Air & Waste Management AssociationSeptember 13, 2012The Cahaba Lilies

Photo by Danny Smith

U.S. Environmental Policy U.S. Environmental Policy Issues and the Natural Gas Issues and the Natural Gas

SolutionSolution

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The First Issue: Climate Change Policy

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Carbon Tax?

Energy Efficiency Requirements?

GHG Cap & Trade Program?

Who do you regulate?

Renewable Portfolio Standards?Who are the Winners & Losers?

GHG Emission Limits?

Would a Federal Program Preempt Existing State Programs?

Carbon Offsets?

Carbon Sequestration?

A Menu of Options and Issues Associated with GHG Regulation

Full Fuel Cycles?

State Government Regulation of

GHG Emissions

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EPA’s Mandatory GHG Emission Reporting Rule

On September 22, 2009 EPA issued the Mandatory Reporting of Greenhouse Gases Rule. The rule requires reporting of annual GHG emissions from the following:

• Suppliers of fossil fuels and industrial greenhouse gases (GHGs)

• Manufacturers of vehicles and engines outside of the light duty sector

• Facilities that emit 25,000 metric tons or more of GHGs per year to submit annual reports to EPA.

The rule is intended to collect accurate and timely emissions data to guide future policy decisions on climate change.

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EPA’s Proposed New Electric Power Plant CO2 Standard

• Would limit CO2 emissions from new electric power plants to 1,000 pounds per megawatt-hour

• Would apply to new fossil fuel-fired power plants greater than 25 megawatts in size

• The end result will be that new fossil fuel-fired power plants will more than likely be fueled with natural gas rather than coal or utilize Carbon Sequestration technologies

• These proposed new rules were published on March 27, 2012 for 60 days public comment that was extended to June 25

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CO2 Capture and Sequestrationas a Climate Change Strategy

7Campfire Photo by Danny Smith

CO2 Geologic Storage

Injection Rock (Target Formation)

Cap Rock (Confining Formation)Sandstone with porositySandstone with porosityShale with no porosityShale with no porosity

Slide Source: Southern Company

Large CO2 geologic storage capacity is available

Deep Saline Sandstone Formations 100 – 10,000 GtC

Depleted Oil and Gas Reservoirs 100 – 1,000 GtC

Coal Seams 10 – 1,000 GtC

Mississippi-Alabama-Florida Sandstone Saline Formations

300 - 400 GtC

EOR utilization currently <0.1 GtC/yr

Sequestration Option

Capacity

(order of magnitude est.)

NOTE: “GtC” = Gigatonnes Carbon Slide Source: Southern Company

Enhanced Oil Recovery (EOR)

• Primary oil production uses reservoir pressure or pumping toget 10‐20% of OOIP.

• Secondary production, using water flooding gets another10‐20%.

• Injecting CO2 reduces the oil viscosity and, with water can drive the mixture to production wells with another 10‐20%.

•Some of the CO2 comes up with the  oil and is recycled.

Source: USDOE/NETL

Slide Source: Southern Company

CO2Injection

CO2Injection

CO2 SourceCO2 SourceOil to MarketOil to Market

Production WellProduction Well

CO2Recycled

CO2Recycled

Oil BankOil Bank

Oil BankOil Bank

Swept AreaSwept Area

Saline ReservoirSaline Reservoir

Integrating CO2-EOR and Geologic Storage

1 ton CO2 = 1-3 bbl oil

Slide Source: Southern Company

The Cahaba Lilies in Alabama - Photo by Danny Smith

Natural Gas as a Climate Change Strategy

CLEAN ABUNDANT EFFICIENT

Natural Gas is a CleanerGenerating Choice

Approximately 23% of the electricity in the United States is generated from natural gas

Source: American Gas Association

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The Full Fuel Cycle is the Basis for Sustainable Energy Choices

U.S. natural gas reserves are growing with more new gas discovered every year. Analysts believe enough future supply exists to meet America’s diverse energy needsfor 100 years.

Natural Gas is Abundant in the USA

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U.S. Natural Gas Production, 1990-2035 (trillion cubic feet)

0

5

10

15

20

25

30

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

History 2010 Projections

Shale gas

Non-associated onshore

Non-associated offshore

Coalbed methane

Tight gasAlaska

Associated with oil

23%

26%

9%

10%

9%

49%

21%

7%

7%1%

7%9%

2%

21%0

5

10

15

20

25

30

1990 1995 2000 2005 2010 2015 2020 2025 2030 2035

History 2010 Projections

Shale gas

Non-associated onshore

Non-associated offshore

Coalbed methane

Tight gasAlaska

Associated with oil

23%

26%

9%

10%

9%

49%

21%

7%

7%1%

7%9%

2%

21%

2012 Annual Energy Outlook Early Release, Energy Information Administration.

U.S. and Canada Shale Basins

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Source: National Energy Board, Understanding Canadian Shale Gas, 2009.

Global Shale Resources

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Source: EIA Annual Energy Outlook 2011

Shale Gas ProductionTechnologies such as directional (horizontal) drilling and hydraulic fracturing have unlocked the potential for gas development from shale rocks

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The Second Issue: New EPA Hazardous Air

Emission Standards for Electric Power Plants

EPA’s New Mercury and Air Toxic (Utility MACT) Standards for

Electric Power PlantsIssued February 16, 2012

• These Standards will reduce mercury and various other air toxic emissions from new and existing coal- and oil-fired power plants

• Emissions-control technology options include:• Scrubbers• Electrostatic Precipitators• Fabric Filters• Activated Carbon Injection / Dry Sorbent Injection• Blending or Switching Fuels (i.e. natural gas!)

• Compliance time up to 4 years• Natural Gas Fired Power Plants are not Effected by these Standards!

In the U.S., Power Plants Emit:

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60% of the SO2

20% of the chromium13% of the NOx

organics, dioxins/furans, and others

50% of the mercury

over 50% of many acid gases

30% ofthe nickel

60% of the arsenic

Sources: NEI Trends Data (2009) and IPM (2010) (SO2, NOX); Proposed toxics rule modeling platform, based on inventory used for 2005 NATA (Hg);Inventory used for 2005 NATA (other toxics)

Source: EPA

23Source: National Electric Energy Data System (NEEDS 4.10) (EPA, December 2010) Source: EPA

The New Standards Affect 1,350 Coal and Oil-Fired Units at 525 Power Plants

Natural Gas Power Plants are not affected by these new standards

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The Third Issue: Proposed EPA Regulation of

Coal Ash

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Proposed EPA Regulation of Coal Combustion Residuals (Coal Ash)

Source: Tennessee Department of Health

December 22, 2008TVA Kingston Power PlantFailure of a Fly Ash Pond DamApproximately 5.4 Million cubic yards of fly ash sludge was released into a branch of the Emory River

Coal Combustion Ash

Bottom Ash: Falls to the bottom of the furnace

Fly Ash: Collected by electrostatic precipitators

Source: Georgia Power Company

Typical Coal Ash Handling Facilities

Ash Landfill Ash Pond

Source: Georgia Power Company

Proposed EPA Options for Regulating Coal Combustion Residuals (Coal Ash)

Option #1: Treat it as Hazardous Waste (Expensive!!)

Option #2: Treat it as non-hazardous waste and impose new pond design requirements

NOTE: Coal combustion Residuals are currently exempt from federal regulation and are only subject to state and local requirements

The Conclusion –

Natural Gas Wins

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Questions?

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The Cahaba Lilies in Alabama Photo by Danny Smith