[Senate Hearing 110-343]
[From the U.S. Government Publishing Office]
S. Hrg. 110-343
REGULATORY ASPECTS OF CARBON CAPTURE, TRANSPORTATION, AND SEQUESTRATION
=======================================================================
HEARING
before the
COMMITTEE ON
ENERGY AND NATURAL RESOURCES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
SECOND SESSION
TO
RECEIVE TESTIMONY ON THE REGULATORY ASPECTS OF CARBON CAPTURE,
TRANSPORTATION, AND SEQUESTRATION AND TO RECEIVE TESTIMONY ON TWO
RELATED BILLS: S. 2323, A BILL TO PROVIDE FOR THE CONDUCT OF CARBON
CAPTURE AND STORAGE TECHNOLOGY RESEARCH, DEVELOPMENT AND DEMONSTRATION
PROJECTS, AND FOR OTHER PURPOSES; AND S. 2144, A BILL TO REQUIRE THE
SECRETARY OF ENERGY TO CONDUCT A STUDY OF THE FEASIBILITY RELATING TO
THE CONSTRUCTION AND OPERATION OF PIPELINES AND CARBON DIOXIDE
SEQUESTRATION FACILITIES, AND FOR OTHER PURPOSES
__________
JANUARY 31, 2007
Printed for the use of the
committee on Energy and Natural Resources
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COMMITTEE ON ENERGY AND NATURAL RESOURCES
JEFF BINGAMAN, New Mexico,Chairman
DANIEL K. AKAKA, Hawaii PETE V. DOMENICI, New Mexico
BYRON L. DORGAN, North Dakota LARRY E. CRAIG, Idaho
RON WYDEN, Oregon LISA MURKOWSKI, Alaska
TIM JOHNSON, South Dakota RICHARD BURR, North Carolina
MARY L. LANDRIEU, Louisiana JIM DeMINT, South Carolina
MARIA CANTWELL, Washington BOB CORKER, Tennessee
KEN SALAZAR, Colorado JOHN BARRASSO, Wyoming
ROBERT MENENDEZ, New Jersey JEFF SESSIONS, Alabama
BLANCHE L. LINCOLN, Arkansas GORDON H. SMITH, Oregon
BERNARD SANDERS, Vermont JIM BUNNING, Kentucky
JON TESTER, Montana MEL MARTINEZ, Florida
Robert M. Simon, Staff Director
Sam E. Fowler, Chief Counsel
Frank Macchiarola, Republican Staff Director
Judith K. Pensabene, Republican Chief Counsel
C O N T E N T S
----------
STATEMENTS
Page
Allred, C. Stephen, Assistant Secretary, Land and Minerals
Management, Department of the Interior......................... 24
Anderson, Scott, Environmental Defense, Austin, TX............... 53
Bengal, Lawrence, E., Arkansas Oil and Gas Commission, Little
Rock, AK....................................................... 48
Bingaman, Hon. Jeff, U.S. Senator From New Mexico................ 1
Coleman, Hon. Norm, U.S. Senator From Minnesota.................. 7
Domenici, Hon. Pete V., U.S. Senator From New Mexico............. 11
Edwards, Krista L., Deputy Administrator, Pipeline and Hazardous
Materials Safety Administration, Department of Transportation.. 15
Evans, Ronald T., Denbury Resources, Inc., Plano, TX............. 58
Grumbles, Benjamin H., Assistant Administrator for Water,
Environmental Protection Agency................................ 20
Kelliher, Joseph T., Chairman, Federal Energy Regulatory
Commission..................................................... 12
Kerry, Hon. John, U.S. Senator From Massachusetts................ 4
Salazar, Hon. Ken, U.S. Senator From Colorado.................... 3
Slutz, James, Acting Principal Deputy Assistant Secretary, Office
of Fossil Energy, Department of Energy......................... 27
APPENDIXES
Appendix I
Responses to additional questions................................ 71
Appendix II
Additional material submitted for the record..................... 93
REGULATORY ASPECTS OF CARBON CAPTURE, TRANSPORTATION, AND SEQUESTRATION
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THURSDAY, JANUARY 31, 2008
U.S. Senate,
Committee on Energy and Natural Resources,
Washington, DC.
The committee met, pursuant to notice, at 2:05 p.m. in room
SD-366, Dirksen Senate Office Building, Hon. Jeff Bingaman,
chairman, presiding.
OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW
MEXICO
The Chairman. All right. Why don't we get started here? I'm
informed Senator Domenici is on his way.
We have two of our colleagues here to talk first about the
legislation that is the subject of our hearing. Let me give a
very short opening statementand then turn to them.
I'd like to welcome everybody and thank the witnesses who
are testifying before the committee. This is a legislative
hearing on two bills, S. 2144, that Senator Coleman and some
others have introduced, and S. 2323, that Senator Kerry has
introduced along with several of our colleagues.
These two bills focus on important policy aspects of carbon
dioxide capture, transportation and storage. S. 2144 focuses on
the issue of expanding the existing carbon dioxide pipeline
infrastructure. S. 2323 focuses more broadly on carbon capture
and storage research, development and demonstration projects
and perhaps more pertinent to today's hearing also focuses on
developing a policy framework for rapid implementation of
integrated carbon dioxide capture and storage systems.
The topic of reducing greenhouse gases, particularly carbon
dioxide emissions is a topic of great concern to myself and to
all members of this committee. Carbon capture and geologic
storage holds promise as a measure that can be used to mitigate
global climate change while still allowing the use of fossil
fuels at electricity generating plants and industrial
facilities. Discussion centered on coal use in a carbon
constrained world, integrated carbon capture and storage
systems may present the most immediate solution for continued
use of coal than other carbon intensive fuels while not
contributing further to carbon dioxide emissions and global
warming.
Last December a historic piece of legislation was passed
into law, the Energy Independence and Security Act of 2007. It
included key provisions for expanding critical research and
development programs aimed at bringing integrated carbon
capture and storage systems to the full technological
deployment stage. The new law is important for focusing
research and development efforts on technologies that are
essential for reducing carbon dioxide emissions.
This legislation was a first step, a key first step, in
advancing carbon capture and storage projects, but additional
legislation will be needed to advance these storage projects
into full commercial deployment. The next phase in fast
tracking deployment of these technologies is establishing a
policy framework that will assist early industry movers in
selecting the appropriate geologic storage sites, in operation
of their facilities and in managing the facilities for decades
following the closure of a geologic storage operation. The aim
of this hearing is to receive testimony on these two bills and
their contribution to developing a carbon dioxide capture,
transport and storage policy framework.
Let me defer to Senator Domenici for any comments he has
before I call on Senator Coleman and Senator Kerry for their
comments.
Senator Domenici. Mr. Chairman, considering the time I
would ask that you let the two witnesses, the two Senators give
their remarks and then I will give mine.
The Chairman. Alright. We will proceed that way. There's no
particular order here. Senator Coleman, you were the first one
here and Senator Kerry is the taller of the two. Which of you
would like to go?
[Laughter.]
Senator Coleman. I'll certainly defer to my senior
colleague, Senator Kerry.
The Chairman. Senator Kerry, go right ahead, please. Thank
you for being here.
[The prepared statements of Senators Bingaman and Salazar
follow:]
Prepared Statement of Hon. Jeff Bingaman, U.S. Senator From New Mexico
I'd like to welcome everyone here today and thank the witnesses who
are testifying before the committee for this legislative hearing on
bills S. 2144 and S. 2323. These two bills focus on important policy
aspects of carbon dioxide capture, transportation, and storage. S. 2144
focuses on the issue of expanding the existing carbon dioxide pipeline
infrastructure. S. 2323 focuses more broadly on carbon capture and
storage research, development and demonstration projects, and perhaps
more pertinent to today's hearing it also focuses on developing a
policy framework for rapid implementation of integrated carbon dioxide
capture and storage systems.
The topic of reducing greenhouse gases, particularly carbon dioxide
emissions, is a topic of great concern to myself and the members of
this committee. Carbon capture and geologic storage holds promise as a
measure that can be used to mitigate global climate change, while still
allowing the use of fossil fuels at electricity-generating plants and
industrial facilities. With discussion centered on coal use in a
carbon-constrained world, integrated carbon capture and storage systems
may present the most immediate solution for continued use of coal and
other carbon intensive fuels while not contributing further to carbon
dioxide emissions and global warming.
Last December a historic piece of legislation was passed into law,
the Energy Independence and Security Act of 2007, which included key
provisions for expanding critical research and development programs,
aimed at bringing integrated carbon capture and storage systems to the
full technological deployment stage. The new law is important for
focusing research and development efforts on technologies that are
essential for reducing carbon dioxide emissions. This legislation was a
key first step in advancing carbon capture and storage projects, but
additional legislation will be needed to advance these storage projects
into full commercial deployment.
The next phase in fast-tracking deployment of these technologies is
establishing a policy framework that will assist early industry movers
in selecting the appropriate geologic storage sites, operation of their
facilities, and managing the facilities for decades following the
closure of a geologic storage operation. The aim of this hearing is to
receive testimony on S. 2144 and S. 2323 and their contribution to
developing a carbon dioxide capture, transport, and storage policy
framework.
I would like to begin the hearing by welcoming the original bill
sponsors who have come to speak on the bills today, Senator Kerry will
speak on S. 2323 and Senator Coleman will speak on S. 2144.
______
Prepared Statement of Hon. Ken Salazar, U.S. Senator From Colorado
Thank you Chairman Bingaman and Ranking Member Domenici for holding
this hearing on the regulatory aspects of carbon capture,
transportation, and sequestration.
Capturing carbon dioxide at its source and safely storing it to
avoid its release into the atmosphere will be essential to reducing
greenhouse gas emissions. I believe carbon capture and storage (CCS)
should be a top priority in our nation's energy policy. There is little
doubt that a successful domestic CCS program will boost our nation's
coal industry, and that a low-carbon footprint coal industry is
critical to our nation's energy and environmental security.
To make CCS an effective, reliable, and cost-feasible reality, we
need to move forward simultaneously on two fronts: we need to
aggressively develop both the technical knowledge necessary and the
regulatory framework for CCS infrastructure development.
On the technical front, I sponsored the provision of the new energy
bill that directs the United States Geological Survey and the
Departments of Energy and the Interior to coordinate a national
assessment of our carbon dioxide storage capacity. I also fought to
include the provisions that will expand DOE's CCS research and
development programs, with a particular eye towards the large-scale CCS
demonstration projects that are crucial to achieving commercial
viability. I am looking forward to learning about DOE's most recent
progress today.
I am glad that today's hearing will focus attention on the second
front--the regulatory front. We need to establish a regulatory
framework for the transport and storage of carbon dioxide. As you know
I am an original co-sponsor of S. 2144, the Carbon Dioxide Pipeline
Study Act of 2007, which would instruct the federal agencies present
today to perform a broad feasibility study of the construction and
operation of a national CCS infrastructure.
There are open questions about what it will take to create a
national CCS infrastructure. We need a thorough assessment of our
nation's geologic CO2 storage capacity and a critical
appraisal of the pipeline network required and the issues of
transporting carbon dioxide from its sources to storage sites. Even
though short-haul carbon dioxide pipelines already exist in the U.S.
for the purposes of enhanced oil recovery--we've been employing these
techniques in my state of Colorado for more than thirty years--a more
expansive carbon dioxide pipeline network clearly raises new issues
about pipeline network requirements and regulation, regulatory
classification of carbon dioxide, and pipeline safety.
The DOE through its Carbon Sequestration Regional Partnerships, the
DOT through the independent U.S. Surface Transportation Board with
regulatory jurisdiction for transporting carbon dioxide, the FERC with
its experience in the regulation of natural gas and oil pipelines, and
the EPA through its underground injection control program have the
necessary expertise to assess the important issues dealing with carbon
dioxide pipelines that would be needed to handle large-scale carbon
sequestration in this country.
We introduced this pipeline study bill because there has been a
void at the federal level in the attention given to the infrastructure
needed to bring CCS to fruition. We believe your agencies have the
regulatory authority to begin such a feasibility study now, but I am
concerned by the lack of coordinated federal action to answer these
fundamental questions. I look forward to having a frank discussion
regarding our path forward.
Thank you, Mr. Chairman.
STATEMENT OF HON. JOHN KERRY, U.S. SENATOR
FROM MASSACHUSETTS
Senator Kerry. Thanks, Mr. Chairman, Senator Domenici and
the rest of the Senators on the committee. Thank you very, very
much for giving us an opportunity just to share a few thoughts
with you. I particularly appreciate the opportunity to talk
about S. 2323 which is a bill that Senator Stevens and I have
jointly introduced and I'll say a word about it in a moment.
But I just want to remind the committee of the underlying
importance of what drives both pieces of legislation and our
being here today. We all know that last year the Nobel Prize
winning intergovernmental panel on climate change issued its
latest and most comprehensive report reflecting the consensus
of over 2,000 of the world's most respected climate scientists.
That report established beyond any reasonable doubt the urgency
of acting to address climate change.
I had the privilege of representing the Senate for a brief
36 hours, because of our votes at the end of the year, in Bali
at the climate change negotiations. I must say I've been
attending those conferences since 1992 when Al Gore, Tim Wirth
and a bunch of us went down to Rio to the Earth Summit. I've
met with the various delegations over the course of time
including the Chinese.
This time I found the Chinese transformed, engaged,
prepared to discuss how to measure what they do, obviously not
quite at the same rate and same scale. It was an entirely
different conversation than any that we have had yet and opens
the door to what really needs to be done because China will be
at our levels of emissions within 10 years. So, obviously,
we're going to have to find a way to achieve this. But this is
part of that mosaic, if you will, Mr. Chairman.
The science shows that--and I also found there a sense of
urgency among finance ministers, prime ministers, foreign
ministers, environment ministers, trade ministers, presidents,
an unbelievable sense of urgency about this issue. The science
also shows that coal combustion is one of the greatest
contributors to climate change. Those of us that seek to deal
with this issue understand we're going to have to deal with
this component of it.
Coal is not going to go away in the near term, no matter
how much we wish that in terms of its negative impact. Not the
positive, but the negative. It's cheap. It's abundant here in
America. Countries such as China are using it extensively.
They're building approximately one coal fired plant per week,
pulverized coal fired plant, without modern technology right
now. Coal accounts for 80 percent of their CO2
emissions.
So they are building infrastructure that's effectively
going to pollute for years to come. We will get the results of
that pollution because it blows over us and falls in rain and
so forth. Frankly it's my judgment, I think the judgment of a
lot of people that the international community needs to be far
more concerned about this and urgent about this than it is.
That's why we have to rapidly develop and implement carbon
capture and storage technology, which is the purpose of this
hearing. It was recommended last year in a similar report by
the Massachusetts Institute of Technology. This technology will
enable us, providing it works according to all of the designs
and ways in which they believe it will, to capture the
emissions from power plants and other industrial facilities and
permanently bury them in deep saline aquifers and other
geological formations.
Two recent reports identified carbon capture and
sequestration as the most promising area for emission
reductions in the electric power sector. A December 2007
McKinsey study determined that by 2030, 9 percent of U.S.
electricity could come from coal plants equipped with CCS. The
Electric Power Research Institute, the research arm of the
electric power industry, estimated this number at 15 percent.
I might say that I hope those figures reflect a growth
without the level of intervention that ought to take place
because if it isn't, it isn't going to get the job done. All of
us need to understand that. If you believe the scientists and
you heed their warnings and you have to keep the climate change
to a two degree centigrade level and 450 parts per million of
greenhouse gases. There is no way to achieve that at that level
of coal fired growth. So we have an enormous challenge ahead of
us.
These studies demonstrate the potential however for the
application of CCS. The purpose behind our bill and I think
Senator Coleman's bill is to accelerate this effort so we can
let the marketplace decide what works. We're not going to pick
a winner or loser. We want to get the technology out there. Let
the marketplace decide which technology in fact works the best
and most effectively.
Now the energy bill that you passed--that we passed in the
Senate last summer is a great start. I extend my gratitude to
this committee for the provisions to inventory the
sequestration capacity and to conduct essential demonstration
projects. The legislation Senator Stevens and I have introduced
which is the Carbon Capture and Storage Technology Act of 2007
would establish three to five commercial scale sequestration
facilities and three to five coal fired demonstration plants
with carbon capture.
Now there are benefits to these that are not the purpose of
this hearing today so I won't go into those. But today's
hearing is specifically, I gather, focused on one provision of
the bill, which is the regulatory framework that must be
established to oversee carbon capture and storage activities.
The regulatory framework is as urgent as getting the technology
out. Obviously they go hand in hand.
We have to make sure that we implement these projects
correctly. We've never conducted sequestration here in the
United States on the scale that we're contemplating. In fact
only three sites in the entire world have projects of this
magnitude.
First and foremost we need to guarantee the permanent
storage of the CO2 that we inject in the ground.
CO2 is naturally buoyant. When it's injected into
the earth it will seek the earth's surface at all times. So,
all of our aggressive efforts to develop CCS technology would
be wasted if we don't make the right choices about where to
inject the CO2 to avoid leakage that releases the
CO2 back into the atmosphere.
Second, as we advance this technology we'll be making site
specific decisions about appropriate sequestration locations.
We need to ensure that these injection sites, whether in deep
saline formations or oil or gas fields are safe, secure and
permanent. We need to develop national siting guidelines that
will provide confidence in the injectivity, capacity and
effectiveness of storage sites. We need to develop consistent
and reliable monitoring and verification protocols that will
assist with site assessment and planning and baseline and
operational monitoring to ensure that the CO2
remains permanently sequestered. Finally we need an early
warning system that will alert us to potential leakage or
failure issues at these sites.
Now many of these elements are highly technical, but they
are all essential to ensuring the success of this technology in
addressing climate change and in providing companies, investors
and the public with confidence that they're getting what they
pay for when they invest in carbon credits associated with CCS.
Siting monitoring and verification regulation are also
necessary to provide us with certainty they're avoiding any
potential harmful public health or environmental outcome. For
example precautions have to ensure that CO2
injection sites don't result in seepage into drinking water
aquifers and the release of heavy metals.
As we think through the regulatory framework for CCS, we
have to be mindful that any CO2 leakage within a
contained environment could result in additional health or
safety risks if not done properly. So for that reason the
regulatory scheme is going to be critical. It will also
determine whether or not this is going to work, folks. That is
going to determine, very significantly, what our options are
with respect to global climate change. So the faster we get
about this business and the faster we get the demonstration
projects out there properly, the better we're going to be able
public choices for the long term.
To resolve these issues I've developed a provision in this
legislation that directs the key agencies, including EPA, DOE
and Interior to create a task force to develop comprehensive
regulations to address the issues of leakage, public safety and
environmental protection. These regulations would establish the
regulatory framework to oversee the entire CCS process in a
comprehensive fashion linking the complicated mechanisms for
capture, transport, injection and storage of CO2.
The task force is specifically directed to consult with the
industry as well as the technical experts in developing these
regulations. The involvement of these experts, who've been
involved in large scale sequestration projects abroad or
enhanced oil recovery, which many of you are familiar with.
We have used this effort to drive oil out and capture oil
today. So we have it in certain scale. But we need to develop
the ability for the regulatory scheme to govern this process.
Many of those individuals, incidentally, are behind me here
testifying today. I'm eager to learn about their input as to
how we do this most appropriately. I look forward to working
with the committee as we try to meet this urgent challenge.
Thank you, Mr. Chairman.
[The prepared statement of Senator Kerry follows:]
Prepared Statement of Hon. John Kerry, U.S. Senator From Massachusetts
Chairman Bingaman, Senator Domenici and colleagues--thank you for
inviting me to testify today. I appreciate the opportunity to introduce
an issue and a piece of legislation that I believe are critical to our
efforts to combat global climate change.
Last year, the Nobel Prize-winning Intergovernmental Panel on
Climate Change issued its latest and most comprehensive report,
reflecting the consensus of over 2,000 of the world's most respected
climate scientists. The report established beyond any real doubt the
urgency of acting to address climate change.
In the last 250 years, carbon dioxide levels in the atmosphere have
risen from 280 parts per million to 380--higher today than at any time
in the past 650,000 years. Scientists tell us that we have to keep
CO2 concentration below 450 parts per million--which
corresponds to an increase of 2 degrees Celsius--to avoid a large scale
catastrophe. And we only have ten years in which to act. But unless we
take dramatic action, we're expected to reach 600-700 parts per million
by the year 2100. This is urgent. It is being driven by facts and by
the alarms that scientists across the planet are sounding today.
We who seek to fight climate change must face the reality that, in
the foreseeable future, coal isn't going away. It's cheap and abundant
here in America and in places like China, which is growing at 11% a
year and building one coal-fired power plant per week. Today coal
accounts for 80% of China's CO2 emissions, and they and
others are building infrastructure that will pollute for decades to
come.
That is why it is critical that we run, not walk, to develop and
implement carbon capture and storage technology, as recommended last
year in a seminal report by the Massachusetts Institute of Technology.
This technology will enable us to capture the emissions from power
plants and other industrial facilities, and permanently bury them in
deep saline aquifers and other geological formations.
In fact, two recent reports identified CCS as the most promising
area for emission reductions in the electric power sector. A December
2007 McKinsey study determined that, by 2030, 9% of US electricity
could come from coal plants equipped with CCS. The Electric Power
Research Institute, the research arm of the electric power industry,
estimated this number at 15%. These studies demonstrate the tremendous
potential for the application of CCS. Our government should be making
significant commitments to advancing this technology.
The Energy Bill was a very good start--and I would like to extend
my thanks to this committee for its leadership on key provisions to
inventory our country's sequestration capacity and conduct essential
demonstration projects.
In addition, I have introduced legislation with Senator Stevens--
the Carbon Capture and Storage Technology Act of 2007--which would
establish 3-5 commercial-scale sequestration facilities and 3-5 coal-
fired demonstration plants with carbon capture.
I would be happy to discuss the benefits of these projects, but
today's hearing is focused on another component of the bill--the
regulatory framework that we need to put in place to oversee carbon
capture and sequestration activities. My bill establishes an
interagency task force, chaired by the Administrator of the EPA, to
develop regulations governing the complicated mechanisms and
requirements for the capture, transport, injection and storage of
carbon dioxide. The task force is specifically directed to consult with
industry, as well as technical and legal experts, in developing these
regulations--and the individuals who will be testifying this morning
are some of the leading authorities in the country on these issues. I
am eager to hear their thoughts.
I look forward to continuing to work with my colleagues to advance
carbon capture and storage technology, and I thank you again for the
opportunity to testify this morning.
The Chairman. Thank you very much.
Senator Coleman.
STATEMENT OF HON. NORM COLEMAN, U.S. SENATOR
FROM MINNESOTA
Senator Coleman. Thank you, Mr. Chairman. It's a pleasure
to be sitting by the side of my colleague Senator Kerry. Both
of our approaches here proceed with a firm belief that it's
important to get the technology out there. I firmly believe in
it.
Thinking about the Chinese experience and what they're
doing. The country that gets the technology out there, I think,
is going to dominate the 21st century on economic terms. The
Chinese are going to have to buy it. They're choking to death
they're going to have to buy it from us. So we have this, I
think, huge incentive to move forward and you have to have a
framework for that incentive.
When I was a young person I dreamed of being a basketball
player. My heroes were guys like Bob Cousy, Oscar Robertson,
Earl the Pearl Monroe. I'm dating myself here by the way. That
all ended when a coach told me, Coleman, you may be small, but
you can't jump. It is bad when you have two reinforcing
problems.
Our Nation has that. We are highly dependent on foreign
sources of energy and we produce dangerous amounts of
greenhouse gases. How do we solve one problem without
exacerbating the other?
Mr. Chairman this committee under your leadership and that
of the ranking member has boldly moved to address both. You've
crafted two landmark pieces of legislation in the past several
years: the Energy Independence Security Act of 2007 and the
Energy Policy Act of 2005. These comprehensive bills address
numerous critical energy and environmental challenges facing
our Nation and they establish a firm foundation on which to
build our Nation's energy future.
I firmly believe that a big part of that future is going to
require figuring out how to utilize America's 250 year supply
of coal in an environmentally friendly manner. By taking
CO2 produced in coal power plants and piping that
CO2 to a location where it can be permanently
stored, I believe we can greatly add to the country's economic
and even national security. That's why I've introduced the
CO2 Pipeline Study Act which is another step in this
committee's efforts to address these issues in an informed and
timely manner.
I want to thank a number of members of this committee who
are original co-sponsors of the CO2 Pipeline Study
Act for their leadership. Senator Murkowski, who's here today,
Senator Salazar, Landrieu, Johnson, Martinez and Bunning, your
guidance and assistance were invaluable in drafting this
legislation. The fact is we have an immense supply of coal
available in this country. It is a relatively low cost energy
source we do not need to import. Accordingly we do not need to
send our valuable dollars overseas to hostile regimes in order
to keep the lights on. We simply must find a way to use coal
without jeopardizing the climate. Indeed coal already supplies
about half our Nation's electric power.
The good news is my colleague Senator Kerry has testified
about in greater detail is that we can take the CO2
out of the emissions of a coal power plant and store it
underground. More research needs to be done. But the future of
CO2 free coal plants looks bright. One of the key
components of making CO2 free coal is a reality of
how to transport this gas from the power plant to the ground.
Currently there are many uncertainties about the rules and
costs that will exist with the construction and operation of
CO2 pipelines. The CO2 Pipeline Study Act
will answer these questions. It will provide certainty to
industry and to consumers. The CO2 Pipeline Study
Act seeks the input of a number of Federal agencies and
departments: the Department of Energy, Interior,
Transportation, the Federal Energy Regulatory Commission, FERC,
the Environmental Protection Agency. Each of these has
expertise about a variety of issues associated with the
building of pipelines.
These agencies are required to conduct the study of any
technical, siting, financing or regulatory barriers that might
prevent or impede the development of a carbon dioxide pipeline
industry. They're also asked to address any safety and
integrity issues associated with constructing carbon dioxide
pipelines. I anticipate the recommendations in their study may
well serve as a basis of future congressional action on these
issues.
In short, this bill will lay out the groundwork for
CO2 free coal plants that will allow America to move
forward quickly, but carefully and responsibly to its piping
CO2. The CO2 Pipeline Study Act also
works in tandem with and complements the actions on that
broader carbon dioxide issue taken in S. 2323, Senator Kerry's
bill, also the Energy Independence and Securities Act of 2007
and the Energy Policy Act of 2005. These bills address carbon
capture at the point of creation, for example at a coal fired
power plant and the storage of carbon dioxide at an appropriate
geologic formation.
However unless the coal fired plant happens to be near a
suitable storage location, the carbon dioxide will have to be
piped to an appropriate geologic formation to sequestration.
That is what the Pipeline Study Act answers. It addresses the
issues associated with transporting carbon dioxide from its
point of capture to its point of storage for use in enhanced
coal recovery.
We have an enormous potential domestic supply of energy. It
can be used to cool and heat our homes, power our businesses
and industries and create enumerable new jobs. However, our
Nation will only realize these benefits if we can produce and
use this energy in an environmentally sensitive manner. The
CO2 Pipeline Study Act is an important step in our
efforts to develop this energy resource in an environmentally
responsible way. We need to have the regulatory framework in
place if we are going to get the technology out in time.
Senator Kerry's bill and my bill begin that necessary and
important conversation.
Chairman Bingaman, Ranking Member Domenici and members of
this committee, I thank you for this opportunity to speak on
behalf of S. 2144, the CO2 Pipeline Study Act. With
your leadership we are turning a national dilemma throwing
energy dependence and greenhouse gas production into a win-win
with the help of our people, our economy and ultimately our
national security. Thank you, Mr. Chairman.
[The prepared statement of Senator Coleman follows:]
Prepared Statement of Hon. Norm Coleman, U.S. Senator From Minnesota
First, I want to thank Chairman Bingaman and Ranking Member
Domenici for holding this important hearing today and inviting me to
speak on behalf of the Carbon Dioxide Pipeline Study Act.
When I was a young person I dreamed of being a basketball player
like Bob Cousy or Earl The Pearl Monroe. That all ended when a coach
told me, ``Coleman, you may be small, but you can't jump.'' It's bad
when you have two reinforcing problems.
Our nation has that. We are highly dependent on foreign sources of
energy and we produce dangerous amounts of greenhouse gases. How do we
solve one problem without exacerbating the other?
This committee, under your leadership, has boldly moved to address
both. You have crafted two landmark pieces of legislation in the past
several years: the Energy Independence and Security Act of 2007 and the
Energy Policy Act of 2005. These comprehensive bills address numerous
critical energy and environmental challenges facing our nation, and
they establish a firm foundation on which to build our nation's energy
future.
I firmly believe that a big part of that future is going to require
figuring out how to utilize America's 250 year supply of coal in an
environmentally friendly manner. By taking CO2 produced in
coal power plants and piping that CO2 to a location where it
can be permanently stored, I believe we can greatly add to the
country's economic and even national security. That's why I've
introduced the CO2 Pipeline Study Act, which is another step
in this committee's efforts to address these issues in an informed and
timely manner.
I want to thank a number of Members of this committee who are
original co-sponsors of the CO2 Pipeline Study Act for their
leadership: Senators Salazar, Murkowski, Landrieu, Johnson, Martinez
and Bunning. Your guidance and assistance were invaluable in drafting
this legislation.
The fact is, we have an immense supply of coal available in this
country--it's an energy source we do not need to import, and
accordingly, we do not need to send our valuable dollars overseas to
hostile regimes in order to keep the lights on.
We simply must find a way use coal without jeopardizing the
climate. Indeed, coal already supplies about half of our nation's
electric power. The good news, as my colleague Senator Kerry has
testified about in greater detail, is that we can take the
CO2 out of the emissions of a coal power plant and we can
store it underground. More research needs to be done, but the future of
CO2-free coal plants looks bright. Yet one of the key
components of making CO2-free coal a reality is how to
transport this gas from the power plant to the ground.
Currently, there are many uncertainties about the rules and costs
that will exist for the construction and operation of CO2
pipelines. The CO2 Pipeline Study Act will answer these
questions, it will provide certainty to industry and consumers.
The CO2 Pipeline Study Act seeks the input of a number
of federal agencies and departments--the Departments of Energy,
Interior, and Transportation, the Federal Energy Regulatory Commission
(FERC) and the Environmental Protection Agency (EPA). Each of these has
expertise about a variety of issues associated with the building of
pipelines.
The agencies are required to conduct a study of any technical,
siting, financing, or regulatory barriers that might prevent or impede
the development of a carbon dioxide pipeline industry. They are also
asked to address any safety and integrity issues associated with
constructing carbon dioxide pipelines. I anticipate the recommendations
in their study may serve as a basis for future Congressional action on
these issues. In short, this bill will lay the groundwork for
CO2-free coal plants, it will allow America to move forward
quickly, but also carefully and responsibly toward piping
CO2.
The CO2 Pipeline Study Act works in tandem with and
compliments the actions on the broader carbon dioxide issue taken in S.
2323, the Carbon Capture and Storage Technology Act, the Energy
Independence and Security Act of 2007 and the Energy Policy Act of
2005. These bills address carbon capture at the point of creation--for
example at a coal fired power plant--and the storage of carbon dioxide
at an appropriate geologic formation.
However, unless the coal fired power plant happens to be near a
suitable storage location, the carbon dioxide will have to be ``piped''
to an appropriate geologic formation for sequestration. This is what
the CO2 Pipeline Study Act answers. It addresses the issues
associated with transporting carbon dioxide from its point of capture
to its point of storage or for use in enhanced oil recovery.
We have an enormous potential domestic supply of energy. It can be
used to cool and heat our homes, power our businesses and industries
and create innumerable new jobs. However, our nation will only realize
these benefits if it can be produce and use this energy in an
environmentally sensitive manner.
The CO2 Pipeline Study Act is an important step in our
efforts to develop this energy resource in an environmentally
responsible way.
Chairman Bingaman, Ranking Member Domenici and members of this
committee--thank you for this opportunity to speak on behalf of S.
2144, the CO2 Pipeline Study Act.
With your leadership you are turning a national dilemma--growing
energy dependence and greenhouse gases production--into a ``win-win''
for the health of our people, our economy and ultimately our national
security.
Chairman. Thank you both very much. I think you made a
contribution by the introduction of these bills and the efforts
you've put into educating us on them.
Let me now either dismiss these witnesses, unless anybody
has a question that's burning that they want to ask. We will
allow you folks to get on with your other activities. But thank
you again for being here.
We have two panels. Let me turn to Senator Domenici to make
his opening statement and then I will call the first panel
forward.
STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR
FROM NEW MEXICO
Senator Domenici. Thank you very much, Mr. Chairman. Good
afternoon. I want to thank Senator Bingaman for scheduling this
hearing and the witnesses for appearing. I'd like to thank
Senators Coleman and Kerry for their work in drafting the
measures before us.
Carbon sequestration, Mr. Chairman, holds real promise for
reducing the emissions of greenhouse gases. Today however, that
promise is far from realized. The technology has not been
commercialized and a massive investment in infrastructure,
pipelines, etc. is needed. As a result carbon sequestration
must be viewed for what it is; a small piece of the solution to
what is a larger issue of global climate change.
The recently passed energy bill included many provisions on
this subject. It is recognized that an appropriate Federal role
exists for researching, developing and commercializing cleaner
technologies. It will be one thing to implement the Federal
laws that we have passed, but we must also remember the
economic law of diminishing returns.
Carbon sequestration as we know it is a classic example of
that concept. The more aggressively we pursue it, the more it
will cost. Because climate change is very much a global
challenge, the benefits we derive will be incrementally
smaller. America can be a leader in carbon sequestration. We
have experience in the form of enhanced oil recovery to guide
our investment and regulatory decisions.
Yes, if the United States acts unilaterally to reduce its
emissions we risk saddling taxpayers with a steep price for
minimal results. Other nations are on the verge of passing the
United States in annual greenhouse gas emissions on a per
capita basis, some already have. As greenhouse gas emissions
decrease here at home increases in developing countries will
more than offset our progress. Discussions of the carbon
sequestration process are worthy of our committee's time.
I'll keep an open mind. I hope to learn what more can be
done. But I also urge that my colleagues not put the cart
before the horse. While we can and should advance this
promising concept, we must know for sure that other countries
will join us in this effort. I look forward to hearing from the
witnesses that we have scheduled. I thank you again, Mr.
Chairman.
The Chairman. Thank you very much. Let me call the first
panel forward. First we have Chairman Kelliher from the Federal
Energy Regulatory Commission. Benjamin Grumbles from the EPA.
James Slutz, who is the Deputy Assistant Secretary in the
Office of Oil and Natural Gas in the Department of Energy.
Krista Edwards, Deputy Administrator with the Pipeline and
Hazardous Materials Safety Administration in the Department of
Transportation. Stephen Allred who is the Assistant Secretary
for Land and Minerals Management in the Department of the
Interior.
Thank you all very much for being here. If you could each
take 5 to 6 minutes and just summarize the main points of your
testimony for us, we will include your full testimony in the
record, but I'm sure there will be questions of all of you.
Let me start with Chairman Kelliher and then Krista
Edwards, Mr. Grumbles, Steve Allred and Mr. Slutz. So go right
ahead Mr. Chairman. Thank you for being here.
STATEMENT OF JOSEPH T. KELLIHER, CHAIRMAN, FEDERAL ENERGY
REGULATORY COMMISSION
Mr. Kelliher. Thank you, Mr. Chairman. Let me say first of
all, thank you for the opportunity to be here today and the
possibility of being here. My term of office would have expired
at the end of last session. But in the waning minutes of the
session I was confirmed along with my colleague Jon
Wellinghoff. It reminded me a little bit like the Georgetown/
West Virginia game the other night except the shot wasn't
blocked at the last second. So I'm grateful for the support of
the chairman, Senator Domenici, committee members and the
staff.
Mr. Chairman, members of the committee, thank you for the
opportunity to speak with you today about the regulatory
aspects of carbon capture, transportation, sequestration and
related legislation. My written testimony offers comments on
the legislation before the committee and but in particular I
want to say that FERC would be pleased to participate in the
study required by S. 2144. We believe we can contribute to an
examination of the regulatory barriers and regulatory options
relating to the construction and operation of carbon dioxide
pipelines.
I'm going to focus my oral testimony on the regulatory
aspects of carbon transportation, the area where FERC's
experience regarding pipelines may have the most value to the
committee. While there are questions about carbon capture and
sequestration technology, carbon dioxide transportation has
been proven and storage of carbon dioxide has taken place for
years. A network of carbon dioxide pipelines has been
developed, mostly since the 1980s to promote enhanced oil
recovery in declining oil fields. There is also some experience
with storage of carbon dioxide.
Now up to this point the injection of carbon dioxide into
oil production reservoirs has been a means of increasing oil
production rather than an end unto itself. Storage takes place
in the oil production fields rather than in reservoirs
dedicated to carbon dioxide sequestration. Construction of the
U.S. carbon dioxide pipeline network began over 25 years ago
and that network now spans more than 3,900 miles. Siting of
carbon dioxide pipelines has been governed by State law and to
my knowledge state siting has worked well.
Under current law there is no Federal role in siting carbon
dioxide pipelines. While operators of interstate carbon dioxide
pipelines are free to set their own rates in terms of service,
the U.S. Department of Transportation's Surface Transportation
Board may hold proceedings to determine that rates are
reasonable if a third party files a complaint. U.S. Department
of Transportation's Office of Pipeline Safety within the
Pipelines and Hazardous Material Safety Administration
administers safety regulations governing interstate carbon
dioxide pipelines.
The committee expressed an interest in exploring the
regulatory aspects of carbon dioxide transportation. FERC is an
infrastructure agency with nearly 90 years of experience
regulating a broad range of energy infrastructure projects
including oil and natural gas pipelines and related facilities.
The United States has used three different regulatory schemes
for pipeline transportation that might be relevant to
congressional consideration of the regulatory aspects of carbon
dioxide transportation.
First there is the model that has governed the existing
carbon dioxide pipeline network. Under this approach pipelines
are sited under State law. Transportation rates are set by the
Surface Transportation Board when a complaint filed regarding
rates is filed. The Office of Pipeline Safety ensures safety.
Second there is the oil pipeline model. Under this model
oil pipelines are sited under State law. FERC sets the
transportation rate. FERC has no siting or safety role with
safety issues being handled by the Department of Transportation
Office of Pipeline Safety. This model also has worked well for
decades.
The third model is the natural gas pipeline model. Under
the current version of this model FERC both sites interstate
natural gas pipelines and sets their transportation rates. It
may be useful to note however, that the original version of the
Natural Gas Act, the 1938 Act, provided for state siting of
interstate natural gas pipelines.
In 1947 however, Congress reached the conclusion that State
siting of natural gas pipelines had failed and that it was
necessary to resort to Federal siting. Congress amended the
Natural Gas Act and provided for exclusive and preemptive
Federal siting of interstate natural gas pipelines. While the
Commission, while FERC is responsible for safety issues during
the siting and construction phases, safety jurisdiction shifts
to the Department of Transportation through the Pipeline and
Hazardous Materials Safety Administration once construction is
complete.
Now in my view any of these three approaches could prove
effective in regulating a network of carbon dioxide pipelines.
I have no reason to believe the existing regulatory scheme
administered by the Surface Transportation Board is inadequate.
In particular I would not recommend that Congress preempt the
states in siting carbon dioxide pipelines by providing for
exclusive and preemptive Federal siting. The precondition that
led Congress to such a course for siting natural gas pipelines,
the failure of State siting, does not appear to exist here.
Further I would not recommend that Congress alter the safety
role of the Pipeline and Hazardous Materials Safety
Administration.
I appreciate the opportunity to testify here today and
would be pleased to answer any questions you might have. Thank
you.
[The prepared statement of Mr. Kelliher follows:]
Prepared Statement of Joseph T. Kelliher, Chairman, Federal Energy
Regulatory Commission
Mr. Chairman and members of the committee, thank you for the
opportunity to speak with you today about the regulatory aspects of
carbon capture, transportation, and sequestration and two related
bills, namely S. 2144, the ``Carbon Dioxide Pipeline Study Act of
2007'', and S. 2323, the ``Carbon Capture and Storage Technology Act of
2007''. I commend the committee for holding this hearing.
carbon capture and sequestration technology
Development of carbon capture and sequestration technology is an
important need. There are questions about carbon capture and
sequestration technology. The two bills that are the subject of this
hearing address this need by requiring studies and funding research and
development and demonstration projects. If these efforts are
successful, carbon capture and sequestration may become a practical
reality.
S. 2144
S. 2144 would direct the Secretary of Energy, in coordination with
the Federal Energy Regulatory Commission (FERC), the Secretary of
Transportation, the Administrator of the U.S. Environmental Protection
Agency, and the Secretary of the Interior, to conduct a study to assess
the feasibility of the construction and operation of pipelines to be
used for the transportation of carbon dioxide for the purpose of
sequestration or enhanced oil recovery and carbon dioxide sequestration
facilities.
FERC has extensive experience in the siting and regulation of a
wide variety of energy infrastructure projects, and we would be pleased
to participate in the study required by S. 2144. In particular, FERC
can play a helpful role examining regulatory barriers and regulatory
options relating to the construction and operation of carbon dioxide
pipelines, as provided by section 2(b) of the bill.
S. 2323
As I indicated above, there are questions relating to carbon
capture and sequestration technology. This bill would address those
questions directly, by funding carbon dioxide capture and storage
research and development, and both carbon dioxide capture and
sequestration demonstration projects. The bill has other provisions
relating to establishment of an interagency task force to develop
regulations for carbon dioxide capture and storage, an assessment of
carbon dioxide storage capacity, and technology agreements.
regulatory aspects of carbon dioxide transportation
While there are questions about carbon capture and sequestration
technology, carbon dioxide transportation has been proven and storage
of carbon dioxide has taken place for years. A network of carbon
dioxide pipelines has been developed, mostly since the 1980s, to
promote enhanced oil recovery in declining oil fields. There is also
some experience with storage of carbon dioxide.
Up to this point, the injection of carbon dioxide into oil
production reservoirs has been a means of increasing oil production,
rather than an end unto itself. Storage takes place in the oil
production fields themselves, rather than in reservoirs dedicated to
carbon dioxide sequestration. Enhanced oil recovery results in the
storage of carbon dioxide in depleted production reservoirs.
I am not aware of whether any information has been developed
regarding the leakage of carbon dioxide from the existing pipeline
network or production fields. This might be an area worthy of research
and development.
Besides enhanced oil recovery, carbon dioxide has been used for
other purposes, including refrigeration and cooling, casting metal
molds, welding, sandblasting, methanol and urea production,
carbonation, and medical purposes.
Construction of the U.S. carbon dioxide pipeline network began over
25 years ago, and that network now spans more than 3,900 miles. Siting
of carbon dioxide pipelines has been governed by state law, and to my
knowledge state siting has worked well. Under current law, there is no
federal role in siting carbon dioxide pipelines. While operators of
interstate carbon dioxide pipelines are free to set their own rates and
terms of service, the U.S. Department of Transportation's Surface
Transportation Board may hold proceedings to determine that rates are
reasonable, but only if a third party files a complaint. Under the
Interstate Commerce Termination Act of 1995, the Surface Transportation
Board regulates interstate pipelines transporting commodities other
than water, oil, or natural gas. The U.S. Department of
Transportation's Office of Pipeline Safety, within the Pipelines and
Hazardous Materials Safety Administration (PHMSA), administers safety
regulations governing interstate carbon dioxide pipelines.
The committee expressed an interest in exploring the regulatory
aspects of carbon dioxide transportation. FERC has a great deal of
experience regulating energy infrastructure. The original mission of
the agency was development of energy infrastructure, specifically
licensing and regulating non-federal hydropower projects. Our
infrastructure role has expanded over time to include natural gas
pipelines and associated facilities, oil pipelines, and more recently
we have been given a limited role in electric transmission siting.
The U.S. has used three different regulatory schemes for
transportation of energy resources by pipeline that might be relevant
to Congressional consideration of the regulatory aspects of carbon
dioxide transportation. First, there is the model that has governed the
existing carbon dioxide pipeline network, namely continuing the current
regulatory scheme for interstate carbon dioxide pipelines. Under this
approach, pipelines are sited under state law, transportation rates are
set by the Surface Transportation Board when a complaint regarding
rates is filed, and the Office of Pipeline Safety ensures safety.
Second, there is the oil pipeline model. Under this model, oil
pipelines are sited under state law and FERC sets the transportation
rate. FERC has no siting role or safety role (safety issues being
handled by the Department of Transportation). This model has worked
well for decades.
The third model is the natural gas pipeline model. Under the
current version of this model, FERC both sites interstate natural gas
pipelines and sets their transportation rates. It may be useful to note
that the original version of the 1933 Natural Gas Act provided for
state siting of interstate natural gas pipelines. However, in 1947
Congress reached the conclusion that state siting of natural gas
pipelines had failed, and it was necessary to resort to federal siting.
Congress amended the Natural Gas Act and provided for exclusive and
preemptive federal siting of interstate natural gas pipelines. While
the Commission is responsible for safety issues during the siting and
construction phases, safety jurisdiction shifts to the Department of
Transportation, though PHMSA, once construction is complete.
In my view, any of these three approaches could prove effective in
overseeing a network of carbon dioxide pipelines. I have no reason to
believe the existing regulatory scheme administered by the Surface
Transportation Board is inadequate. In particular, I would not
recommend that Congress preempt the states on siting carbon dioxide
pipelines, by providing for exclusive and preemptive federal siting of
carbon dioxide pipelines. The precondition that led Congress to such a
course for siting natural gas pipelines--the failure of state siting--
does not exist here. Further, I would not recommend that Congress alter
PHMSA's safety role.
I appreciate the opportunity to testify before you today and would
be pleased to answer any questions you may have.
Senator Domenici [presiding]: Ms. Edwards, you're next,
ma'am.
STATEMENT OF KRISTA L. EDWARDS, DEPUTY ADMINISTRATOR, PIPELINE
AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION, DEPARTMENT OF
TRANSPORTATION
Ms. Edwards. Ah, yes. Ranking Member Domenici, members of
the committee, I appreciate the opportunity to discuss the
safety programs administered by the Department of
Transportation's Pipeline and Hazardous Materials Safety
Administration and PHMSA's role in overseeing the safe
transportation of carbon dioxide.
First on behalf of Secretary Peters I want to express
PHMSA's strong support for the committee's efforts. We share
your commitment to energy security and environmental
protection. We are pleased to have a seat at the table as the
committee considers the transportation requirements associated
with carbon capture and storage.
DOT has vast experience managing the risks of
CO2 in all modes of transportation. Under the
hazardous materials transportation law the Department has long
overseen the movement of CO2 by rail, highway, air
and vessel. PHMSA's hazardous materials regulations established
standards for the design, testing and filling of tanks and
other packages used to contain and store CO2 in each
of its physical states as a gas, liquid and solid.
Since 1991, DOT has also overseen the transportation of
CO2 by pipeline. Together with our State partners,
PHMSA currently oversees the operation of nearly 4,000 miles of
CO2 pipelines. We expect that that number will grow
as the Nation moves ahead with carbon capture and
sequestration. So I am pleased to assure the committee that DOT
existing pipeline safety program will fit new CO2
pipelines however they may be configured.
Congress reauthorized the program only a little more than a
year ago, we thank you for that, reflecting strong support for
PHMSA's mission and approach. Our approach is performance
based. We aim to protect people, property and the environment
by preventing pipeline failures and by mitigating the
consequences of those that occur. Our integrity management
programs promote continuous improvement by requiring operators
to identify all threats to pipeline integrity and to remedy
safety problems in priority order, worse first. By identifying
and reducing defects before they grow to failure our integrity
management programs are driving significant improvement in
safety performance and reliability.
Our national pipeline safety program provides seamless
oversight of pipeline operations through PHMSA's five regional
offices and strong partnerships with our pipeline safety
programs. The State programs play a critical role directly
overseeing the vast share of pipeline infrastructure including
most intrastate pipelines.
To meet our goals PHMSA also must be more than a regulator.
We are supporting the development of new technologies such as
tools for improving assessment of pipelines and non-regulatory
initiatives such as the nationwide campaign to promote safe
excavation practices. We work with all stakeholders who can
contribute to safety outcomes including communities near new,
existing and planned pipelines. As part of a comprehensive
approach to pipeline safety we believe in preparing communities
to make risk informed land use decisions and in preparing local
first responders to respond to pipeline incidents.
Although PHMSA has no authority over pipeline siting we
work closely with FERC and DOI in reviewing designs for
pipelines and in responding to local concerns about pipeline
safety. These efforts are paying off in terms of improved
safety, reliability of supply and public confidence. The number
of significant pipeline incidents has reached historic lows
even as the size of the pipeline network has grown. Within
these data I'm very pleased to report that the safety record
for CO2 pipelines is particularly good. There's been
no loss of life and no injuries on DOT regulated CO2
pipelines.
In closing I want to reiterate our strong support for the
development of new energy solutions. PHMSA is pleased to work
with the committee, our Federal and State partners and industry
to prepare for the safe operation of new and expanded
CO2 pipelines. We offer our agency's expertise and
experience as the committee considers and addresses future
requirements for carbon capture and storage.
Thank you again for the opportunity to testify. I'll be
pleased to answer any questions.
[The prepared statement of Ms. Edwards follows:]
Prepared Statement of Krista L. Edwards, Deputy Administrator, Pipeline
and Hazardous Materials Safety Administration, Department of
Transportation
Chairman Bingaman, Ranking Member Domenici, members of the
committee: Thank you for the opportunity to discuss the safety programs
administered by the U.S. Department of Transportation's Pipeline and
Hazardous Materials Safety Administration (PHMSA) and our experience in
overseeing the commercial transportation of carbon dioxide.
As the committee considers future requirements for carbon capture
and sequestration, I am pleased to confirm that large volumes of carbon
dioxide (CO2) are shipped safely in the U.S. today,
including by pipeline. PHMSA's existing programs and standards
governing CO2 transportation provide effective protection to
life and property, with due regard for the efficiency and performance
of the transportation system.
As the DOT agency with jurisdiction over the movement of hazardous
materials by all transportation modes, PHMSA has extensive experience
managing the risks of compressed CO2, in each of its
physical states: gas, liquid, and solid (dry ice). Unlike natural gas
and other gases regulated as hazardous materials, CO2 is
noncombustible and nontoxic. A colorless, odorless by-product of human
respiration, CO2 is present naturally in the environment
and, at normal atmospheric levels, is vital to plant life and poses no
immediate hazard to people or animals. In higher concentrations, as
when CO2 is contained for transport or storage, exposure to
CO2 can cause respiratory problems, including suffocation.
CO2 reaches its liquid state at combinations of high
pressure and low temperature. Both variables affect the consequence of
a release of liquefied CO2 in each case depending on the
proximity of people and the location and surrounding conditions. In a
remote, unpopulated area, even a large release of liquefied
CO2 will vaporize harmlessly into the atmosphere and is
unlikely to cause serious injury. By contrast, a large, sudden release
of liquefied CO2 could have catastrophic consequences in a
populated area. Because it is heavier than air, compressed
CO2 tends to pool near the ground, displacing all oxygen,
and form a vapor cloud as it dissipates.
Because of these properties when compressed and/or in high
concentrations, CO2 has long been considered a hazardous
material subject to the Hazardous Materials Transportation Laws, 49
U.S.C. 5101 et seq., and DOT's implementing regulations, 49 C.F.R.
parts 171-180, governing transportation by air, rail, highway, and
water. PHMSA's Hazardous Materials Regulations (HMR) prescribe a
comprehensive risk management framework for CO2 transport,
covering classification, packaging, handling, and hazard communication
(shipping documentation and labeling). The packaging standards for
CO2 transport vary based on volume, pressure, and
transportation mode; in each case, the HMR mandate the use of an
approved cylinder or tank, subject to specific requirements for design,
testing, certification, and filling.
The Department assumed oversight of CO2 pipelines in
1988, under legislation directing the Secretary to develop regulations
for the safe transportation of CO2 by pipeline. Pursuant to
the mandate, in 1991, the Department extended its existing hazardous
liquid pipeline rules (49 C.F.R. part 195) to these operations.
CO2 pipelines became subject to additional integrity
management requirements when the liquid IM program was adopted in 2000.
As with liquid operations generally, PHMSA shares oversight of
certain CO2 pipelines with authorized State programs.
Together with these State partners, PHMSA currently oversees close to
4,000 miles of CO2 transmission pipelines (as depicted in
*Figure 1)--amounting to roughly five percent of all hazardous liquid
pipeline mileage under our jurisdiction. Of these CO2 lines,
approximately 66 percent are interstate (crossing State borders)
pipelines with the remaining 34 percent classified as intrastate
(within State borders). Located primarily in the States of Texas, New
Mexico and Wyoming, these pipelines deliver CO2 for a
variety of industrial purposes, including enhanced oil recovery
activities. Within the national pipeline network as a whole, the
CO2 lines are relatively new: approximately 91 percent were
constructed after 1980.
---------------------------------------------------------------------------
* Figures 1-2 have been retained in committee files.
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As the Administration and Congress work to enhance our Nation's
energy security and protect the environment, we understand the need to
extend the transportation infrastructure--including the delivery of
alternative fuels and the transport of CO2 for sequestration
or use in energy production. And we understand the importance of
pipeline transportation for safe and efficient movement of large
volumes of hazardous materials. With the right risk controls in place,
pipelines can operate safely anywhere--it's not a matter of ``if,'' but
``how.''
PHMSA's pipeline safety program aims to promote continuous
improvement in public safety, environmental protection, and system
performance by identifying and addressing all threats to pipeline
integrity and mitigating the consequences of pipeline failures. Our
regulations cover the design, construction, maintenance, and operation
of liquefied natural gas (LNG) facilities and hazardous liquid and
natural gas pipelines, both interstate and intrastate, including the
gas distribution systems that directly serve homes and businesses. We
work closely with national and international standards organizations
and encourage the development of consensus standards complementing our
performance-based regulations.
Our integrity management regulations, which currently apply to
transmission pipelines (liquid and gas), require operators to conduct
risk assessments of the condition of their pipelines; develop and
implement risk control measures to remedy safety problems, worst first;
and evaluate and report on program progress and effectiveness. Under
integrity management programs, operators are identifying and repairing
pipeline defects before they grow to failure, producing steady declines
in the numbers of serious incidents.
Along with risk-based standards and practices, technological
advances are driving significant improvement in the control of pipeline
risks. PHMSA administers a cooperative research program that promotes
the development of new methods, materials, and tools for improving leak
detection systems and detecting and preventing corrosion, outside force
damage, and other threats to pipeline integrity. We work closely with
informed stakeholders, including other Federal agencies, our State
partners, and industry, to target our limited R&D funding on promising
technologies to address the most urgent safety issues. Most recently,
in preparation for the growing use of alternative fuels, our R&D
program is focused extensively on technical issues associated with the
movement by pipeline of ethanol and ethanol-blended fuels.
As an agency dedicated to the safe transportation of hazardous
materials, PHMSA must be more than a regulator. Our success depends on
our ability to leverage non-regulatory solutions and to work closely
with all stakeholders who can contribute to safety outcomes, including
communities in the path of existing or new pipelines. Although PHMSA
has no authority in pipeline siting, we work closely with the Federal
Energy Regulatory Commission (FERC) in reviewing designs for proposed
gas transmission pipelines and liquefied natural gas (LNG) facilities
and in responding to local concerns about pipeline safety. We consult
with other Federal and State agencies on how our regulatory
requirements relate to their permitting decisions about pipelines.
Recognizing that public decisions affecting transportation and energy
supply often must be made at a national level, we believe a pipeline
safety program can and must involve local communities, including zoning
and planning officials and emergency responders. As part of a
comprehensive approach to pipeline safety, we believe in preparing
communities to make risk-informed land use decisions and in building
local capability to respond to pipeline incidents. PHMSA works closely
with fire service organizations on numerous safety projects, including
the development of training standards and educational materials
concerning pipeline incident response.
To carry out our oversight responsibilities, PHMSA operates five
regional pipeline safety offices and is authorized to employ 111
inspection and enforcement professionals for fiscal year 2008. In
addition to compliance monitoring and enforcement, PHMSA's regional
offices respond to and investigate pipeline incidents and participate
in the development of pipeline safety rules and technical standards.
Our regional offices also work closely with PHMSA's State program
partners, which employ approximately 400 pipeline inspectors and
directly oversee the largest share of the U.S. pipeline network,
including most intrastate pipelines. Under our Congressionally-
authorized Community Assistance and Technical Services (CATS) program,
PHMSA's regional offices provide safety-focused community outreach and
education. With the current wave of pipeline expansion, and increasing
commercial and residential development around existing pipelines, the
CATS program is serving a vital role in educating the public about
pipeline safety and encouraging risk-informed land use planning and
safe excavation practices.
With safety our top priority, under Secretary Peters' leadership,
the Department is targeting the prevention of all transportation-
related deaths and injuries. Although further improvement is needed,
the safety record for hazardous materials transportation is good and
getting better in all sectors, including hazardous liquid pipeline
operations. Since the introduction of IM programs in 2000, the annual
number of serious incidents involving hazardous liquid pipelines has
reached historic lows, even as the size of the pipeline network has
grown. Although the data sets are not yet large enough to make
statistically significant comparisons, the trend line over the past 20
years (as depicted in *Figure 2) is favorable.
Within these data, the safety record for CO2 pipelines
is particularly good. Of the 3,695 serious accidents reported on
hazardous liquid pipelines since 1994, only 36 involved CO2
pipelines. Among the 36 incidents, only one injury, and no fatalities,
was reported. In all other instances, the accidents were classified as
serious based on the extent of property damage (including damage to the
pipeline facility) or product loss.
With the benefit of this experience and record, PHMSA is pleased to
work with the committee, our Federal and State partners, and industry
to prepare for the safe operation of new or extended CO2
pipelines. The existing pipeline safety program administered by PHMSA
has provided effective oversight of CO2 pipelines since 1991
and will accommodate new and expanded carbon dioxide pipelines, however
they are configured. We are happy to work with the Department of Energy
and other Federal partners to evaluate the feasibility of particular
pipeline configurations and/or plan for their development.
Likewise, PHMSA is committed to working with any agency or agencies
involved in siting CO2 pipelines, just as we work with FERC
today in connection with the licensing of gas transmission pipelines
and LNG facilities. We offer our agency's considerable experience and
technical expertise to the committee as it considers and addresses the
transportation requirements associated with CO2 capture and
sequestration.
Mr. Chairman, I want to assure you and members of the committee
that the Administration, Secretary Peters, and the dedicated men and
women of PHMSA share your strong commitment to safe, clean, and
reliable pipeline transportation. Like you, we understand the
importance of PHMSA's mission to the Nation's economic prosperity and
energy security, and we look forward to working with the committee to
address the current challenges. Thank you.
Senator Domenici. Thank you very much. Senator, do you want
me to proceed?
Senator Dorgan. Why don't you, the chairman will be here
momentarily.
Senator Domenici. All right. Let me ask the two of you who
have already testified, neither of you made a statement about
quality of CO2. Could I start with you, Mr.
Chairman? Is CO2 dangerous?
Mr. Kelliher. Is CO2 dangerous?
Senator Domenici. I said is it dangerous like natural gas?
Mr. Kelliher. No, it's not like natural gas storage.
Senator Domenici. Does it blow up?
Mr. Kelliher. No, sir.
Senator Domenici. Will it hurt people?
Mr. Kelliher. Not in the way a natural gas leak could hurt
people.
Senator Domenici. I imagine if you got too much you would
go to sleep, right? Does it hurt people, ma'am?
Ms. Edwards. I'm pleased to speak to the hazard, thank you.
We do regulate CO2 in each of its forms as a
hazardous material for the purposes of transportation.
Certainly there are risks and hazards associated with it that's
why it's under both of our safety programs.
On the other hand, as you pointed out, the hazards
associated with this material are different and in many ways
less than the hazards associated with other materials that are
part of our--that we manage the oversight of through pipelines
or significantly CO2 in certain concentrations will
cause respiratory problems in humans and could cause
suffocation in a situation in which, you know, a human was
exposed to intense concentrations. It tends--it's heavier than
air as a liquid which is the form in which it's transported in
pipelines so a massive release in a populated area without the
right conditions and there are variables having to do with
ventilation and temperature, of course, in terms of its
vaporization and the rate of vaporization. But, you know, there
have been, again I reiterate that our safety record for
CO2 pipelines has been very good. But, you know, it
is why we oversee its movement in transportation because it
poses a hazard.
Congress directed us to take on this oversight in 1988.
Senator Domenici. Thank you very much, ma'am.
Proceed, sir.
STATEMENT OF BENJAMIN H. GRUMBLES, ASSISTANT ADMINSTRATOR FOR
WATER, ENVIRONMENTAL PROTECTION AGENCY
Mr. Grumbles. Thank you, Senator.
Senator Domenici. You're welcome.
Mr. Grumbles. Members of the committee I'm Benjamin
Grumbles. I'm the Assistant Administrator for Water at the U.S.
EPA. I really appreciate the opportunity to discuss EPA's
important work on the regulatory aspects of carbon
sequestration.
The Administration is committed to taking timely and
responsible actions to confront the serious challenges of
global climate change. EPA, in particular, believes innovative
solutions will be critical to meeting this long term challenge
including technologies and practices to mitigate greenhouse gas
emissions. Carbon capture and storage is one of a portfolio of
innovative technologies that could make a significant
contribution to reducing greenhouse gas emissions. EPA is
committed to advancing such efforts in a manner consistent with
our obligations to safeguard public health and the environment
as required by the Safe Drinking Water Act.
Carbon sequestration isn't a silver bullet, but it may be
an ace in the hole for mitigating greenhouse gas emissions.
We're very excited at EPA about the recent activities that the
Administrator announced in October of last year that the Agency
would move forward with a rulemaking under our authorities of
the Safe Drinking Water Act. Our current schedule is an
accelerated schedule. But our schedule is to propose
regulations under the Safe Drinking Water Act's Underground
Injection Control Program by the summer of this year.
The Agency is engaged in many efforts with our partners in
Federal, State and local government and in the private sector
on the wide array of carbon capture and storage and
sequestration matters. But my testimony does focus on the
regulatory aspects of injection and sequestration. Over the
past several years we've been coordinating with the Department
of Energy, the lead agency for research and development, and
working with them on in support of their efforts on the carbon
sequestration technology road map.
In March 2007, EPA issued technical guidance under our Safe
Drinking Act authorities to help State and EPA regional
managers in processing permit applications for experimental
well permits for carbon sequestration. As I mentioned the
Administrator then followed that up with an announcement in
October 2007 that we are now fully committed to moving forward
with a rulemaking, for full scale, not just experimental, but
for full scale geo- sequestration of carbon dioxide recovered
from emissions of coal fired power plants and other facilities.
The proposed regulation which is currently in development will
take into account our UIC program requirements that we have for
the existing classes under the UIC program.
The key components of the proposed regulation will include
requirements related to geologic site characterization to
ensure wells are sited in suitable areas to limit the potential
for migration of injected and formation fluids into an
underground source of drinking water. The proposed regulation
that we're working on will include well construction and
operation requirements to ensure wells are properly constructed
and managed. Mechanical integrity testing for the wells,
monitoring for the wells and also, importantly, well closure,
post closure care and also financial responsibility
requirements regarding the proper plugging and abandonment of
injection wells.
Importantly we will also be discussing long term liability
and seek further comment on the issue as part of the proposed
rulemaking. We recognize there will need to be a robust debate
on this important issue. We're expecting that once this rule is
proposed that we will take next steps, coordinate with our
Federal colleagues, review public comments. We're estimating a
final rule in late 2010 or sometime in 2011.
The rule will embrace the concept of adaptive management.
We're using an adaptive approach that will allow the agency to
collect information and use data from DOE demonstration and
other early projects to inform the final regulation and any
subsequent revisions, if necessary. The hallmark of progress
for us on this is continued coordination at the Federal level,
but also at the State level with our State partners, whether
it's IOGCC or the Ground Water Protection Council and at the
local level and the national laboratories and with the private
sector.
Mr. Chairman, I would just underscore the importance of
this. It's one of the Administrator's priorities in our
agency's own climate change clean energy strategy. I look
forward to answering questions members of the committee might
have. Thank you, Mr. Chairman.
[The prepared statement of Mr. Grumbles follows:]
Prepared Statement of Benjamin H. Grumbles, Assistant Administrator for
Water, Environmental Protection Agency
Thank you, Chairman Bingaman and Members of the committee. I am
Benjamin H. Grumbles, the Assistant Administrator for Water at the EPA,
and I appreciate the opportunity to describe the Agency's important
work on regulatory aspects of carbon dioxide sequestration.
This Administration is committed to taking timely and responsible
actions to confront the serious challenge of global climate change. EPA
believes innovative solutions will be critical to meeting this long-
term challenge, including technologies and practices to mitigate
greenhouse gas emissions. The Administration is actively investigating
the prospects for carbon capture and storage (CCS), a process that
involves capturing carbon dioxide (CO2) from power plants
and other industrial sources and injecting it into deep subsurface
geologic formations for long-term storage. CCS is one of a portfolio of
innovative technologies that could make a significant contribution to
reducing greenhouse gas emissions to the atmosphere and EPA is
committed to advancing such efforts in a manner consistent with our
obligation to safeguard public health and the environment as required
by the Safe Drinking Water Act (SDWA).
EPA staff are evaluating many aspects of CCS technology and
deployment, focusing our efforts in two areas: (1) partnering with
public and private stakeholders to develop an understanding of the
environmental aspects of carbon capture and storage that must be
managed for the necessary technologies to become a viable strategy for
reducing greenhouse gases; and (2) ensuring carbon dioxide storage is
conducted in a manner that protects underground sources of drinking
water. My testimony focuses on the second of these two areas, EPA's
development of a regulation for geologic sequestration (GS) of
CO2 and the collaboration taking place to support such
efforts, all of which are relevant to your consideration of Section 5
of Senate Bill 2323.
Over the past several years, EPA has been coordinating with the
Department of Energy (DOE), the lead agency for research and
development of CCS technology. As DOE has developed a Carbon
Sequestration Technology Roadmap for the development and deployment of
this technology, EPA has been working to design an appropriate
management framework for geologic sequestration. By engaging in DOE's
expansive R&D program early and working with stakeholders on all sides
of this issue, EPA is well positioned to help in the permitting of
future carbon dioxide underground injection wells.
regulatory scope, content, and timeframe
EPA has statutory authority under the SDWA to carry out the
UndergroundInjection Control (UIC) program to protect underground
sources of drinking water from the injection of fluids for disposal or
storage. In March 2007, EPA issued technical guidance to help State and
EPA Regional UIC managers in processing permit applications for GS
demonstration projects under the general UIC regulations. Recognizing
that the technology is rapidly progressing towards full-scale
deployment, Administrator Stephen Johnson announced, in October 2007,
EPA's plans for developing national rules for full-scale GS of carbon
dioxide recovered from emissions of coal-fired power plants and other
facilities. EPA will propose regulations in the Federal Register this
Summer to ensure that carbon dioxide injection is done in a manner that
does not endanger underground sources of drinking water.
Under the SDWA, EPA develops minimum requirements for state UIC
programs. States may develop their own regulations for injection wells
in their State. These requirements must be at least as stringent as the
federal requirements (and may be more stringent). Annually, billions of
gallons of fluids are injected underground through wells authorized
under State and Federal UIC Programs. This includes approximately 35
million tons of carbon dioxide that are injected for the purposes of
enhancing oil and gas recovery. EPA's proposed regulations will build
on the UIC Program's many years of experience in safely injecting
fluids, including carbon dioxide, into the subsurface.
The proposed regulation, currently in development under an
accelerated schedule, will take into account the EPA's existing UIC
program requirements. Key components of the proposed regulation will
include requirements related to: (1) geologic site characterization to
ensure that wells are sited in suitable areas to limit the potential
for migration of injected and formation fluids into an underground
source of drinking water; (2) well construction and well operation to
ensure that the wells are properly constructed and managed; (3) well
integrity testing and monitoring to ensure that the wells perform as
designed; and, (4) well closure, post-closure care and financial
responsibility to ensure proper plugging and abandonment of the
injection well. We will also discuss long-term liability and seek
further comment on this issue as part of the proposed rulemaking.
Importantly, the proposal will also include public participation
requirements that would be associated with issuance of permits. We will
assess the costs of carrying out regulations for geologic sequestration
programs as part of the economic analysis for the rulemaking.
EPA is reviewing available data on existing demonstration projects
to inform our decision-making and development of the rule. Once a
proposal is published, EPA will review public comments and take into
account any new data and demonstration project outcomes prior to
publishing a final rule by 2011. EPA's timeframe for the proposed
rulemaking is consistent with the time frame for the DOE Roadmap, which
projects fullscale project deployment to begin in the 2012-2020
timeframe. To ensure that GS can be deployed as rapidly and safely as
possible, EPA is using an adaptive approach that will allow the Agency
to collect information and use data from DOE demonstration and other
early projects to inform the final regulation and any subsequent
revisions, if necessary.
coordination and collaboration
Within EPA, the Office of Water and Office of Air and Radiation are
working together on all activities related to geologic sequestration in
order to conduct technical and economic analyses, develop risk
management strategies, collaborate with key stakeholders, and clarify
the relationships among various statutes (including the Safe Drinking
Water Act and Clean Air Act) and EPA regulations.
EPA is working closely with DOE to leverage existing efforts and
technical expertise. EPA and DOE are coordinating with Lawrence
Berkeley National Laboratory to answer key technical questions
regarding impacts on groundwater and underground formations. The Agency
is also monitoring the progress of research being conducted by
organizations such as the Pacific Northwest National Laboratory,
Lawrence Livermore National Laboratory, and international projects such
as Sleipner, In Salah, and Weyburn to help inform the regulatory
framework.
The DOE's Regional Carbon Sequestration Partnerships are conducting
demonstration projects to gather data on the effectiveness and safety
of GS. These Regional Partnerships will implement many small and large-
scale field tests of carbon dioxide injection throughout the country in
a variety of geologic settings. One goal of the technical permitting
guidance EPA issued in March of 2007 is to promote the exchange of
information to support the development of a long-term GS management
strategy.
EPA will also engage with the Department of Transportation,
Department of Interior, States, and Tribes during the rulemaking
process. EPA has worked closely with key organizations such as the
Groundwater Protection Council (GWPC) and the Interstate Oil and Gas
Compact Commission (IOGCC), which represent States that implement UIC
programs, and we will continue to do so throughout the regulatory
process. For example, the Agency has reviewed the IOGCC report entitled
``Storage of Carbon Dioxide in Geologic Structures: A Legal and
Regulatory Guide for States and Provinces.'' The document's discussion
of issues such as permitting and property rights may be very useful as
we develop regulations.
In December 2007, EPA established a workgroup on geologic
sequestration to provide input to the proposed regulation. The
workgroup includes EPA and DOE staff, as well as representatives of
four state agencies, two of whom were recommended by the IOGCC and two
by GWPC. Thus far, the workgroup has provided input on various aspects
of the regulatory framework and has begun to draft issue papers on key
issues.
Over the past several years, the Agency has been holding workshops,
attending conferences and meeting with public and private stakeholders
including industry experts, legal experts, technical experts, and
environmental advocates to gather useful input. Our past experience
gives us confidence we can work closely with key stakeholders and
experts to develop well-designed regulatory approaches.
This past December, EPA held a meeting that focused on the
potential regulatory framework for geologic sequestration. The two day
workshop, held in Washington, DC, was attended by more than 200
stakeholders representing government, research institutions, industry,
public interest groups, law firms, and the general public. Another
stakeholder meeting is planned for February 26 and 27, 2008 in
Alexandria, Virginia. Additionally, over the past year EPA has held
technical workshops with researchers and stakeholders to discuss
technical considerations for establishing a GS framework.
conclusion
EPA is committed to working with our public and private partners to
accelerate the important work underway to realize the significant
potential of carbon dioxide capture and geologic storage. EPA will
continue to engage with other federal agencies and encourage
participation of states, associations, public interest groups,
industry, and other stakeholders as the Agency moves forward on this
critical path towards development of a regulatory framework. Consistent
with the goal of Senator Kerry's bill, our goal is to develop sound
regulations that will enable full-scale CCS projects to move forward
without endangering underground sources of drinking water.
Thank you, Mr. Chairman and members of the committee for this
opportunity to describe EPA's important work on carbon sequestration. I
would be happy to answer any questions you may have.
Senator Domenici. Mr. Grumbles, I just have one question
that came to my mind. I don't understand; why does it take 4
years to make a rule regarding a substance of like
CO2?
Mr. Grumbles. We have a lot of experience with
CO2 already under the UIC program under the class
two category for enhanced oil and gas recovery. But this is a
whole new approach, a whole new opportunity when it comes to
long term storage. It's a complex issue and it requires public
participation and discussion and also that 4 years will allow
us to take into account lessons learned as the demonstration
projects occur, whether they are DOE or other demonstration
projects through the process.
Senator Domenici. All right. Thank you.
Mr. Allred.
STATEMENT OF STEPHEN ALLRED, ASSISTANT SECRETARY FOR LAND AND
MINERALS MANAGEMENT, DEPARTMENT OF THE INTERIOR
Mr. Allred. Senator Domenici, members of the committee,
it's a pleasure to be here and to represent the Department of
the Interior. As you're aware, we deal with oil and gas, coal,
geothermal and biomass as well as fish and wildlife issues on
Federal lands and Federal resources. We're involved in a number
of different strategies with regard to carbon sequestration,
including the capture and storage through enhanced oil recovery
of carbon dioxide and into geologic formations and also
investigating the capture through air and terrestrial biomass,
soils and trees of carbon dioxide on our lands.
One of the things that is probably not well known is the
fact that currently carbon dioxide is a salable commodity under
the mineral leasing laws of the United States. We currently
collect revenues in the form of royalties from the sale of
carbon dioxide produced in connection with oil and gas
production on public lands. In 2007 the sale of carbon dioxide
generated over 23 million dollars in royalty revenues in
Colorado, New Mexico and Wyoming. I mention that because one of
the things that I think as we look forward to carbon
sequestration is that it may well be a valuable resource for
the future that can be recovered as we need it.
Specifically I would like to talk a little bit more about
the opportunity I think that we have to investigate and
understand carbon dioxide sequestration because of the number
of enhanced oil recovery projects that we have. Some of the
largest new ones are in Senator Barrasso's area in Wyoming. I
think we have an opportunity by adding perhaps another purpose
to those projects to learn a lot from carbon sequestration that
we can then apply to other areas. It's also interesting to note
that there are estimates that we have the capacity, based on
preliminary estimates of carbon dioxide production and volume
in our oil reservoirs to sequester, if they were in the right
places, 20 to 40 years of carbon dioxide production.
Public Law 110-140, enacted last year, gave the Department
of the Interior a number of different responsibilities. We are
to develop and are currently involved in the process of
developing a methodology for and to conduct national
assessments of geologic capacity for sequestration. We are in
the process of preparing a national assessment of storage
capacity of oil and gas and saline reservoirs through the USGS.
We will conduct that in conjunction with the Department of
Energy, with the input of the Environmental Protection Agency,
and equally as important, the State geological surveys that we
work with.
It is our intent to convene an independent panel of experts
and stakeholders to provide a technical review of that effort.
Upon completion of that review the methodology will be
published and provided for public use. There are also a number
of other things that are ongoing efforts that we'll also try to
answer some of these questions, certainly to identify the
criteria to determine candidate geologic sequestration sites in
various different types of geologic settings.
We will also be involved in looking at a proposed
regulatory framework for leasing decisions on public lands with
regard to long term sequestration. We also were mandated to
determine a means by which we can provide for public review and
comment and to ensure that we protect the quality of natural
and cultural resources in those areas. To suggest additional
legislation that we feel might be important. Again I want to
emphasize as we go forward with these we will consult with our
Federal and State partners and the public.
We believe, in conclusion, that it is extremely important
to No. 1, understand the effect and to determine the complex
issues that we will have in sequestration and there are many
interrelated components to that. Secondly, we believe that it
is important to use the ongoing activities that are already in
place to try to enhance the knowledge that we have. The
Department of the Interior is looking forward to working with
other agencies and working with Congress to answer these
important questions. I'd be most happy to answer any questions.
I have a couple of experts with me if I can't answer those
today.
[The prepared statement of Mr. Allred follows:]
Prepared Statement of Stephen Allred, Assistant Secretary for Land and
Minerals Management, Department of the Interior
introduction
Mr. Chairman and Members of the committee, thank you for the
opportunity to provide the Department of the Interior's views on S.
2323, the ``Carbon Capture and Storage Technology Act of 2007'' and S.
2144, the ``Carbon Dioxide Pipeline Study Act of 2007.'' As both bills
vest the Secretary of Energy with primary authority and the Secretary
of the Interior is identified as a cooperator, I will defer to the
Department of Energy for specific views on this legislation. My
testimony today will address the Department of the Interior's
perspective on carbon capture and storage as it relates to future work
of the Department's bureaus, specifically the U.S. Geological Survey
(USGS) and the Bureau of Land Management (BLM).
The challenges of addressing carbon dioxide accumulation in the
atmosphere are significant. Fossil fuel usage, a major source of carbon
dioxide emissions to the atmosphere, will continue for the foreseeable
future in both industrialized and developing nations. Therefore, a
variety of strategies are being investigated to reduce emissions and
remove carbon dioxide from the atmosphere. Such strategies include the
facilitated sequestration of carbon for the capture and storage of
carbon dioxide by injection into geologic formations as well as capture
from the air to terrestrial biomass, including soils and trees.
Carbon injection techniques also have useful practical applications
in processes known as enhanced oil recovery (EOR), which currently
takes place on some public lands managed by the Bureau of Land
Management. Carbon dioxide is a saleable commodity under the Mineral
Leasing Act of 1920. The Bureau of Land Management currently collects
revenues in the form of royalties derived from the sale of carbon
dioxide produced in connection with oil and gas production on public
lands. In 2007, for example, the sale of carbon dioxide generated over
$23 million in royalty revenue in the states of Colorado, New Mexico,
and Wyoming.
In addition to enhancing oil recovery, EOR's utilization of carbon
injection may yield valuable data that will inform efforts to capture
and sequester carbon dioxide effectively in geologic formations found
on public lands. A critical issue for evaluation of storage capacity is
the integrity and effectiveness of these formations for sealing carbon
dioxide underground, thereby preventing its release into the
atmosphere.
geologic storage of carbon
The current atmospheric carbon dioxide concentration is
approximately 380 parts per million volume and rising at a rate of
approximately 2 parts per million volume annually, according to the
most recent information from the Intergovernmental Panel on Climate
Change (IPCC). The 2005 IPCC Special Report on Carbon Dioxide Capture
and Storage concluded that in emissions reductions scenarios striving
to stabilize global atmospheric carbon dioxide concentrations at
targets ranging from 450 to 750 parts per million volume, the global
storage capacity of geologic formations may be able to accommodate most
of the captured carbon dioxide. How much of this carbon dioxide storage
capacity would be economically feasible (assuming some price on
carbon), however, is not known. Also, geologic storage capacity may
vary widely on a regional and national scale. A more refined
understanding of geologic storage capacity is needed to address these
knowledge gaps.
Geological storage of carbon dioxide in porous and permeable rocks
involves injection of carbon dioxide into a subsurface rock unit and
displacement of the fluid or formation water that initially occupied
the pore space. This principle operates in all types of potential
geological storage formations such as oil and gas fields, deep saline
water-bearing formations, or coal beds. Most of the potential carbon
dioxide storage capacity in the U.S. is in deep saline formations.
ongoing efforts
H.R. 6, the Energy Independence and Security Act of 2007 (EISA),
which the President signed into law last month, includes provisions on
Carbon Capture and Storage that the Department is working to implement.
The requirement in Section 7 of S. 2323 directing the Secretary of the
Interior, acting through the Director of the U.S. Geological Survey
(USGS), to develop a methodology for and conduct a national assessment
of geological storage capacity for carbon dioxide is very similar to
Section 711 of EISA and therefore we believe inclusion of this
provision in new legislation is unnecessary.
The Department has developed an implementation plan for Section
711. In fiscal year 2008, the Department will begin development of a
methodology that could be used to conduct assessments of carbon dioxide
storage capacity in oil and gas reservoirs and saline formations
nationally. The methodology development will be conducted in
coordination with a number of organizations in order to maximize the
usefulness of the assessment for a variety of partners and
stakeholders. These organizations include the Department of Energy, the
Environmental Protection Agency, and State Geological Surveys. In
particular, the Department will coordinate its work with Department of
Energy's National Carbon Sequestration Database and Geographical
Information System (NATCARB). The purpose of NatCarb is to assess the
carbon sequestration potential in the U.S. and to develop a national
Carbon Sequestration Geographic Information System (GIS) and Relational
Database covering the entire U.S.
An independent panel, consisting of individuals with relevant
expertise and representing a variety of stakeholder organizations, will
be convened to provide a technical review of the methodology. Upon
completion of the review, the methodology will be published and
available for public use. The subsequent national assessment called for
by EISA would need to compete among other administration priorities for
funding.
In addition, Section 714 of the EISA directs the Department to
develop a framework for geological sequestration on public land and
report back to this committee, as well as the House committee on
Natural Resources, by December 2008.
This effort, coordinated among several agencies within the
Department, is anticipated to result in recommendations relating to:
criteria for identifying candidate geological sequestration
sites in several specific types of geological settings;
a proposed regulatory framework for the leasing of public
land or an interest in public land for the long-term geological
sequestration of carbon dioxide;
a procedure for ensuring any geological carbon sequestration
activities on public land provide for public review and protect
the quality of natural and cultural resources;
if appropriate, additional legislation that may be required
to ensure that public land management and leasing laws are
adequate to accommodate the long-term geological sequestration
of carbon dioxide; and
if appropriate, additional legislation that may be required
to clarify the appropriate framework for issuing rights-of-way
for carbon dioxide pipelines on public land.
The report will also describe the status of Federal leasehold or
Federal mineral estate liability issues related to the release of
carbon dioxide stored underground in public land, including any
relevant experience from enhanced oil recovery using carbon dioxide on
public lands.
The report will, in addition, identify issues specific to the
issuance of pipeline rights-of-way on public land and legal and
regulatory issues specific to carbon dioxide sequestration on land in
cases in which title to mineral resources is held by the United States,
but title to the surface estate is not.
This effort will be undertaken in coordination with the
Environmental Protection Agency, the Department of Energy, and other
appropriate agencies.
conclusion
It is clear that addressing the challenge of reducing atmospheric
carbon dioxide and understanding the effect of global climate change is
a complex issue with many interrelated components. The assessment
activities called for in the recently passed Energy Independence and
Security Act of 2007 should ultimately increase the information base
upon which decision makers will rely as they deal with these issues,
and the assessments called for in these bills would duplicate those
already mandated. In addition to addressing the challenges presented by
carbon dioxide, we should also recognize that this commodity presents
certain opportunities for future knowledge and utilization. As a
leasable commodity, our experience demonstrates that there is a demand
and a value attributable to this resource. As we examine undeveloped
oil and gas reservoirs, we should consider the potential benefits of
accessible sequestered carbon dioxide. It is clear that the discussion
on this subject will continue and the Department stands ready to assist
Congress as it examines these challenges and opportunities. Thank you
for the opportunity to present this testimony. I am pleased to answer
questions you and other Members of the committee might have.
The Chairman [presiding]: Thank you very much. Mr. Slut, go
right ahead.
STATEMENT OF JAMES SLUTZ, ACTING PRINCIPAL DEPUTY ASSISTANT
SECRETARY, OFFICE OF FOSSIL ENERGY, DEPARTMENT OF ENERGY
Mr. Slutz. Ok. Mr. Chairman, members of the committee, it
is my pleasure to appear before you today to discuss Senate
bills 2323 and 2144. I currently serve as the Acting Principle
Deputy Assistant Secretary for Fossil Energy.
Balancing the economic value of fossil fuels with the
environmental concerns associated with fossil fuel use is a
difficult challenge. Carbon capture and storage technologies
provide a key strategy for reconciling energy and environmental
concerns. DOE has assumed a leadership role in the development
of carbon capture and storage technologies and in fact the
United States, I would argue, is the global leader in this
area. Through its carbon sequestration program DOE is
developing the technologies through which geologic carbon
sequestration could become an effective and economically viable
option for reducing CO2 emissions.
Since DOE first investigation into carbon sequestration
began in 1997 with a budget of one million dollars, DOE has
spent a total of 483 million through fiscal year 2008. Our
fiscal year 2009 budget request of 148 million is a powerful
sign of the continuing importance of this technology to our
energy and environmental future. I might add that fiscal year
2009 we had a 30 million dollar increase over our 2008 request.
A recent report completed by the National Petroleum Council
which was a comprehensive landmark study requested by the
Secretary of Energy titled, ``Facing the Hard Truths About
Energy''. The NPC's purpose of this report was to increase
understanding about the scale and significance of the energy
industries activities and to produce sound, balanced strategies
to meet today's challenges and benefit future generations. In
the section of the report dealing with carbon management, the
NPC recommended and I quote, ``The United States must develop
the legal and regulatory framework to enable carbon capture and
sequestration and as policymakers consider options to reduce
CO2 emissions provide an effective global framework
for carbon management.'' DOE is doing precisely that as a few
examples more fully described in my submitted testimony
illustrate.
DOE is working to increase the cost effectiveness of carbon
capture technologies and to prove the viability of a long term
geologic and terrestrial CO2 storage. DOE's regional
carbon sequestration partnerships are co-funding field tests
for large scale CCS demonstrations. DOE is working closely with
the Environmental Protection Agencies and the states through
organizations such as the Interstate Oil and Gas Compact
Commission to establish a standardized regulatory framework for
CO2 storage in deep geologic formations.
In December 2007, DOE participated in EPA's first workshop
in preparation for a proposed rule for large scale injection of
CO2. Fortunately the United States has a large
number of geologic formations amenable to CO2
storage. In fact according to the 2006 carbon sequestration
atlas of the United States and Canada, aggregate CO2
sink capacity is estimated to hold several hundred years of
total domestic U.S. emissions.
The U.S. Government, DOE and other agencies of the 50
States, several Canadian provinces, private industry,
environmentalists and the scientists and the engineers have
expanded great effort, invested heavily and made remarkable
progress over the last decade in understanding and preparing
for an energy and environmental future in which carbon
sequestration technology will play an integral role. DOE
believes regarding the specific bills being considered, DOE
does have some specific positions. DOE believes that the
research and development and demonstration projects prescribed
in Sections 3, 4 and 6 of Senate Bill 2323 are duplicative of
our R&D demonstrations underway in our existing program.
We also believe that Section 5ive which requires
interagency task force duplicates the task force the EPA has
underway. Section 6 of the proposed legislation would shift
lead responsibility for part of the Department's R&D program
from Fossil Energy to the Office of Science. DOE opposes this
provision.
Senate Bill 2144 would require a feasibility study related
to the construction and operation of pipelines and carbon
dioxide sequestration facilities and for other purposes. DOE
supports this legislation.
There are many questions and I think it's useful to
consider the scale of CO2 issues and CO2
management. Building the infrastructure required to capture and
store the CO2 emitted by energy producing activities
requires serious, long term commitment on the part of
government and industry and the public. As an example, in the
United States all the CO2 from existing coal fired
electric generation alone would total, if liquefied, would
total 50 million barrels per day. That's two and a half times
the volume of oil handled daily in the United States. Again I
mention that just to scale the challenge and illustrates the
urgency of moving forward with some of these issues.
Mr. Chairman, thank you for the opportunity to testify
today. I'd be happy to answer any questions.
[The prepared statement of Mr. Slutz follows:]
Prepared Statement of James Slutz, Acting Principal Deputy Assistant
Secretary, Office of Fossil Energy, Department of Energy
Mr. Chairman, members of the committee, it is a pleasure for me to
appear before you today to discuss Senate bills 2323 and 2144.
I intend, first, to survey The Department of Energy's (DOE) overall
Carbon Sequestration Research and Development program, our goals and
our progress to date. I will then describe DOE's collaboration with the
Environmental Protection Agency (EPA) in carbon capture and storage.
Complete knowledge of all these efforts already underway should be
of interest as the Senate bills under consideration go forward.
carbon sequestration and fossil fuels
The availability of affordable energy is a bedrock component of
economic growth. The use of fossil fuels, however, can result in the
release of emissions with impacts on the environment. Of growing
significance are emissions of carbon dioxide (CO2) which
contribute to global climate change.
Balancing the economic value of fossil fuels with the environmental
concerns associated with fossil fuel use is a difficult challenge.
Carbon capture and storage technologies provide a key strategy for
reconciling energy and environmental concerns. Geologic sequestration--
the capture, transportation to an injection site, and long-term storage
in a variety of suitable geologic formations--is one of the pathways
that DOE is pursuing to allow the continued use of fossil fuels while
reducing CO2 emissions.
DOE has assumed a leadership role in the development of carbon
capture and storage technologies. Through its Carbon Sequestration
Program--managed within DOE's Office of Fossil Energy and implemented
by the National Energy Technology Laboratory (NETL)--DOE is developing
technologies through which geologic carbon sequestration could
potentially become an effective and economically viable option for
reducing CO2 emissions. The Carbon Sequestration Program
works in concert with other programs within the Office of Fossil Energy
that are developing the complementary technologies that are integral to
coal-fueled power generation with carbon capture: Advanced Integrated
Gasification Combined Cycle, Advanced Turbines, Fuels, Fuel Cells, and
Advanced Research. Successful research and development could enable
carbon control technologies to overcome various technical and economic
barriers in order to produce cost-effective CO2 capture and
enable wide-spread deployment of these technologies.
doe's carbon sequestration program
Since DOE's first investigation into carbon sequestration began in
1997 with a budget of $1 million, DOE has spent approximately $483
million through Fiscal Year 2008 (twelve year cumulative total) on
further research and development, a powerful sign of the importance of
this technology to our energy and environmental future.
The Carbon Sequestration Program, with a Fiscal Year 2008 budget of
$119 million, encompasses two main elements of technology development
for geologic sequestration: Core R&D and Validation and Deployment. The
Core R&D element addresses several focus areas for laboratory
technology development that can then be validated and deployed in the
field. Lessons learned from the field tests are fed back to the Core
R&D element to guide future research and development. Through its
Integrated Gasification Combined Cycle, Fuels, Sequestration, and
Advanced Research programs, DOE is investigating a wide variety of
separation techniques, including gas phase separation and adsorption,
as well as hybrid processes, such as ad sorption/ membrane systems.
Current efforts cover not only improvements to state-of-the-art
technologies but also the development of several revolutionary
concepts, such as metal organic frameworks, ionic liquids, and enzyme
based systems. The ultimate goal is to drive down the energy penalty
associated with capture so that geologic sequestration can be done with
only a moderate increase in the cost of electricity.
regional carbon sequestration partnerships
One of the key questions regarding geologic sequestration is the
ability to store CO2 in underground formations with long-
term stability (permanence); this requires monitoring and verification
of the fate of the CO2, to ensure that the science is sound
and ultimately gains public acceptance. DOE's NETL, with the Regional
Carbon Sequestration Partnerships (RCSPs) are developing and validating
technology, and national infrastructure needed to implement geologic
sequestration in different regions of the Nation.
The RCSPs are evaluating numerous geologic sequestration approaches
in order to determine those best suited for specific regions of the
country. They are also helping develop a framework to validate and
deploy the most promising technologies for geologic sequestration.
a three-phase approach
NETL's three-phased approach began with a Characterization Phase in
2003 that focused on characterizing regional opportunities for carbon
capture and storage, and identifying regional CO2 sources
and storage formations. The Characterization Phase was completed in
2005 and led into the current Validation Phase, which focuses on field
tests to validate the efficacy of geologic sequestration technologies
in a variety of storage sites throughout the U.S. Using the extensive
data and information gathered during the Characterization Phase, NETL
identified the most promising opportunities for carbon storage in their
regions and commenced geologic field tests. In addition, NETL is
verifying regional geologic sequestration capacities initiated in the
first phase, satisfying project permitting requirements, and conducting
public outreach and education activities.
The third phase, or Deployment Phase, for large-volume testing is
intended to demonstrate the feasibility of CO2 capture,
transportation, injection, and storage at a scale comparable to future
commercial deployments. DOE has in recent months awarded funds to
initiate five large-volume demonstration projects. Depending on the
results of a scientific needs assessment being conducted in FY 2008 and
the ability of additional project proposals to meet those needs,
additional large-scale projects may be initiated. In October, 2007, DOE
announced awards totaling $318 million for two projects with the Plains
Carbon Dioxide Reduction Partnership, and one project each with the
Southeast Regional Carbon Sequestration Partnership and Southwest
Regional Partnership for Carbon Sequestration. In December, DOE
announced a $66.7 million award for a project with the Midwest
Geological Sequestration Consortium.
The geologic structures to be tested during these large-volume
storage tests will serve as potential candidate sites for the future
deployment of technologies demonstrated in FutureGen and the Clean Coal
Power Initiative, which plans to complete a solicitation for carbon
capture technologies at commercial scale in 2008.
The NETL, with the RCSPs and the National Carbon Sequestration
Database and Geographical Information System (NATCARB), has created a
methodology to determine the capacity for CO2 storage in the
United States and Canada and an Atlas from data generated by the RCSPs
and other databases, including the United States Geological Survey's
(USGS) National Coal Resources Data System, USGS National Water
Information System Database, and EROS Database. Based on data displayed
in the 2006 Carbon Sequestration Atlas of the United States and Canada,
the aggregate CO2 sink capacity--including saline
formations, unmixable coal seams, and oil and natural gas formations--
is estimated to hold several hundred years of total domestic U.S.
emissions.
moving toward commercial deployment
Carbon capture and storage can play an important role in mitigating
carbon dioxide emissions under potential future stabilization
scenarios. The United States has a large capacity of geologic
formations amenable to CO2 storage. DOE's Carbon
Sequestration Program will continue to help move geologic sequestration
technology toward readiness for commercial deployment.
epa's role in the deployment of carbon capture and storage technology
Complementing DOE's carbon capture and R&D research program is the
EPA program for ensuring that underground injection of CO2
is conducted in a manner that is protective of underground sources of
drinking water (USDWs) in accordance with section 1421(d)(2) of the
Safe Drinking Water Act (SDWA). EPA is initiating work to develop
proposed regulations to ensure consistency in permitting commercial
scale geologic sequestration projects. It plans to propose regulations
in the summer of 2008. EPA is also responsible for reviewing and
commenting on environmental impacts statements under the National
Environmental Policy Act (NEPA).
As DOE moves forward with its R&D program and geological storage
projects, EPA is focused on: evaluating risks to human health and the
environment; providing guidance on permitting CO2 injection
wells for pilot-scale projects; identifying technical and regulatory
issues associated with field tests and commercial projects; and
developing an appropriate management framework for permitting.
DOE-sponsored and industry-sponsored research will help develop
data and tools to address these issues. It is anticipated that EPA will
aggregate and analyze the information generated from those efforts and
initiate new research where there are gaps.
DOE has also sponsored a five-year, two-phase study by the
Interstate Oil and Gas Compact Commission (IOGCC), which is reported on
in the publication a Model CO2 Storage Statute and Model
Rules and Regulations. The report provides industry perspective on
development of regulations governing the storage of CO2 in
geologic media and an explanation of those regulatory components. EPA
will consider these and other viewpoints in its regulatory development
process.
program coordination
EPA coordinated with DOE in the preparation of its research plan,
and is working closely with DOE, state regulators and other
stakeholders on all geological storage activities so as to leverage
resources, clarify key questions and data gaps, and ensure that work is
complementary and not duplicative.
EPA and DOE, for example, hold quarterly coordination meetings (at
both the staff and managerial level) to share progress and discuss key
issues.
EPA, in coordination with DOE, organized a series of technical
workshops in 2007 to help define future research needs. The workshops
were focused on technical issues that need to be addressed in order to
design, operate, and permit CO2 injection wells. Attendees
included EPA and state regulators, DOE project managers, and DOE-funded
researchers.
In addition, EPA has and will continue to be involved in major DOE/
NETL activities such as the National Conferences on Carbon
Sequestration and the Regional Partnership Annual Review Meetings.
s. 2323: carbon capture and storage technology act of 2007
The U.S. Government, DOE and other agencies, the 50 states, several
Canadian provinces, private industry, environmentalists, and scientists
and engineers have expended great efforts, invested heavily and made
remarkable progress over the last decade in understanding and preparing
for an energy and environmental future in which carbon sequestration
technology will play an integral role.
The Administration strongly supports research and development of
carbon capture and storage technology as a solution to reduce carbon
dioxide emissions and address global climate change. The Administration
is currently performing the research and development needed to
successfully develop this technology. DOE has numerous initiatives
looking at decreasing the cost of carbon dioxide capture and proving
the permanence of carbon dioxide storage in geologic formations and has
success with its current structure. DOE believes that the research,
development and demonstration projects prescribed in Sections 3, 4 and
6 of Senate Bill 2323 are generally duplicative of the R&D and
demonstrations underway in our existing program. DOE is currently
evaluating some of details of this bill within the context of its
existing program, such as the use of competitive grants to fund
commercial demonstration of carbon dioxide sequestration and the number
of projects needed.
Section 5 of this bill would require an interagency task force to
develop regulations for the capture and storage of carbon dioxide. This
task force was officially established last year, and is chaired by EPA,
with considerable support from DOE. Therefore, we believe that this
section of the bill is also redundant.
For the past 10 years, DOE's Sequestration Program within the
Office of Fossil Energy has funded research in areas of carbon dioxide
capture, storage, monitoring, mitigation, and verification (MMV),
breakthrough concepts, and infrastructure development through its
Regional Partnership Initiative. NETL is researching the most suitable
technologies, informing regulatory development, and evaluating
infrastructure needs for carbon capture, storage, and sequestration in
different areas of the country. The RCSPs are conducting much of these
efforts, and include 41 states and over 350 distinct organizations
working together for the most cost-effective solutions. Additionally,
the Clean Coal Power Initiative and FutureGen are providing the
demonstration platform for testing larger carbon dioxide capture
methods at power plants. These activities are currently providing the
plan forward and should continue along their current path to produce
the best results at the earliest time so that this technology can be an
important option to cost-effectively reduce greenhouse gas emissions.
s. 2144: carbon dioxide pipeline study act of 2007
This bill would require the Secretary of Energy, in consultation
with the Federal Energy Regulatory Commission, the Secretary of
Transportation, the Administrator of the EPA, and the Secretary of the
Interior to conduct a feasibility study relating to the construction
and operation of pipelines and carbon dioxide sequestration facilities,
and for other purposes. It also requires that the Secretary provide
this report to Congress no later than 180 days after the enactment of
this bill. DOE supports this legislation and notes that, although it is
the study lead, it will work closely with the other agencies in
conducting this study, and in particular with DOT's Pipeline and
Hazardous Materials Safety Administration (PHMSA), which will have a
leading role in evaluating plans for construction and operation of
pipelines for carbon dioxide. Mr. Chairman, and members of the
committee, this completes my prepared statement. I would be happy to
answer any questions you may have at this time.
The Chairman. Thank you all very much. There are a lot of
questions, obviously. One of the questions that occurs to me is
what we are talking about when we talk about permanent
CO2 storage. I know Senator Kerry referred to
permanent CO2 storage.
Mr. Grumbles, I was not here during your testimony. I had
to step out, but is this an issue? Is EPA planning to clearly
define the required length of storage time for CO2
in the regulatory work that you're working on these days?
Mr. Grumbles. Senator, I know we will certainly address
that issue. That is one of the key areas, long term liability,
financial responsibility and duration of requirements. So we do
intend to seek comment on questions such as those about the
duration and also on the responsibility, financial
responsibility requirements.
Currently much of the UIC program, Underground Injection
Control Program, has in place for other types of injections of
fluids, financial responsibility requirements that last
typically 30 years. So one of the questions that is very much
going to be at the forefront of our debate and discussion is
duration. How long of a period to ensure that there's
monitoring and responsibility, financial responsibility.
The Chairman. Let me ask you, Chairman Kellier, what road
do you see FERC as appropriately performing here? Is FERC the
appropriate entity to regulate transportation rates? Is that
something that you think is clearly FERC's responsibility?
Mr. Kelliher. I think we could regulate the rate. There are
three really existing models on how to regulate pipeline
transportation either of energy resources or CO2. In
two of the three existing models FERC does set the
transportation. In the other one the rate is--can be set by the
Surface Transportation Board upon complaint. Otherwise it's set
through a contract between parties. But FERC certainly has set
the rate for oil and gas pipelines for decades.
The Chairman. Let me ask you, Mr. Allred, if you could just
elaborate a little bit on what responsibility you would see in
your agency for the site selection on Federal lands to the
extent that someone were to determine that they wanted to
pursue a carbon storage sequestration project on Federal lands.
How far are you from having in place a regulatory framework
that would tell them how to proceed?
Mr. Allred. Mr. Chairman, members of the committee, I think
that at this point in time we would have the basic rules that
we could use in a sequestration project. There will be lots of
questions as we go forward. One of the things that we have
thought about are some demonstration projects that would,
associated with enhanced oil recovery, help us answer some of
those questions.
But I think the leasing rules and the Mineral Leasing Act
and the laws that we have with regard to the management of
Federal lands provide us the basics that we would need. That
does not mean that as we go forward there won't need to be
enhanced and changed.
The Chairman. All right. Let me go ahead and call on the
next Senator on this.
Senator Barrasso.
Senator Barrasso. Thank you very much, Mr. Chairman, and I
want to first commend Senators Coleman and Senator Kerry for
bringing this legislation before us today. The carbon capture,
transmission and sequestration are enormously important to the
people of Wyoming. Mr. Allred made some comments about that.
Wyoming produces about 38 percent of our Nation's coal.
This coal provides a substantial portion of America with
affordable electricity. Wyoming holds promising geologic
formations for coal sequestration. Wyoming has experience in
safely moving carbon dioxide and effectively using it for our
enhanced oil recovery. Since emissions are not always located
near appropriate geologic voids, carbon dioxide may need to be
transported through States like Wyoming.
So I think we need some additional research to inform us on
these issues. Congress and State Legislatures must fully
explore any gaps in the existing legal and regulatory
frameworks. The Wyoming Legislature is doing that when it meets
next week in Cheyenne for this session.
I concur with Senator Coleman and Kerry on the urgency of
this problem--and certainly in light of the current climate
change debate and the potential of Congress imposing a price on
carbon in one form or another. I am hearing a lot about this
around the State of Wyoming. I'm hearing it from workers, from
consumers, and also from industry.
Many of my constituents are increasingly concerned that the
Federal Government will impose a cap on carbon before we've
developed the appropriate legal and regulatory framework to
address carbon dioxide. They're concerned that Congress is
going to act on those issues before we act on the technology.
So I applaud what Senators Coleman and Kerry are trying to do.
If anything I'm going to be pushing to do more research and
more analysis, find more certainty for markets and to delve
deeper into the important areas such as liability of
CO2 as it's transported and stored and some of the
things that we've heard from the Honorable Edwards and to
accomplish all of this in a shorter period of time. I'm
distressed when I hear it's going to take till the year 2011
before regulations can be written. I want to thank the Chairman
for calling this meeting.
I do have a question or two for Mr. Slutz. It really has to
do a little bit with something along this line but a little
different and that's the Future Gen issue from the Department
of Energy. We talk about public/private partnerships, and when
private entities put up money and make decisions, business
decisions, that they want to have confidence that they're going
to have a good partner in the U.S. Government. With this change
for Future Gen, I think that confidence is eroding.
My question is how can we make sure that commitments by the
Federal Government are really commitments that the private
enterprises can depend upon and rely on?
Mr. Slutz. Thank you, Senator. You know and the, I should
say the Future Gen decision that was announced yesterday was a
very challenging and difficult decision. But part of that
commitment is a partnership and you have to have both--there's
the Federal Government and the industry partners. Both of those
have to have agreements that they can work through and when a
project doubles in cost it's a time to sit down and rework
those agreements. In the details of that it was decided that
the current agreement was not in the best interest of the
American people and there were--the requirements that would
have been in place to go forward would have put that project at
risk.
So this issue is very, very important, too important not to
allow that not to be successful. The decision was made by the
Department to--with a new direction. Not a lack of commitment
to Future Gen or a lack of commitment to furthering research
and furthering demonstrating the technology of carbon capture
and storage on a full commercial scale project, but doing it a
way, I think, that the market could really act and it would be
very market based commercial type plans that would be where the
success would be very likely. That was the foundation for that
decision is to make sure we have a successful outcome.
Senator Barrasso. Mr. Chairman, as a member of both the
Energy committee as well as the Environment and Public Works
committee we're looking at using all the sources of energy, but
doing it in an appropriate way for our environment. We don't
want to put the cart before the horse too far. We want to make
sure that we're working in unison to try to get things going on
developmentally and educationally in a way that would help
folks and help our environment, but also make sure that we have
all the energy that we need. Thank you, Mr. Chairman.
The Chairman. Thank you very much.
Senator Tester.
Senator Tester. Thank you, Mr. Chairman. I want to thank
Senator Barrasso for his comments. I want to dovetail on to
them initially. Mr. Slutz, what's the level of urgency in the
DOE as far as carbon capture and storage?
Mr. Slutz. It's the very critical to much of our research
programs. A majority of clean coal is about how do we increase
efficiency, reduce emissions or actually have carbon capture
and storage. I think one of the urgencies that's communicating
if you look at part of this decision on Future Gen and to
communicate the importance that the Administration places on
our clean coal research program.
We released our budget numbers early this year and showed a
very significant increase in coal research which shows how we
want to move this faster.
Senator Tester. Coal research based on carbon capture?
Mr. Slutz. Based on carbon capture and storage.
Senator Tester. How close are we to having a large scale
carbon capture technology available?
Mr. Slutz. The technology exists. The issue is the cost of
the technology and the costs that it would----
Senator Tester. How close are we to having to having
affordable large scale carbon capture technology?
Mr. Slutz. First let me, the technology exists. One of the
advantages of this Future Gen approach is to actually get a
commercial power plant in operation. We're looking at a date of
2015 that it could be operational on this because we don't know
all of the costs. We only now can speculate and estimate the
costs, but having actual real data on commercial scale,
commercial operating power plants will be hugely beneficial in
making those advancements in the future.
Senator Tester. Ok. I just tell you I echo Senator
Barrasso's comments. We have to have the technology. That
technology is critically important. Everybody blames the price
of food on corn ethanol. There's also a worldwide drought. That
probably has more to do than any kind of renewable energy
policy we put out of here.
I attribute a lot of that to worldwide global warming. I
think that if we lead, and we lead in a way that's there's
urgency, we can have our eggs and eat it too, as Senator
Coleman said. That is that we can develop technology we can
sell to other countries and we can clean it up on a worldwide
basis. But there has to be a level of urgency. Because if
there's not a level of urgency, we'll develop the technology
and it will be too late.
I've got a question for Mr. Grumbles from the EPA. You
talked about under any proposed regulation, and I'm reading
from your written statement, currently under development that
geological site characterizations to ensure that wells are
sited in suitable areas to limit potential for migration and
injected formation fluids into underground drinking water. Now
I know you're with the drinking water area of the EPA, but what
about leeching into the atmosphere? Isn't that also considered
insuitable sites?
Mr. Grumbles. It's a very important issue that is part of
our discussions with the Air Office. It's part of our
discussions with all the stakeholders so far and all the
national workshops and research forums we've had. We want to
look at the environmental risks but from the standpoint of the
Safe Drinking Water Act.
Senator Tester. Ok.
Mr. Grumbles. We will be focusing on protection of
underground sources of drinking.
Senator Tester. I appreciate that. But so what you're
saying here only as it applies to drinking water, but
somebody's got to be looking at leeching of the atmosphere
because that's another significant problem.
Mr. Grumbles. Monitoring of these sites it's very important
to have post closure monitoring of sites as it is with existing
UIC programs.
Senator Tester. Ok.
Mr. Grumbles. Monitoring can get into releases, surface
releases as well.
Senator Tester. Good. Mr. Allred, I have a question that
kind of dovetails on the chairman's question. It deals with
storage and with the plume that will be created with
CO2 storage. I don't care where you put it. That
plume may affect not only Federal lands but also private lands
and private lands where there's Federal minerals underneath
them.
What do you recommend, or do you have a recommendation to
deal with the liability as it applies to the plume and
potential exposure there. Keeping in mind that, we put it under
the ground, somebody may decide to drill a hole and let it out,
that might happen on private lands. So how do you deal with
that issue?
Mr. Allred. Mr. Chairman, Senator Tester, I--as I look at
the Federal land question and I look at most of my background
as you probably know is not in government. I look at how do you
implement projects or how do you cause things to occur. To me
one of the most important things that we need to look at is,
first, to keep regulation as simple as it can be because if it
is complicated, I think that that will deter people and
organizations and financial resources from being applied to
this.
Second, there's a big learning curve on this. The more that
we can use existing legal frameworks to assure that we don't
have unintended consequences or that we provide the ownership
and responsibility for these the better off we'll be. I think
that our oil and gas laws, both the Federal Government's and
the State's, perhaps provide some of that mechanism.
Particularly on Federal lands we think that through our leasing
requirements and steps that we take to assure that oil and gas
is properly handled and that the United States receives its
proper royalty from that.
If you use the reverse of that, we think that those same
processes or same legal applications can work on Federal
grounds. I think one of the things you really have to consider
is who owns that carbon dioxide because if you decide that then
you probably have gone a long way to decide about liability and
responsibility. If they are on Federal lands or Federal
resources we're either going to have an agreement with the
lessee to store their carbon dioxide or there will be decisions
that that will become a Federal resource where there's Federal
ownership and before that agreement is ever entered into there
will be some assurances as to how safe it is to have it where
it is.
Senator Tester. I've run out of time, but the other
question is what happens if it starts on Federal land and moves
into private land? I don't want you to answer that because
there are other people that have questions but that is a
concern.
The Chairman. Senator Corker.
Senator Corker. Actually I think that is a great question.
This is an area that I guess I'm somewhat skeptical about just
because, for a long, long time we've been pumping carbon in the
air and we figure out here recently that's a problem. I don't
know if we've done enough work to see what kind of problems
will exist underground pumping tremendous amounts of carbon in.
But I'd love for you to answer Senator Tester's question
because it seems to me that we do get into a lot of mineral
rights issues, and storage rights issues. Storage can end up
taking place under somebody's land and they might want to drill
for something else. I mean it does seem to me there are a lot
of complications that exist. So please answer Senator Tester's
question.
Mr. Allred. Mr. Chairman, Senator Corker, to the best that
I can, I will. But one of the advantages we have with depleted
oil or even operating oil reservoirs is there's a tremendous
amount of information about that reservoir with regard to its
extent and characteristics. That's a source of data that we
don't have perhaps in places that we might seek to sequester
where we have not had that oil or gas experience.
Not in all cases will we be 100 percent sure. That's going
to be a, I'm mean, there's got to be a concern about that
because we may not. But remember why the oil and gas is there.
It was captured because there was some structure that kept it
there. What will be a bigger question probably is what have we
done to make it not suitable because obviously we've drilled
holes. That is an issue that can be dealt with fairly easily
although it might be expensive.
The second question is when you enhance oil recovery, you
do a thing called fracking and you fracture some of the area in
order to have oil flow into a well more easily. That will be a
real question as to how that fracking has affected those
reservoirs and their integrity. That is something that we'll
have to understand.
Senator Corker. So is it envisioned that if a property,
private property owner has an area underneath them where oil
has been recovered and now there's a cavern there or someplace
just to store carbon that that person would actually be paid
for carbon to be stored under their land?
Mr. Allred. Mr. Chairman, Senator, if you were to follow
the oil and gas laws and that's a big if, I think.
Senator Corker. Right.
Mr. Allred. That has to be decided on non-Federal lands. I
would assume that there would have to be a lease like an oil
lease so you could use that. But I think that's one of the big
questions about how do you regulate. I think the question on
Federal land may be more clear than on private lands.
Senator Corker. Yes, I would guess so. I actually think
that as we get into this, while I agree with others there
should be a tremendous sense of urgency, I think there are so
many complications that exist around this that I can see how it
might take several years to work out this whole process of
rulemaking even though we'd like to see it happen more quickly.
In the area of drinking water itself it seems to me that
water is becoming more and more of an issue even in a State
like Tennessee. Talk to us about some of the hazards that
exist, that you can envision existing storing carbon adjacent
to water supplies and those types of things.
Mr. Grumbles. Senator we have extensive experience as was
already mentioned with the Class two UIC program under the Safe
Drinking Water Act injecting carbon dioxide for enhanced oil
and gas recovery. But one of the key areas of focus for us, as
we work to issue a regulation ensuring there are safeguards for
the long term storage and sequestration of carbon dioxide, is
to reduce the likelihood of migration of that CO2
into underground sources of drinking water. That it can lead to
different types of pollution problems.
I would say one of the areas we're looking at as potential
risks to aquifers, potential sources of drinking water, because
we recognize that in some areas--data we have indicates that by
2013 at least 36 States in this country will experience some
form of water shortage. That's not just in drought stricken
areas. It's a combination of growth and population and
development or drought.
So for us as we're going through this analysis, of
CO2 storage, we want to make sure that it doesn't
migrate, that it stays in place. The experience to date is that
it is a very promising technology. That it does stay in place
for very long periods of time if the geologic siting is done
properly, the well construction is done properly and it's
monitored. So it is very promising in not producing or posing a
significant risk to underground sources of drinking water.
Senator Corker. Mr. Chairman, thank you for the time. At
some point I hope we'll gain an understanding as to the
practicality of this. I think that a lot of times we move in a
direction and it sounds utopic to move there and there's a lot
of political momentum.
I have to tell you that this still, to me, and I'm not an
oil drilling State, seems like a fairly impractical thing to do
on a mass scale. I can see in geographic locations that might
be good, but thank you so much for this hearing.
The Chairman. Senator Dorgan.
Senator Dorgan. Mr. Chairman, thank you very much. In North
Dakota we have the only coal gasification plant that was ever
completed and it exists now as a technological marvel in terms
of its production. It produces synthetic natural gas from
lignite coal. It also is, I think, the world's largest
demonstration of CO2 capture and it captures 50
percent of the CO2 from the coal gasification plant.
It puts it in a pipe and pipes it to Canada to the oil wells in
Alberta and they use it for enhanced oil recovery.
So there is a capture process with respect to coal
gasification. I suspect if we're taking a look at what's
happening in the oil wells up in Canada we can get a sense of
some leeching issues and other issues about is this
sequestration for the long term and so on. But I want to ask
this question. This is such an important area. Fifty percent of
our electricity comes from coal. We're not going to have a
future without using coal. I mean our future's going to include
the use of coal. The question is how do we use coal.
We're going to be able to use coal if we can effectively
unlock the mysteries of capturing carbon and sequestering
carbon. How do we do that? I'm chairing the appropriations side
on the subcommittee on appropriations that funds a lot of this.
Here's the way it looks to me.
We've got carbon sequestration R&D projects. We've put 120
million into that. We have regional organization. So we got 120
million dollars in our area. It's called PECORE. But 120
million dollars was for carbon sequestration R&D. 70 million
dollars for the clean coal power projects. 75 million dollars
was put in this year for Future Gen, now I saw your
announcement yesterday about that, six billion dollars for loan
guarantees for coal projects that will demonstrate these
technologies.
So we have all of these things happening. You know, it
reminds me kind of a circus with a bunch of rings. The question
is who brings it all to the center ring? Who brings it to
center stage to decide how all of this works together because
we're in a big hurry? The fact is we need to get to center
stage soon with technologies we know will work. So, Mr. Slutz,
who down there at the Energy Department is bringing these five
or six projects or areas of funding together to accomplish what
we want to accomplish?
Mr. Slutz. It is, Senator. We do manage these programs as
an integrated approach even though it may not look like it all
the time, but we do. In fact I will use an example in answering
some of the questions about what's this going to do in the
subsurface. That's why we have those--that carbon sequestration
program with the seven partnerships and we have four large
scale projects underway. Three more will be finalized and ready
to announce later this spring.
Those--the four that are announced are each there in the
site characterization doing those detailed geologic
assessments. They will when they, a little after that
assessment is done and assuming the assessment all proves out,
they are scheduled--will inject at least a million metric tons
a year of CO2. They'll be monitored extensively.
It's to get that information, that detailed information, that
then working with our partners at EPA and the other agencies
can use to develop what's the best rules.
One side on that this CO2 is not in some big
cavern. It's in the pore space of rock. I think that's an
important piece and I'm sorry to end----
Senator Dorgan. You know, last year I called down because
what was happening inside the department is the Department of
Science was over here and others were over here and the money
wasn't being released to the partnerships. So I don't know that
both hands were communicating so well. They finally got the
money but there is an urgency about this.
Someone just gave me this core sample. This is sandstone
and this is where you would invest CO2. The question
is does it stay there? What are the conditions under which it
stays there?
You know, the science is very sophisticated, very important
and my great concern is we're moving very quickly on this issue
of climate change and our understanding that we have to take
immediately no regret steps to deal with it and perhaps more
aggressive steps. But that doesn't mean that this country's
going to be able to have the kind of energy supply that it
wants and needs without using our most abundant resource and
that is coal. So, when I mentioned five or six programs I don't
know that you have this all laced up real tight down there. I
hope so.
Because just for example the last six billion dollars we
put in which would be loan guarantees. I don't know how you
intend to use those. I don't know the announcement you made
yesterday. I don't know what that means in terms of the several
larger projects rather than one in Future Gen. I don't know how
that relates to the regional partnerships.
So, I hope you can continue to give us as much information
as possible about how all these things come together and lace
up something that gets us to a conclusion. Because we can--you
know one of the things about the government is it just studies
things forever. That's really interesting but not very
effective. At some point you have to have coordinated studies
that get the results you need in order to move forward and
achieve the goals you have.
Mr. Slutz. Let me answer that as I think it requires a
little more of an answer that we can provide outside in
subsequent to the hearing. But it is coordinated even as we
work through our budget process. In looking we've done climate
overlays that look at things like where can we spend the money
to get different benefits at different times from the various
programs within DOE. Not just fossil, but energy efficiency and
all those are layered together to see how would we address, how
would the overall DOE research budget address climate change?
Then as you then work within the programs, for instance the
fossil energy, we have the core coal R&D that's going to move
these advance technologies. The CCPI program that gets those
technology pieces out into a demo environment. The Future Gen
project that is a full scale powered plant with CCS and then
you mentioned you get these proved up in demo. You still have
to get them deployed into the marketplace and that's where loan
guarantees come into play.
So it is a program that works together. I would be happy to
follow up with a little more detail on how that meshes up a
little bit.
[The information follows:]
Attached is a graphic* that outlines the activities of the Office
of Fossil Energy's Carbon Sequestration Program and the relationship of
those activities to basic research carried out under DOE's Office of
Science. Carbon Sequestration an Storage is one of six areas
highlighted in the FY 2009 DOE budget request for enhanced coordination
between basic and applied research and development. Coordination of
activities between the DOE programs is carried out through program
manager-level working groups.
---------------------------------------------------------------------------
* The graph has been retained in committee file.
Senator Dorgan. My time has expired. I want to thank all
the witnesses today. I have to go to another hearing as well,
but I appreciate very much your testimony.
The Chairman. Thank you.
Senator Murkowski.
Senator Murkowski. Thank you, Mr. Chairman. Thank you for
the testimony here this afternoon. I want to follow on a little
bit to Senator Dorgan's comments and those made by Senator
Barrasso about the Future Gen project and the decision coming
out of DOE and more specifically to the signal that is sent.
Again you had a pretty ambitious private/public partnership
there. A lot of time, a lot of money goes into it and then I
understand what you were saying, Mr. Slutz about having to re-
evaluate and do the cost. But in terms of signals sent, it is
not a very encouraging signal sent from the Department of
Energy about one of these proposals that we're looking to
firmly establish that the technology has worked and we're
making it happen right here.
Ms. Edwards, I want to ask you a question about just the
logistics of how these CO2 pipelines would work. If
we were to go to full CCS for all powers I would imagine we're
going to have to expand this pipeline network, not only the
numbers of pipelines, but the lengths of the pipelines that
we're talking about. The question is, as you are pumping the
CO2 further distance and in larger volumes, does
this cause any problems? You kind of spoke to the safety aspect
of the process, but recognizing that it's going to be more,
higher volumes going farther distances, does that do anything
to us?
Ms. Edwards. Again these are the sorts of risks that we
regularly manage in transportation. So I would think that the--
we have a regulatory framework in place that's ready for
CO2 pipelines however they were configured. They may
be short. They may be longer and with more capacity. So I would
say that the----
Senator Murkowski. But it does cause the pipe to age more
quickly?
Ms. Edwards. You know again it would and that would be part
of the requirements or if it did it would be part of the
requirements. You know the operator understands the risks and
does the monitoring. Of course it's very consequence phased
depending on where the segments run and what is the exposure.
Senator Murkowski. So do we not know yet?
Ms. Edwards. This is material that does not have the same
types of, you know, certainly environmental risks or even risks
of life and property as other materials that are moved by
pipeline. So we, yes, you know those questions--the technology
is mature for pipelines. So I would say that the core
significant issues having to do with pipeline transportation
are not technical but more economic in terms of siting and
investment.
Senator Murkowski. Let me ask you this, Commissioner
Kelliher, about the siting you mentioned in your opinion that
the State siting seem to be working relatively well if you have
an increase again in this pipeline network. With the siting
issues, does it become more complicated with an increased
capacity there in terms of the siting? Is it something that at
some point you might say that the Federal preemption is the way
to go? Is this something to be evaluated later?
Mr. Kelliher. I think looking at what Congress did on gas
pipeline siting. It started off with state siting and at some
point it failed. In the views of Congress they concluded that
state siting had failed. But it was after the failure was
demonstrated. Then Congress came in and changed the law.
Exclusive and preemptive siting was the rule.
The State siting has worked for CO2 pipelines up
to this point. But the network is much smaller than the oil and
gas pipeline networks. The CO2 pipeline network is
about 3,900 miles. The natural gas pipeline network is about
300,000 miles and the oil pipeline network is about 200,000
miles. Last year actually was a very big year for gas pipeline
additions and we added about 2,700 miles last year alone on gas
pipelines.
So it really relates to if this is the path the country
goes down how big of a CO2 pipeline network are we
going to need and how quickly are we going to need it? There
are varying estimates on how big of a network we might need.
Senator Murkowski. So at some point in time you may have to
evaluate this preemption issue. I would certainly think there
would be state consultation if that is the route you would go.
I want to ask you a question a little bit off topic, but since
you're here, Commissioner Kelliher I'd like to ask you about
this MOU that I understand this is regarding ocean energy
projects.
You know I've been following this and trying to see some
progress with this. There's been some competing Federal
jurisdiction out there, FERC, saying anything within three
miles MMS is looking at those projects located on the outer
continental shelf. Can you give me a status very, very quickly
as to what is happening with that MOU?
Mr. Kelliher. The quick status is that in my view it is
final. In my view we're prepared to sign, but the MOU cannot be
effective with only one agency signature.
Senator Murkowski. Can we expect the other agency
signatures shortly? What is the status on that?
Mr. Kelliher. I would have to defer to Secretary Allred on
that.
Senator Murkowski. Secretary, can you give me an update on
where you are on your end?
Mr. Allred. Senator Murkowski, as you are aware we had
negotiated an agreement. I think it's one that was generally
acceptable to both of us. We were asked by this committee not
to proceed with that in light of and until there were certain
decisions that I assume the committee chose to make with regard
to the energy legislation.
One of the things that's happened in the intervening period
of time is that our regulations for alternative energy offshore
are now about ready to be released. While I don't anticipate
that that would make a significant change in how we and FERC
deal together it's probably premature for us to do that in
light of the fact that these regulations will go out for public
comment. If the regulations themselves don't deal, and there
are some that do deal with some of the issues in the memorandum
of understanding, it would be my intent that we would modify
that agreement so that it will be specific to the items that we
might have yet uncovered in those rules and regulations.
Senator Murkowski. You're not giving me any indication in
terms of timing on this then.
Mr. Allred. I would anticipate that the rules and
regulations will be out for draft review within the next 2
months.
Senator Murkowski. We certainly--an awful lot of people
that are hoping that this gets resolved very quickly and we're
very optimistic when this MOU was announced. So, I'd like to
think that we're going to see that sooner than later. My time
is up, but perhaps I can have a little follow up after this
with you if it's possible to do that. Thank you, Mr. Chairman.
Mr. Kelliher. Just 30 seconds or so, Mr. Chairman, thank
you. I just want to emphasize how important it is that we
clarify the respective roles of the two agencies. Actually I
don't see that there's conflict between the MMS role and the
FERC role. I actually think they're complementary. It's just
that the two agencies actually have never worked together on
projects. We haven't seen ocean projects in the outer
continental shelf before that are FERC jurisdictional.
So from the developers point of view there's tremendous
uncertainty. I think perpetuating that uncertainty is
forestalling exactly what we need now on ocean energy
demonstration projects. We need to demonstrate these
technologies and the uncertainty means we probably won't see
development of ocean hydro projects. So I think we do need to
clarify the respective roles to the agencies.
Senator Murkowski. Mr. Chairman, if there's anything that
we on this committee can do to help encourage that along I
think it would be very, very beneficial for all. Thank you.
The Chairman. Thank you very much.
Senator Menendez.
Senator Menendez. Thank you, Mr. Chairman. I appreciate
your leadership here on the committee on this particular issue.
It seems to me that we need action that matches the sense of
urgency that we are feeling on climate change.
We've heard testimony here and elsewhere that China is
building a coal fired plant every week. It seems to me if we
have any hope of lowering greenhouse gas emissions and avoiding
catastrophic climate change we need to act quickly and
effectively. But it also seems to me if we want technologies
like carbon capture and sequestration to flourish in the near
future it would appear to me that we need to pass a cap and
trade bill as soon as possible because when carbon emissions
have a price attached to them well the coal powered industry
will act quickly by investing their own money and not just
relying on Federal research.
I was listening to Senator Dorgan's numbers as he was
putting them out there and other numbers that we've heard
projected. We're talking about an enormous amount of money. I
think there's a good part of who participates in this process
because while we need to act quickly, I think we also need to
act wisely.
The issue I'd like to pursue with this panel to some degree
is I think maybe one of the most important issues in the
question of the regulatory regime and that's the question of
who pays to oversee and regulate this new effort. I mean I look
at Future Gen which some of us have believed is has always been
Never Gen. I look at the statement made by the Deputy Energy
Secretary, Clay Sell, who said among the reasons why they were
dropping and this was just as in December the Department was
listing this as the centerpiece of their strategy for clean
coal technologies. One of the major reasons is that the price
had risen to 1.8 billion dollars.
That I think goes to the very heart of the question of who
participates in this process in paying toward it. You know we
have had 150 years of electric power and fossil fuel that has,
yes, it has lit up America, but it's also caused some
significant environmental damage along the way and a lot of
public health concerns including acid rain, mercury poisoning,
asthma attacks, ozone depletion, particulate matter pollution,
just to name a few. There are no apologies, no apologies for
any of this.
Instead now when the industry is under threat they want the
American taxpayers to save them. I think it has it backward.
I'm wondering whether one of the views that we should have is
that in fact an industry that is mature and immensely
profitable shouldn't be significantly in the forefront of the
concept of polluter pays for example is one.
So my question that I wanted to throw open to the panel is
if we're likely to have to ensure CO2 stays in the
ground for 100 years or more who's going to ensure. Who's going
to pay for that process of making sure that we have the
pipelines, that we have the monitoring, that we in essence are
going to ensure that something, that we're going to pursue that
course on is going to be one that is not born specifically by
the American taxpayer. Do we view this being born by the
American taxpayer? You don't all have to jump to answer the
question.
Mr. Grumbles. Just from an EPA perspective we understand
that is one of the key questions and as we're moving forward on
the regulatory piece that relates to safeguards for underground
sources of drinking water. As I mentioned earlier the financial
responsibility question for not only the closure, but the post
closure and monitoring is one that we're going to be getting
comments from the public on in the rulemaking process. Outside
of the rulemaking process, we have an established workgroup
with DOE and with States.
A key question on that is also the important role of the
States in this effort. From the Safe Drinking Water Act
standpoint, the UIC program, 35 States have been delegated the
authority to run the program and many States are very
interested in carbon sequestration, the new frontier. We're
going to be working with States on that question of liability.
EPA continues to embrace the polluter pays principle. When
it comes to government oversight and management that's going to
be one of the key issues; post closure monitoring and financial
responsibility.
Senator Menendez. Many of us find the EPA weakening the
provisions of polluter pays by virtue of the fact that
Superfund is a perfect example of how we have not met that
standard. But my question is to the rest of you. You know we're
talking about an enormous outlay of pipelines, of the
sequestration caverns which we will put this in, the monitoring
for the leaking and just the technology. Isn't there a
participation of some significant degree by the industry or do
we see the American taxpayer putting this all out there and
ultimately not having a very robust, to say the least,
participation by the industry at the end of the day.
Mr. Slutz.
Mr. Slutz. We really how this has developed just like the
rest of the infrastructure of this country will be by the
private sector and the market and in the case of DOE
technologies the idea is to create these technologies so the
market can pick them up. One of the issues with reference to
the Future Gen project that was 74 percent U.S. Government
funded and 26 percent industry. The revised approach that we
have come out with while we're still we have a request for
information. We're seeking feedback, but would likely the way
this comes out would reverse that percentage and have a much
larger private sector share in a power plant than it would be
much more commercially oriented. So it is built into that.
I would add one more thing as we deal with issues of
carbon. One of the challenges which I know all of you are aware
of is how do you develop the technology. How do you implement
them without dramatically increasing the price of energy
because as you say that will then impact our economy and impact
citizens.
Senator Menendez. Mr. Chairman I know my time is over, but,
you know, I find it interesting just two notes here for future
reference. Powers affect the price of energy, of course it's
important. But by the same token if the government is funding
overwhelmingly all of this effort and then the monitoring, that
is the taxpayer too. They may not see it in their energy bill,
but they're seeing it out of their money in enormous fashion,
No. 1.
No. 2, I find it interesting we had a hearing on a
different matter, Mr. Chairman on the Banking committee where
the whole issue is what are we doing to try and help people of
this country having the American dream not become the American
nightmare. A lot of those who say don't get engaged. You know,
let the market work its forces.
If we're not going to solve the problem for people who
ultimately may be losing their homes was the centerpiece of the
American dream, then I'm not so sure the American taxpayer can
be called upon to solve the problems for the coal industry, be
responsible, overwhelmingly for the problems of the coal
industry in trying to meet the challenges of the future. I
think there has to be some symmetry at the end of the day as to
what's our views in terms of responsibility. But, thank you,
Mr. Chairman. I appreciate the opportunity.
The Chairman. Thank you very much. We have another panel
right after this. Let me ask if Senator Corker has any final
question to put to this panel?
Senator Corker. Mr. Chairman, thank you and Senator
Menendez, I agree with you. I think this is what we need to get
away from is any subsidizing. We ought to figure out the true
cost of energy and I hope it will be industry funded.
We're all going to be looking at bills. Senator Bingaman
has a very thoughtful bill. There's other bills regarding cap
and trade. Regardless of whether the money is there from the
private sector to put carbon in the ground or not, the first
thing we all have to be comfortable with is it is safe to do
that. I mean can we, are we really solving a problem? Are we
not having other unintended problems occur?
I'm just wondering if you all could give us a guess, if you
will. We got a lot of departments that work on this. It's kind
of a cluster making everything happen sequentially. Do you all
have any idea when we're going to know for real, in a way that
we can really pump some significant resources toward this from
this from the private sector, when we're really going to know
when it is safe and we have the regulations in place? It would
be helpful to us.
We're going to have to be dealing with credits and
allowances and all those kinds of things. Just to have an idea
of when you think on a mass basis we will be able to do that? I
would just love a number.
Mr. Grumbles. From an EPA standpoint the key part of
answering that question is getting in place the safeguards up
front. We believe that there's very minimal risk associated
with carbon sequestration if you do have the proper geologic
siting and well construction and monitoring and post closure
monitoring. We're learning a lot by the work that is going on
around the world in some of the demonstration sites. So we're
optimistic about this promising, but still unproven technology.
IPCC basically has said it's very promising from their
perspective. They say that carbon dioxide could be trapped for
millions of years in appropriate geologic formations are likely
to retain over 99 percent of the injected CO2 over
1,000 years. So it is a question of when you go from the
smaller and experimental demonstration sites to the larger
commercial scale sites. Will you have the basic safeguards in
place to ensure the proper siting and monitoring and measuring?
If so, then we're very optimistic about the safety of this long
term storage.
Senator Corker. That seems vague to me.
The Chairman. Does anybody else want to respond?
Mr. Slutz. I will respond. We can get some more information
with some of the dates from our--we have a carbon sequestration
research road map that lays out certain milestone dates. Rather
than throw them out and be incorrect. But we can show some of
those things.
One of the challenges is we have a greatly differing and
varying geology in this country. That's why we have these seven
partnerships to try to get information in different regions,
different types of geology. One of the challenges we don't
always know, you know, it's research. You don't know exactly
what you're going to find. But I think we can put together some
information that will show you some of the key milestones on
where we're trying to get with our research program and our
portfolio to help understandthat.
I don't know if it will, it won't give you that specific
date, a year or something. But it'll show you the various
milestones that we're getting over the next 5 to 8 years.
[The information referred to follows:]
Following is the response to information (milestones/dates) as to
when a system will be in place that assures the safety of carbon
sequestration and a regulatory framework to allow ongoing mass storage
of CO2.
DOE agrees with the testimony presented by the Environmental
Protection Agency (EPA) on January 31, 2008, which stated as follows:
In March 2007, EPA issued technical guidance to help State and EPA
Regional managers in processing permit applications for geological
sequestration (GS) demonstration projects under the general UIC
regulations.
Under the SDWA [Safe Drinking Water Act], EPA develops minimum
requirements for state UIC [Underground Injection Control] programs.
States may develop their own regulations for injection wells in their
State. These requirements must be at least as stringent as the federal
requirements (and may be more stringent). Annually, billions of gallons
of fluids are injected underground through wells authorized under State
and Federal UIC Programs. This includes approximately 35 million tons
of carbon dioxide that are injected for the purposes of enhancing oil
and gas recovery. EPA's proposed regulations will build on the UIC
Program's many years of experience in safely injecting fluids,
including carbon dioxide, into the subsurface.
The proposed regulation, currently in development under an
accelerated schedule, will take into account the EPA's existing UIC
program requirements. Key components of the proposed regulation will
include requirements related to: (1) geologic site characterization to
ensure that wells are sited in suitable areas to limit the potential
for migration of injected and formation fluids into an underground
source of drinking water; (2) well integrity testing and monitoring to
ensure that the wells perform as designed; and, (4) well closure, post-
closure care, and financial responsibility to ensure proper plugging
and abandonment of the injection well. We will also discuss long-term
liability and seek further comment on this issue as part of the
proposed rulemaking.
The Chairman. Anyone else?
Mr. Allred.
Mr. Allred. Mr. Chairman, Senator Corker. Just a point that
I think that there is already a lot of information that is
available that would show that it can be done. I think we have
to be more deliberate about how that information is collected,
but as Mr. Slutz indicated, they have projects where in excess
of a million tons of CO2 have been injected. We have
a number of places where over a million tons a year has been
injected for enhanced oil recovery.
So I think there are a lot of those things which either are
now being done or could be done. The purpose of those, at least
the oil recovery projects, has not been sequestration, although
there may have been a significant amount of sequestration
occur. One of the things I think that we have the potential to
do is to add a purpose to those, not to eliminate the other
purpose, but add a purpose to those. Answer a lot of questions
that you were just asking. I suspect that those answers will be
with proper knowledge and proper consideration that we will be
safe in can be done fairly quickly.
The Chairman. Thank you. Senator Lincoln, did you have
questions of this panel?
Senator Lincoln. No.
The Chairman. Let me thank all the witnesses of this panel
and we will stay in touch with you and try to continue moving
ahead on this set of issues.
Let me call the final panel forward. Lawrence Bengal who is
with the Arkansas Oil and Gas Commission. Tracy Evans who is
with Denbury Resources in Plano, Texas and Scott Anderson with
Environmental Defense from Austin, Texas. Thank you all for
coming.
Yes. Let me call on Senator Lincoln to make whatever
introductions she would like of our witnesses here. I know one
of these witnesses is from her home State. Blanche, go right
ahead with whatever you would like to say.
Senator Lincoln. Mr. Chairman, I apologize that I've been
absent for the earlier part of the hearing. As most of us know
it gets over scheduled way too much, but I certainly appreciate
your leadership in this area. There's so much to be done and so
much for us to learn without a doubt.
But it is my pleasure to introduce the Chairman of the
Arkansas Oil and Gas Commission, Larry Bengal. Mr. Bengal has
held positions as researcher with the Illinois State Geological
Survey as a project manager for Geologic and Mining Engineering
Consulting firm, engaged in projects throughout the United
States and as an independent counseling or consulting petroleum
geologists as manager of the Illinois Class II underground
injection control program and as a supervisor of the Illinois
Oil and Gas division. He is here today in his capacity as
chairman of the IOGC carbon capture and geologic storage task
force. We're certainly appreciative of all of what he has done.
I feel, like you, Larry, we appreciate you being here and
appreciate all the both evidence and intelligence that you
bring to the issue that we're dealing with here and grateful
that you've joined us. We look forward to continuing to work
with you as well. But we're very proud of him in Arkansas and
his work in the oil and gas issues there and equally proud of
his fine work with the CCGS task force. So thank you, Mr.
Chairman and thank you, Larry for being here and to all the
panelists.
The Chairman. Alright. Thank you very much. Mr. Bengal, why
don't you start and then Mr. Anderson and then Mr. Evans.
STATEMENT OF LAWRENCE E. BENGAL, DIRECTOR, ARKANSAS OIL AND GAS
COMMISSION, LITTLE ROCK, AR
Mr. Bengal. Good afternoon and thank you, Senator Lincoln
for that gracious introduction.
Mr. Chairman, committee members, my name is Lawrence
Bengal. I am the director of the Arkansas Oil and Gas
Commission and I'm appearing here today in my capacity as
chairman of the Interstate Oil and Gas Compact Commissions Task
Force on Carbon Capture and Geologic Storage. I would like to
share with the committee the experience and conclusions of the
task force and offer brief comments on S. 2144 and S. 2323.
Funded by the U.S. Department of Energy through the
National Energy Technology Laboratory, the task force has been
engaged since 2003 in a two phase effort relating to the
regulation of geologic storage of carbon. In phase one the task
force undertook a thorough review of the technology of geologic
storage. In phase two developed model regulations. A major
conclusion of the task force in phase one was that the geologic
storage of carbon dioxide or CO2 was not something
entirely new or mysterious, but the technological outgrowth of
analogs with which the States already have regulatory
experiences.
In phase two the task force has produced a clear and
comprehensive model regulatory regime for the geologic storage
of CO2. Utilizing these model frameworks, States and
provinces and indeed other nations can begin immediately the
process of enacting legislation and promulgating rules and
regulations enabling CO2 geologic storage projects.
In fact a number of States have already begun this process.
By 2010 I fully expect that at least 5, 10 or more States
will have legal and regulatory systems in place. The EPA carbon
storage regulations under the Safe Drinking Water Act and it's
implementing underground injection control or UIC programs
should also be in place within this timeframe. It is my
expectation the State regulatory systems will work seamlessly
like hand in glove with the regulations likely to emerge from
the EPA regulatory development process. This is largely because
of the role States play in the administration of UIC programs
under EPA privacy authority.
As concerns SB, Senate bill 2323 the legal and regulatory
framework proposed by the task force does not require in order
for our program to work effectively any broader, overarching
Federal regulation. Framework proposed by the IOGCC task force
is comprehensive and contains many aspects that are solely a
function of State law. Our expectation is that the combination
of State and EPA UIC regulatory systems will produce a
flexible, responsive, safe and environmentally sound regulatory
framework for CO2 geologic storage that will be more
than adequate to get the first project planned and safely off
the ground.
We would suggest that before we rush to create a
potentially unnecessary Federal and regulatory framework that
we observe how this combined State and EPA administered storage
framework functions. If a need for additional Federal
regulatory authority manifests, it can be addressed at that
time. As concerns SB 2144, I would only suggest that the
departments and agencies designated in the bill to conduct the
study be required to conduct it in close cooperation and
consultation with the States which have much experience in this
area.
Let me now turn to the diagram which you see before you
which illustrates the cradle to grave regulatory model that was
developed by the task force and this is what we recommended to
States. There are three phases you can see. Although I do not
have enough time at this stage to go over each of the phases,
this will give you some idea of the breadth of the regulatory
structure proposed by the IOGCC task force.
I would note however that only within the project areas
indicated by the green box does it appear to the EPA has
regulatory authority over the Safe Drinking Water Act. The
other areas would be covered under State law.
Let me close by noting the obvious that public support for
carbon storage as a strategy for mitigating the impact of
global climate change will be crucial. It is important to
educate the public about this technology including
CO2 long history of being transported, handled and
used in a variety of applications. CO2 is certainly
no more, if not less, than the hazardous waste of natural gas
and calling it such makes it very difficult for public
acceptance of CO2 storage.
It will also be vitally important to include the public in
every step of the regulatory development process at the State
and Federal levels. State laws will ensure public notice and
participation and the State processes of both legislation and
regulation development stages. Thank you for the opportunity to
appear here today. If I can provide any information, please do
not hesitate to ask. I would ask though that a copy of the full
IOGCC task force be included in the record today.*
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* Document has been retained in committee files.
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[The prepared statement of Mr. Bengal follows:]
Prepared Statement of Lawrence E. Bengal, Director, Arkansas Oil and
Gas Commission, Little Rock, AR
Good afternoon. My name is Lawrence Bengal. I am the Director of
the Arkansas Oil and Gas Commission and I'm appearing here today in my
capacity as Chairman of the Interstate Oil and Gas Compact Commission's
Task Force on Carbon Capture and Geologic Storage (CCGS). The Task
Force was comprised of representatives from IOGCC member state and
provincial oil and gas agencies, U.S. Department of Energy sponsored
Regional Carbon Sequestration Partnerships, the Association of American
State Geologists, industry experts, as well as representatives from the
U.S. Environmental Protection Agency (EPA), the U.S. Bureau of Land
Management (BLM) and the environmental group, Environmental Defense,
who attended as observers.
The member states of the Interstate Oil and Gas Compact Commission
(IOGCC) produce more than 99% of the oil and natural gas produced
onshore in the United States. Formed by Governors in 1935, the IOGCC is
a congressionally ratified interstate compact. The organization, the
nation's leading advocate for conservation and wise development of
domestic petroleum resources, includes 30 member states, associate
states, and 4 international affiliate provinces. The mission of the
IOGCC is two-fold: to conserve our nation's oil and gas resources and
to protect human health and the environment during the production
process. Our current chairman is Governor Sarah Palin of Alaska.
I am here today to share with the committee the experience and
conclusions of IOGCC's CCGS Task Force and to offer our comments on S.
2144, the ``Carbon Dioxide Pipeline Study Act of 2007'', and S. 2323,
the ``Carbon Capture and Storage Technology Act of 2007''.
Funded by the U.S. Department of Energy (DOE) and its National
Energy Technology Laboratory (NETL), the Task Force has been engaged
since 2003 in a two-phase effort relating to the regulation of the
geologic storage of carbon. In Phase I, the Task Force undertook a
thorough review of the technology of geologic storage and in Phase II
developed a model statute and model rules and regulations for the
states and provinces to administer regulatory oversight of geologic
storage of carbon dioxide (CO2).
A major conclusion of the Task Force in Phase I was that the
geologic storage of CO2, in addition to conservation, is
among the most immediate and viable strategies available for mitigating
the release of CO2 into the atmosphere. It was readily
apparent to the Task Force that carbon storage was also not something
entirely new and mysterious--but the technological outgrowth of four
analogues. These four analogues, in the opinion of the Task Force,
provide the technological and regulatory basis for storage of
CO2 in geologic media: 1) naturally occurring CO2
contained in geologic reservoirs, including natural gas reservoirs; 2)
the large number of projects where CO2 has been injected
into underground formations for Enhanced Oil Recovery (EOR) operations;
3) storage of natural gas in geologic reservoirs; and 4) injection of
acid gas (a combination of H2S and CO2), into underground
formations, with its long history of safe operations.
It was the opinion of the Task Force that given the jurisdiction,
experience, and expertise of the states and provinces in the regulation
of oil and natural gas production as well in regulating the analogues
identified above, the states and provinces would not only be well able
to regulate, but would be the most logical and experienced regulators
of CO2 geologic storage. Additionally and importantly, the
oil and natural gas producing states and provinces are strategically
and geologically well-situated for the geologic storage of
CO2. Regulations already exist in most oil and natural gas
producing states and provinces covering many of the same issues that
need to be addressed in the regulation of CO2 geologic
storage, and consequently serve as adaptable frameworks.
Given these Phase I conclusions, the Task Force, in Phase II, began
work and in September of 2007 produced, for the first time, a clear and
comprehensive model legal and regulatory regime for the geologic
storage of CO2. Utilizing these model regulatory frameworks,
states and provinces, and indeed other nations, can begin immediately
the process of developing and enacting legislation and promulgating
rules and regulations enabling CO2 geologic storage
projects. California, New Mexico, North Dakota, Texas, and Wyoming are,
among other states, in various stages of developing such a legal and
regulatory framework.
I anticipate that by 2010 there will be at least 5-15 states,
encompassing much of the country best suited for carbon geologic
storage, with legal and regulatory systems in place for the regulation
of geologic storage of CO2. I would also anticipate that in
this same general timeframe that EPA will likewise have in place
regulations governing geologic storage of CO2 under the Safe
Drinking Water Act and the implementing Underground Injection Control
(UIC) Program.
It is appropriate that I now briefly address how the IOGCC
anticipates the EPA's CO2 geologic storage regulations will
interface with the regulatory systems being developed by the states.
Given the incorporation of UIC-like regulatory requirements into the
proposed IOGCC model regulatory frameworks, there is every reason to
anticipate that the IOGCC and EPA frameworks will fit like hand in
glove. This is largely because of the role that states play in the
administration of UIC programs under EPA primacy authority.
In this regard, as you are no doubt aware, the EPA is in the
process of developing regulations for geologic sequestration under the
Safe Drinking Water Act with the goal of having draft regulations for
public comment by the summer of 2008. The IOGCC at the invitation of
EPA has two representatives, Berry ``Nick'' Tew of Alabama and myself,
actively participating in the process as state co-regulators. States
with primacy already play an integral role in administering the UIC
program and under future rules governing geologic storage, are likely
to do so again. Having representatives from states involved in the
process helps insure compatibility between the state and federal
components of geologic storage regulatory oversight.
What is clear to me, especially given my involvement with the
current EPA workgroup, is that the state regulatory system for carbon
storage proposed by the IOGCC Task Force will in all likelihood work
seamlessly with the regulations likely to emerge out of the EPA
regulatory development process.
Having made this observation let me now offer brief comment on the
two bills which are the subject of this hearing today.
The legal and regulatory framework proposed by the Task Force,
which I will discuss in more detail subsequently, does not require, in
order to work effectively, broader over-arching federal regulation such
as that apparently contemplated by S. 2323. The Task Force strongly
believed that what it was proposing was comprehensive and given the
number of aspects that are solely functions of state and not federal
law (for example ownership of storage rights and means for amalgamating
those rights through some type of condemnation proceeding) that there
was no need or in some respects even the possibility of a broader
federal role. It is suggested that there will be ample time over the
coming years to see how the state-administered CO2 storage
frameworks function in tandem with the EPA UIC storage regulations
thereby alleviating the need to rush to create a potentially
unnecessary federal regulatory framework at this time. If there is need
for additional federal regulatory authority, it can be addressed
legislatively then. I fully anticipate that what will exist during this
interim period will be a flexible, responsive, and environmentally
sound combination of state and EPA UIC regulatory systems, which will
be more than adequate to get the first projects planned and off of the
ground. Experience with these projects will show us rather quickly if
weaknesses or problems with the existing frameworks manifest. We have
absolutely no expectations at this time that they will.
As concerns S. 2144 and the requirement of a study of feasibility
relating to construction and operation of pipelines and CO2
sequestration facilities, I would note first that the Task Force's
proposed legal and regulatory infrastructure encompasses construction
and operation of CO2 sequestration facilities. Second, I
would suggest that given this, that the federal government departments
and agencies designated in the bill to conduct the study at a minimum
be required to conduct the study in close cooperation and consultation
with states, including representatives of the IOGCC Task Force.
It is now appropriate to supply a little more detail about the
legal and regulatory system which the IOGCC Task Force has proposed for
the geologic storage of CO2 and how, precisely, the proposed
EPA regulatory system for CO2 storage would likely fit into
this system. This *diagram will be helpful:
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* Document has been retained in committee files.
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The diagram represents the ``cradle to grave'' regulatory model
which the Task Force has recommended to states. There are three phases.
1. Licensing including amalgamation of Storage Rights
The first phase is the licensing phase which includes the critical
requirement that the project operator control the storage rights.
The Task Force concluded that as a part of the initial licensing of
a storage project that the operator of the project must control the
reservoir and associated pore space to be used for CO2
storage. The operator would need to acquire these rights from the
owners or assume those rights by means of eminent domain, unitization
or some other vehicle that either exists in a state or would be created
by the state uniquely for this purpose. This step is necessary because
in the U.S., the right to use reservoirs and associated pore space is
considered a private property right and must be acquired from the
owner. It was the conclusion of a Task Force legal subgroup that in
most U.S. states, for non EOR-related storage, the owner of these
rights would likely be the owner of the surface estate. It may be
prudent, however, depending upon the specific property right ownership
framework in a given state, for an operator to also control the
relevant subsurface mineral rights.
Additionally, as part of the initial licensing of a project the
operator would be required to submit for State Regulatory Authority
(SRA) approval, detailed engineering and geological data along with a
CO2 injection plan that includes a description of mechanisms
of geologic confinement that would prevent horizontal or vertical
migration of CO2 beyond the proposed storage reservoir. The
operator would also be required to submit for approval by the SRA a
public health and safety and emergency response plan, worker safety
plan, corrosion monitoring and prevention plan and a facility and
storage reservoir leak detection and monitoring plan.
The rules also include requirements for an operational bond that
would be sufficient to cover all operational aspects of the storage
facility excluding wells which would be separately bonded.
Site licensing and amalgamation of storage rights is generally
believed to be outside the scope of the current UIC Program, and given
that regulatory involvement with property rights is a state issue, this
phase is best addressed at the state level. In addition, given the
likely competition for acceptable storage sites, it is in a state's
interest to manage these sites to maximize storage capacity and resolve
any operator conflicts over the right to use storage resources, thereby
maximizing the state's best economic interest in providing storage
sites for that state's generators.
2. The Storage and Closure Phase
In this second phase we are talking about the phase, following
initial licensing, when the storage project is developed, operated, and
closed. This includes a short time period following plugging of the
wells during which time the project is monitored to ensure stability of
the injected CO2.
During the storage component of this phase the model rules specify
the procedures for permitting and operating the project injection wells
to safeguard life, health, property and the environment. The operator
would be required to post individual well bonds sufficient to cover
well plugging and abandonment, CO2 injection and/or
subsurface observation well remediation. The rules also specify design
standards to ensure that injection wells are constructed to prevent the
migration of CO2 into other than the intended injection
zone. Provisions in the rules also ensure that all project operational
standards and plans submitted during the licensing phase would be
adhered to and that the project and wells are operated in accordance
with all required operating parameters and procedures. Quarterly and
annual reports would be required throughout the operational life of the
project. The rules also ensure that the wells are properly plugged and
the site restored. The individual well bonds, maintained during the
operational phase of the project would be released as the wells are
plugged.
The closure component of this phase is defined as that period of
time when the plugging of the injection wells has been completed and
continuing for a defined period of time (10 years unless otherwise
designated by the State Regulatory Authority) after injection
activities cease and the injections wells are plugged. During this
closure period, the operator of the storage site would be responsible
for providing the required data to ensure the injected CO2
has not migrated beyond the project boundaries and the injected
CO2 plume has been stabilized. During this time the operator
is required to maintain an overall project operational bond.
This phase is primarily where EPA is developing proposed rules to
ensure the operation and plugging of the wells are protective of the
groundwater resources under the UIC Program.
3. Long-Term ``Care Taker'' Phase (long-term monitoring and liability)
The last phase is the Long Term or Post-Closure Period and is
referred to as that period of time when the operator of the project is
no longer the responsible party and the long-term ``care taker'' role
is assumed by a government entity or government-administered entity.
The major issue faced by the Task Force was how to deal with long-term
monitoring and liability issues. The formula settled upon by the Task
Force is the following:
At the conclusion of the Closure Period, the operational bond would
be released and the regulatory liability for ensuring that the site
remains a secure storage site would transfer to a trust fund
administered by the state. During the Post-Closure Period, the
financial resources necessary for the state or a state-contracted
entity to engage in future monitoring, verification, and remediation
activities would be provided by this state-administered trust fund.
The Task Force concluded that such a state-administered trust fund
would be the most effective and responsive ``care-taker'' to provide
the necessary oversight during the Post-Closure Period. The trust fund
would be funded by an injection fee assessed to the site operator and
calculated on a per-ton basis.
In summary, the EPA Regulations under the SDWA and the UIC Program
primarily deal with the Storage and Closure Phase as illustrated by the
green box in the diagram, for it is only in the project areas within
that box that EPA has authority under the SDWA. In addition to EPA's
mandate to protect drinking water under the SDWA, the IOGCC regulations
cover other public health and safety issues that need to be a part of a
comprehensive regulatory framework. As previously stated, almost all of
the well operational standards proposed in the IOGCC model regulations
are already UIC requirements of one form or another.
What I anticipate is that the proposed EPA regulations, whatever
they end up being, will yield a set of uniform national standards,
which superimposed on whatever state regulations may be in place will
result in national consistency of application so as to ensure that
drinking water resources are protected. Again as previously stated,
given most states (those with primacy) already administer the existing
UIC program, they will continue to do so, conforming their state
regulations as they pertain to the geologic storage of carbon to the
minimum standard set by the new EPA regulations.
Unless the EPA regulations end up being unnecessarily proscriptive
and onerous, the systems should work together perfectly and as I've
already stated, ``seamlessly''. Certainly this is the hope and current
full expectation of the IOGCC.
I will note that with regard to federal lands (surface and/or
mineral interests), that federal regulations emanating out of the BLM
will undoubtedly be necessary. However, what emanates out of BLM would
in all likelihood be more akin to what the states have done with regard
to state and private lands rather than an overarching and broader
national regulatory scheme.
Additionally, our model regulatory system does not address the
regulatory issues involving CO2 emissions trading and
accreditation for the purpose of securing carbon credits. The Task
Force concluded that the issue of CO2 emissions trading and
accreditation would likely best be addressed in the marketplace and/or
at the federal government level and was beyond the scope of the Task
Force's mandate. In any event, the Task Force strongly believes that
development of any future CO2 emissions trading and
accreditation regulatory frameworks should utilize the experiences of
the states.
As concerns long term ``care taker'' liability, what the Task Force
has proposed will have to be addressed by each state and province as
they develop their own framework. It remains to be seen if states will
agree with the Task Force or propose something new. There may indeed be
a need for a federal role here at some point in the future but it is
suggested that federal action in this area await a clear need
manifesting itself in the years ahead.
Additionally and very importantly, states and provinces are likely
to continue to regard CO2 geologic storage reservoirs as a
valuable resource that should be managed using resource management
frameworks, therefore avoiding the treatment of CO2 storage
as waste disposal. The Task Force strongly believes that treatment of
CO2 as a waste under waste management regulatory frameworks
will diminish significantly the potential of carbon storage technology
to meaningfully mitigate the impact of CO2 emissions on the
global climate. The energy consuming public and the industry which
produces that energy share a common goal in coming up with a workable
solution.
Let me close by noting the obvious--that public support for carbon
storage as a strategy for mitigating the impact of global climate
change will be crucial. It will be important to educate the public
about this technology including CO2's long history of being
transported, handled, and used in a variety of applications. It will
also be vitally important to include the public in every step of the
regulatory development process, state and federal. State open meeting
laws will ensure public notice and participation in the state process
at both legislation and regulation development stages.
Thank you for the opportunity to appear here today. If I can
provide any additional information, please do not hesitate to ask.
The Chairman. We'll be glad to include that in the record.
Thank you very much for your testimony.
Mr. Anderson.
STATEMENT OF SCOTT ANDERSON, ENVIRONMENTAL DEFENSE, AUSTIN, TX
Mr. Anderson. Thank you, Mr. Chairman. We're pleased to be
here today as the committee considers how to create a
regulatory framework regarding carbon capture and storage so
that CCS can play a role in the fight against climate change.
Climate change is the most significant environmental issue of
our generation. The Senate is doing important work in this
area. Cap and trade legislation if adopted would do a lot to
commercialize CCS by creating a market value for voiding
CO2 emissions and considering the measures you have
before you today it is vital work as well.
Without a sound regulatory framework uncertainty will
prevail and the marketplace will not be able to move CCS
forward in a significant way. Public acceptance will happen
only if the public is confident that rigorous and credible
regulatory oversight is in place. The fact that Environmental
Defense supports deployment of CCS does not mean that we are
champions of coal.
We believe that business as usual for coal is over. Public
opinion is shifting and conventional coal plants are being
delayed or canceled at a rate unimaginable a year ago. People
are increasingly recognizing that energy efficiency and
renewables should play a leading role in energy and climate
policy.
We're not champions of coal at Environmental Defense but we
are realists. Coal will continue to be used for the foreseeable
future and we believe that CCS can play a significant role in
helping coal to reduce its greenhouse emissions. Even today in
the absence of a full fledged private market it's possible
where the economics arrive to begin deployment.
The Texas legislature passed a bill in 2007 that provided a
severance tax incentive for oil producers who use
CO2 to produce oil and then sequester the carbon
afterwards, defining permits as meaning 99 percent retention
for 1,000 years or more. So at least in Texas the legislature
has made a determination that CCS is ready for deployment now.
I'll turn now to Senate bill 2144 and section 5 of Senate
bill 2323. Senator Coleman's Senate bill 2144 would require a
feasibility study that we believe is sound. We endorse this
measure.
Section 5 of Senator Kerry's bill would establish an
interagency task force to develop regulations and we believe
that with some modification this is worthy of passage as well.
Section 5 has several notable strengths. It assures that the
development of a regulatory framework will move forward
expeditiously that includes the Departments of Energy and
Interior in the process. It appropriately names the
administrator of the EPA who has key responsibilities of the
Safe Drinking Water Act to be chairman or chairperson of the
task force.
Finally the legislation builds on existing regulatory
authority on an incremental as needed bases. Subsection (a)(5)
requires regulations to take into account the existing UIC
program and then continues to provide additional requirements
that regulations must satisfy. We believe such a step by step
approach is prudent for first generation CCS rules. As the need
for additional grants of jurisdiction or congressional guidance
become apparent additional provisions can be enacted through
supplemental legislation.
There are also several areas of Section 5 that we feel
could be improved. I'll only touch verbally on one of those. We
are confident that the bill is intended to accelerate adoption
of carbon sequestration regulations, but EPA is already engaged
in rulemaking and there's a risk that the bill can actually
slow down adoption of the first set of regulations. We
recommend adding a provision indicating that Congress does not
intend to discourage rulemaking in the near term, but rather
intends that regulations should reflect the interagency process
spelled out in the bill. If EPA adopts rules based on existing
procedures in the meantime in a rules developed pursuant to
this bill would become the second generation of rules.
The final portion of my prepared testimony discusses the
appropriate design of geologic sequestration regulations. We
suggest that rules generally should be flexible and performance
based and that they should adapt to evolving knowledge and best
practices. At the same time we say that it's not enough to be
flexible, adaptive and performance based. It's essential that
rules be grounded in a thorough scientific understanding of the
risks involved and the rules assure that the risk will be
managed properly. Some aspects of the rules such as site
characterization and selection requirements will need to be
relatively more prescriptive than others. With that I'll close.
Thank you.
[The prepared statement of Mr. Anderson follows:]
Prepared Statement of Scott Anderson, Environmental Defense, Austin, TX
We appreciate the opportunity to speak to you today as the
committee considers how to create a regulatory framework that will
enable carbon capture and storage (CCS) to play a role in the fight
against climate change. Climate change is the most important
environmental issue of our generation and successful development and
deployment of CCS is a critical path for taking coal, the world's most
abundant but carbon-intensive fossil fuel, and accommodating it to a
carbon-constrained future.
Environmental Defense is a national non-profit organization
representing more than 500,000 members. Since 1967, we have linked
science, economics and law to create innovative, equitable and cost-
effective solutions to urgent environmental problems. My personal
background includes more than 20 years representing independent oil and
gas producers in Texas, and so I have some appreciation for many of the
issues and concerns related to the underground storage of carbon
dioxide.
The Senate is doing important work to address the threat of climate
change. The single most important thing the Senate can do to
commercialize CCS is to take quick action on cap and trade legislation,
since such legislation would create a market value for avoiding carbon
dioxide emissions. Given the right incentives, we believe that the
market will be far more effective and efficient in discovering
necessary technologies of all types, including CCS, than any suite of
government mandates or subsidies, however well intentioned.
Consideration of regulatory measures such as those before you today
is vital work as well. Without a sound regulatory framework to govern
carbon capture, transportation and storage, uncertainty will prevail
and the marketplace will not be able to achieve the kind of deep and
sustained reductions necessary to avoid the worst consequences of
greenhouse gas build-up. Similarly, public acceptance of CCS will
happen only if the public is confident that rigorous and credible
regulatory oversight is in place.
The fact that Environmental Defense supports the deployment of CCS
does not mean that we are champions of coal. We believe that business
as usual for coal is over. Public opinion is shifting and conventional
coal plants are being delayed or canceled at a rate unimaginable even a
year ago. In states like Texas, Florida, Oklahoma and Kansas, people
are beginning to realize that it is environmentally irresponsible and
fiscally imprudent to proceed with building new coal plants, absent a
concrete plan to reduce and avoid CO2 emissions. We are also
pleased that people are increasingly recognizing that energy efficiency
and renewables should play a leading role in energy and climate policy.
Although we are not champions of coal at Environmental Defense, we
are realists. Coal will continue to be used for electricity production
for the foreseeable future. Therefore the nation and the world need
technologies that enable coal to be used in a manner that avoids
significant greenhouse gas emissions. According to an IEA study
released in 2006, CCS could rank, by 2050, second only to energy
efficiency as a greenhouse gas control measure. The Intergovernmental
Panel on Climate Change projects that CCS could, by 2100, contribute 15
to 55% of the greenhouse gas reductions needed to avert catastrophic
climate change. Just last week in a proposed directive on CCS, the
Commission of the European Communities noted that efficiency and
renewables are the most sustainable supply options in the long run but
that ``we cannot reduce EU or world CO2 emissions by 50% in
2050 if we do not also capture CO2 from industrial
installations and store it in geological formations.''
While different analysts come up with somewhat different scenarios,
it is clear that coal is not going to disappear anytime soon and
therefore effectively capturing and sequestering carbon dioxide
emissions from coal can make a real difference in whether mankind will
be able to solve climate change problems. We are fortunate that early
sequestration projects, together with over 30 years of experience with
injecting CO2 into oilfields, have provided confidence that
long-term sequestration in properly selected geologic formations is
feasible.
In fact, even today, when large-scale commercialization of CCS is
hampered by the absence of price signals that could be provided by a
market in trading allowances, it is possible to begin deployment and
start making real reductions in CO2 emissions. McKinsey &
Company's recent study, ``Reducing U.S. Greenhouse Gas Emissions: How
Much at What Cost?,'' provides a sense of the costs involved. My fellow
panelist Tracy Evans of Denbury Resources can speak from direct
experience about the feasibility of deploying CCS in the oilfield
context.
summary of comments on s. 2144 and s. 2323
I would like to cover several things this morning. I will touch
briefly on S. 2144, which would require a study of the feasibility of
constructing and operating carbon dioxide pipeline and sequestration
facilities. I want to focus most of our remarks, however, on Section 5
of S. 2323, which would establish an interagency task force to develop
regulations for CO2 capture and storage. Our remarks on
Section 5 will focus on regulations for geologic sequestration, rather
than capture. Finally, we will offer comments on the appropriate design
of sequestration regulations. We will mention why it is important for
CO2 storage regulations, especially in the early years, to
be relatively performance-based rather than prescriptive and why it is
important for the regulatory framework to adapt as knowledge improves.
We believe that it would be useful to adopt S. 2144, and Section 5
of S. 2323 if modified in several respects, as stand-alone measures.
These measures would be most useful, however, if enacted as part of or
in concert with comprehensive cap and trade legislation that would
create a market value for avoiding CO2 emissions and thereby
encourage market participants to engage in the activities that these
measures are intended to address.
s. 2144
Senator Coleman's S. 2144 would require the Secretary of Energy, in
coordination with certain other agencies, to study the feasibility of
constructing and operating carbon dioxide pipelines and sequestration
facilities. We believe that the scope of the contemplated study is
sound and that the study is likely to yield important information.
Without prejudice to the possibility that others may have valuable
suggestions on improving the scope of the study, we generally endorse
this bill as proposed.
section 5 of s. 2323
Section 5 of Senator Kerry's S. 2323 would establish an Interagency
Task Force ``to develop regulations providing guidelines and practices
for the capture and storage of carbon dioxide.''
Section 5 has several notable strengths:
1. The most fundamental benefit of Section 5 lies in assuring
that the development of a regulatory framework for CCS will
move forward expeditiously. The intent is clearly that issuance
of regulations should be accelerated, not delayed.
2. Including the Departments of Energy and Interior in the
regulatory development process is worthwhile. DOE has
significant expertise in carbon capture and sequestration that
can benefit the rulemaking process. The Department of
Interior's Geologic Survey also has significant expertise and
is in a position to offer useful input.
3. The bill appropriately names the Administrator of the
Environmental Protection Agency as the chair-person of the task
force. This is appropriate given that EPA, in addition to
having its own significant expertise in CCS, has responsibility
under the Safe Drinking Water Act's Underground Injection
Control Program to protect underground sources of drinking
water from contaminants that might cause a violation of a
national primary drinking water regulation or otherwise
adversely affect the health of persons.
4. The legislation builds on existing regulatory authority on
an incremental, as-needed basis, i.e. subsection (a)(5)(A)
requires that the regulations ``take into account existing
underground injection control program requirements'' and then
provides additional requirements that regulations must satisfy
in subsections (a)(5)(B)-(F). We believe it is prudent to take
such a step-by-step approach to authorizing and overseeing the
development of ``first generation'' rules for CCS. Both
industry and regulators will ``learn while doing'' in the early
years of this technology. For now, most observers (ourselves
included) appear to find the Safe Drinking Water Act's
Underground Injection Control Program to be generally adequate
as a basis for initial federal regulations. As the need for
additional grants of jurisdiction and/or Congressional guidance
becomes apparent, additional provisions can be enacted through
supplemental legislation.
There are also several aspects of Section 5 where the committee has
an opportunity to make improvements:
1. As noted above, subsection (a)(5)(B)-(F) builds on the
Safe Drinking Water Act by requiring that carbon dioxide
capture and storage regulations satisfy several objectives that
are not part of the existing underground injection control
program. However, in our judgment, two more requirements ought
to be added. These are (to borrow language from the proposed
Lieberman-Warner Climate Security Act): (a) a requirement to
regulate the ``long-term storage of carbon dioxide and
avoiding, to the maximum extent practicable, any release of
carbon dioxide into the atmosphere;'' and (b) a requirement
that the carbon dioxide storage regulations protect not just
underground sources of drinking water and human health, but
``the environment'' as well. In order to fill these two gaps,
we recommend borrowing the language just quoted from section
8001 of S. 2191.
2. We are confident that S. 2323 is intended to accelerate
the adoption of carbon sequestration regulations (while at the
same time broadening the regulatory development process beyond
EPA). There is a risk, however, that the bill could actually
slow down adoption of EPA's first set of regulations, which the
agency currently plans to propose in the Federal Register by
this fall. Publication and adoption of rules in the near term
would be likely to have a positive effect on the development of
early CCS projects. It would be extremely unfortunate if
passage of S. 2323 served to convince EPA to wait for the
conclusion of the S. 2323 process before adopting the first set
of regulations. Accordingly, we recommend that a provision be
added to the bill indicating that Congress does not intend to
discourage earlier CCS rulemaking but rather desires to make
sure that regulations growing out of an interagency process are
adopted in the near-term. If EPA adopts rules based on existing
procedures in the meantime, the regulations developed pursuant
to S. 2323 would become the second generation rules.
3. Subsection (a)(5)(C) requires carbon dioxide storage
regulations to ``address the potential appropriate transfer of
liability to governmental entities.'' We would prefer that any
regulations transferring liability to governmental entities be
postponed until after the task force report called for in
Section 8004 of S. 2191. If such regulations are authorized
sooner, however, we think additional guidance is desirable in
order to assure that those who develop the regulations
recognize that shifting liability to the taxpayers affects the
taxpayers differently depending on whether or not monitoring
has demonstrated that the storage project in question is
performing as expected. The current proposal in Europe
regarding the transfer of liability, released January 23 by the
Commission of the European Communities, would transfer
liability to the government only ``if and when all available
evidence indicates that the stored CO2 will be
completely contained for the indefinite future.'' (Proposed
Article 18, Proposal for a Directive of the European Parliament
and of the Council on the Geological Storage of Carbon
Dioxide). Perhaps that would be a good policy for the United
States as well. It would protect the taxpayer and assure that
project developers maintain an incentive to operate projects
safely and effectively. At a minimum, however, we recommend
that subsection (a)(5)(C) of Section 5 be amended so that those
who draft regulations addressing liability will do so ``taking
into account whether or not particular projects have
demonstrated a reasonable likelihood that virtually all the
CO2 stored will remain sequestered permanently.''
4. Subsection (a)(4) of Section 5 calls on the Interagency
Task Force to consult with industry, legal and technical
experts. We suggest that consultation be expanded to include
experts from non-governmental public interest organizations.
appropriate design of geologic sequestration regulations
Geologic sequestration of carbon dioxide is feasible under the
right conditions. It has been successfully demonstrated in a number of
field projects, including several large projects. The Intergovernmental
Panel on Climate Change (IPCC) Special Report on Carbon Capture and
Storage concluded in 2005 that the fraction of CO2 retained
in ``appropriately selected and managed geological reservoirs'' is
likely to exceed 99% over 1000 years. The IPCC also concluded that the
local health, safety and environmental risks of CCS are comparable to
the risk of current activities such as natural gas storage, enhanced
oil recovery and deep underground storage of acid gas if there is
``appropriate site selection based on available subsurface information,
a monitoring programme to detect problems, a regulatory system and the
appropriate use of remediation methods to stop or control
CO2 releases if they arise.''
While there is little doubt that geologic sequestration is
feasible, and little doubt that successful projects are technically
achievable today, knowledge and understanding are expected to increase
dramatically as the technology begins to be deployed on a large scale.
Current projects are highly customized. There are gaps in our knowledge
and neither government nor industry have yet developed standard
protocols for fundamental aspects of the process such as site
characterization and monitoring. The IPCC Special Report projects that
increasing knowledge and experience will ``reduce uncertainties'' and
``facilitate decision-making.''
In other words, we know enough to get started but we can expect to
experience a lot of ``learning by doing.''
What are the implications of this for the regulatory system? We
believe at least four recommendations are in order to account for the
fact that increasing knowledge and experience will facilitate rational
decision-making in different ways over time:
1. Lean toward a performance-based system. ``Performance-
based'' regulations and ``command-and-control'' regulations do
co-exist--they are two poles on a continuum;
2. Be reasonably flexible. Different projects will present
different risks and uncertainties, and the uncertainty
presented by a single project will tend to decline over time;
3. Require projects to employ an iterative process, informed
by monitoring results and perhaps even by experience gained
from other projects, in order to reduce uncertainty and drive
improvements in site characterization, site suitability
assessment, models, model inputs, field operations, the
monitoring plan itself, and the remediation plan;
4. Write ``adaptive'' rules. Look for language that
automatically accommodates evolving best practices. Also
structure rules to make use of evolving knowledge at each
particular site. Be willing to amend rules when needed to
protect the environment, giving due regard to the fact that it
generally is in the public interest for the regulatory
framework to give the regulated community the certainty needed
to make investment decisions.
At the same time, it is not enough for rules to be flexible,
adaptive and performance-based. It is essential that rules be grounded
in a thorough, scientific understanding of the risks involved and that
rules assure that the risks will be managed properly. In order to
accomplish this, some aspects of the rules (e.g. site characterization
and site selection requirements) will need to be more prescriptive than
others.
conclusion
In a carbon-constrained world where market forces are harnessed to
make sure that society's carbon footprint is reduced in an economically
rational fashion, Environmental Defense foresees a dramatically
increased role for renewable energy and for energy efficiency. At the
same time, since any complete transition away from fossil fuels is
likely to take a very long time, we foresee a long-term need to deal
with CO2 emissions from coal-based facilities. The sooner we
begin to deploy CCS technology on a large scale the better. We applaud
you for working on measures to make this a reality.
The Chairman. Thank you very much.
Mr. Evans.
STATEMENT OF RONALD T. EVANS, SENIOR VICE PRESIDENT, RESERVOIR
ENGINEERING, DENBURY RESOURCES, INC., PLANO, TX
Mr. Evans. Thank you Chairman Bingaman and members of the
committee for the opportunity to share our views on the policy
aspects of carbon capture and storage for CCS. As Denbury
Senior Vice President I oversee all reservoir engineering,
land, acquisitions and purchases of anthropogenic
CO2. Denbury's primary focus is enhanced oil
recovery utilizing CO2.
We are currently the largest oil producer in the State of
Mississippi and one of the largest injectors, if not the
largest injector of CO2 in terms of volume in the
United States. Since 1999 we have produced over 15 million
barrels of oil from CO2 flooding from ten active EOR
projects in Mississippi and Louisiana. We are currently
participating in several demonstration projects and DOE's
regional carbon sequestration partnership program. I will
briefly address what we at Denbury believe are the most
important policy aspects of carbon capture and storage: cost,
taxation and the question of pipeline access and the
legislation before the committee today.
Cost. Perhaps the single largest obstacle to developing CCS
beyond a limited number of projects currently in operation is
the significant cost involved with carbon capture and storage.
The cost of capture stem from variations in the quantity and
the quality of the CO2 produced by hydrocarbon
combustion, gasification or other industrial processes. The
cost to purchase the compressors and the power to generate the
compression necessary to pressure the gas significantly to
enter the pipeline or sequestration, the lower the percentage
of CO2 in the stream of gases and the greater amount
of impurities in the streams the greater the cost of capture.
In addition most technologies capture CO2 at a
lower pressure than the pressure required to enter a typical
CO2 pipeline or to inject into a deep saline
reservoir or EOR project. The cost of the compressors and the
power necessary to drive them are significant. One example
approximately seven dollars and fifty cents per ton or just
over one third of the estimated total cost of 20 dollars per
ton for carbon capture and storage from the least expensive
sources when transported only moderate distances.
The costs of transportation are also significant.
Installation costs for CO2 pipelines have increased
dramatically in recent years. From about 30,000 dollars per
inch mile for Denbury's free State pipeline to an estimated
100,000 dollars per inch mile for Denbury's proposed green
pipeline due to rising steel prices, rising energy prices and
construction costs doubling our effective CO2
pipeline transportation rate. Without some means of reducing
the cost of carbon capture and storage infrastructure,
significantly development, will likely remain stagnant.
Senate bill 2144 directs the Secretary of Energy to study
technical and financing issues related to the construction and
operation of CO2 pipelines. While further studies
should prove useful, Congress can act now to address carbon
capture and storage costs. Congress should amend section 7704,
the tax code to clarify that section (d)(1)(E) covers man made
as opposed to just naturally occurring CO2.
A substantial portion of all the CO2, natural
gas, oil and product pipelines in the United States are owned
and operated by publicly traded partnerships under section 7704
whose lower cost of capital lowers the cost of development and
transportation of natural resources. Because of the current
uncertainty in section 7704 much of the existing CO2
pipeline capacity cannot be used and new capacity may not get
built to transport anthropogenic CO2. The Senate
Finance committee approved a clarification last June, but
Congress failed to include it in the Energy Independence and
Security Act. We strongly urge members of this committee to
work with their colleagues to pass this clarifying amendment.
Pipeline access. The natural gas, oil and product pipeline
systems today consist of hundreds of thousands of miles of
pipelines with significant interconnects between individual
pipeline systems. There also exists a huge retail market or oil
and natural gas with a large number of users. This situation
stands at market contrast to CO2 pipelines. In
addition to CO2 not being explosive, flammable or
poisonous there currently exists no large interconnected system
nor are there reasonable prospects for development of a retail
market for CO2 with a large number of users.
Only a limited number of regional CO2 shippers
and users exist. CO2 pipeline systems are only a
tiny fraction of the size of the oil and gas network.
CO2 pipelines should be given room to grow before
FERC like regulation, including regulating access, is
contemplated.
To conclude the U.S. economy will continue to require
massive amounts of energy well into the future and thus this
country needs to use all of its resources to produce the energy
it requires given economic and environmental realities. EOR is
already playing an important role in this regard and can do so
by far greater scale with the right policies. EOR is the only
currently active, actual on the ground method for
CO2 injection and sequestration.
While we agree that the additional research and studies
proposed in Senate bills 2144 and Senate bill 2323 are
worthwhile. We do not believe there's a need for comprehensive
Federal regulation as section five of Senate bill 2323
proposes. Congress should provide necessary incentives in
mechanisms to foster the development of CCS allowing states to
continue to oversee various aspects with which they already
have significant experience. Thank you.
[The prepared statement of Mr. Evans follows:]
Prepared Statement of Ronald T. Evans, Senior Vice President, Reservoir
Engineering, Denbury Resources, Plano, TX
Denbury Resources, Inc., (``Denbury'') appreciates this opportunity
to share with Members of the Senate committee on Energy and Natural
Resources its views on policy aspects of carbon capture,
transportation, and sequestration (hereinafter collectively referred to
as ``CCS''). As Senior Vice President, Reservoir Engineering for
Denbury, I oversee all reservoir engineering, land functions and
acquisition activities; am responsible for securing and contracting
sources of anthropogenic CO2; and coordinating our
government relations. Denbury is currently the largest oil producer in
the State of Mississippi and the one of the largest injectors of carbon
dioxide (``CO2'') in terms of volume in the United States.
Denbury's primary focus is enhanced oil recovery (``EOR'') utilizing
CO2. At the present time we operate ten (10) active
CO2 enhanced oil projects, nine in the State of Mississippi
and one in the State of Louisiana.
Denbury also owns the largest natural deposit of CO2
east of the Mississippi River, called Jackson Dome in central
Mississippi, which we extract and transport through approximately 350
miles of dedicated CO2 pipelines for use in EOR. Denbury is
also in the process of designing or constructing an additional 375
miles of CO2 pipelines in order to expand our operations
into additional fields throughout the Gulf Coast of the United States.
Finally, the committee may be interested to know that Denbury is
working with the federal Department of Energy and various research
universities on several Phase II and Phase III demonstration projects
in the Regional Carbon Sequestration Partnership Program. While our
business model focuses primarily on the transportation and
sequestration components of CCS, we also are very familiar with the
capture component both in terms of (1) the compression demands of
transportation and sequestration and (2) our enhanced oil operations,
which recycle large volumes of CO2 in order to recover
additional volumes of oil. Given this background, Denbury is pleased to
share its perspective on various policy aspects of CCS and the proposed
legislation before the committee today.
A thorough understanding of both (1) the physical processes by
which CO2 is obtained, transported and injected for purposes
of EOR and/or permanent storage, and (2) the economics that underlie
existing and future EOR-related use of CO2 is essential to
any consideration of potential policy issues. The significant and
varying costs associated with CCS--whether in conjunction with EOR or
not--are perhaps the single largest obstacle to developing CCS
infrastructure beyond the limited, discrete projects currently in
operation. From Denbury's perspective, it is critical that any
contemplated state or federal regulation not increase these costs and
impede private sector development of the CCS infrastructure necessary
to meet the demands of our energy hungry and potentially carbon-
constrained world. As explained in greater detail below, the current
regulatory structure surrounding CO2 consists of state and
federal provisions that cover discrete aspects of CCS. For instance,
the over 3,500 miles of dedicated CO2 pipelines currently in
use were constructed and are operating under rules and guidelines for
safety issued by the Department of Transportation's Office of Pipeline
Safety; with pipeline siting issues significantly impacted by state
eminent domain laws; and with CO2 injection wells permitted
and approved by individual state government divisions or departments of
Underground Injection Control, utilizing the standards and policies
issued by the Environmental Protection Agency. While this system may
appear patch-work and noncomprehensive, the current structure is
entirely appropriate, as CCS is very much still in its infancy. This
predominantly state-law-based system should suffice for many years to
come. Thus, Denbury supports the recommendations of the Interstate Oil
and Gas Compact Commission's 2005 Regulatory Framework for States. With
few exceptions, such as funding research and further study of the
issues involved as both bills propose, and given the current system of
regulations and natural physical and economic constraints likely to
exist for years to come, federal policymakers might best further
national energy and carbon capture goals by deferring broad legislation
or regulation while CCS is in this nascent phase.
i. capture / compression
In thinking about the policy aspects of CCS, it is useful to
separate the various components of CCS and to identify what issues
within each merit particular attention, distinguishing between EOR-
related CCS and CCS in saline or other formations where appropriate.
The starting point for any type of CCS is to capture the
CO2. Denbury currently obtains all of its CO2
from its natural deposit at Jackson Dome. Certain existing and some
evolving technologies allow CO2 emitted from various
manufacturing processes to be captured. The combustion or gasification
of hydrocarbon-based fuels such as coal, petcoke or other hydrocarbons
produces particularly large volumes of CO2 at varying levels
of quality and purity. As new capture-inclusive projects are
constructed, Denbury plans to acquire thousands of metric tons of
CO2 each day for use in EOR.
Aside from the threshold questions of how to properly classify
CO2 and whether and to what extent to restrict emissions,
from Denbury's perspective, the capture of CO2 presents no
policy issue. Rather, the capture component presents a significant
economic issue: First, capture technology is expensive. The byproduct
of hydrocarbon combustion or gasification is a stream of gases and
other impurities that contains various quantities of CO2. In
order for CO2 to be usable in EOR it must be injected in a
relatively pure form. Similarly, CO2 injected into deep
saline reservoirs must be in a relatively pure form to maximize the
storage space available to be filled with CO2. Thus, a
significant component of the capture cost is the cost to separate and
purify the CO2 to be injected. The lower the percentage of
CO2 in the stream of gases and the greater the amount of
impurities in the stream the greater the cost of capture. Second, most
technologies capture the CO2 at a lower pressure than is
required to either enter a typical CO2 pipeline or to inject
into a deep saline reservoir or EOR project. The costs of the
compressors and the power necessary to drive them are significant--
approximately $7.50/ton of the estimated $20/ton total cost\1\ for
CO2 that is transported moderate distances. Therefore, the
compression costs associated with CO2 capture are slightly
more than one-third (33%) of the total CCS cost for the least expensive
sources of anthropogenic (man-made) CO2. Additional
compression costs are incurred to maintain pressure in pipelines and
again when CO2 is pressured up to sufficient level for EOR
reservoir injection. In sum, without some means of reducing the cost of
captured anthropogenic CO2 significantly, infrastructure
development will likely remain stagnant.
---------------------------------------------------------------------------
\1\ Total costs of CCS varies substantially by source of
CO2--to upwards of $70/ton--and even across proposed
gasification projects because of variances in each process. This figure
represents an estimate of the lowest-cost industrial-sourced
CO2.
---------------------------------------------------------------------------
To address this issue, last year the Finance committee approved a
tax credit for the capture and sequestration of CO2 of
$10.00/ton in connection with EOR and $20/ton for non-EOR projects for
up to 75,000,000 tons sequestered. From Denbury's perspective, this
would be sufficient to incentivize construction of additional pipelines
from emission sites to geologic sequestration sites in connection with
EOR activities. Unfortunately, this provision was not included in the
energy legislation ultimately signed into law in December. We hope that
Congress will address the issue of CCS costs in 2008, especially those
associated with capture and compression, and note that proposed
projects from gasification through to sequestration have the potential
to create hundreds and perhaps thousands of jobs across the country. On
this point, S. 2144 directs the Secretary of Energy to study technical
and financing issues related to the construction and operation of
CO2 pipelines and sequestration facilities. While this will
be helpful to policymakers, the legislation should also direct the
Secretary to consider these same issues in relation to CO2
capture, separation, purification and compression.
ii. transportation
The most economical way to transport CO2 is through
pipelines at pressures in excess of 1100 psi so that the CO2
is transported as a supercritical fluid (dense phase). At pressures in
excess of 1100 psi and temperatures common for CO2
pipelines, CO2 is a supercritical fluid which means that the
CO2 has properties of both a liquid and a gas. Larger
volumes of CO2 can be transported through CO2
pipelines in this dense phase than can be transported as a gas. Given
the pressure requirements to maintain CO2 in the dense
phase, CO2 pipelines are generally operated at pressures
greater than 2,000 psi. This pressure is well in excess of the average
operating pressure of a natural gas pipeline, though the material used
to manufacture both types is the same.
A. Safety
CO2 is not as dangerous to transport as some other
gases, such as hydrogen and natural gas because it is not explosive,
flammable or poisonous. The primary safety issue with transporting
CO2 is asphyxiation caused by a leak in a pipeline. Although
there have been a few accidents, releases and leaks reported, none of
the dozen leaks that occurred from 1986 to 2006 resulted in significant
injury. The characteristics of anthropogenic CO2 and natural
CO2 are essentially the same. Thus, whether natural
CO2 or anthropogenic CO2 is being transported in
a CO2 pipeline for the purposes of being delivered to an
enhanced oil recovery project or being delivered to a deep saline
reservoir sequestration project is irrelevant to the safe construction
and operation of a CO2 pipeline. At the present time there
exist over 3,500 miles of dedicated CO2 pipelines, most of
which have been transporting CO2 for over 20 years--and some
for over 30 years--with an excellent safety record. We do not see any
evidence to suggest that the current regulatory framework that oversees
construction and operation of CO2 pipelines should be
modified. To the extent that consideration of safe handling,
transportation, and sequestration issues by the Department of Energy,
as S. 2144 directs, will address any lingering misconceptions about the
relative safety of dense phase CO2, it will facilitate
public understanding and acceptance of CO2 pipelines and
sequestration projects.
B. Siting
At the present time federal eminent domain authority does not
extend to CO2 pipelines. Several states have provided
eminent domain authority to CO2 pipeline owners to assist in
getting CO2 pipelines constructed. While this is helpful in
constructing intrastate pipelines, individual state eminent domain
powers may not extend to interstate pipelines that are just traversing
through a state with no origin or terminus there. For this reason and
due to the long distances across state lines that separate potential
CO2 emission capture sites from potential EOR locations,
federal eminent domain authority may ultimately be required to develop
a nationwide CO2 pipeline infrastructure. In addition, some
mechanism may be necessary to address the siting of pipelines and CCS
generally on federal lands. S. 2144 directs the Secretary of Energy to
study CO2 pipeline siting issues, which should facilitate a
thoughtful approach by policymakers.
C. Rates
Any contemplation of federal regulation of CO2
transportation rates and pipelines similar to the regulations that
currently exist for natural gas, oil or products pipelines is
premature, as there is no interconnected system of CO2
pipelines to which to apply any such regulation, nor prospects for
development of one for many years, nor reasonable prospects for
development of a ``retail'' market for CO2 with large
numbers of ``users'' of the CO2. At the present time there
are very limited areas with existing CO2 pipelines and
limited industrial CO2 emissions being captured (North
Dakota Gasification). The vast majority of the existing CO2
pipelines are transporting natural CO2 from natural
underground CO2 production sources that are owned and
operated by the CO2 pipeline owner--generally for use in
enhanced recovery projects also owned and operated by the
CO2 pipeline owner. In cases where the owner of the
CO2 pipeline has CO2 production volumes in excess
of its own EOR requirements, the excess CO2 volumes are sold
to EOR operators in other projects or to industrial gas suppliers. This
limited number of regional CO2 shippers and consumers stands
in marked contrast to the numerous and geographically widespread
producers and consumers of oil and natural gas products.
It would be a substantial mischaracterization to suggest that the
U.S. has an integrated CO2 pipeline system similar to the
fully integrated natural gas, oil or hydrocarbon products pipeline
systems which have their transportation rates regulated by the Federal
Energy Regulatory Commission (``FERC''). The natural gas, oil and
product pipeline systems today consist of hundreds of thousands of
miles of pipelines with significant interconnects between individual
pipeline systems to accommodate the transfer of natural gas, oil or
products from one pipeline system to the other. In contrast, existing
CO2 pipeline systems are a tiny fraction of that size (3500
miles) and are not interconnected. (see Attachment No. 1) Several
pipelines delivering CO2 for enhanced oil recovery in the
Permian basin of west Texas are interconnected at Denver City, where
CO2 can be transferred from one pipeline to another. The
other CO2 pipeline systems in Wyoming, North Dakota,
Oklahoma, and Mississippi are not connected to the Permian basin
pipeline system or to each other. Thus, today no national
CO2 pipeline system exists and no federal regulation to
ensure access is necessary.
Natural gas, oil and hydrocarbon products pipelines were
constructed in a similar manner to today's CO2 pipeline
systems. Individual pipeline systems were developed to transport
natural gas, oil or products from production sites to consumption sites
in their infancy. Only after a significant period of time, were these
individual systems eventually interconnected to allow the transfer from
one pipeline system to the other. Although the Federal Power Commission
and eventually the FERC was granted jurisdiction over the
transportation rates for natural gas, oil and hydrocarbon products, the
combination of regulating rates and requiring open access has only
existed since 1985. Several decades passed between the time that
individual pipelines were constructed and eventually interconnected to
create an integrated intrastate pipeline system. CO2
pipelines should also be given room to grow before FERC-like regulation
is contemplated.
D. Costs
The construction and installation of CO2 pipelines is a
capital intensive effort, the costs of which have increased in recent
years for a variety of reasons, including rising steel prices,
construction costs and energy prices. By way of example, Denbury's 93
mile, 20 inch Freestate pipeline (see Attachment No. 2) completed in
2006 cost approximately $30,000 per inch-mile, resulting in an
effective transportation rate of approximately $3.50/ton at full
capacity. The initial 37 mile segment of Denbury's 24 inch Delta
pipeline was completed in 2007 at a cost of approximately $55,000 per
inch-mile. We estimate that our planned 314 mile, 24 inch Green
Pipeline that will run from Donaldsonville, Louisiana to Hastings field
in southeast Texas will cost approximately, $100,000 per inch-mile
resulting in an effective transportation rate of approximately $7/ton
at full capacity. While the length (pumping stations to maintain
adequate pressure add an additional $1 to $2 per ton to transportation
costs), route obstacles and type of terrain all added to the estimated
cost of the Green pipeline, the fact remains that such endeavors, even
under the best of circumstances are extremely costly and take years of
careful planning. As stated above, S. 2144 directs the Secretary of
Energy to study technical and financing issues related to the
construction and operation of CO2 pipelines. Such
information should prove useful to policymakers seeking to understand
the significant costs involved in developing the infrastructure of CCS.
Also, any study of CO2 pipeline financing issues will
undoubtedly encounter the tax code impediment discussed in the next
section.
E. Taxation
Today, a substantial portion of all CO2, natural gas,
oil and products pipelines in the U.S. are owned and operated by
companies that are organized as Publicly Traded Partnerships commonly
referred to as Master Limited Partnerships (``MLPs''), which through
their lower cost of capital have been an important financing source for
building these assets. Section 7704 of the tax code permits MLPs to be
taxed so that income and tax liabilities are passed through to the
partners, even though the MLPs are large public entities, provided 90
percent or more of the MLP's gross income is derived from certain
qualifying activities. These activities include exploration,
development, processing and transportation of natural resources,
including pipelines transporting gas, oil, or products thereof (see
Sec. 7704(d)(1)(E)). While this provision covers the processing and
pipelining of ``natural'' CO2, it is unclear whether it
covers anthropogenic CO2. Because of this uncertainty, much
of the existing CO2 pipeline capacity (that owned by MLPs)
cannot currently be used to transport anthropogenic CO2 from
emissions sites--at least not without significantly higher tax costs
than other pipeline assets in the industry.
Last year, as part of its energy tax package, the Senate Finance
committee adopted a modification to include industrial source
CO2 in the definition of qualifying income (see Sec. 817 of
the Energy Enhancement and Investment Act of 2007, June 19, 2007).
However, Congress ultimately failed to include that package of
provisions in the Energy Independence and Security Act of 2007 (P.L.
110-140). Without this modification of the tax code, a substantial 6
portion of the pipeline industry will most likely not contribute
capital to the construction of the CO2 pipeline
infrastructure necessary to facilitate CCS through transportation of
anthropogenic CO2. We strongly urge Members of the Energy
and Natural Resources committee to work with their colleagues on the
Finance committee and the House Ways and Means committee to accomplish
this important clarification.
iii. injection / sequestration
Enhanced oil recovery utilizing CO2 requires multiple
injection wells throughout a unitized field or reservoir.
CO2 injection wells are permitted and approved by each
State's division or department of Underground Injection Control
utilizing the standards and policies issued by the EPA. CO2
injection wells utilized in tertiary oil recovery (a.k.a. EOR) are
permitted and approved as Class II Injection wells. Such wells have
been in existence for over 30 years. The CO2 sequestration
commercial demonstration projects proposed in S. 2323 and enacted in
the Energy Independence and Security Act of 2007 should yield
additional helpful data on the ability of EOR and saline reservoirs to
sequester CO2.
In 2005, the Interstate Oil and Gas Compact Commission (``IOGCC'')
issued its recommendations concerning CO2 injection wells in
EOR and non-EOR applications. The IOGCC has recommended that future
CO2 regulation should build upon the primarily state-based
regulatory framework already in place, due to states' decades of
experience with CO2 EOR, natural gas storage, and acid gas
injection. We concur with their recommendation that for future
CO2 injections in EOR projects, the existing regulatory
framework should not be modified. The IOGCC recommended that for non-
EOR CO2 injections, additional regulatory requirements may
need to be considered since these types of applications may not have a
defined period of injection as does EOR. We also concur with the IOGCC
recommendation that CO2 injection wells for non-EOR
applications should be permitted and approved as a sub-class of Class
II injection wells or a new classification but not permitted as Class I
or V injection wells.
Generally, every CO2 well drilled is required by state
regulations to set and cement a surface casing string below the
Underground Source of Drinking Water (USDW) depth to protect the fresh
water and ground water intervals. Cement is required to be circulated
back to the surface to insure that all potential zones above the USDW
depth that contain freshwater are protected. Only after setting the
surface casing are wells drilled to the depth required to produce oil
and gas or to inject CO2. Once the well reaches total depth
an additional casing string is cemented in the well to provide
additional protection to the freshwater intervals and to produce or
inject through. We believe existing laws and regulations provide
sufficient protection of the fresh water and ground water reservoirs
from the injection of CO2 in EOR operations or, for that
matter, in deep saline reservoirs.
The potential for significant migration or leakage from an EOR
operation is extremely remote due to the geological nature of oil and
gas reservoirs and the existing mechanism that has trapped the oil or
gas. At the present time oil and gas operators are required under their
mineral leases and state regulations to properly plug and abandon
wellbores within a reasonable period after oil and gas operations
cease. Responsibility for re-plugging an improperly plugged well
remains with the oil and gas operator for an extremely long period of
time and, in practice, remains as long as the oil and gas operator is
in existence. Such responsibility should be essentially the same for
deep saline reservoir injection. However, the detailed geologic and
engineering information required by states for EOR projects does not
exist for saline reservoirs. Thus, information about deep saline
reservoirs will have to be developed, taking into account that
CO2, being less dense than saline water, will segregate due
to gravitational forces and migrate to the highest subsurface position
in the reservoir. As noted above, S. 2323 proposes, and the Energy
Independence and Security Act of 2007 provided for, commercial
demonstration projects, as well as a national CO2 storage
capacity assessment. These undertakings should yield important data
currently lacking on saline reservoirs.
iv. conclusion
The U.S. economy will continue to require massive amounts of energy
well into the future and thus the country needs to use all of its
resources to produce the energy it requires given economic and
environmental realities. EOR is already playing an important role in
this regard--taking a waste product and using it to increase domestic
energy production--and can do so on a far greater scale, with little
action required by federal policymakers. The most important step
Congress can take at present is to amend Section 7704(d)(1)(E) of the
tax code to make clear that anthropogenic CO2 is included.
The two bills being considered by the committee today, S. 2144 and
S. 2323, are clearly intended to provide meaningful vehicles to better
understand the issues central to CCS and we commend the committee for
focusing on them. While we agree that additional research and further
study are worthwhile--as both bills propose--we do not believe there is
a need for comprehensive federal regulation, as Section 5 of S. 2323
proposes. Of course, there are areas where federal oversight will
likely be necessary, such as management of CO2 on and under
federal lands. For the most part, however, Congress should simply
provide necessary incentives and mechanisms to foster the development
of CCS, allowing states to continue to oversee various aspects with
which they already have significant experience.
The Chairman. Thank you very much. Thank you all for your
excellent testimony.
Let me start with you, Mr. Bengal. I think you make a point
in your testimony which is fairly key to our consideration of
this whole subject and that is that you say States and
provinces are likely to continue to regard CO2
geologic storage reservoirs as a valuable resource that should
be managed using resource management frameworks therefore
voiding the treatment of CO2 storage as a waste
disposal. I gather that what you have put together, your task
force as you see it, deals with this not as a pollutant but
rather as a resource that should be managed in that way. Could
you clarify that for me?
Mr. Bengal. The CO2 in and of itself may be not
the resource as much as the pore space you would be putting it
into. Primarily there's only so many places that would be good
for CO2 storage. Not every State has good geologic
sites and there's some States that you should not store
CO2 in because of the nature of the geology. It's
just not safe and sound.
So there will be a competition for that pore space for
those places where it is good that would be an economic benefit
to a State who has that pore space to effectively manage that
pore space. Ensure that No. 1, the maximum amount of
CO2 is put into that storage area so it's not
wasted, the space is not wasted, to keep other entities from
encroaching upon that area so it can be set aside just for a
particular project. There's a question about drilling through
that site. If you had an entire site permitted and set aside
for any particular project the State would then ensure that
there's no other penetration to the well bores to that site.
So what we're really talking about is we're looking at the
management of the pore space where you put the CO2
as basically the resource. The CO2 placed in that
resource management frameworks deal with that because we deal
with natural gas storage maximizing pore space to store the
natural gas. With oil and gas you maximize recovery by managing
the pore space much the same way here.
In a waste framework you're just looking at a place to
inject something to get rid of it. You're not managing
effectively what you're using and where it's going. So that's
the way we want to look at it. It's more regulatory framework
issue as opposed to the CO2 itself.
The Chairman. Let me ask, with my very limited knowledge of
this subject at this point, it seems to me that a big problem
is that much of the production of CO2 from power
plants is not going to be particularly near the storage
locations that we're going to try to store or sequester this
CO2 in. So we're going to be talking about quite a
few pipelines that are transferring this CO2 across
several states. So there's going to be a Federal responsibility
once you get an interstate pipeline.
What do you see? I know you have a thing here saying that
broader, overarching Federal regulation that's like that
contemplated in 2323 is not appropriate in your view. How do
you see the Federal Government regulating that transportation
if I'm right that the significant amount of interstate
transportation is going to be required?
Mr. Bengal. What we're referring to basically is the
storage site itself and not the transportation system. That
would be a Federal role. The pipelines and the infrastructure
for that would remain a DOT role as it is or a FERC role.
We're basically talking about the regulation of the site,
the licensing of the site, the long term storage and things
like that is what we're referring to and the Federal
regulations that would deal with that. With respect to the
location and the cost of CO2 from existing power
plants, you're absolutely correct. The cost of right now to
retrofit an existing power plant to concentrate the
CO2 from that emission stack and then transport it
somewhere, a distance for storage which is many years off in
the future for sure.
What we're looking at is initially, I think the first
projects would be basically a plant built for that purpose at a
storage site where you have minimal transportation. Those are
the kinds of projects we need to get going on first and right
away as opposed to planning for this massive retrofitting of
all existing power plants and a massive pipeline system which
we don't need to do first. We need to get some major projects
going right now. The technology exists. The regulatory
frameworks are in place right now to do that.
The Chairman. Senator Corker.
Senator Corker. Yes, sir, Mr. Chairman. Thank you for your
testimony, all of you. Mr. Anderson, you talked about how coal
is going to be moving into a new era. I can't help but think,
based on all the complications that center around either the
cost of transport that Mr. Evans talked about and just the
geographic differences that exist between where carbon is
produced and where it's going to be stored, that really, unless
there's huge allowances that are laid out for coal on the front
end, that basically coal is going to go through a really,
really tough period of time beginning in 2012 if a bill does
pass regarding carbon cap and trade which I'm not saying is a
plus or minus. I'm just making an observation. Do you have any
comment on that? It just seems to me that the price of coal,
the cost of coal produced electricity is going to skyrocket in
the beginning as some of these other more complicated things
are worked out. I wonder if you have any comment in that
regard.
Mr. Anderson. The studies that I'm familiar with project a
very large role for coal based CCS in the future under regimes
like this. The International Energy Agency for example has
estimated that by 2050 that CCS could rank second only to
energy efficiency as a contributor to solving global warming.
There are other estimates that project a 15 percent to 55
percent contribution.
So while I think that business as usual is over for coal, I
think coal has a very bright future.
Senator Corker. That it has a bright future just at a
different cost structure?
Mr. Anderson. Yes, sir.
Senator Corker. Mr. Evans do you have any comments in that
regard?
Mr. Evans. The comments I have, Senator, would be that the
actual cost of transportation when you look at it although it's
one third of the cheapest sources, it becomes a much, much
lower component of say from an existing coal fired power plant.
It may be as low at 10 percent of that cost. So really the cost
on conventional coal today is primarily in the capture side not
the transportation.
As we develop sequestration in general with EOR the oil and
gas companies can build pipelines to capture the CO2
and transport to their oil fields. We can cover that cost of
the transportation and the sequestration side. It's how much of
the capture cost in addition to that are we able to cover.
Senator Corker. What kind of commercial market for carbon
other than for use in enhanced oil recovery do we see 15, 20
years out? What part of the carbon that will be produced can
actually be used for other commercial uses other than enhanced
oil recovery?
Mr. Evans. If I do a comparison in Mississippi we produce
almost 550 million cubic feet a day of CO2. About 80
million cubic feet of that goes into industrial uses to make
dry ice, freeze chickens, industrial uses of CO2 so
there you're looking at around 20 percent. That market has only
been growing about two to 3 percent a year. So I don't know
that there's going to be without significant discoveries of
other uses for CO2 much use of it other than EOR or
permanent sequestration.
Senator Corker. Mr. Chairman, thank you.
The Chairman. Thank you.
Senator Lincoln.
Senator Lincoln. Thank you, Mr. Chairman. Again welcome
gentlemen. We appreciate your expertise in working with us.
Mr. Bengal you mentioned some states have begun the process
of beginning a legal and regulatory structure for carbon
storage. What are some of those or who are some of those
States?
Mr. Bengal. California, New Mexico, Wyoming, North Dakota,
Texas and several other States.
Senator Lincoln. So there are a few.
Mr. Bengal. Yes, they're working on legislation as well as
rules to move CO2 storage along in their States.
Senator Lincoln. What was the other or whoever was on your
task force? Was there other expertise there?
Mr. Bengal. Yes. The task force consisted of actually of
two task forces through phase one and phase two. But it was
State oil and gas regulators from various oil and gas States,
representatives from the various DOE partnerships, the
Association of Professional or state geologists, State geologic
surveys, representatives from DOE, EPA, BLM and Environmental
Defense was an observer during the process of our rules
development.
Senator Lincoln. So you had quite a wide----
Mr. Bengal. Yes. There were industry experts as well.
Senator Lincoln. I don't know that you've gotten into this
yet today and maybe I'm being redundant. I hope not. But you
might explain to me the issue regarding storage rights.
Mr. Bengal. Much like natural gas if you're going to store
something underground like you do natural gas the pore space is
owned by someone. It's mineral right. It's a property right and
you can't just use that without the property rights authority
to do so.
That has to be acquired and that's generally, probably akin
to the natural gas storage industry where it belongs to the
surface owner. So in order to store these amounts of
CO2 we're talking about even though you may have a
very large area an operator will have to acquire the right to
store it in that area. There was a question before where's the
plume going to go? How are you going to manage the plume for
future liability?
You're going to know that before you start because that
operator is going to have to own and control the entire area
where that plume will go. That's a very large undertaking to do
to acquire those rights. So that will be worked out prior to
injection what the ultimate static disposition of that plume
will be because it will be owned and controlled by owning those
property rights.
Senator Lincoln. That seems like that would be quite the
lengthy process. I know just with the Fayetteville shale
drilling that is going on in Arkansas the mineral rights and
property rights and how they've gone in there has taken quite a
bit of time.
Mr. Bengal. It will be in a natural gas storage setting.
States do that through eminent domain condemnation proceedings.
You get a certain percentage of the site locked up and then you
would go to the State and condemn the rest to move that project
forward.
Senator Lincoln. In terms of the--maybe you can help
explain a little better too, more detail, how you see the state
framework working with the EPA framework? Is that kind of like
a MOA or how do they do that?
Mr. Bengal. Right now the UIC program, the Underground
Injection Program, most states have the authority through
privacy from the U.S. EPA to administer that program at the
State level for the U.S. EPA in each state.
Senator Lincoln. So they've already got that?
Mr. Bengal. They've already got that. In a few States, a
direct implementation State, the EPA does on its own. But for
those States that do have privacy whatever EPA changes the
regulations to be they're automatically incorporated into the
State functions that exist and are ongoing now.
Senator Lincoln. Is there something special about Federal
land. Is there something that--does there need to be
regulations of CO2 storage specifically on Federal
lands?
Mr. Bengal. They probably will have to develop a similar
type of framework for regulation that we would have on private
lands within the States. The State would probably be involved
in that. I don't see why it would have to be much different
than what the States would do on private lands. The one benefit
of Federal lands is you have one mineral owner or one surface
owner for the entire project. You could actually site projects
very succinctly and not have to deal with the property issue at
all.
Senator Lincoln. Last just about emissions trading or
accreditation of storage projects for the purposes of securing
the carbon credits. Does your proposed infrastructure cover
that as well?
Mr. Bengal. No. We do not do that. We dealt with just the
technology and the legal framework for the storage itself.
That's probably going to be worked out at the marketplace or be
federally--under the cap and trade system and you'll have to
figure that out. We will fit in whatever it is.
Senator Lincoln. We're always grateful for any suggestions
or models you might have already come up with.
Mr. Bengal. Just don't do more than you have to.
Senator Lincoln. Ok. Thank you, Mr. Chairman.
The Chairman. All right. I think that's the end of our
questions, and thank this panel very much. This was very useful
testimony and we think it is a useful hearing. Thank you.
[Whereupon, at 4:25 p.m. the hearing was adjourned.]
APPENDIXES
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Appendix I
Responses to Additional Questions
----------
Responses of Scott Anderson to Questions From Senator Bingaman
Question 1. Many people have called for ``permanent'' storage in
introduced legislation (e.g. all the introduced climate bills), but do
not go so far as to define permanence. Can any one of you elaborate on
a clear definition of ``permanent CO2 storage'' as it
relates to geologic storage?
Answer. We suggest using retention of at least 99% for at least
1000 years as the standard for ``permanence.'' The Intergovernmental
Panel on Climate Change has indicated that it is feasible to meet such
a standard in well-selected, well-managed sites.
Question 2. What is the appropriate amount of time that
CO2 should be stored in the subsurface, as means of
mitigating CO2 emissions? Will storage times of that
magnitude be burdensome on CCS projects?
Answer. We are hopeful that a 1,000 year standard as suggested
above will assure that any material leakage that takes place will occur
well beyond the era of fossil fuels and therefore at a time when
climate change due to emissions of greenhouse gases such as
CO2 is no longer an issue. We do not expect such a standard
to be burdensome and in fact we expect that well-executed projects will
have minimal leakage for even longer times. Studies at the Weyburn
project, for example, indicate a 95% probability that 98.7 to 99.5% of
the sequestered CO2 will remain in the geosphere after 5,000
years and that there will be even less leakage as time goes on. The
longer CO2 is contained underground the more likely it is to
stay contained due to mineralization, dissolution in formation water,
and residual trapping in pore spaces. See Whittaker, S., White, D.,
Law, D, and Chlaturnyk, R., IEA GHG Weyburn CO2 Monitoring &
Storage Project Summary Report, Petroleum Technology Research Center,
Regina, 273 (2004); Damen, K., Faaij, A., and Turkenburg, W., Health,
Safety and Environmental Risks of Underground CO2 Storage--
Overview of Mechanisms and Current Knowledge (Springer 2006).
Question 3. Is there any amount of leakage that is acceptable? The
IPCC suggests that storage should be on the order of 1000 years in a
geologic formation, with less than 1% leakage of the volume of
CO2 that is injected over the life of the storage project.
Is this a reasonable expectation? How can we enforce such a
requirement?
Answer. Some have calculated that leakage rates as low as .01% per
year, implying 90% retention over 1000 years, might be acceptable from
the perspective of climate change policy. Hepple, R. and Benson, S.,
Implications of Surface Seepage on the Effectiveness of Geologic
Storage of Carbon Dioxide as a Climate Change Mitigation Strategy, in
Gale, J. and Kaya, Y. (eds), Sixth International Conference on
Greenhouse Gas Control Technologies, vol. I, 261-266 (2003). We believe
that the 99% for 1000 years standard is feasible and provides a better
margin of safety.
In order to enforce such a requirement, it will be necessary to:
(1) require that sequestration projects take place only at well-
characterized, properly selected sites; (2) require project developers
to define the containment system and explain why it is reasonable to
expect the system to contain the appropriate amount of CO2
for the appropriate time frame; (3) require the developer to model and
project the fate of the CO2 in the containment system; (4)
require monitoring to confirm or modify the definition of the
containment system and to confirm or modify the projections regarding
the fate of CO2 in the system; (5) require that operations
be modified if monitoring indicates that a risk of unacceptable leakage
is developing; and (6) require remediation where problems develop that
cannot be adequately resolved through modification of operations.
Question 4. In your written testimony, you support the coordinated
efforts of the EPA, DOE, and DOI that are specified in Senator Kerry's
bill (S.2323). Would there be any additional agencies, organizations,
or individuals who you feel should be involved in the interagency task
force? (e.g. in the case of ultimate liability of storage sites the
Department of Justice may need to be consulted, DOT & FERC for
pipelines issues, etc.)
Answer. Yes, the Department of Justice, DOT and FERC could all have
valuable roles to play.
Question 5. You also state in your testimony a need to specify
``permanent'' geologic storage. In your opinion and that of
Environmental Defense, how would you define permanent storage?
Answer. Please see answer to question 1 above.
Responses of Scott Anderson to Questions From Senator Dorgan
Question 1. I also think it's important that the general public
have an understanding of how vastly important an issue this will be to
our energy future. In your judgment, what will it take for the general
population to better understand and support the approaches associated
with carbon capture and storage?
Answer. Education is important in order to achieve public
understanding and support. A sound, rigorous regulatory framework is
also essential. In addition, the public is more likely to support CCS
if it views the technology as only one tool among many for combating
climate change, as opposed to viewing CCS as being in competition with
renewables and energy efficiency.
Question 2. Coal and oil & gas are two different sectors that
traditionally have little history of working together. Today, through
enhanced oil recovery opportunities, we are seeing these partnerships
beginning to take shape. What kind of new relationships and
partnerships will have to be established in order to achieve larger
scale carbon capture and storage projects? How can we build on these
and other public and private sector relationships to expand this into
an industry (regional or national)?
Answer. Putting a market value on carbon sequestration by passing
cap and trade legislation is the single most important thing Congress
can do in order to encourage these relationships. Once this is done,
the market will be able to become the primary driver for answering
questions about the types of relationships and partnerships that ought
to arise.
Response of Scott Anderson to Question From Senator Menendez
Question 1. Mr. Anderson, I agree with your testimony that carbon
capture and sequestration technology needs to be advanced and I agree
with you that a cap and trade bill would be the best way to make sure
this technology is developed quickly. But I also do not want us to lose
focus on the fact that we need to eventually transform our economy from
one based on fossil fuels to one based on renewables. I am curious
about your views on what the balance between funding for CCS and
renewable should be. For instance, the Administration is asking for
more funding for research on the technology than they are asking for in
solar research. Is this the correct balance in your opinion?
Answer. We support the proposed level of CCS funding because it
seems proportionate to current RD&D needs. This funding level should
not be permanent, however. Once these investments have been made, the
investment incentive in the future will need to come from the price
signal induced by cap and trade legislation. Publicly-funded research
needs for renewable energy are likely to remain large for a longer
period of time, and accordingly we hope that the balance between CCS
investments and investments in solar and other renewable energy will
improve as time goes on.
______
Responses of Benjamin H. Grumbles to Questions From Senator Bingaman
Question 1. Many people have called for ``permanent'' storage in
introduced legislation (e.g. all the introduced climate bills), but do
not go so far as to define permanence. Can any one of you elaborate on
a clear definition of ``permanent CO2 storage'' as it
relates to geologic storage?
Answer. There is currently not a precise definition of ``permanent
CO2 storage.'' Effectiveness of geologic storage is
contingent on CO2 remaining stored underground for a long
period of time. A desirable timeframe for geologic storage of
CO2 is on the order of thousands of years or longer.
However, effectively sequestering CO2 for even a few hundred
years could provide valuable flexibility in reducing CO2
emissions and contribute to reducing the costs of mitigating climate
change.
Accumulation of CO2 in natural geologic formations has
been underway as a natural process in the earth's upper crust for
hundreds of millions of years. In most proposed carbon capture and
storage (CCS) projects, the goal is to remove CO2 from the
atmosphere, and store it in the subsurface for significant periods.
Thus, ``permanent'' means some long period of time that provides a
reasonable assurance that the majority of the CO2 will stay
in place over a number of years (100's to 1,000's). Eventually, an
increasing portion of CO2 stored in the subsurface will be
trapped through processes such as formation of minerals, and
hydrodynamics with the result that this portion of the CO2
would be sequestered at a geologic time scale of millions of years. As
we gain knowledge from geologic storage projects, a more precise
understanding of ``permanent CO2 storage'' should emerge.
For the purposes of EPA's proposed rulemaking under the Underground
Injection Control (UIC) program, we have not defined this term.
However, CO2 will be stored for long periods of time (e.g.,
centuries) and EPA's regulations will ensure that CO2
storage is conducted in a manner that does not endanger underground
sources of drinking water.
Question 2. What is the appropriate amount of time that
CO2 should be stored in the subsurface, as means of
mitigating CO2 emissions? Will storage times of that
magnitude be burdensome on CCS projects?
Answer. DOE and others are conducting pilot scale geologic
sequestration projects to help better understand these questions and
others. CO2 storage in geologic formations can mirror the
timescale of oil and gas deposits in formations containing naturally
occurring carbon dioxide gas. These formations have held these fluids
for millions of years. A desirable timeframe for geologic storage of
CO2 is on the order of thousands of years or longer.
Demonstrating storage over these timeframes should not be overly
burdensome. For well-selected, designed, constructed and managed
geologic storage sites, the vast majority of CO2 will
gradually be immobilized by various trapping mechanisms and, in that
case, could be retained for up to millions of years. Because of these
mechanisms, storage could become more secure over longer timeframes
(IPCC 2005).
Question 3. Is there any amount of leakage that is acceptable? The
IPCC suggests that storage should be on the order of 1000 years in a
geologic formation, with less than 1 % leakage of the volume of
CO2 that is injected over the life of the storage project.
Is this a reasonable expectation? How can we enforce such a
requirement?
Answer. EPA is currently deliberating on several of these issues as
the Agency works to develop a regulatory proposal under the UIC
program. EPA anticipates that some CCS projects will exhibit a certain
amount of leakage within the subsurface, however, safeguards such as
leak detection and monitoring will protect against leakage that
endangers underground sources of drinking water. The Agency is
considering requiring monitoring for leakage to the atmosphere as it is
an indicator of potential leakage to or endangerment of underground
sources of drinking water.
Question 4. In the context of the national regulations that you are
developing for carbon storage, have/will you make a clear definition of
the appropriate storage time for CO2 in the subsurface? Will
you be proposing acceptable leakage rates and be mandating a minimum
storage time? If so, how will you enforce this regulation?
Answer. EPA is currently deliberating on these issues as it works
to develop a proposed regulation.
Question 5. In the case of other ``pollutant'' storage, the EPA has
mandated 10,000 years residence time for the pollutant (or waste
product) in the geologic subsurface. Do you anticipate proposing this
sort of mandatory time restriction? In the case of Yucca Mountain this
has proved to be very burdensome in the permitting/regulatory process.
Answer. EPA is in the middle of a deliberative process as it
develops its proposed regulations and is considering this, among many
other issues.
Question 6. According to a study conducted by Argonne labs, there
is a perception from state EPA employees that they are currently
inadequately trained, underfunded, and understaffed for handling the
existing UIC program. After you complete the new regulations that you
have described in your written testimony, do you anticipate that the
state and regional EPA offices will have enough manpower, fiscal
resources, training, and expertise to effectively implement these new
rules? Should new staffing be required? How will this be funded?
Answer. While CO2 storage raises new technical
considerations, EPA is committed to continuing to support regional and
state regulators for the purposes of implementing the UIC program.
Currently, EPA provides nearly $11 million annually to assist primacy
states and EPA regions where states do not have primacy with UIC
program implementation. EPA directly implements programs in 10 states
and shares responsibility in 7. The FY 2009 President's Budget requests
$10.9 million for this work.
We would note that the Clean Air Act Advisory committee's (CAAAC)
Advanced Coal Technology Work Group, which recently issued its final
report, developed a recommendation regarding this topic. Specifically,
the Work Group recommended that EPA, working with other agencies,
``sponsor education and training programs for regulators and other
officials involved in the permitting and monitoring of carbon capture
and sequestration projects'' (more information is available at http://
www.epa.gov/air/caaac/coaltech.html). EPA is currently preparing a more
indepth evaluation of this issue in order to respond to CAAAC. The
President's Budget requests a total of $3.9 million for UIC regulatory
work in FY 2009, which the Agency could partially target to help
address the CAAAC recommendation.
Responses of Benjamin H. Grumbles to Question From Senator Dorgan
Question 1. It seems to me that we need to much more quickly begin
establishing and defining the ``rules of the road'' when it comes to
carbon management. As we begin to unlock the opportunities for
capturing, moving and storing larger amounts of CO2, it is
fair to say that the federal government will likely play a greater
role. It will be better if we begin to better define appropriate roles
for local, state and federal government. What are the most critical
near-term issues that your agency can address so that developers can
begin demonstrating CCS projects?
Answer. EPA understands the importance of clearly defining roles
and responsibilities. Under the Safe Drinking Water Act, EPA develops
minimum requirements for state and tribal Underground Injection Control
(UIC) programs. Primacy states may develop their own regulations for
injection wells in their state. These requirements must be at least as
stringent as the federal requirements (and may be more stringent).
EPA has been working closely with DOE over the past several years
as they implemented their CCS research and development program. The
Agency recognized the critical near-term issue associated with
facilitating UIC permits for demonstration projects to ensure that
projects are carried out in a manner that does not endanger underground
sources of drinking water. To address this, in March 2007, EPA issued
guidance on permitting experimental projects as Class V injection
wells. EPA plans to propose regulations in the summer of 2008 to ensure
consistency in permitting fullscale CO2 geologic
sequestration projects. Final regulations would be issued by 2011. As
with our other regulations, when EPA publishes new federal regulations
with specific criteria and standards for constructing, operating, and
closing CO2 wells, a primacy state would need to adopt these
standards and classes of wells and seek approval from EPA. In the
interim, states will be able to permit CO2 wells under
existing EPA regulations and guidance.
Question 2. Creating an infrastructure to capture, transport,
store, and monitor CO2 will take greater federal resources
including staff, technology and other elements. Do you think your
agency is well-equipped to begin to undertake this enormous challenge?
Answer. There are several federal agencies that will play a role in
establishing a national program to carry out carbon dioxide capture and
storage (CCS) on the scale that will be needed to address climate
change. While EPA itself will not undertake infrastructure projects,
the Agency is responsible for implementing environmental statutes and
other programs that may affect deployment of CCS. EPA has been and
continues to thoroughly examine its CCS-related statutory and
programmatic responsibilities in order to prioritize Agency efforts.
Along those lines, establishing a regulatory framework for geologic
sequestration (GS) under the UIC program is an integral step towards
creating an enabling framework for CCS. EPA is committed to continuing
to provide funding and resources for regional and state regulators for
the purposes of implementing the UIC program. Currently, UIC programs
receive nearly $11 million annually to assist in implementing their
programs.
The UIC Program has regulated over 800,000 injection wells for over
35 years. While the GS of CO2 is a new technology that poses
a unique set of risks to underground sources of drinking water and
human health, EPA believes that GS can be a safe and effective tool
when wells are properly sited, operated, monitored, and closed. We
believe the UIC program provides an appropriate regulatory framework
within which to manage the injection of CO2 to ensure
protection of underground sources of drinking water.
Question 3. Many of the introduced climate change bills have called
for ``permanent'' storage, but do not go so far as to define
``permanence.'' Since the EPA may have a role in monitoring
CO2, does the agency have a clear definition of ``permanent
CO2 storage'' as it relates to geologic storage? Would there
be any amount of leakage that is acceptable? What is reasonable? How
can we enforce such a requirements?
Answer. Effectiveness of geologic storage is contingent on
CO2 remaining stored underground for a long period of time.
A desirable timeframe for geologic storage of CO2 is on the
order of thousands of years or longer. However, effectively
sequestering CO2 for even a few hundred years could provide
valuable flexibility in reducing CO2 emissions and
contribute to reducing the costs of mitigating climate change.
For the purposes of EPA's proposed rulemaking under the UIC
program, we have not yet defined this term. Generally, the
CO2 will need to be stored for long periods of time (e.g.,
centuries or millennia) in a manner that does not endanger underground
sources of drinking water.
EPA is currently deliberating on several of these issues as the
Agency works to develop a regulatory proposal under the UIC program.
EPA anticipates that some CCS projects will exhibit a certain amount of
leakage within the subsurface, however, safeguards such as leak
detection and monitoring will protect against leakage that endangers
underground sources of drinking water. The Agency is considering
requiring monitoring for leakage to the atmosphere as it is an
indicator of potential leakage to or endangerment of underground
sources of drinking water.
Question 4. Could you elaborate more about how the EPA could work
with state regulations to monitor CO2? Would there be
similarities to how you monitor the UIC program?
Answer. The Safe Drinking Water Act, 42 U.S.C. 300h-1, allows
States to apply to EPA for primary enforcement responsibility to
administer the UIC program; those States receiving such authority are
referred to as ``Primacy States.'' For UIC Class I,111, IV and V wells,
states must meet EPA's federal minimum requirements for UIC programs,
including minimum construction, operating, monitoring and testing,
reporting, and closure requirements for well owners or operators. Where
states do not seek this responsibility or fail to demonstrate that they
meet EPA's federal minimum requirements, EPA is required, by statute,
to implement a UIC program for such States (42 U.S.C . 300h-1(c)). We
expect that states who wish to implement a CCS program would be subject
to similar requirements for primacy and would need to demonstrate that
they meet EPA's federal minimum requirements for CCS.
Response of Benjamin H. Grumbles to Question From Senator Menendez
Question 1. Mr. Grumbles, CCS technology does not necessarily
address other environmental problems with coal fired power plants. Coal
is a major source of air pollution, with coal-fired power plants
spewing 59% of total U.S. sulfur dioxide pollution and 18% of total
nitrogen oxides every year. Coal-fired power plants are also the
largest polluter of toxic mercury pollution, the largest contributor of
hazardous air toxics, and release about 50% of the nation's particle
pollution. In addition, mining coal itself can pollute groundwater and
devastate landscapes. Do you agree that even with an effective carbon
capture and sequestration program that other environmental harms from
coal need to be addressed before CCS technology can truly usher in an
era of ``clean coal?''
Answer. EPA is committed to addressing environmental challenges
associated with the use of coal, which is an abundant domestic energy
source that is important to U.S. energy security. Under the Clean Air
Act, EPA has made and will continue to make significant achievements in
reducing major pollutants from coal fired power plants, including
sulfur dioxide, nitrogen oxides, and mercury. Reductions in air
pollution, since the 1990 Clean Air Act Amendments, have moved
significantly further through policies such as the Clean Air Interstate
Rule. The proposed rulemaking under the Underground Injection Control
(UIC) Program is an important step towards ensuring protection of U.S.
drinking water. EPA is also working under the Clean Water Act (CWA)
with other Federal agencies, the States, and the coal mining industry
to significantly reduce adverse impacts to the Nation's waters from
surface coal mining activities. We are using our CWA regulatory tools
to ensure mining impacts to streams and wetlands are avoided wherever
possible, and where impacts can not be avoided, we are requiring more
effective mitigation and reclamation to offset these impacts.
______
Responses of Ronald T. Evans to Questions From Senator Bingaman
Question 1. Many people have called for ``permanent'' storage in
introduced legislation (e.g. all the introduced climate bills), but do
not go so far as to define permanence. Can any one of you elaborate on
a clear definition of ``permanent CO2 storage'' as it
relates to geologic storage?
Answer. The only definition or measure of permanent storage of
which I am aware is that set forth by the Intergovernmental Panel on
Climate Change (IPCC) which states that storage should be on the order
of 1,000 years in a geologic formation, with less than 1% leakage of
the volume of CO2 that is injected.
Question 2. What is the appropriate amount of time that
CO2 should be stored in the subsurface, as means of
mitigating CO2 emissions? Will storage times of that
magnitude be burdensome on CCS projects?
Answer. I am not an expert on climate change and thus not in a
position to recommend the appropriate length of time CO2
should be stored underground to mitigate emissions.
Whether or not storage times will be burdensome on CCS projects--
specifically on projects undertaken in conjunction with enhanced oil
recovery, Denbury's area of operations--will depend on the nature and
scope of any post-injection monitoring requirements. Denbury currently
monitors and verifies CO2 volumes we inject in enhanced oil
recovery projects in order to properly manage the project. When it is
determined that all of the economically producible oil or gas has been
recovered, the projects are generally abandoned by properly plugging
the wells. However, to date, we have not sequestered any volumes of
CO2 for permanent storage and thus have no experience
managing long-term monitoring requirements. Further, we are not aware
of any companies, or governments for that matter, that have been in
existence for 1,000 years. Thus, the 1,000 year period being suggested
by the IPCC seems difficult to envision, much less manage, particularly
without knowledge of what will be required to satisfy regulatory
agencies overseeing CCS projects.
Question 3. Is there any amount of leakage that is acceptable? The
IPCC suggests that storage should be on the order of 1000 years in a
geologic formation, with less than 1% leakage of the volume of
CO2 that is injected over the life of the storage project.
Is this a reasonable expectation? How can we enforce such a
requirement?
Answer. I am not an expert on climate change and thus not in a
position to recommend the amount of CO2 leakage that is
``acceptable.''
It is difficult to say whether 1% leakage of the volume of
CO2 that is injected over the life of the storage project is
a reasonable expectation. Based on our experience, we believe that
CO2 injected into a geological reservoir during and
following the successful completion of enhanced oil recovery will
remain in the ground permanently without leakage, assuming the project
is abandoned properly following the recovery of the oil or gas.
Subsequent events such as improper cementing, the drilling of wells
through the geologic reservoir seeking additional minerals, or
subsurface seismic activities, could cause the trapping mechanism to be
breached, leading to some leakage. These risks can be properly managed
to reduce the potential for leakage, but it is impossible to assert a
particular percentage amount of leakage that is reasonable to expect
from CCS projects generally.
In the short run, to enforce any leakage limitation, credits for
sequestration could be withdrawn or withheld proportionate to the
amount of leakage from a particular site. The best way for the
government to enforce such a limit over the long run would seem to be
for the government to assume control over and/or responsibility for the
stored CO2.
Question 4. Is Denbury or other EOR companies concerned that the
EPA regulatory effort may be too onerous or prescriptive? Do you think
they should be the lead agency in developing regulations for CCS (at
the State or Federal level)?
Answer. It is difficult for Denbury to assess the EPA's regulatory
effort until the EPA proposes rules for comment. Nonetheless, we are
concerned about how the EPA will eventually classify CO2
emissions, and subsequently, what requirements the EPA will propose
concerning how to capture and store CO2. CO2 is
not poisonous, explosive or flammable and has been vented for many
years without incident. In addition, CO2 is currently
consumed by individuals, consumed by plants, and utilized in the
refrigeration of food. Thus, classifying CO2 as any sort of
hazardous substance would be inconsistent with its safety and its
current uses.
I am not certain whether EPA is the appropriate lead agency in
developing regulations for CCS. As stated in my written hearing
testimony, Denbury agrees with the recommendation of the Interstate Oil
and Gas Compact Commission (IOGCC) that future CO2 policies
should build upon the state-based framework already in place, as this
framework has provided an entirely safe development of infrastructure
for EOR involving CO2. Based on Assistant Administrator
Grumbles' testimony at the hearing, the EPA plans to address the
injection of CO2 emissions for CCS in its proposed rules
this coming summer. His testimony indicated EPA would be working with a
variety of government agencies within the existing framework of the
underground injection control regulations. We believe that in
developing proposed regulations on Underground Injection Control
specific to CCS, EPA should work closely with the Department of the
Interior's Minerals Management Service, which has significant
experience managing the nation's natural gas, oil and other mineral
resources.
Question 5. Many industry professionals have indicated that for
large scale CCS to take hold, government must help provide certainty by
developing a legal and regulatory framework for the storage of
CO2. Besides resolving technological hurdles, what are the
first steps that the government can take specific to legal, regulatory
or social elements that will allow more CCS projects to go forward?
Answer. First, Congress should amend tax code Section 7704 to
clarify that subsection (d)(1)(E) covers man-made, as opposed to just
naturally occurring, CO2. With the current legal uncertainty
in Sec. 7704, much of the existing CO2 pipeline capacity
cannot be used--and new capacity may not get built--to transport
anthropogenic CO2. This action would not be providing a new
incentive for CCS; it would simply remove existing legal ambiguity.
Second, as discussed in my written testimony, federal eminent
domain authority may ultimately be required to develop a nationwide
CO2 pipeline infrastructure.
Third, we believe that the current regulatory structure is
sufficient with respect to (a) CO2 pipeline safety, overseen
by the Office of Pipeline Safety in the U.S. Department of
Transportation's Pipeline and Hazardous Materials Safety
Administration, (b) CO2 pipeline access, which is not
currently federally regulated and need not be, due to the small,
regional, non-integrated nature of existing and planned CO2
pipelines, and (c) protection of the fresh water and ground water
reservoirs from the injection of CO2, as provided in the
Safe Drinking Water Act and by the EPA's Underground Injection Control
Program.
Finally, we concur with the IOGCC's recommendation that future
CO2 regulation should build upon the primarily state-based
regulatory framework already in place, due to the states' decades of
experience with CO2 EOR, natural gas storage, and acid gas
injection.
Responses of Ronald T. Evans to Questions From Senator Dorgan
Question 1. I also think it's important that the general public
have an understanding of how vastly important an issue this will be to
our energy future. In your judgment, what will it take for the general
population to better understand and support the approaches associated
with carbon capture and storage?
Answer. For the general population to better understand and support
CCS, it is important to educate and disseminate information about
various approaches to CCS, such as EOR, through various forums and
Congressional hearings similar to the one held by this committee. The
general public and legislators need to be educated about the various
costs, merits and limitations of various energy sources, including the
costs of CCS, available to the country along with reasonable forecasts
of the energy needs of this country.
Capturing and storing CO2 from various sources is
technically feasible today, can provide additional sources of energy
through enhanced oil recovery, and assist in the reduction of
greenhouse gases. The transportation and sequestration of
CO2 related to enhanced oil recovery has been safely
demonstrated for over 30 years with no loss of life due to
CO2 leakage. Particularly important is the necessity to
distinguish between the relative safety of CO2 in comparison
to the other materials transported via pipeline such as oil, natural
gas, petroleum products and hydrogen. CO2 is not poisonous,
explosive or flammable and thus poses far less risk when transported.
Question 2. I have seen reports that indicate that over 200 billion
barrels of oil may remain as residual oil in geologically complicated,
partially-produced or in mature oil fields in the U. S. What can you
tell me about the potential for oil recovery using CO2 EOR
(enhanced oil recovery) that is practiced today versus the potential
for so called ``next generation'' EOR technologies?
Answer. The various technologies associated with EOR (e.g. water
flooding, steam flooding, CO2 flooding, polymer flooding,
advanced well designs, etc.) have been used and developed over the past
thirty years. The CO2 flooding used by Denbury today is
state of the art and the most efficient at recovering oil in the proper
applications. Nonetheless, we continue to refine and improve EOR
processes in an attempt to yield additional barrels of oil. Future
technological advances will likely allow recovery of incremental
volumes of oil, rather than result in a quantum leap or step change in
amounts recoverable.
In general, less than 50% of the oil discovered in this country was
or will ever be produced, and thus a significant volume of oil is still
in the ground and unable to be recovered without some sort of
additional investment. The U.S. Department of Energy commissioned a
study of the potential amount of oil that could be recovered from
CO2 enhanced oil recovery. The results of this study,
completed by Advanced Resources International in 2006, indicated that
approximately 390 billion barrels of the 580 billion barrels of oil
originally discovered will remain in the ground after primary and
secondary methods are applied. Using current technologies it is
technically possible to recover approximately 89 billion barrels via
CO2 enhanced oil recovery. These technically recoverable
barrels are based on several assumptions within the report concerning
CO2 prices, oil prices and other variables. The report can
be found at: http://www.fossil.energy.gov/programs/oilgas/eor/
Ten_Basin-Oriented_CO2-EOR_Assessments.html
Question 3. Many industry professionals have indicated that for
large scale CCS to take hold, federal and state governments must help
provide certainty by developing a legal and regulatory framework for
the storage of CO2. Besides resolving technological hurdles,
what are the first steps that the government can take specific to
legal, regulatory or societal elements that will allow more CCS
projects to go forward?
Answer. Please see my response to Senator Bingaman's question #5.
In addition, the Coal Fuels and Industrial Gasification Demonstration
and Development Act, S. 2149, which you introduced on October 4, 2007,
includes the necessary clarification of Section 7704(d)(1)(E) to cover
man-made CO2 and Denbury commends your leadership on this
issue.
Question 4. I believe that in the near term we need to find ways to
create certainty for investors to deploy CCS projects. I introduced a
bill called the Clean Energy Production Incentives Act (S. 1508)
earlier this year that among other things includes a 10-year production
tax credit for the storage of CO2. Developers receive a
higher credit for permanent storage and slightly lower credit for using
enhanced oil recovery techniques. The bill also included accelerated
depreciation and tax credit bonds for CO2 capture and
storage property. Can you talk more about the scale of incentives and
how these incentives can accelerate development of large scale carbon
capture and storage? Are the incentives adequate to incentivize near-
term and long-term storage options?
Answer. I agree that we need to find ways to create certainty for
investors to deploy CCS. The production tax credits and accelerated
depreciation of pipelines proposed in the Clean Energy Production
Incentives Act introduced by you are meaningful incentives to encourage
the development of large scale CCS. The proposed level of incentives
should be sufficient to encourage the capture of the lowest cost
emissions currently and a significant number of proposed gasification
projects. Our analysis of the costs to capture, transport and store the
lowest cost emissions indicates total costs of approximately $20/ton.
Thus a $20/ton tax credit should be meaningful to projects that will be
required to sequester their emissions in deep saline reservoirs. The
corresponding lower amount, $10/ton for CO2 sequestered in
EOR projects, is sufficient to encourage the development of additional
enhanced oil recovery projects using volumes of captured anthropogenic
CO2. These tax credits would encourage the development of
CCS projects in the near term.
Technological solutions will have to be developed in coming years
to decrease the costs of CCS for many additional existing sources of
CO2 emissions. The cost of CCS for many of these sources is
up to $70/ton and potentially higher. The current proposed production
tax credits are not sufficient to encourage or incentivize the capture
and storage of these emissions. Necessary technology will only be
developed, and the costs of CCS driven down for these sources, by
getting the lowest cost CCS projects up and operating. As the lowest
cost emissions get captured and research and development progresses, we
are convinced that technological and cost breakthroughs will occur.
However, delay in incentivizing the lowest cost CCS projects will delay
the overall timeframe of the technology development necessary to
ultimately address the higher cost emissions.
Response of Ronald T. Evans to Question From Senator Menendez
Question 1. You claim that government incentives are necessary to
promote the use of man-made carbon dioxide in enhanced oil recovery
[EOR] projects. I find this claim troubling on a number of levels. EOR
was economically viable even back when we had cheap oil. Why isn't $90
a barrel oil all the incentive needed? In fact, there are several
existing projects which do in fact capture man-made carbon dioxide for
use in EOR. The process is economically viable right now, without any
government incentives. More importantly, using CO2 to
recover more oil won't stop global warming because we may be putting
some CO2 in the ground, but the extra oil we extract will
lead to more emissions of CO2 when that oil is used. Why
should EOR operations get credit for reducing greenhouse gas emissions,
when the process is probably a wash at best in terms of the reduction
of net CO2 reductions?
Answer. In my written testimony, I stated that ``without some means
of reducing the cost of capturing anthropogenic CO2
significantly, infrastructure development will likely remain
stagnant.'' As explained therein, the cost of capturing and compressing
anthropogenic CO2 is significant. EOR can indeed absorb a
portion of the capture and compression costs, but the percentage of the
capture and compression costs that EOR can cover is dependent upon the
level of oil prices. The total cost of CCS from different industrial
sources varies widely from $20/ton to over $70/ton. EOR can cover the
costs of transportation and sequestration, which have seen significant
increases over the last few years, and cover a portion of the capture
and compression cost. Unfortunately, even with oil at $90 per barrel,
EOR cannot cover 100% of the CCS costs for a significant number of
current emitters.
Naturally occurring CO2 is generally priced as a
percentage of oil prices. Thus, when oil prices were low,
CO2 prices were reduced in order to keep projects economic,
but at very low oil prices almost all of the projects were uneconomic.
As prices have increased, the cost of naturally occurring
CO2 has also increased. In addition to increasing
CO2 costs, the capital costs associated with CO2
facilities and well work have increased substantially and in some cases
the costs have more than doubled.
The only significant use of man-made CO2 in EOR at
present is EnCana Corporation's use of CO2 from the North
Dakota Gasification Project, which was made possible with significant
support from the Canadian government. The other anthropogenic sources
of CO2 currently captured and used in EOR in the United
States, primarily in the Permian Basin of West Texas, are produced
along with natural gas from underground reservoirs. The reason this
CO2 is available at a relatively low cost is because the
CO2 must be separated from the natural gas in order to sell
the natural gas. This separation results in a relatively pure stream of
CO2 that then only has to be compressed and transported
short distances to the oil field.
The reason EOR should qualify for whatever credit may eventually
exist for reducing green house gas emissions is straightforward: First,
America will continue to rely on fossil fuels to meet a substantial
portion of its energy needs for the foreseeable future and a molecule
of CO2 stored, whether in EOR or non-EOR sequestration, is a
molecule that will not get vented to the atmosphere. Second, use of EOR
to produce oil domestically avoids the significant emissions and
potential spills associated with shipping oil from overseas. Third,
according to a recent study of CO2 storage in connection
with EOR commissioned by the U.S. Department of Energy's National
Energy Technology Laboratory, advances in technology could enable
storage of 1.6 times as much CO2 in oil reservoirs as the
CO2 content in the recovered oil. (See: http://
www.netl.doe.gov/energy-analyses/ pubs/
Storing%20CO2%20w%20EOR_FINAL.pdf) At present, EOR is the
only viable process that can accept and use productively large volumes
of anthropogenic CO2 that would otherwise be emitted.
In addition, EOR benefits U.S. energy security by producing
additional volumes of oil in the United States and displacing the
necessity for imports from foreign countries. The barrel of oil
produced by U.S. workers in the U.S. is worth significantly more in
terms of domestic investment, jobs and energy security than the value
of an imported barrel of oil.
Keeping up with America's ever-growing demands for energy while
reducing emissions of greenhouse gases will take an enormous effort
across all fields of energy development, all manner of industry, and
all levels of society. If the twin goals of energy independence and a
cleaner environment are to have any hope of being achieved without
significant reductions in our standard of living, the country cannot
afford to ignore particular resources or technologies; the U.S. must
utilize every means available to it. EOR is not the answer to all of
America's energy and emissions challenges, but it is one of the only
readily available alternatives that is working now and that can be
broadly utilized in the near term if policymakers decide action is
imperative.
______
Responses of Krista L. Edwards to Questions From Senator Bingaman
Question 1. Many people have called for ``permanent'' storage in
introduced legislation (e.g. all the introduced climate bills), but do
not go so far as to define permanence. Can any one of you elaborate on
a clear definition of ``permanent CO2 storage'' as it
relates to geologic storage?
Answer. I would respectfully defer to the U.S. Department of Energy
and other agencies represented at the hearing. The U.S. Department of
Transportation's Pipeline and Hazardous Materials Safety Administration
(PHMSA), through its two safety programs, prescribes and enforces
standards for the design, testing, and maintenance of tanks, cylinders,
and other containers used in the transportation and incidental storage
of CO2. But we do not regulate any aspect of the long-term,
permanent, or geologic storage of CO2 and, accordingly, have
had no occasion to consider the requirements for permanent geologic
CO2 storage.
Question 2. What is the appropriate amount of time that
CO2 should be stored in the subsurface, as means of
mitigating CO2 emissions? Will storage times of that
magnitude be burdensome on CCS projects?
Answer. I would respectfully defer to other agencies represented at
the hearing. As I mentioned in response to an earlier question, PHMSA's
oversight extends to hazardous materials transportation, including
incidental storage, and we have had no occasion to consider the
requirements for long-term geologic storage of hazardous materials.
Question 3. Is there any amount of leakage that is acceptable? The
IPCC suggests that storage should be on the order of 1000 years in a
geologic formation, with less than 1% leakage of the volume of
CO2 that is injected over the life of the storage project.
Is this a reasonable expectation? How can we enforce such a
requirement?
Answer. I would respectfully defer to the other agencies
represented at the hearing. As mentioned in response to an earlier
question, PHMSA has had no occasion to consider standards for permanent
or long-term geologic storage.
Question 4. In your testimony you stated that CO2
pipelines have a strong safety record. Does your agency do any sort of
public outreach to convey this message to the general public?
Answer. Yes. PHMSA regularly posts safety-related data, including
incident statistics, on our public website (http://
primis.phmsa.dot.gov/comm/reports/safety/PSI.html). In addition, PHMSA
has several program initiatives focused on safety-related public
education and outreach. The agency's Community Assistance and Technical
Services (CATS) program is devoted to enhancing public understanding
about pipeline operations and risk controls through direct interaction
with local officials and concerned citizens and the development and
dissemination of training programs. CATS representatives working out of
the agency's five regional offices participate directly in community
meetings and public hearings related to existing or proposed pipelines.
As experienced pipeline engineers, our CATS representatives are
uniquely qualified to answer public questions and concerns about
pipeline operations and oversight.
As part of a comprehensive approach to pipeline safety, PHMSA also
requires pipeline operators to develop and implement system-specific
public awareness programs targeting nearby communities. These programs
are designed to enhance public understanding about pipeline risks and
safety performance and to educate communities about the prevention,
detection, and reporting of pipeline events. Together with our state
partners, PHMSA reviews operators' public awareness programs and
enforces requirements under which operators must periodically evaluate
their programs' effectiveness in reaching targeted populations and
satisfying information needs.
Building on these efforts, PHMSA's Pipelines and Informed Planning
Alliance (PIPA) is bringing together a broad group of stakeholders
(including industry, safety advocates, and state and local officials)
to promote the development of risk-informed standards to guide land use
and community planning. We launched PIPA in January of 2008 and have
arranged working group meetings throughout the year, targeting a final
report by January 2009.
Question 5. Do you envision PHMSA taking on an expanded regulatory
role should the existing CO2 pipeline network be expanded
beyond its current geographic distribution? Are there any areas where
CO2 pipelines may be more challenging to site and regulate?
Answer. PHMSA's existing pipeline safety program has provided
effective oversight of CO2 pipelines since 1991 and will
accommodate new CO2 pipelines, however and wherever they are
located. From the perspective of public safety and environmental
protection, the CO2 pipeline network can be expanded beyond
its current geographic distribution using existing technologies and
under existing safety standards and oversight arrangements.
Under PHMSA's current program, a limited number of states are
certified to oversee hazardous liquid pipelines, including
CO2 pipelines. To the extent that new CO2
pipelines are planned in other states, we will be prepared to work with
state and local officials to address information requirements and, as
appropriate, help states expand their program certifications to
encompass CO2 pipelines.
I would defer to other witnesses concerning the economic and
regulatory challenges associated with siting of CO2
pipelines.
Responses of Krista L. Edwards to Questions From Senator Dorgan
Question 1. It seems to me that we need to much more quickly begin
establishing and defining the ``rules of the road'' when it comes to
carbon management. As we begin to unlock the opportunities for
capturing, moving and storing larger amounts of CO2, it is
fair to say that the federal government will likely play a greater
role. It will be better if we begin to better define appropriate roles
for local, state and federal governments.What are the most critical
near-term issues that your agency can address so that developers can
begin demonstrating CCS projects?
Answer. PHMSA and our state partners currently oversee nearly 4,000
miles of CO2 pipelines under established and effective
standards for public safety and environmental protection. The same
oversight arrangements and standards will govern new CO2
pipelines, however and wherever they are configured and located.
Accordingly, PHMSA foresees no significant challenges meeting its
statutory responsibilities with respect to CCS projects involving
pipeline transportation. We will be prepared to work with communities,
prospective operators, and state pipeline safety programs to plan for
the construction, operation, and oversight of new CO2
pipelines.
Under our current program, a limited number of states are certified
to oversee hazardous liquid pipelines, including CO2
pipelines. To the extent that new CO2 pipelines are planned
in other states, we will be prepared to work with state and local
officials to address information requirements and, as appropriate, help
states expand their program certifications to encompass CO2
pipelines.
Question 2. Creating an infrastructure to capture, transport, store
and monitor CO2 will take greater federal resources
including staff, technology and other elements. Do you think your
agency is well-equipped to begin undertaking this enormous challenge?
Answer. Yes. Having successfully overseen the operation of
CO2 pipelines since 1991, DOT is well-positioned to carry
out its statutory responsibilities with respect to future
CO2 transportation. PHMSA's existing pipeline safety
programs and standards are established and effective, as reflected in
accident trends generally and the strong safety record of the roughly
4,000 miles of CO2 pipelines currently in operation. Since
we introduced our Integrity Management program in 2000, the annual
number of serious incidents involving hazardous liquid pipelines has
reached historic lows, even as the size of the pipeline network has
grown. Within these data, the safety record of CO2 pipelines
is especially strong, with no incidents involving death or serious
injury since the inception of DOT oversight in 1991.
Together with our state partners, PHMSA currently oversees more
than two million miles of natural gas and hazardous liquid pipelines,
including pipelines carrying crude oil, refined products, highly
volatile liquids, anhydrous ammonia and hydrogen, in addition to carbon
dioxide. Because it is neither combustible, reactive, nor toxic,
CO2 is the least hazardous of the materials regulated under
our pipeline safety program.
The Nation's pipeline network is expanding, with numerous
privately-financed pipeline construction projects currently underway
and in the planning and permitting stages. Although I would defer to
other members of the panel for more precise data and projections, we
expect this growth to continue, without regard to any pipeline
expansion associated with CCS projects.
In accordance with the Pipeline Inspection, Protection,
Enforcement, and Safety Act of 2006 and our FY 2008 appropriations,
PHMSA is in the process of increasing the numbers of federal inspection
and enforcement personnel and increasing financial support for state
pipeline safety programs. The President's FY 2009 budget proposes
further increases in staffing and state grants, addressing a variety of
new oversight demands, including the construction of new and expanded
energy pipelines and the use of existing pipelines for the
transportation of new fuel products and blends.
PHMSA's existing program can accommodate the expansion of
CO2 pipelines, without significant new challenges or
resource requirements. The current CO2 pipeline network
accounts for roughly two percent of the hazardous liquid pipeline
mileage under our jurisdiction (and less than 0.2 percent of the total
pipeline mileage we oversee). Accordingly, even a significant expansion
of the CO2 pipeline network will only marginally increase
the mileage under our jurisdiction and is unlikely to necessitate any
changes in our standards and oversight arrangements. PHMSA is prepared
to work with communities and prospective operators to plan for new
CO2 pipelines, and we will be prepared to oversee their
construction and operation, just as PHMSA is doing today in connection
with the expanding network of natural gas, crude oil, and refined
products pipelines.
As I mentioned in response to an earlier question, PHMSA
anticipates that state pipeline safety programs may play a larger role
in oversight of new CO2 pipelines, depending on the location
and configuration of the new lines. We will be prepared to provide
financial and technical support to states interested in participating
in oversight of CO2 pipelines.
______
Responses of Lawrence E. Bengal to Questions From Senator Bingaman
Question 1. Many people have called for ``permanent'' storage in
introduced legislation (e.g. all the introduced climate bills), but do
not go so far as to define permanence. Can any one of you elaborate on
a clear definition of ``permanent CO2 storage'' as it
relates to geologic storage?
Answer. Using the term ``permanent'' when referring to storage of
carbon dioxide (CO2) unnecessarily identifies CO2
with the disposal of manmade ``wastes'', which essentially remain the
same in the subsurface, unlike CO2. CO2 is a
``natural'' gas that, in addition to being part of the air we breathe,
can be found naturally in the subsurface throughout the world.
Naturally stored CO2 is part of the earth's geologic
processes. Injected CO2 will likewise become part of the
natural earth processes, mineralizing, going into solution and
eventually reaching a stability as do natural CO2, natural
gas and crude oil reservoirs, in which CO2, natural gas and
oil are ``stored'' naturally for millennia.
It is important also to realize that it is primarily during the
active injection phase that there is a risk of leakage into the
atmosphere. These risks can be significantly reduced if not eliminated
by injecting the CO2 only into select geologically sound
storage reservoirs and making certain through subsurface monitoring
that the CO2 during the active injection phase is being
contained within the storage interval. Once the injection ceases and
the injection facility is closed, the risks of migration from the
reservoir decrease exponentially as the CO2 incorporates
with the reservoir environment. Should a leak be detected during the
injection phase, remedial actions can be initiated to address the leak
until the situation is mitigated. Although monitoring will continue
during the post closure phase, it unlikely to reveal leakage that
hadn't been detected during and immediately after the active injection
phase.
In summary, at the time a site is closed, the regulator would be
expected to have a good understanding of how the CO2 is
behaving in the storage interval and a good deal of confidence that the
injected CO2 is likely to remain in that interval over the
very long term. As I have discussed, however, the term ``permanence''
seems to be more applicable to the situation where a non-natural man-
made substance is being emplaced into the earth. In this case, in a
very real sense, CO2 becomes part of the geologic
environment into which it is emplaced. It is thus not so much
``permanently'' contained, as it is incorporated, albeit permanently,
into the geologic system as are natural accumulations of oil and
natural gas.
Question 2. What is the appropriate amount of time that
CO2 should be stored in the subsurface, as means of
mitigating CO2 emissions? Will storage times of that
magnitude be burdensome on CCS projects?
Answer. The answer to the prior question basically answers this
question as well. If all goes as anticipated in the storage of
CO2 in an appropriate geologic reservoir, where during the
injection, closure and post-closure phases no leakage from the storage
interval has been detected by monitoring, it can generally be assumed
that the CO2 has become integrated into the geology of the
interval into which it has been emplaced. As previously discussed,
there is no reason to anticipate post closure leakage (see also the
answer to question #3), although monitoring will continue indefinitely.
The IOGCC-proposed state administered trust fund, to which operation of
the site would be transferred post closure, would be designed to be
more than adequate to indefinitely monitor the site and take, should
such be deemed necessary, any and all remedial actions. The
specification of a ``storage time'' would not be a burden, but an
expected part of the post closure regime. Of more importance would be
the definition of ``leakage'' and the regulatory burden a strict ``un-
measurable'' standard would impose on a CO2 project (see
next question).
Question 3. Is there any amount of leakage that is acceptable? The
IPCC suggests that storage should be on the order of 1000 years in a
geologic formation, with less than 1% leakage of the volume of
CO2 that is injected over the life of the storage project.
Is this a reasonable expectation? How can we enforce such a
requirement?
Answer. In answering this question it is important to be clear what
we are trying to accomplish in regulation of the storage of
CO2. We begin with the assumption that first and foremost
the reason we are geologically storing CO2 in the first
place is in lieu of ``storing'' (releasing) this greenhouse gas in the
atmosphere where it will contribute to global climate change.
There are three regulatory standards which will determine an
acceptable amount of ``leakage''; 1) carbon credits--the leakage
threshold in this respect will likely be established by the
governmental and or commercial entity which is ultimately established
to award carbon credits for the underground storage of CO2;
2) public health and safety--while there is a threshold of even minimal
release into the atmosphere which could endanger public health and
safety, catastrophic release from underground storage is almost
inconceivable, and; 3) drinking water protection--this is the purpose
of the regulations being developed by the U.S. Environmental Protection
Agency (EPA), likely to be administered by states under delegated
authority from EPA under its Underground Injection Control program.
Presumably these regulations will establish this threshold, which is
likely to be ``no contamination''.
Having said this, it is very clear that the most important factor
in assuring that stored CO2 remains in the subsurface is to
make certain that the geologic sites selected for the storage of
CO2 are optimal for that purpose and mirror the ``storage''
capabilities of naturally occurring oil and natural gas reservoirs. I
therefore begin with the assumption and expectation that CO2
will be stored in formations for which the geology indicates a very
strong likelihood of long term containment which meet the thresholds of
all three regulatory interests identified above. I further assume and
fully expect that the regulatory framework which permits any such
storage facility will contain layers of safeguards designed to prevent
leakage. However, the purpose of subsurface monitoring is, first and
foremost, to detect leakage in the subsurface (above the storage
interval) well before the CO2 reaches the surface and hence
the atmosphere. However, even in the very unlikely event that
monitoring reveals leakage and that leak is mitigated (mitigation
options range from complete cessation of injection--including
ultimately depressurizing of the storage interval until leakage is no
longer occurring--to capture and re-injection of the leaking
CO2 all while still contained in the subsurface) I am
assuming and expecting that any escaping CO2 will be
unlikely to reach the surface and hence the atmosphere.
Question 4. In your testimony you outline the operational bond
requirements for the post-closure phase of the CCS project. Following
site closure, the operational bond is released the regulatory liability
is turned over to a trust fund administered by the state. Did the IOGCC
consider a period of time whereby private insurance companies could
manage these sites (post-closure)?
Answer. No. Based on the states' long experience with financial
assurances in the plugging of oil and gas wells and the administration
of state administered abandoned oil and gas well programs, the IOGCC
Task Force believed that the state-administered trust fund would offer
the greatest flexibility post closure to monitor and ``caretake'' the
facility in perpetuity. Private insurance would lack the flexibility
and responsiveness to be able to immediately respond to potential
contingencies. It would also require that a regulator adopt inflexible
rules setting the parameters under which insurers would operate.
Responses of Lawrence E. Bengal to Questions From Senator Dorgan
Question 1. I also think it's important that the general public
have an understanding of how vastly important an issue this will be to
our energy future. In your judgment, what will it take for the general
population to better understand and support the approaches associated
with carbon capture and storage?
Answer. I couldn't agree more. I indicated in my testimony the
importance of public support for this technology, but before the public
can support this technology, they must understand and feel
``comfortable'' with the process. The U.S. Department of Energy has
understood this and has required each of the Regional Carbon
Sequestration Partnerships to have a strong public outreach component.
It has also funded the Interstate Oil and Gas Compact Commission to
widely distribute the findings of the Task Force's work regarding
geologic storage of CO2. The most recent publication of the
IOGCC entitled Road to a Greener Energy Future--CO2 Storage:
A Legal and Regulatory Guide for States is being circulated broadly and
can be downloaded at the IOGCC website at (http://
www.iogcc.state.ok.us/PDFS/Road-to-a-Greener-Energy-Future.pdf).
We also firmly believe that a key component of building public
support is making absolutely certain that states in their process of
creating the laws and regulations to govern this technology do so in a
completely open and transparent manner. It is essential that all
stakeholders be included in the process if the public is to have
confidence in the technology. The public must understand that site
selection will be a very important part of the regulatory process. Not
every site will be suitable for storage. Only the sites most
geologically suitable will be considered.
Also important will be how this issue is presented to the public.
As I indicated in my testimony, the public needs to be informed about
the long history of CO2 transportation, handling and use in
a great variety of applications. They need to understand that
CO2 is a substance that is part of the air we breathe and
that storing it underground is not something entirely new and
mysterious, but the technological outgrowths of things with which
states already have regulatory experience, like oil and natural gas
development, natural gas storage, and CO2 injection for
enhanced oil recovery. I believe it will be important that the public
understand that the production of CO2 is a consequence of
the public's demand for and use of fossil energy and that it is
arguably in the public's interest to actively participate along with
industry in efforts to reduce CO2 emissions through geologic
storage.
Given the regulatory complexities of CO2 storage
including environmental protection, ownership and management of the
pore space, maximization of storage capacity and long term liability,
geologically stored CO2 should be treated under resource
management frameworks as opposed to waste disposal frameworks.
Regulating the storage of CO2 under a waste management
framework sidesteps the public's role in both the creation of
CO2 and its interest in the mitigation of its release into
the atmosphere and places the burden solely on industry to rid itself
of ``waste'' from which the public must be ``protected''. Such an
approach lacking citizen buy-in with respect to responsibility for the
problem as well as the solution could well doom geological storage to
failure and diminish significantly the potential of geologic carbon
storage to meaningfully mitigate the impact of CO2 emissions
on the global climate.
A resource management framework, as proposed by the Task Force,
allows for the integration of these issues into a unified regulatory
framework and proposes a ``public sector-private sector partnership''
to address the long-term liability, given that the release of
CO2 into the atmosphere is at least partially a societal
problem and that the mitigation of that release is likewise at least
partially a societal responsibility and clearly a societal benefit.
Question 2. Many industry professionals have indicated that for
large scale CCS to take hold, federal and state governments must help
provide certainty by developing a legal and regulatory framework for
the storage of CO2. Besides resolving technological hurdles,
what are the first steps that the government can take specific to
legal, regulatory or societal elements that will allow more CCS
projects to go forward?
Answer. Echoing a point made above and in my testimony, the
technology which will be used to store CO2 underground is
not something new, but a technological outgrowth of things with which
states already have regulatory experience, like oil and natural gas
development, natural gas storage, and CO2 injection for
enhanced oil recovery. What could kill this technology is regulatory
uncertainty in such areas as long term liability. If the federal
government imposes a Superfund model on storage, the technology is
probably dead on arrival as a viable means of mitigating the impacts of
climate change on the environment. If on the other hand investors and
companies interested in undertaking the storage of CO2 are
reasonably assured that a long term regulatory system along the lines
of that proposed by the IOGCC Task Force is adopted, then such an
atmosphere will likely be much more conducive to rapid development of
the technology.
other issues of importance
The IOGCC team clearly understands that there are large numbers of
underground sites with effectively no risk of leakage and other sites
where CO2 injection should not be permitted. States, working
with Federal officials, need to develop a set of criteria by which the
optimal sites are chosen first. Such things as properties of primary
seals, the presence of secondary and tertiary seals clearly need to be
considered in such a ranking.
Aggregation of sufficient mineral and/or storage rights will be a
large obstacle for this activity in a large number of places within
otherwise suitable areas for sequestration. Both Federal and State
rules may need clarification and action to facilitate such aggregation
activities.
Many areas with CO2 emissions will be effectively
unsuitable for sequestration. Pipelines moving CO2 from such
areas to suitable ones will therefore be necessary. State and Federal
legislation could simplify this task. Adoption of an open-access status
to those pipelines may be appropriate as well. Additionally, it appears
that some sort of public assistance might prove a useful incentive to a
private organization seeking to build a private pipeline. Incentives
could come in the form of special tax treatment, access to eminent
domain provisions, bonding assistance (similar to the Wyoming or North
Dakota Pipeline Authorities), or some private-public arrangement (with
the public part designated as open access).
Avoidance of unnecessary and ominous ``permanence'' requirements is
also essential.
The post closure transfer of responsibility to a governmental
entity is considered a necessity. Qualifying a site as low risk and
allowing a rapid transfer in a short post-closure period would be both
appropriate and stimulating for early action.
Question 3. I believe that in the near term we need to find ways to
create certainty for investors to deploy CCS projects. I introduced a
bill called the Clean Energy Production Incentives Act (S. 1508)
earlier this year that among other things includes a 10-year production
tax credit for the storage of CO2. Developers receive a
higher credit for permanent storage and slightly lower credit for using
enhanced oil recovery techniques. The bill also included accelerated
depreciation and tax credit bonds for CO2 capture and
storage property. Can you talk more about the scale of incentives and
how these incentives can accelerate development of large scale carbon
capture and storage? Are the incentives adequate to incentivise near-
term and long-term storage options?
Answer. Until government imposes a limitation on the amount of
carbon that can be released into the atmosphere, presumably through
adoption of a carbon tax or a cap and trade system, no additional
incentives are likely to prove particularly efficacious. After that
happens, all of the incentives noted in the question would be most
beneficial indeed. I would caveat that I would question the rationale
for disadvantaging enhanced oil recovery (EOR). Perhaps the solution is
to frame any production tax credit so as to advantage the
CO2 capturing entity or the pipeline entity or both rather
than the injector. That effectively makes the CO2 less
expensive thus encouraging the sequestration with expanded EOR
projects.
Additionally, the biggest issue today is the cost of separating and
compressing the CO2 at the source so whatever can be done on
that front will be money well invested.
______
Responses of Joseph T. Kelliher to Questions From Senator Bingaman
Question 1. Many people have called for ``permanent'' storage in
introduced legislation (e.g. all the introduced climate bills), but do
not go so far as to define permanence. Can any one of you elaborate on
a clear definition of ``permanent CO2 storage'' as it
relates to geologic storage?
Answer. I note, as an initial matter, that the Commission has
extensive expertise in the storage of natural gas in underground
reservoirs. However, the storage of natural gas differs significantly
from the ``permanent'' sequestration of CO2. Natural gas
storage is a dynamic process whereby gas is injected, stored and
withdrawn with some regularity while the point of CO2
sequestration is to ``permanently'' inject and sequester the
CO2 in the reservoir.
Permanent sequestration would appear to contemplate CO2
remaining in place for the long term. ``Permanent'' sequestration may
pose problems similar to those experienced by natural gas storage
reservoirs which are not cycled (the process of injecting and
withdrawing gas) on a regular basis. In the case of a natural gas
storage field that does not experience sufficient cycling, and does not
have well defined geologic boundaries, gas could migrate through the
storage formation into other formations or, in the case of aquifer
storage facilities, the gas eventually could dissolve into the water
and the water eventually could fill the reservoir. If a natural gas
storage reservoir is cycled, and the physical infrastructure (piping,
casing, surface facilities) is maintained, there is no reason to
believe that the storage field could not operate indefinitely.
Question 2. What is the appropriate amount of time that
CO2 should be stored in the subsurface, as means of
mitigating CO2 emissions? Will storage times of that
magnitude be burdensome on CCS projects?
Answer. The Commission has no information regarding the amount of
time that CO2 needs to be sequestered to ameliorate the
effects of climate change. However, a study by the Massachusetts
Institute of Technology (MIT) titled, ``The Future of Coal'' states, at
p. 44, `` . . . it is very likely that the fraction of stored
CO2 will be greater than 99% over 100 years, and likely that
the fraction of stored CO2 will exceed 99% for 1000 years.''
(footnote omitted).
Question 3. Is there any amount of leakage that is acceptable? The
IPCC suggests that storage should be on the order of 1000 years in a
geologic formation, with less than 1% leakage of the volume of
CO2 that is injected over the life of the storage project.
Is this a reasonable expectation? How can we enforce such a
requirement?
Answer. References to leaks in natural storage fields generally
apply to leaks in the equipment at the storage field including well
casings, piping, compressors, and other miscellaneous surface
facilities, not the storage formation, per se. This lost and
unaccounted-for gas varies by facility. Gas can also migrate through
rock formations and this may be what the referenced IPCC report refers
to. Natural gas storage operators drill and maintain observation wells
to monitor the migration of natural gas out of the designated
boundaries of their storage field. Migration out of designated storage
boundaries could occur if the operator does not have a complete
understanding of the geology of the storage location. This is not to
suggest that the operator is at fault--despite advances in technology,
it is still impossible to know exactly what lies beneath the earth's
surface. However, migration can also occur as a result of improper
operations or as a result of third party operations outside the
boundaries of the storage field.
The MIT study referenced in the previous response addresses
CO2 storage leakage as follows:
Importantly, CO2 leakage risk is not uniform and
it is believed that most CO2 storage sites will work
as planned. However, a small percentage of sites might have
significant leakage rates, which may require substantial
mitigation efforts or even abandonment. It is important to note
that the occurrence of such sites does not negate the value of
the effective sites. However, a premium must be paid in the
form of due diligence in assessment to quantify and
circumscribe these risks well. [p. 50] (footnote omitted).
Even though most potential leaks will have no impact on
health, safety, or the local environment, any leak will negate
some of the benefits of sequestration. However, absolute
containment is not necessary for effective mitigation. If the
rate and volume of leakage are sufficiently low, the site will
still meet its primary goal of sequestering CO2. The
leak would need to be counted as an emissions source as
discussed further under liability. Small leakage risks should
not present a barrier to deployment or reason to postpone an
accelerated field-based RD&D program. This is particularly true
of early projects, which will also provide substantial benefits
of learning by doing and will provide insight into management
and remediation of minor leaks. [p. 51] (footnotes omitted).
Question 4. In your testimony you mention three models for
governing interstate pipelines. Are you prepared, as an agency, to
implement any of these three models for pipeline management?
Answer. In my testimony, I referenced the oil pipeline model, where
the states have siting authority, the Commission sets rates, and the
Department of Transportation handles safety matters; the natural gas
pipeline model, in which the Commission authorizes siting and sets
rates, while the Department of Transportation handles post-construction
safety; and the current carbon dioxide pipeline model, under which
pipelines are sited under state law, and rates are set by the
pipelines, subject to review by the Department of Transportation's
Surface Transportation Board in the event a complaint is filed. Should
Congress so require, the Commission could implement either of the first
two models, while the third model would have no role for the
Commission. However, as I said in my testimony, I would not recommend
that Congress preempt the states or alter the Department
Transportation's ratemaking and safety roles by providing for exclusive
and preemptive FERC siting of carbon dioxide pipelines, because the
precondition that led Congress to such a course for siting natural gas
pipelines--the failure of state siting--does not exist.
Question 5. While you state in your testimony that you feel the
siting of CO2 pipelines should stay in the jurisdiction of
the state agencies--do you think that they are the appropriate entity
to regulate transportation rates? This seems like it is well within the
jurisdiction of FERC to regulate fair and equitable transportation
costs.
Answer. As I mentioned in my written testimony, rates for carbon
dioxide pipelines are currently set by the pipelines themselves,
subject to the authority of the Department of Transportation's Surface
Transportation Board to hold proceedings regarding the reasonableness
of the rates, if a complaint is filed. While the Commission does
possess ratemaking expertise, I have seen nothing to indicate that the
current model is not functioning well. I do not recommend granting
ratemaking authority over carbon dioxide pipelines to the individual
states, because of the prospect of a patchwork of inconsistent rate
regulation for an interstate pipeline network.
Responses of Joseph T. Kelliher to Questions From Senator Dorgan
Question 6. It seems to me that we need to much more quickly begin
establishing and defining the ``rules of the road'' when it comes to
carbon management. As we begin to unlock the opportunities for
capturing, moving and storing larger amounts of CO2, it is
fair to say that the federal government will likely play a greater
role. It will be better if we begin to better define appropriate roles
for local, state and federal government. What are the most critical
near-term issues that your agency can address so that developers can
begin demonstrating CCS projects?
Answer. Given that the Commission has no jurisdiction over carbon
dioxide pipelines or sequestration facilities, I do not believe that
there are issues that the Commission can address directly to speed the
development of these projects. However, should Congress pass
legislation such as S.2144, my staff and I would be pleased to work
with other agencies to study the feasibility of carbon dioxide capture,
transportation, and sequestration projects. As I said in my testimony,
FERC can play a helpful role examining regulatory barriers and
regulatory options relating to the construction and operation of carbon
dioxide pipelines.
Question 7. Creating an infrastructure to capture, transport,
store, and monitor CO2 will take greater federal resources
including staff, technology and other elements. Do you think your
agency is well-equipped to begin undertake this enormous challenge?
Answer. Should Congress establish a role for the Commission in this
area, I am confident that the Commission could carry it out. Depending
on the nature of the responsibilities given to the Commission, and the
extent of the CO2 capture, pipeline and storage network, the
Commission might need additional personnel resources were it assigned
to regulate these activities.
Question 8. Your agency has experience siting and regulating
interstate pipelines for natural gas and oil. I said earlier in my
statement that building a new system for CCS transportation could be
compared to building the Interstate Highway System. This means creating
right-of-ways, landowner rights and liability issues and others. In
terms of siting CO2 pipelines and potentially moving
CO2 across state lines, which priorities should we as policy
makers address in order to help CCS projects move forward?
Answer. Your question poses some of the key issues Congress would
need to address if it chose to create a comprehensive federal
regulatory regime for carbon dioxide pipelines. Among other things,
Congress might want to consider what type of ratemaking regime (cost-
based or market-based) would be appropriate; whether carbon dioxide
pipelines should be common carriers; whether to grant the holders of
authorization for carbon dioxide facilities the power of eminent
domain; and whether there are specific environmental, economic, or
other findings that the siting agency would be required to make in
connection with authorizing such facilities.
______
Responses of James Slutz to Questions From Senator Bingaman
Question 1. Many people have called for ``permanent'' storage in
introduced legislation (e.g. all the introduced climate bills), but do
not go so far as to define permanence. Can any one of you elaborate on
a clear definition of ``permanent CO2 storage'' as it
relates to geologic storage?
Answer. There is currently not a precise definition of ``permanent
CO2 storage.'' Effectiveness of geologic storage is
contingent on CO2 remaining stored underground for a long
period of time. A desirable timeframe for geologic storage of
CO2 is on the order of thousands of years or longer.
However, effectively sequestering CO2 for even a few hundred
years could provide valuable flexibility in reducing CO2
emissions and contribute to reducing the costs of mitigating climate
change.
Geologic storage of CO2 has been underway as a natural
process in the earth's upper crust for hundreds of millions of years.
At geologic time scales, CO2 forms a natural part of the
Carbon Cycle and is necessary for life. In most proposed carbon capture
and storage (CCS) storage projects, the goal is to remove
CO2 from the atmospheric portion of the Carbon Cycle, and
store it mainly in the subsurface for significant periods. Thus,
``permanent'' must mean no unacceptable change over some long period of
time and should provide a reasonable assurance of indefinite storage of
the majority of the carbon over a defined number of years (100's to
1,000's). Any leakage from the subsurface to the atmosphere could be
mitigated, or the CO2 could be recovered and stored
elsewhere, if deemed necessary. Eventually, an increasing portion of
CO2 stored in the subsurface will be trapped through
processes such as formation of minerals, and hydrodynamics with the
result that this portion of the CO2 would be sequestered at
a geologic time scale of millions of years. As we gain knowledge from
geologic storage projects, a more precise understanding of ``permanent
CO2 storage'' should emerge.
Question 2. What is the appropriate amount of time that
CO2 should be stored in the subsurface, as means of
mitigating CO2 emissions? Will storage times of that
magnitude be burdensome on CCS projects?
Answer. DOE and others are conducting pilot scale geologic
sequestration projects to help better understand these questions and
others. CO2 storage in geologic formations should mirror the
timescale of oil and gas deposits in formations containing naturally
occurring carbon dioxide gas. These formations have held these fluids
for millions of years. A desirable timeframe for geologic storage of
CO2 is on the order of thousands of years or longer.
Demonstrating storage over these timeframes should not be overly
burdensome. For well-selected, designed, constructed and managed
geologic storage sites, the vast majority of CO2 will
gradually be immobilized by various trapping mechanisms and, in that
case, could be retained for up to millions of years. Because of these
mechanisms, storage could become more secure over longer timeframes
(IPCC 2005).
Question 3. Is there any amount of leakage that is acceptable? The
IPCC suggests that storage should be on the order of 1000 years in a
geologic formation, with less than 1% leakage of the volume of
CO2 that is injected over the life of the storage project.
Is this a reasonable expectation? How can we enforce such a
requirement?
Answer. Yes, this is reasonable to expect. Ideally, of course, no
leakage will occur and any leakage that does occur must be taken in the
context of how much CO2 must be sequestered to reach and
maintain preferred atmospheric levels. Extensive monitoring and
modeling will be implemented at each of DOE's large-scale field tests.
This monitoring and modeling will occur before, during, and after the
CO2 is injected, for a period of approximately 10 years.
This extensive monitoring will result in the opportunity to mitigate
any potential leakage.
A natural analog is the million barrels of oil and gas deposits, as
well as naturally occurring carbon dioxide gas, that has been trapped
in underground geologic formations for millions of years. Furthermore,
with proper construction and monitoring, there is a very high
probability that the same geologic formations which trap oil and gas
deposits and naturally occurring carbon dioxide gas will also help to
prevent the significant leakage of carbon dioxide. Sites will need to
be chosen carefully, and only the ones with the best geology and proper
characterization should be selected for storage. I might add that the
United States has a great deal of experience injecting and storing
natural gas (in which gas is injected underground during the summer and
then recovered to heat homes in the winter) and, though short-term,
this experience will also prove useful in developing successful carbon
sequestration technologies.
In all cases, best engineering practices will be developed and used
when carbon dioxide is injected into geologic formations. The carbon
dioxide in the formation is trapped in porous rock, like sandstone.
Using a variety of tests and mapping activities should help to identify
any fractures in the cap rock and other faults which then can be
avoided.
In addition to extensive modeling to determine the potential fate
of CO2, proper site monitoring, measurement and verification
(MMV) also can determine if the CO2 is remaining in the
formation. The oil and gas industry has extensive knowledge of
monitoring for leaks of various gases from their wells and also for
characterizing potential drilling sites for hydrocarbon recovery. This
technology along with others being developed through research can be
utilized for MMV to ensure that CO2 leakage is not an issue.
Enforcement via continuous monitoring technology may be implemented
through a variety of potential regulatory or other legal frameworks
that are currently under development.
Question 4. Is the DOE comfortable with the EPA leading the
interagency task force described in S. 2323 or would you suggest
another organization as the lead agency?
Answer. DOE is comfortable with the EPA leading the interagency
task force described in S. 2323. Over the past several years, EPA has
been coordinating with DOE. As DOE has developed a Carbon Sequestration
Technology Roadmap for the development and deployment of this
technology, EPA has been working to design an appropriate management
framework for geologic sequestration. By engaging in DOE's R&D program
early and working with stakeholders on all sides of this issue, EPA is
well-positioned to help in the permitting of future carbon dioxide
underground injection wells.
Question 5. As I understand it, one of the chief benefits of the
FutureGen approach was that it would demonstrate an integrated design,
optimized to maximize CO2 capture and overall plant
efficiency. How are you going to insure we receive this same benefit
from a substantially smaller federal investment in a commercial
facility?
Answer. The FutureGen program remains a vital component of the
Administration's plan to make coal a part of a cleaner, more secure
energy future for America. The Administration is restructuring the
FutureGen program to accelerate commercial use of carbon capture and
storage technology and expand the program from one project to multiple
demonstration projects. The 2009 budget request more than doubles
funding for FutureGen, from $74 million in 2008 to $156 million in
2009.
Rather than investing in the total cost of an experimental facility
integrated with carbon capture and storage, the revised FutureGen
approach will invest in the carbon capture and storage portion of
commercial power projects, capturing and sequestering at least double
the amount annually compared to the FutureGen concept announced in
2003. This will limit taxpayer's financial exposure to only a portion
of the incremental cost of the carbon capture and storage portion of
the plant. Furthermore, this new approach will allow us to accelerate
nearer-term technology deployment in the marketplace faster than the
timetable for the previous approach. In order to be successful in
competitive power markets (not to mention in the Department's
competitive proposal evaluation process), the underlying power plant
projects will still need to be efficient, competitive and
environmentally sound. The original FutureGen approach was targeting a
CO2 capture and sequestration level of approximately 90
percent, and that level is also specified in the Request for
Information for the re-structured FutureGen program.
Question 6. I have heard estimates that including large-scale
carbon capture and sequestration on a typical power plant will increase
costs by roughly a third. What assurance do you have that the amounts
you propose to distribute under this program will be sufficient
incentives to lead to commercial-scale demonstration of the technology?
Will other federal incentives be available to the applicants, and are
more necessary?
Answer. Approximately thirty commercial Integrated Gasification
Combined Cycle (IGCC) projects are in various stages of planning,
permitting and design across the Nation, which is evidence that a
commercially viable basis for IGCC technology already exists. Some are
stalled because of uncertainty regarding CO2. Federal
incentives, such as loan guarantees and tax credits, are awarded on a
competitive basis and may also be available to some of these projects.
Federal funding for FutureGen demonstration projects will help pay for
the CCS part of some of these projects this provides additional
incentives for such projects. Responses to FutureGen's Request for
Information are due by March 3, 2008, and should provide further
information on how to structure the FutureGen solicitation to provide
sufficient incentives for demonstration projects. Nothing precludes
FutureGen applicants from applying for other Federal incentives, such
as loan guarantees or tax credits. We have considered the need for
further incentives, but believe that none are necessary at this time.
Question 7. In recent months we have seen proposed commercial IGCC
plants significantly delayed or cancelled. What assurance do you have
that there will be sufficient commercial interest in building these
plants to give us the demonstrations we need?
Answer. At the present time over 30 Integrated Gasification
Combined Cycle (IGCC) power plants are in various proposal stages and
major barriers to their deployment include the uncertainties regarding
future CO2 emissions regulations and the actual costs of
constructing and operating IGCC-Carbon Capture and Storage (CCS) power
plants. The restructured FutureGen is designed to help understand,
address, and solve technical, siting, permitting, regulatory, and
fiscal aspects of CCS deployment in various commercial settings.
Through its Request for Information, DOE expects to identify the power
producers who would consider participating in the revised FutureGen
initiative.
Question 8. The 4 phase-3 large-scale CO2 sequestration
tests that have been awarded thus far are all expected to inject less
than 1 million tons (approx 500,000) of CO2 per year--will
there be an effort to increase those amounts so that we can have
information more in line with that FutureGen would have produced?
Answer. In addition to the four large-scale tests awarded to three
of the Regional Carbon Sequestration Partnerships (RCSP) in October
2007, a fifth test was awarded in December 2007 to a fourth RCSP. Three
of the tests (in the Alberta Basin, Lower Tuscaloosa Formation, and
Entrada Formation) individually are expected to inject at least 1
million tons of CO2 per year for at least one year. Two
other tests (in the Williston Basin and Mount Simon Sandstone
Formation) will inject greater than 1 million tons in total, though at
a rate of less than 1 million tons of CO2 per year. The
injection rates will be at a scale that demonstrates the ability to
inject and sequester several million metric tons for a large number of
years. This operation at commercial-scale is as significant as that of
higher injections of 1 MM tons per year. It is our intention to confirm
the design of these injections, including the applicability of the
injection scale proposed for the demonstrations to operations at
commercial scale, in a March 2008 technical peer review.
Question 9. The competition for FutureGen between Texas and
Illinois led both states to examine the policy framework that would be
necessary for CO2 sequestration. How will the new program
create similar incentives for states in which the projects will be
located? What can we do here to accelerate this deployment?
Answer. There are major technical and regulatory hurdles to
overcome before coal with CCS can be commercially deployed, however it
is in the best interest of states to adopt a posture that would help
enable ultra-low emission integrated gasification combined cycle (IGCC)
plants with CCS, like FutureGen, to provide stable power supplies at
affordable prices.
FutureGen will provide early CCS demonstration experience in a
commercial setting, which is aimed at accelerating deployment and
advancing carbon capture policy. The revised approach would sequester
at least double the amount of CO2 than the previous
approach, generate enough electricity per plant to power 400,000
households, and have the potential of demonstrating CCS in multiple
states. FutureGen will help establish commercial feasibility and
formulate a model that industry could use to deploy commercial-scale
plants that each sequester at least one million metric tons of carbon
dioxide annually.
Responses of James Slutz to Questions From Senator Dorgan
Question 1. It seems to me that we need to much more quickly begin
establishing and defining the ``rules of the road'' when it comes to
carbon management. As we begin to unlock the opportunities for
capturing, moving and storing larger amounts of CO2, it is
fair to say that the federal government will likely play a greater
role. It will be better if we begin to better define appropriate roles
for local, state and federal government. What are the most critical
near-term issues that your agency can address so that developers can
begin demonstrating CCS projects?
Answer. The most critical near-term issues DOE can and is
addressing through its research, development, and demonstration carbon
capture and storage (CCS) program are the development of technology for
CCS, which in turn will advance public acceptance of CCS as a
technology for mitigating greenhouse gas emissions. Testing the storage
of CO2 in deep saline formations and depleted oil fields
will enable representatives from industry, states, the U.S.
Environmental Protection Agency, and others to learn from the field
demonstration of site characterization, operations, and closure which
will lead to the development of best management practices for all
aspects of CCS projects. These field activities, which DOE is
supporting on a cost-shared basis, are critical in the deployment of
these technologies and will provide key information in the development
of regulations and policies to support CCS. The near-term successes of
the field activities will help to support demonstrations planned under
the restructured FutureGen Program [at 1M tons CO2/yr,
FutureGen is about the same scale as the field tests].
Question 2. Creating an infrastructure to capture, transport,
store, and monitor CO2 will take greater federal resources
including staff, technology and other elements. Do you think your
agency is well-equipped to begin undertake this enormous challenge?
Answer. The DOE has a dedicated interdisciplinary team, working to
develop and demonstrate technologies for carbon capture and storage
(CCS) and provide support to other agencies in the development of
regulatory structures for injection. Additionally, DOE works with other
countries through the Regional Carbon Sequestration Partnerships (with
over 350 entities involved) and the Carbon Sequestration Leadership
Forum. DOE also has the ability to add resources from the nineteen
national laboratories and enter into cooperative agreements with
industry and other research institutions when necessary.
Question 3. DOE has been implementing the Carbon Sequestration
Regional Partnership program to study carbon management in different
regions of the country. Also, your agency has been working to identify
storage sites for CO2. I think this work is important and
should continue to help us evaluate where the opportunities for CCS
demonstrations could take place.
I do believe that we can find cleaner and more efficient ways to
utilize our coal resources. However, we must do so in a way that does
not jeopardize are ability to generate base load power. Your agency has
several different areas working on different elements of carbon capture
and storage.
Could you provide me with an explanation of how the Department of
Energy is coordinating the different research, development,
demonstration and deployment program areas working on CCS in order to
deploy the technology more rapidly?
Answer. There are several elements of DOE's Sequestration Program
for carbon capture and storage (CCS). They include the R&D which fund
basic and applied basic research for carbon storage and capture
technologies. The projects funded through these R&D programs represent
innovative approaches that can significantly reduce the cost and
demonstrate the safety and effectiveness of CCS. The second part of the
program consists of large-scale CO2 injection projects,
which are designed to take the technologies developed in the R&D
programs and deploy them in the field through programs like the
Regional Carbon Sequestration Partnerships. This part of the program is
also responsible for developing the infrastructure technologies and
information, such as CCS best practices that could help form a basis
for regulations, for CCS deployment through the involvement of
representatives from industry, non-governmental organizations (NGOs),
universities, and Federal and state partners. The final piece of the
DOE CCS program will be implemented through the clean coal
demonstration program (such as the Clean Coal Power Initiative and
FutureGen demos), which will take the technologies developed from the
R&D and large-scale injection projects and implement these in full-
scale power plant demonstrations that include CCS. Early commercial
deployment of plants with CCS can benefit from FutureGen demos and
other deployment incentives. The Sequestration Program, which is
managed by the Office of Fossil Energy, also coordinates with DOE's
Office of Science to enhance the scientific learning and understanding
in the field demonstration projects.
All of the projects awarded through these DOE programs are based on
cooperative agreements with industry and/or research institutions.
Therefore, the success of these programs depends upon the success of
our partners and DOE's continued efforts to promote technology
transfer.
DOE is also supporting working groups through other Federal
agencies, nongovernmental organizations (NGO), and industry that are
working to develop regulations and liability frameworks, and to educate
stakeholders about the benefits of CCS.
Responses of James Slutz to Questions From Senator Landrieu
Question 1. I learned that the Department of Energy has decided to
alter course on its ``FutureGen'' project. In the Request for
Information that you released yesterday, you describe that your new
approach will target IGCC plants to demonstrate carbon capture and
storage technology. In Louisiana, we have saline storage formations,
and we have a 300 megawatt power plant coming online. At present, it
will be fueled by Petroleum Coke, but it is not currently slated to be
an IGCC plant. Will the Department keep an open mind about selecting
plants that may not be IGCC equipped, but that are nonetheless capable
of capturing and storing their carbon?
Answer. Yes, alternatives to Integrated Gasification Combined Cycle
(IGCC) will be considered. The Request for Information does seek
comments on whether the revised FutureGen approach should allow for
advanced coal-based technology systems, other than IGCC, that would
meet the stated performance requirements for FutureGen (e.g.,
approximately 90 percent CO2 capture and storage, 0.04 lbs/
million Btu SO2 emissions, less than 0.05 lb/million Btu NOX
emissions, less than 0.005 lb/million Btu particulate matter emissions,
and greater than 90 percent mercury removal).
Question 2. Additionally, your Request for Information states that
the Department will contribute the incremental cost associated with
adding CCS technology to the facilities power train. Would the DOE
cover the costs associated with compressing and transporting the
CO2? Are these grants only intended to cover capital costs,
or will they cover certain qualified operating costs as well?
Answer. DOE will contribute a portion of the incremental cost
associated with adding CCS technology. Based in part on input obtained
through the Request for Information, DOE will determine which
incremental costs are eligible for cost-sharing, such as compressing
and transporting the CO2 and certain operating costs. The
determination of which costs will be eligible for cost sharing,
particularly for any equipment that might be shared between the power
plant and CCS technology, will be articulated in the formal
solicitation.
Responses of James Slutz to Questions From Senator Cantwell
Question 1. The Energy Bill (Title VII, Section 702) passed in
December directs the Department of Energy to conduct not less than 7
initial large-scale sequestration tests to study and validate
commercial deployment of technologies for CO2 capture and
sequestration. Seven regional partnerships have been identified and are
currently entering Phase III of their projects. I understand the
Department has currently awarded 4 of the 7 partnerships with Phase III
funding. What is your path forward to provide funding for the final
three in 2008?
Answer. DOE has made awards for five large-scale tests to four of
the Regional Carbon Sequestration Partnerships (RCSP) for Phase III
Large Volume Sequestration Testing. Depending on the results of a
scientific needs assessment being conducted in FY 2008 and the ability
of additional project proposals to meet those needs, additional
projects may be awarded in FY 2008 or FY 2009. The remaining three
Phase III projects are in the process of being evaluated. The
evaluation process requires finalizing the technical scope of the
project along with undertaking a scientific evaluation and cost
analysis of the proposed projects to verify their appropriateness
within the overall objectives of the Sequestration Program. Independent
cost verification is being undertaken by DOE to ensure the project
costs are adequate prior to award. Independent cost reviews of the
projects that have received awards have been completed. An independent
technical review will be conducted at the end of March 2008. This
technical review, conducted by an internationally renowned group of
experts, will compare the proposed test plans against the program needs
and that required for proper scientific evaluation in order to develop
an integrated portfolio of robust tests. DOE is conducting reviews and
plans to evaluate award of the remaining RCSP Phase III Projects based
on the results on the scientific evaluation. The estimated time-frame
for evaluating the remaining awards is the summer of FY 2008. The
Sequestration Program budget is available to fund these awards.
Question 2. Which partnership takes into consideration the geologic
formations in the Pacific Northwest and what is the status of this
project?
Answer. The Pacific Northwest is shared by two Regional
Partnerships, the Big Sky Regional Partnership (Big Sky) and the West
Coast Regional Carbon Sequestration Partnership (WESTCARB). The Big Sky
Regional Partnership is currently evaluating basalt formations in the
region. The West Coast Regional Carbon Sequestration Partnership in
addition to the West Coast is responsible for working with the states
in the Pacific Northwest to characterize the geology and terrestrial
sinks in that region. The WESTCARB project has completed the initial
characterization of saline reservoirs and coal seams which could be
possible storage formations. The results of this characterization is
available through the National Carbon Sequestration Database and
Geographic Information System online Atlas at the following site:
http://www.natcarb.org These Regional Partnerships are currently in
Phase II, undertaking Field Validation Testing in the region, and are
two of the awards that are in the process of evaluation for potential
award under Phase III.
Response of James Slutz to Question From Senator Menendez
Question 1. In April, in testimony before this committee, Thomas
Shope, Acting Assistant Secretary for Fossil Energy at the Department
of Energy, estimated that Carbon Capture and Sequestration technologies
would become deployable and available in 2020 to 2025, but that wide
deployment for most projects would not happen until 2045. Do you agree
with this estimate? If so, won't this be too late if we are going to
reduce our greenhouse gas emissions by 80% below 1990 levels by 2050?
Answer. Widespread deployment of Carbon Capture and Storage (CCS)
depends on a variety of factors, including success of R&D to drive down
the cost of safe CCS, particularly the cost of separating
CO2 from other gases and compressing it (to a supercritical
fluid) for injection into geologic formations, and success of
demonstration of CCS technologies so that the lowest cost technologies
can be identified and commercialized in a timely manner.
The Administration believes that significant reductions in
CO2 can be made through investment in technology that will
lead to a fundamental change in the way we produce electricity and
power our vehicles. The President's 2009 budget request for research,
development and demonstration of advanced clean coal technology, when
combined with required private-sector contribution, will approach a
total investment of nearly $1 billion. With continued support, it could
be possible to significantly advance the timing for full deployment of
CCS technologies.
______
[Responses to the following questions were not received at
the time the hearing went to press:]
Questions for Stephen Allred From Senator Bingaman
Question 1. Many people have called for ``permanent'' storage in
introduced legislation (e.g. all the introduced climate bills), but do
not go so far as to define permanence. Can any one of you elaborate on
a clear definition of ``permanent CO2 storage'' as it
relates to geologic storage?
Question 2. What is the appropriate amount of time that
CO2 should be stored in the subsurface, as means of
mitigating CO2 emissions? Will storage times of that
magnitude be burdensome on CCS projects?
Question 3. Is there any amount of leakage that is acceptable? The
IPCC suggests that storage should be on the order of 1000 years in a
geologic formation, with less than 1% leakage of the volume of
CO2 that is injected over the life of the storage project.
Is this a reasonable expectation? How can we enforce such a
requirement?
Question 4. In your testimony you mention that the Dept of Interior
will have a critical role in determining how CO2 is managed
on public lands. One area your testimony did not discuss was the site
selection criteria that will be necessary in choosing geologic
formations suitable for storing CO2. The USGS employs some
of the world's leading geologic experts. In your opinion, would the
USGS be a good organization to recommend a set of ``best practices''
for geologic site selection for CO2 storage? By this I mean
that they would not be regulators of the site selection, but instead
recommend the technical requirements for safe, long-term geologic
storage of CO2.
Questions for Stephen Allred From Senator Dorgan
Question 1. It seems to me that we need to much more quickly begin
establishing and defining the ``rules of the road'' when it comes to
carbon management. As we begin to unlock the opportunities for
capturing, moving and storing larger amounts of CO2, it is
fair to say that the federal government will likely play a greater
role. It will be better if we begin to better define appropriate roles
for local, state and federal government.What are the most critical
near-term issues that your agency can address so that developers can
begin demonstrating CCS projects?
Question 2. Creating an infrastructure to capture, transport,
store, and monitor CO2 will take greater federal resources
including staff, technology and other elements. Do you think your
agency is well-equipped to begin undertake this enormous challenge?
Questions for Stephen Allred From Senator Smith
Question 1. I want to thank you for your response to my December
2007, letter concerning the pending Memorandum of Understanding between
the Minerals Management Service (MMS) and the Federal Energy Regulatory
Commission (FERC) regarding wave and current energy projects on the
Federal Outer Continental Shelf (OCS). It is my understanding that this
issue also came up at the Energy Committee on Thursday. I appreciate
the actions taken by MMS, but I remain concerned that the potential for
environmentally-friendly wave energy development will continue to be
delayed on the OCS. Can you tell me when these proposed regulations,
which have yet to be published for public comment, will be finalized?
In the current draft of the agency rulemaking, do you address the issue
of jurisdiction between MMS and FERC, which I understand would have
been addressed in the MOU? If not, why can't MMS sign the MOU in order
to provide regulatory certainty on agency jurisdiction now, and seek to
amend the MOU if the final regulations require such a modification?
Question 2. You stated in your letter and at the Committee hearing
that you had been asked by the Committee not to sign the MOU. It is my
understanding that such a request was orignally made when there was
Senate-passed language in the 2007 energy bill that would have
specified that FERC did not have jurisdiction over kinetic hydropower
facilities located in the OCS. However, that language was not included
in the final version of the bill, which is now P.L. 110-140. Can you
tell me why, in the absence of this language, it wouldn't be helpful to
those seeking to develop projects on the OCS to provide immediate
clarity concerning the regulatory roles and responsibilities of the two
agencies?
Question for Stephen Allred From Senator Wyden
In my State of Oregon and in the State of Washington, western
coastal basins offer potential carbon sequestration opportunities.
Promising basins include the Puget Trough, Tofina-Fuca Basin, West
Olympic Basin, Whatcom Basin, and Willapa Hills Basin in Washington,
and the Astoria-Nehalem Basin and Tyee-Umpqua Basin in Oregon.
Furthermore, Oregon is one of the states that is part of the Big
Sky Carbon Sequestration Partnership (BSCSP). Their vision is to
prepare its member organizations for a possible carbon-constrained
economy and enable the region (Montana, Idaho, South Dakota, Wyoming,
eastern Oregon and Washington, and adjacent areas in British Columbia
and Alberta) to cleanly utilize its abundant fossil energy resources
and sequestration sinks to support future energy demand and economic
growth. The BSCSP will achieve this vision by demonstrating and
validating the region's most promising sequestration technologies and
creating the supporting infrastructure required to deploy commercial
scale carbon sequestration projects. BSCSP has the goal of developing
an infrastructure to support and enable future carbon sequestration
field tests and deployment throughout the BSCSP region.
This technology is extremely attractive in assisting to address
climate change issues; assuring the environmental acceptability and
safety of carbon dioxide (CO2) storage in geologic
formations and determining that CO2 will not escape from
geologic formations or contaminate drinking water supplies are major
concerns. Much research is needed to better understand and characterize
sequestration of CO2 in geologic formations; I understand
that researchers are building on the significant baseline of
information and experience that exists.
Question 1. During the second panel discussion of the hearing, Mr.
Allred of the Department of the Interior discussed issues pertaining to
land leasing requirements and mineral rights, as well as carbon dioxide
ownership and eminent domain. While this discussion was informative, no
resolution was provided on the subject matter. Mr. Allred, can you
provide details on how carbon capture, transport, and sequestration, as
well as the creation of carbon dioxide transport pipelines will impact
private land owners' property and mineral rights in Oregon? And what
are the federal land right impacts of carbon capture, transport, and
sequestration on public property such as national forests and those
supervised by the Bureau of Land Management?
Appendix II
Additional Material Submitted for the Record
----------
American Public Power Association,
Washington, DC, January 28, 2008.
Hon. John Kerry,
U.S. Senate, 304 Russell Senate Office Building, Washington, DC.
Dear Senator Kerry: I am writing to express the American Public
Power Association's (APPA) support for Section V of your bill (S. 2323)
that establishes an interagency task force to develop regulations
providing guidelines and practices for the capture and storage of
carbon dioxide.
As Congress continues to debate climate change, one of the most
frequently discussed technologies is that of carbon capture and
storage. While this may be a viable option to address climate change,
there are major challenges that must be overcome, both technically and
in public policy, before widespread commercial-scale carbon capture and
storage can be achieved. APPA believes your bill is a step in the right
direction to overcoming these challenges.
Again, thank you for your dedication and hard work on this matter
and we look forward to working with you as your legislation moves
forward.
Sincerely,
Mark Crisson,
President & CEO.
______
Statement of Robert J. Finley, Director, Energy and Earth Resources
Center, Champaign, IL, on S. 2323
The Illinois State Geological Survey is one of the largest and most
diverse state geological surveys in the United States. We have been
researching carbon sequestration in the Illinois Basin of Illinois,
southwestern Indiana, and western Kentucky since 2001. In 2003, we
submitted a successful competitive proposal that began our work as a
lead agency for a Department of Energy (DOE), Regional Carbon
Sequestration Partnership. Phase I of that work was completed in 2005,
and a Phase II program was awarded in 2005 that runs through 2009. Our
Phase III large-scale sequestration test was awarded this past December
and we will inject one million metric tonnes of carbon dioxide (CO2)
into a saline reservoir with the collaboration of the Archer Daniels
Midland Company who is providing the site and the high-purity carbon
dioxide for the test. Other tests we are conducting include injection
into mature oil reservoirs and into coal seams to evaluate enhanced oil
recovery and the ability of coal to adsorb CO2. With these efforts we
have established a program to address the major potential reservoirs
for carbon sequestration, as have the six other Regional Carbon
Sequestration Partnerships in their respective regions around the
country. The existence of these efforts leads me directly to offer
comments on S.2323.
Section 3 of this bill is essentially duplicative of the work that
the DOE Regional Carbon Sequestration Partnerships are conducting as
part of their Phase III efforts. The projects already planned and
underway involve 1 million tonnes from a variety of commercial sources.
For purposes of sequestration, and assessing the safety and
effectiveness of the process of isolating CO2 from the atmosphere, the
Partnership tests are addressing the very issues this bill proposes to
address. Given the urgency in developing responses to climate change, I
cannot support initiating a new effort that duplicates work that is
already in place with similar goals, volumes of CO2, and geographic
diversity.
I would also call your attention to Section 6. A significant amount
of research has already been conducted or is now underway with respect
to carbon capture by the Office of Fossil Energy within DOE. S.2323
seemingly does not provide for coordination between Office of Science
and the Office of Fossil Energy with respect to the work that already
has been accomplished. Thus, the potential for duplicative work again
arises.
It is important that Section 7 of S.2323 recognizes the work on
capacity assessment that has been completed and is now being updated by
the DOE Office of Fossil Energy. The initial methodology is already
undergoing modification and refinement. However, some of the work
proposed in this section is likely to be duplicative and the required
coordination provisions should be strengthened. Certainly, some
detailed, recent assessments of the volumes of oil incrementally
recoverable through CO2 enhanced oil recovery have been made on a basin
scale, published, and presented around the nation. With regard to the
Geological Verification provision of Section 7, I would suggest that
this element be dropped. The authorized funding will not cover any
useful new drilling in its entirety while providing for the other
aspects of this Section. It would be far more effective to focus on
partnerships with existing drilling efforts in order to specifically
cofund data collection (coring, advanced well logging, and similar) but
not make any contributions to actual drilling expenditures or footage
rates.
Senator Bingaman and Members, I appreciate the opportunity to
submit these comments to the committee and would welcome any follow-up
communications that may be useful to you.