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Archive for July, 2007

Here is Gristmill’s take (citing a Greenwire story) on a Citigroup report downgrading coal shares. Much can be said of the report (HSBC Global Research also downgraded coal stocks recently), but I’ll let Citigroup speak for itself:

… prophesies of a new wave of coal-fired generation have vaporized, while clean coal technologies such as IGCC with carbon capture and coal-to-Liquids remain a decade away, or more.

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The National Petroleum Council (NPC) recently released a report–Facing the Hard Truths About Energy (executive summary). The report was requested in October of 2005 by Secretary Bodman of the Department of Energy. The hard truths that the NPC articulated are:

  1. Coal, oil, & natural gas are indispensable .
  2. “The world is not running out of energy resources, but there are accumulating risks to continuing expansion of oil and natural gas.”
  3. Energy independence “is not realistic in the foreseeable future.”
  4. The workforce in the energy industry is aging.
  5. Policies aimed at curbing CO2 emissions will alter the energy mix, increase energy-related costs, and require reductions in demand growth.

The report presents 5 core strategies:

  1. Use energy more efficiently.
  2. Expand and diversify sources of energy.
  3. Integrate energy policy into trade, economic, environmental, security, and foreign policies.
  4. Enhance science and engineering education.
  5. Develop the legal and regulatory framework to enable carbon capture and storage.

There is a lot of blog fodder in the report, but its analysis of carbon capture and storage (CCS) will distract us here. One of the hard truths in the report is that potential CCS activities will require significant new infrastructure. The scale of CCS is also addressed. The report points out that in the U.S. if all CO2 from current coal-fired electricity generation was captured and compressed, it would total 50 million barrels per day (based on an estimate of 150,000 barrels a day of supercritical CO2 per GW). Such a volume would be more than double that of the amount of oil handled daily. The report recommends establishing a legal and regulatory framework conducive to CCS. This should include regulatory clarity for land use and liability, as well as access to federal lands for storage. A national CO2 sequestration capacity assessment is also recommended. The authors suggest that the U.S. encourage global application of CCS.

Beyond endorsing CCS, the broader implication of the report is that even the executives in the oil and gas industry admit that there will be supply problems, and the admission is officially sanctioned. This report has received more attention than the earlier Hirsch Report (also commissioned by DOE). Perhaps due to the realization that other less optimistic reports have been coming out recently, the NPC softened the hard truths a bit and issued a gentler report.

The Peak Oil Caucus (link to a video of a press conference) in Congress, which consists of Bartlett (R-MD) and Udall (D-NM), stated that Secretary Bodman asked the right question, but that the bitter truths were sugar-coated in the answers. Moreover, the Peak Oil Caucus accuses the NPC of avoiding a direct answer to the question of when peak oil would occur. Instead of a “clarion call for action”, the NPC produced “a good report for bureaucrats”. Because of the vague and soft pedaled approach, any position can be read into the NPC’s report, even a justification for business as usual. The Peak Oil Caucus favors a recent IEA report that calls for strong, immediate action.

Perhaps I have spent too much time with bureaucratic and legal distractions. When I read “The world is not running out of energy resources, but there are accumulating risks to continuing expansion of oil and natural gas from the conventional sources relied upon historically.” I immediately realized that this was an admission that fossil fuels would no longer be sufficient for business as usual. As long as the sun shines, the world will have energy resources, so the first clause merely acts as a buffer for the statement “there are accumulating risks”. To a lawyer, that sounds like an admission, but far from a clarion call.

A commentary on The Oil Drum also credits Secretary Bodman for asking the right questions, but suggests that he asked the wrong group. Why not ask the National Academies?

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The need for carbon capture and storage (CCS) is premised upon a steady supply of relatively inexpensive coal. Several recent reports question this premise. In summary, the reports find that much of the data on coal reserves is old, unreliable, and based on assumptions that are no longer valid. In some areas, reserves are declining rapidly. This brings up the question of whether CCS might be limited by resource availability.

The National Research Council of the National Academies (U.S.A.) published a book-length report Coal: Research and Development to Support National Energy Policy (2007) (available free online).

The Energy Watch Group initiated by a German MP published Coal: Resources and Future Production (2007).

The European Commission commissioned a report from the Institute for Energy The Future of Coal (2007).

Here is a link to a presentation by Dave Rutledge (Caltech) on Youtube.

Richard Heinberg summarizes the issues well in an article on Global Public Media. For the short and sweet version, blog style, here is an entry from Climate 411.

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Greenwire’s (subscription only) Daniel Cusick reported today about leaked information from a classified report. The report, prepared by DOE’s National Energy Technology Laboratory, states that the chilled ammonia process for post-combustion carbon dioxide capture does not show “any significant improvement” over amine scrubbing.

If confirmed, this would be bad news for those companies that are still planning to build pulverized coal power plants. Gas Turbine World’s Gasification and IGCC Forum has a discussion of the issue (6 July 2007).

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Two carbon capture and storage (CCS) projects previously mentioned on this blog, BP’s project in Scotland and Statoil and Shell’s joint venture in Norway, have both been canceled. Although various reasons were given, it is worth noting that both projects involved using the captured CO2 for enhanced oil recovery (EOR). A BP spokesperson made references to the lifetime for production in the Miller oil field in a interview with the BBC. Statoil’s website states that “The evaluation shows that though the value chain is technically feasible, it is not commercially viable.”

Do these cases speak to the commercial viability of CCS in general? Or would it be best to consider CCS only on its own merits, rather than relying on EOR to compensate for the cost of CO2 capture? NewEnergyNews asks whether the problem is peaking oil or failing sequestration.

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Surfrider has issued a Statement on Wave Energy in Oregon. Two previous blog entries (one & two) here have served as a distraction.

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A new law in Washington has led to a carbon capture and storage (CCS) project. Washington’s SSB 6001, following on California’s SB 1368, created an emission performance standard on baseload electricity generation. Power plant emissions are initially limited to 1100 lbs. (almost 500 kg) of CO2 per MWh. The emissions limit is reviewed every five years, and must match the average rate of emissions of new combined cycle natural gas generation plants. Coal-fired plants must therefore employ CCS to meet the standard.

Wallula Energy Resource Center plans to build a 600-700 MW coal-fired IGCC power plant with CCS in eastern Washington. The plant will capture around 65% of the CO2 created and sequester it in subsurface basalt formations. The CO2 trapped in the pore space of the basalt is meant to react with the rock to form calcium carbonate and magnesium carbonate. This would sequester the carbon for a long period of time. Others are interested in the success of this CCS operation. India, Iceland, and others with similar basalt formations will be watching.

Other states might also be watching to see how carbon caps affect the state’s economy. So far, it appears that the affects are positive. Emissions will decrease, yet power plants are still being built. During the construction of the plant, 530 people will be employed. More than 100 people will be employed to operate the plant.

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