Coal, carbon capture and cheap natural gas

There are a couple of interesting articles that came out today on the future of coal as a power source that indicate some of the shorter and longer term concerns over energy supply. One is a tale of the United States the other the United Kingdom.

Looking at the United States condition first, those that are concerned about the future climate of the planet are particularly concerned about the amount of carbon dioxide that is generated when coal is used to generate electricity. (I am not going to go through the pro’s and con’s of their arguments, I do that on Saturdays, and there are lots of others who provide stronger arguments than I). The world had been anticipating that the upcoming meeting in Copenhagen would lead to a new treaty, and set of international regulations to control carbon dioxide emissions. This would build on the Kyoto accords which are expiring. However it now appears that the chances of an agreement in Denmark is not going to happen, and with the chances of a climate bill passing the US Congress in the near future fading, an alternative path to emission control is perceived, by those concerned, to be needed.

Thus the EPA is taking steps to generate regulations that will enforce carbon capture and sequestration by those using coal-fired power stations to generate electricity. One of the problems with a large scale program to undertake this effort is that it relies on a set of technologies that are not necessarily all worked out yet.

Certainly carbon dioxide can be captured from flue gases, and then liquefied for transport to an site for injection underground. There have been demonstrations of this in the past, though it should be noted that the two sites that are often quoted as examples of the ability to inject carbon dioxide – Sleipner for example is reinjecting carbon dioxide that is a byproduct of the gas being produced at the site back into a saline aquifer some 1,000 m below the sea bed. The other success quoted is that where carbon dioxide is injected into an oil reservoir to increase tertiary oil recovery. And the success most often cited here is at Weyburn field in Canada.

The EOR technique that is attracting the most new market interest is carbon dioxide (CO2)-EOR. First tried in 1972 in Scurry County, Texas, CO2 injection has been used successfully throughout the Permian Basin of West Texas and eastern New Mexico, and is now being pursued to a limited extent in Kansas, Mississippi, Wyoming, Oklahoma, Colorado, Utah, Montana, Alaska, and Pennsylvania.

Until recently, most of the CO2 used for EOR has come from naturally-occurring reservoirs. But new technologies are being developed to produce CO2 from industrial applications such as natural gas processing, fertilizer, ethanol, and hydrogen plants in locations where naturally occurring reservoirs are not available. One demonstration at the Dakota Gasification Company's plant in Beulah, North Dakota is producing CO2 and delivering it by a new 204-mile pipeline to the Weyburn oil field in Saskatchewan, Canada. Encana, the field's operator, is injecting the CO2 to extend the field's productive life, hoping to add another 25 years and as much as 130 million barrels of oil that might otherwise have been abandoned.

The Weyburn site is also not using flue gas carbon dioxide. There have been considerable questions about the cost of actually doing the carbon capture and liquefaction, but for some it provides the only alternative to shutting down the coal-fired sector of electricity generation.

"CCS is the only climate change solution we have for the existing fleet of coal-powered power plants," said Sarah Forbes of the World Resources Institute.

Thus there is the new initiative being carried out by AEP at their Mountaineer power plant to capture the gas and reinject it underground. The trial is planned for a 12 to 18 month operation

This project will test Alstom's chilled ammonia technology for CO2 capture from flue gases particular to natural gas combined cycle (NGCC) power plants.

The test began in September and is a scale-up from an earlier test. However it is going to take some time, even after the project is completed, to collect analyze and evaluate the data that will result. Unfortunately I would suspect that the EPA is not going to wait, and the high energy and fuel costs that will be required for the sequestration and re-injection of the carbon dioxide underground will not be much of a factor in the agencies move to force the industry into that particular box.

This will produce a significant increase in the price of power at the plant, and since such plants need to make at least some money to continue operation, one might logically anticipate that this will drive up the price of electricity. (I have heard predictions that in Missouri – which gets some 85% of its electricity from coal – the basic cost of electric power at home may double). The impact, worldwide is also projected to be very expensive.

Earlier this month the International Energy Agency said the world will need to spend $56 billion by 2020 to build 100 such projects, with an additional $646 billion needed from 2021-30.

And so, as a result, one might anticipate that there would, where possible, be a switch to using natural gas, which produces less carbon dioxide, and which is currently in abundant supply over a much greater swath of the nation. That coverage was enhanced with the transition to full operation of the Rockies Express Pipeline which has just come on line and will deliver natural gas from Wyoming and Colorado, where there is a plentiful sufficiency, to the Ohio and points East which has been a bit short. Given the availability of shale gas and new LNG terminals to import gas from abroad, gas will likely remain cheap in the short term.

And it is that dilemma that is facing the power station operators in the UK. The abundance of natural gas supplies to the UK (a quarter of which comes as LNG) means that it may be cheaper to generate power with gas-fired stations that by using coal. But the EU is seeking to shut down the older, more polluting stations and has mandated that they only run for 20,000 hours before being shut down permanently in 2015. This has been why there has been a move to build new replacement stations such as that at Kingsnorth (recently postponed).

The problems that might then arise, as the gas supply, on which the alternative is currently focused, provides the lynchpin of the energy plans of most of the world, is that increased demand may shorten the effective economic life of that resource. Given that nations need to have some alternative source in their back pocket, the dismantling of coal-fired stations across Europe may mean that these resources won’t be available if needed, and the move to restrict new nuclear plants, may keep that from being an answer in the same way. We shall see!!