U.S. Fossil Energy Chief Puts Carbon Mitigation into Business
During this year’s Carbon Capture Utilization and Sequestration Conference in Pittsburgh, DOE’s Assistant Secretary for Fossil Energy, Chuck McConnell spoke with evangelistic fervor about an elegantly practical, scientifically proven and almost ridiculously obvious way of reinvigorating carbon management which, in the shadow of failed carbon emissions legislation and the economic downturn, clearly needs a breath of fresh air. In a telephone interview after the conference McConnell talked about the genesis of his approach.
During McConnell’s 2010 interview for the DOE Fossil position Energy Secretary Steven Chu asked him to cite the single most important step necessary to effectively manage carbon emissions. For McConnell the response was easy. As vice president for carbon management technologies at the Battelle Memorial Institute, he had been looking for business models for carbon management for years. Before 2008 he looked for ways to commercialize the disposal of the industrial carbon dioxide that carbon legislation would have mandated. Then after 2008 when carbon legislation failed to materialize, he began to look for a pure-profit commodity model.
He suggested to Chu that given the absence of carbon legislation and in consideration of the economic downturn it was essential to find a robust business model to get CCS technology off government-supported drawing boards and into the marketplace. Doing so would enable the full utilization of U.S. fossil energy reserves without pushing the world over the climate heating brink.
Until that point, carbon management research had focused largely on geologic storage of CO2 in saline aquifers, an approach that required substantial investments in primary research to prove that it actually worked. And if it worked, it would take massive infrastructure investments to put the systems in place – a scenario neither the federal government nor private sector investors were likely to embrace.
McConnell recommended expanding Enhanced Oil Recovery (EOR) a forty year-old oil industry practice that used CO2 to extract residual oil from depleted wells. It was less costly and less risky than saline storage. A fully functional industry was on the ground and running. The only thing it lacked was a large enough supply of naturally occurring CO2 to expand. Anthropogenic CO2 captured at fossil power plants could fill the shortfall. He got the job.
NEW VALUE PROPOSITION
Once in office McConnell repositioned the carbon capture and sequestration value proposition. No longer would the technology’s success depend on the whims of stakeholders variously supporting, objecting, promoting, obstructing and debating CCS in local, regional and global climate change forums. Now that carbon dioxide had metamorphosed from a dangerous waste product into a desirable commodity, carbon mitigation would become a way to make money.
Since he was advocating for the positive use of CO2 rather than its simple disposal, he added the word Utilization to the name. CCS –short for Carbon Capture and Sequestration – became CCUS, for Carbon Capture, Utilization and Sequestration. With the addition of a single letter to the technology’s acronym McConnell revitalized a flagging technology at the same time giving it a patriotic, albeit unofficial, Made in America sensibility. Without inventing a single widget McConnell shifted the thrust of the carbon management business model from climate change and tax avoidance to energy security and profit generation.
PUSHING THE OIL OUT
As a practical matter, Enhanced Oil Recovery involves injecting pressurized carbon dioxide into a depleted oil field to push the stranded oil toward a battery of extraction wells. The technique is typically used on wells that have undergone two previous rounds of extraction – primary extraction which uses the oil’s natural pressure to get it out of the ground – and secondary extraction by water flooding which, as the name implies, uses injected water to push residual oil toward an extraction well. But because water and oil don’t mix, even after water flooding, as much as 60 percent of the original oil may remain stranded in the formation.
Remarkably, of the 596 billion barrels of oil originally contained in U.S. wells, 400 billion barrels remain stranded. Of that 400 billion, 85 billion are considered technically recoverable. McConnell calls this untapped resource America’s hidden gold. All we have to do is get it. Fortunately, since 1972 the enhanced oil industry has been doing just that.
Not that EOR is a matter of alchemy. As with a lot of things that look easy, it’s complicated. At its most basic level, CCUS technology is based upon the fact that when pressurized to about 1,200 pounds, CO2 gas transforms into an exotic state of matter known as a supercritical fluid which flows like water but mixes like steam – the perfect material to “flush” the stranded oil out of a depleted well after water flooding.
While a portion of the supercritical carbon dioxide mixes with the residual oil, effectively thinning it and making it extractable, sixty percent-or-so clings to pores in the rock strata which previously held the oil. There it stays, sequestered from the atmosphere once and for all. Upon extraction the CO2 that mixed with the oil to thin it is chemically removed and reused in another round of injection and extraction.
Today, five percent of U.S. domestic oil -more than 300,000 barrels per day – is produced using enhanced oil recovery. McConnell believes that expanding EOR can push the number to 30 to 40 percent by 2030. The only limiting factor is the fact that the naturally occurring geologic sources of CO2, which have supplied the industry until now, are nearing the end of their production lives. McConnell’s captured anthropogenic CO2 looks like an ideal replacement source.
Once fully tapped, depleted U.S. wells are expected to supply sufficient CO2 storage capacity for eighty to one hundred years of industrial carbon sequestration in the United States. In addition to finding a permanent home for captured carbon dioxide McConnell’s strategy is designed to reduce dependency on foreign oil and become a first mover in a very exportable technology.
Although McConnell’s vision is promising, at this juncture, the path to fully realizing CCUS is not a done deal. Even with naturally occurring CO2, the economics of EOR tread a delicate balance between oil prices and carbon prices. Recent increases in oil prices make EOR economically attractive, but when oil prices go down, the expense of CO2 can make EOR economically unfeasible.
The economics are even more challenging for the capture side of the CCUS equation. While stripping CO2 out of fossil streams either before or after combustion is do-able it takes a lot of energy, which means it is not cheap. Estimates suggest that presently available technologies would impose an energy penalty of up to 40 percent, which breaks the deal. But given the obvious economic incentive to keep the deal alive, energy researchers are in hot pursuit of ways to bring down the price of carbon capture.
On the infrastructure side of the picture, the cost of retrofitting existing U.S. coal plants to capture CO2 ranges from about $30 to $100 per ton when spread over the life of a plant. For carbon priced at $30/ton EOR is very attractive – at $100, not so attractive. Fortunately, the existing EOR industry is served by 1,500 miles of CO2 pipeline, which eases the burden on at least some of the early term infrastructure costs.
Although the United States does not now have a single commercial power plant capable of capturing CO2, fifty-three industrial projects funded in part by the Department of Energy to the tune of about $3 billion are currently underway to demonstrate, innovate, characterize, optimize and improve the physics, chemistry, geology and engineering of CCUS technology.
On one hand the economic and technical obstacles to realizing CCUS are formidable. But on the other hand, Chuck McConnell’s quest to transform an economic burden into a money-making new business tends to make the obstacles disappear into – well – thin air.