Highlights 2009 CCS ConferenceThe Eighth Annual Conference

on Carbon Capture & Sequestration

WYOMING GOVERNOR FREUDENTHAL, AEP CEO MIKE MORRIS, KEY GLOBAL LEADERSADDRESS 700+ PARTICIPANTS AT 2009 ANNUAL CCS CONFERENCE

The Eighth Annual Conference on Carbon Capture and Sequestration, sponsored by ExchangeMonitor Publications &Forums in partnership the National Energy Technology Laboratory, the Department of Energy and several leadingcompanies and organizations directly involved in CCS projects, again attracted more than 700 participants representingsome 20 countries to Pittsburgh. Led by keynote speakers like Wyoming Governor Dave Freudenthal, AmericanElectric Power CEO Michael Morris, Natural Resources Defense Council Director of Climate Programs DavidHawkins and the Department of Energy’s acting Assistant Secretary for Fossil Energy Victor Der, the conferenceexplored all facets of CCS, from financing and policy issues to transportation and regulatory frameworks. In addition,more than 250 technical papers were presented on the latest CCS research and technology development

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Special 2009 CCS Conference Report…FEDERAL INVESTMENT THE KEY TOCOMMERCIAL DEPLOYMENT OF CCS

PITTSBURGH—Carbon capture and sequestrationtechnology will need significant government investment ifit is to be deployed at the commercial scale, financiers andindustry executives told attendees at the 8th Annual CCSConference earlier this month. The financial industry,which already would be somewhat risk averse whenconsidering involvement in a CCS project, has becomeeven more reluctant as the lending market has tightenedwith the worldwide economic downturn. In addition, inmost areas of the country, rate increases have not kept pacewith the costs of deploying CCS, meaning “project financ-ing then becomes almost entirely dependent on govern-ment support,” Barclays’ Theodore Roosevelt IV ex-plained. “Public utility commissions are rightfully viewedas political entities and the truth is, despite consumercomplaints, the rates have not kept up to the capitalinvestments, which are at historical lows. Because PUCsare inconsistent in their rulings … gaining financing fromthat sector becomes either impossible or prohibitivelycostly.”

General Electric’s Director of Gasification Operations TimHuskey also emphasized the need for significant govern-ment support, pointing out that CCS projects are animmense financial burden on private industry. “At thatcommercial size, commercial scale … [these companies]are paying for a lot of people that are going to be followingthem, so it’s probably appropriate for the government toprovide incentives,” Huskey explained, adding that somelegislative vehicle for advancing CCS would be the bestfirst step to ramping up even greater sources of govern-ment funding. “If there’s no assurity on some price orsome value of that emission, it’s going to be very hard forthat technology provider to move forward,” Huskeyexplained. “Cap-and-trade is appropriate for emissionsreductions…[but] it won’t motivate a technology revolu-tion.”

Government Investment Increasing

The Obama Administration, at least in the early stages,appears to be listening. Though the President’s Fiscal Year2010 budget request includes a cut for the Department ofEnergy’s coal R&D funding from current levels, theAmerican Recovery and Reinvestment Act includes morethan $3.4 billion for CCS development and deploymentover the next two years. “If there’s a way to bring moremoney to the table for CCS, I think that’s a good thing,”said DOE acting Assistant Secretary for Fossil EnergyVictor Der, adding, “It’s a learn by doing process thatallows us to move CCS forward better, faster and cheaper.”

Der told conference attendees that driving down theexpense of CCS would not only be important to the U.S.,but globally as well. “[Commercial CCS deployment] isnot going to happen in developing economies unless wefind a way to bring that cost down,” Der said, adding thatSecretary of Energy Steven Chu “is interested in doing truecollaboration on an international basis. He wants to be ableto share that ‘know-how.’”

Information the Best Stimulant to Public Support

Government funding and a risk-averse financial sectoraren’t the only stop-ups for CCS deployment, Rooseveltsaid. “Let’s do a bit of reconnaissance here,” Rooseveltsaid, noting that public opinion about capturing and storingCO2 emissions could play a huge role in how involved thegovernment is going to be in helping get CCS deployed.“The field of public opinion, unfortunately, also is one inwhich much of the financial requirements for the powersector must be rested,” Roosevelt said, adding that envi-ronmental groups have played a significant role in howU.S. energy consumers view the idea of ‘low-carbon’ or‘clean coal’ technologies. “The pollenization of science onboth sides is diminishing the trust that the public places in[CCS] and those who speak for it,” he said.

That’s why explaining to the public how CO2 is capturedand stored is important, explained John Barry, VicePresident of Unconventionals and Enhanced Oil Recoveryfor Shell International. “Public acceptance is an issuewhich I think I underestimated,” Barry said, adding that itcan be “potentially a deal-breaker for many projects.” Ifdone right, though, explaining the mechanics of storingCO2 is relatively easy to do, said Frank Shilling of theCenter for CO2 Storage at the Helmholz Centre Postdam inGermany. Through simple demonstrations with CO2 inbeverages and sandstone absorptions of CO2 in water,Shilling said locals were able to visualize and understandwhy CO2 storage would not be a dangerous addition totheir backyards. “We tried to involve the local public,”Shilling explained. “We tried to explain why and what wewere are doing. The locals want to be involved. It’s theirbackyard.”

EOR May Reduce Cost, But Not An Absolute Fix

As cost prohibitive as CCS currently seems, however,there are ways those costs can be reduced, many speakersat the conference said, most notably through the sale ofcaptured CO2 emissions for use in enhanced oil recovery(EOR). At roughly $20 per ton of captured CO2, EOR isalso far more attractive for companies seeking to capturetheir CO2 while also lowering costs. “There isn’t verymuch money in CO2 storage. You need to do it in an eco-

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nomic way,” explained Shell’s Barry. Beneficial reuses ofCO2—especially with historically viable options likeEOR—can help significantly, according to Barry andExxonMobil Vice President of Environmental Policy andPlanning Sherri Stuewer. “There are a number of projectopportunities that we’re pursing right now,” Stuewerexplained, noting that ExxonMobil’s LaBarge, WyomingCCS project sells a portion of its CO2.

But EOR isn’t the silver bullet that will be needed toreduce costs associated with CCS, Enbridge’s Alternativeand Emerging Energy Vice President Chuck Szmurlo said.“It’s always everyone’s first choice but the volumes forthat are not as big as the targets.” Enbridge, which is alarge player in gas transportation and distribution in bothCanada and the U.S., is currently at work on several CCSprojects in Canada, although Szmurlo said that in order forthe technology to go commercial, government interventionand consortiums would be much needed. “Energy securityis not a free thing,” he told the audience. “We need tobegin that clean energy dialogue that includes U.S. cooper-ation with the Canadian CCS projects.” Such a collabora-tion seems likely, as the President met with CanadianPrime Minister Stephen Harper (GHG, Vol. 4, No. 7) anda Montana-Saskatchewan partnership is already underway.

Reducing Transport Costs Could Be Key

Additionally, Szmurlo estimated that at an anticipated costof $60-100 per metric ton of CO2 for capture and storage,transportation of the CO2 alone could also be a hugeportion of the CCS financing pie. Szmurlo’s cost estimatesput transportation costs at approximately $20-36 per MT,versus roughly $25-45 per MT for CO2 capture. Withestimates for transportation of CO2 in the same costneighborhood as capture, sequestration siting will likely bea key aspect in reducing overall CCS deployment costs.“Siting CCS projects is fundamentally more complicatedthan traditional power projects,” Hydrogen Energy Interna-tional’s Director of Technology and Engineering MarkDavies said. “Keeping everything close keeps the costdown.”

Plentiful saline aquifer space provides a close and abun-dant resource for storing CO2 emissions and cutting costs,according to Sally Benson, director of the Global Climateand Energy Project at Stanford University. “There arecertain clusters where there are a large number of emis-sions sources [in the U.S.]…and they match up very nicelywith the location of some large saline aquifers,” Bensonnoted. In Canada, where Enbridge is currently working onthe Alberta Saline Aquifer Project (ASAP)—in which theyhope to complete several pilot-scale CCS projects by2015—Szmurlo said that the project sites were also“selected based on proximity to pipelines.”

CO2 as a ‘Slurry Pipeline’?

As another cost-saving measure, Szmurlo also advocatedusing CO2 as a ‘slurry pipeline’ for transporting solids.“We’ve been using water to transport coal for a long timeand we know that I can be done. And as it turns out, fromresearch that [Enbridge has] done, CO2 is a much betterstoring agent than water for storing solids,” Szmurloexplained. Although on it’s own, the process wouldn’tnecessarily be profitable, Szmurlo stressed that “if you’regoing to transport the CO2…anyways for environmentalreasons, we think it makes a lot of sense to carry a hitch-hiker to pay some of the costs and reduce overall costs”incurred by the industry and the public. “Many hands makelight work,” Szmurlo said of the concept, which wouldhave the benefit of delivering goods dry, rather than wetlike traditional water transport. Once used for transporta-tion, the CO2 could then be used in either CO2 storage orEOR, he said.#

REGULATORY FRAMEWORKS FOR CCSDOMINATES DISCUSSION AT CONFERENCE

PITTSBURGH—Long-term pore space liability for carboncapture and sequestration should be the responsibility ofthe federal government—not individual states, or eventhose sequestering CO2 emissions—Wyoming GovernorDave Freudenthal (D) said during remarks at the 8th

Annual Carbon Capture and Sequestration Conferenceearlier this month. “There is no corollary in oil and gas lawfor injection of massive amount of material,” Freudenthalsaid of CO2 storage. Enhanced oil recovery (EOR) prac-tices via CO2 injection have long been used in the oil andgas business for extracting hard-to-reach oil reserves, butsequestering CO2 for long-term storage and pollutionmitigation is an area that is still quite experimental,Freudenthal explained. “I think it’s an important concept.At some stage we’re going to have to have a program thatprovides for a backup. It’s my view that we’re going totransferring [the risk] to the federal government,” he said.

Wyoming Makes Industry Carry Risk

Although Freudenthal said the federal government shouldbe ready to accept the long-term responsibility for storingCO2 emissions, he noted the need for states to begin actionnow on creating frameworks to accommodate large-scalestorage. “We decided to take a crack at it,” Freudenthalsaid of Wyoming’s HB 58 legislation, noting that theemerging regulatory environment for CCS “is a verycomplicated question”—especially when deciding whoshould take on the liability of stored emissions that willlikely be in the ground for years. “We decided that the

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state owns the pore space,” Freudenthal said, but addedthat for the long-term matter of liability, “we confirmed,from our point of view that the injector has liability for thematerial for the life of the material.” That means that in theevent of CO2 leakage or escape—which Stanford Univer-sity’s Global Climate and Energy Project Director SallyBenson noted is actually very low—the injector wouldlargely be responsible for any resulting damage.

Other CO2 storage legislation in Wyoming includes HB 57,which stipulates that the mineral rights of subsurface spacesupercedes the right to sequester CO2 in a particularlocation; and HB 80, which requires those looking tosequester CO2 to make agreements with at least 80 percentof landowners who could be affected by subsurface storageof emissions.

Other States Offer Different Alternatives

Regulatory approaches for sequestering CO2 largely varybetween states, with many still lacking any sort of legalframework at all. In Illinois, the proposed site for the near-zero emissions FutureGen plant, the state would assumeliability for injected CO2 emissions and any resultingconsequences. In states like Texas, where untapped oilreserves are abundant, legislators have looked at offeringtax incentives for CO2 storage, as well as the possibility oftaking on legal liability. Speaking of Wyoming’s approach,Freudenthal acknowledged, “It is probably the mostcomplex piece of legislation and the one where we’refurthest out on the limb.”

Academics Say Federal Involvement Important

When it comes to the level of involvement from the federalgovernment, academic policy experts at the CCS confer-ence had varying perspectives. “In the U.S. we have thisincredible patchwork of frameworks,” said GrangerMorgan, head of Engineering and Public Policy at Carne-gie Mellon University. He said there are two key regula-tory issues emerging at both the federal state levels—legalaccess to deep geological pore space ownership and howto develop solutions for the liability of an injected plume’slong-term stewardship. “We think there needs to be newfederal legislation that says CCS serves a national inter-est,” Morgan said, adding that the best way to pursue afederal route for pore space injection would include anexpanded federal program for the Environmental Protec-tion Agency’s UIC permitting program, an adequatedissemination of information to inform mineral rightholders and give active user’s primacy, an enhancedpermitting process for legals rights to inject in pore spaces

and legislative constraints on tort claims regarding porespace injection.

Concerning liability issues, Morgan said the creation of a‘Federal Geologic Sequestration Board,’ independent ofstate and federal agencies, for approving projects andgranting licenses could be an effective method for increas-ing the efficiency and bureaucratic issues associated withtrying to deal with some of overlapping, piecemeal ap-proaches currently in place. The independent board couldalso be tasked with overseeing a single, national andperformance-based fund to cover the costs of long-termstewardship and possible future remediation of issuesassociated with utility and mineral interest affect by thestorage of CO2 emissions. “Whatever the numbers are, youdon’t want to have to build up a pool like that in everystate,” Morgan said, adding, “We think you need to builda bunch of commercial-scale plants and get the experi-ence.” Morgan declined to comment, however, on howmuch it would cost to implement such a board or fund.“Am I ducking? Yes. Because I don’t know what thenumber is.”

Stanford’s Benson also noted the importance of a federalprogram for resolving some of the major issues associatedwith liability and pore space ownership. “The institutionalissues—the liability issues—are really slowing thingsdown,” Benson said. “A government-sanctioned effort tobring together all the right people … would go a long wayto making [CCS] more attractive for accelerated deploy-ment.” She added, “I think CCS creates really uniquechallenges. These are not groups of people who haveworked together in the past. We need to gain experience.We need to engage the private sector. … Beyond institu-tional issues, let’s start by solving [the issues] by gettingall the right people around the table.”

Interim Approach Could be Used Now

Although the most efficient method for permitting andpore space injection and liability will ultimately take muchtime and analysis at the federal level, Carnegie Mellon’sProgram Manager for Engineering and Public Policy, SeanMcCoy, said an interim approach could be taken to speedup commercial-scale deployment. “A number ofcommercial-scale plants could be built today using ad-hocarrangements. A new regulatory framework could be putin place now,” McCoy explained, noting that CarnegieMellon would be working this year to produce a compre-hensive manual that would include some of the bestperceived ways to create a national framework for carboncapture and geologic sequestration, including recommen-dations for siting, liability, pore-space ownership, and theEPA’s UIC permitting process.

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Private Insurance Another Option

Some conference panelists said, though, that comprehen-sive regulatory frameworks aren’t the only way forindustries interested in CCS technologies to protectthemselves against major risks. One example put forth wasnew, and first-of-a-kind, insurance options offered byZurich Financial Services. Some of the insurance optionsoffered by Zurich include risk management for transporta-tion of compressed CO2 emissions either for storage orEOR injection, operation of the actual injection pro-cess—the point at which Benson noted the risk of anunexpected event is most likely, plugging and post-closureof sequestration wells, and the liability of long-termstewardship.

Zurich CEO Lindene Patton said how CCS is deployedwill greatly depend on how risks associated with sequestra-tion and transportation are identified. “If we deploy CCSwith a ‘fat tail,’ that’s not good for any of us,” Patton said,explaining that a fat tail occurs “when you put together arisk profile and you’ve forgotten or not realized that riskincreases over time because you’ve mischaracterized yourrisk suite.” While Patton noted that the risks associatedwith the long-term, if not permanent, storage of CO2“rarely, if ever goes to zero,” Zurich’s insurance servicesfor protecting industry help provide protection of privateindustry assets. “There are lots of options here. Insuranceis not the only one … but we are making the first step,”Patton explained. “This is the part where you need politicalleadership and people need to insist upon it before wemove forward.”

New Regulations Still Important

Patton also noted that while prior liability frameworks,such as the 1957 Price-Anderson Act that provides liabilityprotection for nuclear-related accidents, give some idea ofwhat the government could be diving into with geologicsequestration, “not one” addresses stewardship. Patton alsowarned that Zurich’s insurance options “will not substitutefor public policy leadership.” An interim report issued byCarnegie Mellon also warns that “if such a balance is notstruck through legislation that establishes a generalregulatory framework for CCS, the issues will be resolvedthrough individual suits in the courts, and may not achieve[an] optimal balance of social objectives” from bothindustry and the government.

Additionally, Patton said that while Zurich is “willing toput a stake in the ground … to deal with fortuitous risks,”like most other non-CCS related insurance, if a clientknowingly injects CO2 improperly or carelessly disregardscertain aspect on long-term CO2 monitoring, Zurich wouldnot insure them against private or government lawsuits or

fines. “One of the potential events that can result fromCCS is you could have migration of the gas … that goesinto potable water. Insurance does not help anymore whenyou’re continuing a wrongful act—letting gas escape topotable water or the atmosphere when you know it ishappening.” When asked about the costs of insuringprivate or government geologic sequestration and otheraspects of CCS, Patton noted that the price signals offeredby Zurich also provide an idea of whether or not a projectshould move forward. “My advice to people is that if youfind our premium rates are not competitive … don’t ignorethe price signal we are sending you.” Insurance costs couldbe in the neighborhood of $5,000 per $1 million perannum, although it is likely that as more carriers come intothe marketplace annual rates would likely become morecompetitive—not unlike CCS deployment itself.#

PUBLIC OUTREACH KEY TO CCSPROJECT SUCCESS, EXPERTS SAY

PITTSBURGH—The permitting process for carbonsequestration projects and local public awareness are keydrivers in a project’s success, panelists said during adiscussion headed by Sarah Wade of the World ResourcesInstitute at the 8th Annual CCS Conference, held hereearlier this month. Panelists discussed how several projectshave made it through the permitting process and whatkinds of recommendations they would make to otherutilities and research organizations looking to do the same.“It’s best to have varying degrees of technical information.Be prepared for the full-range of audience knowledge,”said West Coast Regional Sequestration Partnership(WESTCARB) Outreach Coordinator Richard Myhre ofthe public hearing process for new sites.

Public Outreach and Info Important

Although the hearing process varies from state to state, andin some states is not required at all, most of the panelistsagreed that it was an important part of properly informingthe public about new development plans. “In Illinois, youcan get a permit without holding a public hearing, but ifsomeone requests a hearing, it can delay your permittingprocess,” warned Sallie Greenberg, CommunicationsCoordinator with Illinois State Geological Survey. Anotherpanelist, Judith Bradbury of the Midwest Regional CarbonSequestration Partnership (MRCSP), stressed that even ifhearings are not required, dissemination of information forthe public is still very important. “The public meetingsreally need to be supplemented,” Bradbury said, adding,“It’s really important to see the meeting not as a be all andend all, but as a process for keeping the people informed.

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Additionally, local news outlets can also play a key role inthe permitting debate, said Gary Garrett who works withthe Sourthern States Energy Board and SECARB. In manyprojects, Garrett said, the editorial board of a local newspa-per can play a central role in the success of a project.“Don’t sell the use of social media short,” agreed SteveGates, Senior Communications Manager with the Ameri-can Coalition for Clean Coal Electricity. Gates said the useof media and editorial boards are “a positive way toenergize people—to make them feel like they’re a part ofsomething.” Gates also noted that “those who are going tobe most receptive are those on the lower end of the eco-nomic scale,” since any effort to scale back energy costswill net them the most significant relative savings. Repre-sentation is also a key part of the public informationprocess, according to the panelists. “The spokesman makesa big difference when you’re in a community where theutility is used to being there,” Garrett explained. Greenbergagreed, saying, “If a region has familiarity with oil and gasor natural gas storage…the concept of what you’re tryingto do is not as hard to get across.”

Stiff Opposition Hard to Overcome

While the panelists noted that most communities wheregeologic storage is most viable tend to be familiar with theprocess and are often welcoming of it, there will likely beopponents, many of whom have the weight of a largeenvironmental community behind them. “There are somecommunities that no matter what you do, they’re nevergoing to see sequestration as an opportunity,” Greenbergexplained. The panelists noted, however, that the best wayto gain support is to have people on hand willing to answerquestions. “The really nice idea about the public meetingsis to have some experts on hand to answer questions.There’s always some people who might ask some contro-versial questions,” Garrett said. For fence-sitters or thosenew to the idea of CO2 storage, panelists said the mostfrequent concerns and questions regarding included fearsthat the community would become a dumping ground forothers’ CO2, geologic repercussions like leakage, and whya particular site in their community was selected. Overall,however, as long as the public is given adequate andupdated information, the panelists agreed that in mostcases community support isn’t too difficult to garner.#

STUDY: CHINA’S CO2 STORAGE POTENTIALGREATER THAN INITIALLY THOUGHT

PITTSBURGH—China could have more storage potentialfor captured CO2 than initially anticipated, according to anearly assessment conducted by Battelle Memorial Insti-tute’s Pacific Northwest Division. “There does appear tobe significant potential in the geologic storage basins ofChina,” said Robert Dahowski, lead researcher of thestudy, China: Regional Opportunities for CO2 Capture andStorage. Although it has not yet been published, Dahowskishared the latest details of the Battelle study at the 8th

Annual CCS Conference here earlier this month. “Wethink there is more capacity than previously thought [inChina],” Dahowski said, which he explained will beimportant, since the emerging nation has more than 1,600sources of CO2 and emits nearly 4,000 megatons of CO2per year.

China’s Storage a Viable Future Option?

Of the potential 2,300 gigatons of storage capacity esti-mated by Dahowski, approximately 2,288 GT of thatwould come from deep saline formations onshore, makingup roughly “99 percent of [China’s] total onshore poten-tial.” The 1 percent remaining in onshore subsurfacestorage potential, according to Dahowski, would comefrom depleted oil fields, enhanced oil recovery, andunmineable coal seems. Dahowski conceded, however, thatthe Battelle findings are incomplete and still contain “anumber of uncertainties.” But if the study’s projections arecorrect, the cost of storing CO2 could be far-reduced, sinceit wouldn’t have to be shipped offshore or elsewhere to bestored. “Ninety-one percent of large CO2 point sourceshave a storage candidate within 100 miles [in China],”Dahowski said, adding that up to 83 percent of sourceshave storage options within just 50 miles them.

The areas where CO2 storage seems to lack in China is nearcoastal regions, where Dahowski said onshore storageoptions are much more difficult to find. But while CO2storage in China is demonstrably more limited than othercountries, if even a small portion of Battelle’s projectionsare correct, Dahowski said it would be a viable interimsolution. “If only 10 percent of projected capacity isavailable, CCS would still be a viable option for China,”Dahowski said. “I think we will see significant advances inChina looking at CCS and other advanced energy technolo-gies,” he added.#

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