CCS in Central Appalachia
Feature Articles, Feb  12  2010 (Carbon Capture Journal)

- What would CCS in Central Appalachia look like and how is it possible that one could arrive at a successful implementation? By Steven M. Carpenter, Director of Carbon Management & Corporate Risk Manager, Marshall Miller & Associates

In general terms, carbon capture & storage (CCS) is a three pronged technology that addresses most every issue between the source of the carbon emission and sink (or storage) of the CO2. Based on recent research and pi-lot/demonstration programs, most experts agree that the potential for full scale CCS is both possible and required. The capture technology at the plant level is further advanced and is less constrained by the location of both the source (facility) and the sink than are the remaining two aspects - transportation and storage.

Carbon transport and storage in the coal region of Central Appalachia posses several unique issues within this three-pronged approach. In particular, transportation and storage pose significant impediments to the advancement of the technology and more importantly to the implementation and full-scale deployment of its use.

Quite simply, no CO2 (or Enhanced Oil Recovery) pipeline infrastructure exists in Central Appalachia. Open Congressional Research Reports for the People reported in Pipelines for Carbon Dioxide (CO2) Control: Network Needs and Cost Uncertainties that then President Bush would require “the Secretary of the Interior to recommend legislation to clarify the issuance of CO2 pipeline rights-of-way on public land.

The cost of CO2 transportation is a function of pipeline length and other factors. This report examines key uncertainties in CO2 pipeline requirements for CCS by contrasting hypothetical pipeline scenarios for 11 major coal-fired power plants in the Midwest Regional Carbon Sequestration Partnership region. The scenarios illustrate how different assumptions about sequestration site viability can lead to a 20-fold difference in CO2 pipeline lengths, and, therefore, similarly large differences in capital cost.”

These differences (or increases) have significant impacts on financing, ownership, constructability and therefore full scale deployment of the required CO2 pipeline infrastructure. Additionally, higher CO2 transportation costs in “sink-poor” geological regions will lead to regionally higher energy costs.

To date, most CO2 transportation has occurred in existing EOR pipeline infrastructure. The map (provided by the European Energy Forum) illustrates the enhanced oil

recovery (EOR) pipelines in the US that are available for use as CO2 transportation infrastructure. It is readily apparent that no infrastructure exists in the Central Appalachian coal region.

Once the impediment of getting the CO2 from the source to the sink is addressed, the next issue to tackle is that of the “sink” or storage field. It is hard to argue with Mother Nature. Large, deep saline sinks are where they are, and conversely, aren’t where they aren’t. It is impossible to ignore the lack of deep sinks in the hard rock northeastern U.S.

This unfortunate scenario also applies to the coal fields of Central Appalachia. Most of the geological data in Central Appalachia is from formations less than 4,000 feet deep. Knowing that little to no coal exists below that depth, little data exists. This issue is compounded by the fact that due to the proximity of the coal, many coal-fired power plants are located in the Central Appalachian basin to take advantage of mineto-mouth’s lower coal transportation costs.

Along with the Midwest Regional Carbon Sequestration Partnership, the Southeast Regional Carbon Sequestration Partnership (SECARB), managed by the Southern States Energy Board, is providing research and development in the CCS arena especially in the Central Appalachia region. The SECARB Partnership manages four projects in the Appalachian coal basin. In simplest terms: Deeper is better. The lack of deep options coupled with a significant number of coal-fired power plants creates what some are calling the “Perfect Storm” of significant need and significant lack of availability of carbon sinks in the region.

Reverting back to the Mother Nature reference, sometimes the requirement is to take what is available, and make it work. To that end, research performed by Marshall Miller & Associates through SECARB under funding by U.S. DOE contract DEFC26-04NT42590, several storage field options have been identified. The key issue is depth versus breadth. There exists much “shallow” (less than 4,000 feet) geological data. Based on that data, one potential storage area has been mapped in southwestern Virginia. According to the DOE Carbon Sequestration Atlas, the Central Appalachia area of SECARB contains the second-largest concentration of thin, unmineable coal seams. These seams have an estimated storage capacity that ranges between 60-90 billion tons/ CO2 storage.

Data derived from SECARB’s research indicates that the capacity does in fact exist. The following isometric storage potential map of two local power plants (AEP-Clinch River and Dominion-Virginia City Plant) shows the potential for 100 years of 100 percent CO2 emission storage, assuming 100 percent carbon capture was achievable.

The great news is that storage capacity exists. The bad news, accessing that capacity may prove to be difficult. Again, referring to the deeper is better adage, the more shallow a storage field is, the broader or larger “footprint” the storage field will encompass. The general understanding in the CCS industry is that the oil and gas scenario of forced pooling and unitization of property rights to incorporate storage fields will be applied to the carbon aspect of a storage field. As an example, a typical natural gas storage field in northern West Virginia is approximately 14 square miles or 8,960 acres. Based on the “broader” footprint of a carbon field, the needed area could grow to as large as 50 square miles.

This is where the lack of standardized regulations leaves the door open for some interpretation and “philosophizing.” In the U.S., the basis for CCS is derived from the 2007 Supreme Court decision in Massachusetts v EPA, where the court gave the EPA the right to regulate carbon dioxide under the Clean Air Act as a pollutant. The legal basis for the oil and gas industries “forced pooling and unitization” is based on the fact that natural gas stored underground is an asset. And as such, a landowner is compensated for the “use” of the land via a royalty payment.

The Massachusetts v EPA case, in my opinion, opens the door to the use of forced pooling and unitization except in this application, carbon, it is a liability or a “pollutant” under the law. That subtle nuance, changes the royalty game into a liability game.

Here is what I mean: In the absence of some form of federally regulated insurance or risk and liability pool, say similar to the Price-Anderson Act relative to nuclear power plant construction and operation, there is no limit to the “fee” or price someone can demand to accept the liability of carbon stored on his or her property. As in the case of natural gas, the gas is a commodity asset and the price is fixed by an outside entity.

If carbon dioxide is forced into the ground on property owned by someone who doesn’t want it stored there, here is how I see the math working out: Typical to West Virginia, a 50-square-mile tract of land could contain on average 1,250 parcels. Assuming one surface right owner and the potential for two subsurface rights owners (coal, gas and or pore space) = 3,750 liability negotiations. Now is where the nuance gets exponential. Instead of being paid a flat fee or percentage, say 12 percent in normal gas operations (as an asset) the land/mineral right owner can name their price for the liability being placed underground (e.g. CO2). So, take the 3,750 potential property rights holders and multiply them by $100,000/each or $1,000,000 each or higher. Very quickly the cost to secure the property rights for one 50square-mile storage field becomes so large that it has the effect of not being real money

(e.g. Monopoly® money). At a million dollars each (for the liabilty assumption) this “one field” would cost $3.75 bilion just of the liability rights.

The use of these shallow, unmineable coal seams present another potential impediment to carbon storage. Because the sinks are shallow, the CO2 is stored at a non-supercritical state. This creates a volume issue in that the deeper saline formations are at such a depth that the CO2 stored will be at a supercritical state, thus providing an order of magnitude greater storage capacity, simply due to the depth (and therefore pressure) at which the CO2 is stored. The chart below indicates graphically the relative size of CO2 at storage depth.

Let’s assume for the sake of discussion, that the issues of transportation and storage can be addressed. What other impediments stand in the way of full-scale commercialized CCS in Central Appalachia (aside from carbon capture at the plant level)? Unfortunately there are several: cost (DOE vs. industry share), parasitic load for carbon capture at the plant level, risk and liability, and monitor, verify and account.

Cost share from U.S. DOE is at a minimum $1 (DOE) per $1 invested (industry). In many cases, the required industry cost share is higher. The latest round of projects funded under DOE’s Clean Coal Power Initiative (CCPI) Round III, included cost share from industry that was almost 3:1, that is industry invested $3 for every $1 provided by DOE. While having any funds to offset capital expenses, construction and or engineering costs is valuable, many publicly traded companies, in response to stakeholders and shareholders are receiving mixed signals - spend or not to spend - when to spend.

The parasitic load of the carbon capture equipment is very often not discussed. Estimates from Energy Information Agency suggest that to outfit the U.S. coal-fired fleet with full scale CCS would require 40 GW of parasite load – simply put, that is eight new 500 MW power plants to supply the energy needed to power the CCS system.

The risk associated with the previously mentioned asset versus liability discussion for property rights owners is a valid concern. Over half of the states have begun to put in place carbon laws and or programs that define, address and make it possible to address the liability issue of placing CO2 underground. These programs also aim to address the liability of the CO2 generator, specifically, who owns the CO2 once it is placed underground in storage. Is it the state, is it the generator or is it the storage operator?

MMV has become MVA. The DOE’s mantra of “Measure, Monitor and Verify” has become “Monitor, Verify and Account.” It is the last directive of “Account” that has provided some real issues or in the case of this article some real impediments to full scale implementation. Specifically, looking at the Central Appalachian region, there is a lack of homogeneity, time-in-grade and of standardization. As with most geology, Central Appalachia is not different. There is a general lack of homogeneity within seams that causes fractures, seeps, and “losses” that can’t be “accounted” for very easily or, more importantly, in a cost effective manner, at least not yet. There is a lack of time-in-grade with CO2 being injected underground. Now I agree that CO2 has been used for EOR for several decades, but it has been used without regard to whether or not it stayed in place and whether or not, if it moved, how far it moved. These issues can’t appropriately be addressed until there is an accepted (mandated and/or regulated) standard.

With all the hurdles to overcome, what would CCS in Central Appalachia possibly look like and how is it possible that one could arrive at a successful implementation?

The answer is: There is no silver bullet! There is; however, silver buckshot! We must change the paradigm and look at all options and consider all possibilities. We must not get mired in the old landfill-days-paradigm of Not In My Back Yard – NIMBY and prevent what Christopher Power of Dins-more & Shohl’s Natural Resources and Environmental Practice Groups calls “NUMBY” – not UNDER my back yard.

Ken Nemeth, Executive Director of SSEB and contributing author of From Energy Crisis to Energy Security sums it up succinctly. “The problems we confront are not insurmountable, but they are serious. … It is time for the political class to get serious about our access to energy”. If we do that, the end result will be successful. Success is meeting the energy demand in a way that is cleaner, greener and sustainable.

Marshall Miller & Associates

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