG/S&ED
28
Technology leads and informs policy Must build and deploy large projects • Learning opportunity in CCS and clean fossil • Information sharing: partnership as product • Financing is the key challenge; many paths to success
Must develop 2nd and 3rd generation technology Must partner with many
Coal will be used CO2 must be controlled Time to build 29
The next decade of projects = policy infrastructure Quest (CAN)
White Rose Peterhead (UK)
GreenGen (PRC) Shenli Yanchang
Uthmaniyah (KSA)
Lula (BRA) Gorgon (AUS) ESI (UAE)
Key unit of innovation – global engines of discovery 30
Dr. S. Julio Friedmann Deputy Assistant Secretary Office of Clean Coal and Carbon Management
This is a time of fossil energy abundance
Once in a generation opportunity to build 2
3
Future of US Fossil Energy Demand and Generation • Fossil fuel will account for 75% of global primary energy in 2035 • Even with robust natural gas growth, coal remains a major fuel • Fossil Energy remains dominant share (68%) of United States electricity generation in 2040
Source: IEA 2013 World Energy Outlook
• With this continued use and growth is a need to address CO2 emissions
Source: EIA 2014 Annual Energy Outlook
4
Coal Use Growing Overall and Important in Many Economies Continued recent growth • China • Europe • India, Japan
Increased trade and exports Energy security • China • Eastern Europe
Increased CO2 emissions EIA Energy Outlook 20135
CCS/CCUS is the key technology for this era of fossil energy abundance Policy drivers • President’s Climate Action Plan • EPA 111(b) and 111(d) drafts: compliance option • State actions (AB32 etc.)
Technical findings (2008-present) • IPCC WG1 report: must read policy summary! • Continued GHG accumulations • Resilience challenges
Investors speak
A $6B climate mitigation program at DOE 6
CO2 is captured and concentrated from large sources; then injected deep underground Capture: Power plants and industrial sources • • •
Pre-combustion Post-combustion Oxyfired combustion
Storage: > 1km depth • • •
Porous & permeable units Large capacity Good seals and cap rock
Two main targets • •
Saline formations (~2200 Gtons capacity in N. Am.) Enhanced oil recovery (~100 B bbls addl. recovery)
7
Because of abundant fossil energy, clean coal technology remains a critical option “All of the above” required
CCS
Nuclear Power generation efficiency Renewables End-use fuel switching CCS End-use fuel & elec. efficiency
8% 3% 21% 12% 14% 42% 8
Clean coal, with CCUS, will be the cheapest option in many markets
Because coal will be used, CCUS required
IPCC WG3
Courtesy David Victor, UCSD
10
60
140
50
120 100
40
80
30
60
20
40
Operate
Execute
Define
Evaluate
2022
2020
2019
2018
2017
2016
2015
2014
2013
2010
2008
2004
2000
1996
0
1986
0
1982
20 1972
10
Volume CO2 (mtpa)
Number of Projects
Large Scale Integrated Projects World Wide
Cum. Volume Data from Global CCS Institute
11
Boundary Dam, : 1.1M tons/y CO2 Saskpower, Saskatchewan
Operational Oct. 1st 12
DOE CCUS Demonstration Projects Hydrogen Energy California IGCC with EOR $408 Million - DOE $4.0 Billion - Total
Archer Daniels Midland CO2 Capture from Ethanol w/ saline storage $141 Million - DOE $208 Million - Total FutureGen 2.0 Oxy-combustion with CO2 capture and saline storage $1.0 Billion - DOE $1.3 Billion - Total
Summit Texas Clean Energy IGCC with EOR $450 Million - DOE $1.7 Billion - Total
NRG Energy Post Combustion with CO2 Capture with EOR $167 Million – DOE $339 Million - Total
Southern Company Services IGCC-Transport Gasifier w/CO2 pipeline $270 Million - DOE $2.67 Billion - Total
Air Products CO2 Capture from Steam Methane Reformers with EOR $284 Million - DOE $431 Million - Total
Leucadia CO2 Capture from Methanol with EOR $261 Million - DOE $436 Million - Total
FutureGen CCPI ICCS (Area I)
Projects are sources of innovation: Technology, business, and policy
13
Kemper County, MS Southern Co., 2013 (Anticipated start late 2014 or early 2015)
14
W.A. Parrish, TX NRG/PetraNova project
Broke Ground Last Week!!
15
Skyonic “Skymine” project, San Antonio, TX Operational !!
75,000 tons/y CO2 captured >200,000 tons avoided
16
DOE’s top CCS priorities Success of US commercial demonstration projects • Bring into operation 2013-2019 • A deep and rich set of public learning Reimagining the coal and CCS RD&D portfolio International Partnerships • China • Japan, Middle East • Other key partnerships
A $6B climate mitigation program at DOE 17
Clean Coal deployment: urgent and important Not just about cost • Costs are higher than plants without CCS • Costs are lower than many clean energy alternatives
Not just about technology • Many technologies are well demonstrated • Improvement potential is very large
Policy Issue: could finance many ways • Rate recovery; feed-in tariffs; direct grants • Clean energy portfolios; tax-free debt financing; others
Financing is the priority action 18
Loan Program Office: $8 billion for clean fossil LPO Advanced Fossil Energy Solicitation CARBON CAPTURE • From traditional coal or NG generation • Saline formations or EOR
ADVANCED RESOURCE DEVELOPMENT • ECBM, UCG, novel oil and gas drilling • Use of co-produced waste gases vs. flaring
LOW CARBON POWER SYSTEMS • Oxycombustion, chemical looping • Syngas-, H2, or NG-based fuel cells
EFFICIENCY IMPROVEMENTS • CHP and waste-heat recovery • High-T or high-efficiency cycles
19
Cost, policy, and parity
20
Coal as CO2 supply for EOR: • Many 10’s of billions bbls US • 100’s of billions bbls worldwide • Provide revenues: break even for capital retrofit costs in 7-8 years!
>25B tons CO2 storage potential with EOR = ½ the US coal fleet for ~20 years Projected revenues Texas Clean Energy Project
Urea CO2 Power
21
CO2-EOR: Opportunities in power sector policy • EPA’s proposed NSPS under 111(b) sets CO2 limits for new natural gas and coal power plants • Compliance can be achieved using combined cycle technology in new natural gas power plants, or with CCS technology in new coal power plants
• Treatment of CCS technology in EPA’s proposed rule on CO2 from existing power plants (111(d)) is flexible • The proposal doesn’t require CCS technology per se, but states may have the flexibility to choose to comply using CCS
• Successfully building even a few CCS-EOR projects could have significant implications • Some coal retirements could be avoided • Emissions reduction, cost and fuel diversity benefits could be significant • Increasing domestic crude oil production could reduce dependence on foreign oil
Deliberative draft—Not for distribution
22
Huge potential for Residual Oil Zones • 121 wells in 4 Partition 1 counties Partition 2 • 109 B OOIP (!) Russell So. ODC Cedar Lake Havemeyer • 20-30% est. Hanford Partition 5 N GMK & GMK So. recovery W. Seminole Seminole • 60-100B tons Partition 3 Homann CO2 storage Seminole E Black Watch Residual Oil Zone (Rpotential OZ”) S Lower San Andres Shelf Margin
Partition 4 Jenkins
Robertson
Central Basin Platform
Adair TLOC
•
Current “quick look” indicates that over 100 billion barrels of oil may be in-place in the ROZ “Fairway”. Carm-Ann • So far current work in just four counties 0 in Texas indicate 1b0 billion b ls…. work is required to establish its recoverability, economic feasibility and CO2 requirements. (Study should be out this fall) •
So far ROZ also present in: Saudi Arabia, North Sea, Wyoming..
23
Coal, CO2, and Negative C oil One can claim GHG reductions either from the source (e.g., power plant) OR from the produced oil. While both can’t be counted, one must be. • Conventional EOR uses 6000-7000 scf CO2/barrel • On molecular and mass-balance basis, this = 82-95% of C
• At roughly 7500-8000 scf/bbl, this is carbon neutral • Some EOR today uses >9000 scf/bbl: NEGATIVE C
• ROZ production requires 10,000-15,000 scf/bbl: NEGATIVE C
Viable feedstock for low-carbon fuel standards 24
International partnerships required Many platforms (APEC; G7; Boao; UNFCCC; WEC) CSLF: Multinational platform
11th CSLF Ministerial Nov. 2013
– 22 countries + E.C. – 11 years in practice – Productive technical and policy working groups
Partnerships in Commerce – Joint ventures – International investment – “Showcase” projects
Minister’s visit to Kemper project Nov. 2013
Accelerated deployment – Data sharing – International Science Projects
25
Changing International Landscape US-China Accord – Includes large CCS project – Includes enhanced water recovery projects
New EU accord – Policy Parity for CCUS and nuclear (also UNECE) – Innovation funds
New actors – UK: White Rose + – KSA and UAE: EOR + coal – Mexico: growing interest 26
China is the main event: for technology testing and project development • Coal use immense – – – –
67.5% of primary energy near 4B tons/y today ~6B tons CO2 from coal use Continued growth
• Substantial govt. interest – – – –
Pollution helps drive outcomes Chiefly interested in CO2 utilization Active under CCWG New investment in CCS & EOR
• Going for the gold – On technology, finance, construction
27
Counterfacing projects under CCWG/S&ED
28
Technology leads and informs policy Must build and deploy large projects • Learning opportunity in CCS and clean fossil • Information sharing: partnership as product • Financing is the key challenge; many paths to success
Must develop 2nd and 3rd generation technology Must partner with many
Coal will be used CO2 must be controlled Time to build 29
The next decade of projects = policy infrastructure Quest (CAN)
White Rose Peterhead (UK)
GreenGen (PRC) Shenli Yanchang
Uthmaniyah (KSA)
Lula (BRA) Gorgon (AUS) ESI (UAE)
Key unit of innovation – global engines of discovery 30
