1. Robert C. Trautz Principal Technical Leader CREA Energy Innovation Summit Denver, Colorado October 27, 2014 Commercial CO 2 Storage: Around the Corner or Around the Bend?

2. 2 © 2014 Electric Power Research Institute, Inc. All rights reserved. Overview of Geologic Storage Options Saline formations (2,102–20,043 Gt) –Widely distributed but data are sparse Oil and gas fields (226 Gt) –Depleted fields –Enhanced oil recovery (EOR) –Enhanced natural gas recovery (EGR) Unminable coal seams (56-114 Gt) –Enhanced coal bed methane (ECBM) Other –Basalts, shales, cavities (Source: Lawrence Berkeley National Laboratory) CO 2 emissions from the US power sector was 2.1 billion metric tonnes (Gt) in 2012

3. 3 © 2014 Electric Power Research Institute, Inc. All rights reserved. What Is Enhanced Oil Recovery (EOR) and Its Benefits/Challenges? Benefits: –Injection of CO 2 produces more oil –Depending upon oil prices and production costs, CO 2 has a beneficial use and price –Potential market demand for CO 2 is high (25 to 32 Gt) and supply is low (4 to 7 Gt) Challenges: –Large gap exists between CO 2 capture cost ($60-$80/tCO 2 ) and EOR price for CO 2 (<$40/t) –Location, location, location … –Demand for power is variable –CO 2 supplied by power station is relatively constant but EOR operators recycle CO 2 reducing use as the field matures CO 2 is injected into the oil reservoir to enhance oil production by miscible and immiscible displacement (Figure courtesy of Advanced Resources International) EOR provides a market for CO 2 that partially offsets the high cost of capture

4. 4 © 2014 Electric Power Research Institute, Inc. All rights reserved. EPA Regulatory Framework for CO 2 has Arrived or Just Around the Corner Emissions Accounting/Reporting (Arrived) –Greenhouse Gas Mandatory Reporting Rules (Final 2009) Subpart D—Electricity Generation Subpart PP—Suppliers of Carbon Dioxide (capture facilities) Subpart RR—Geologic Sequestration of CO 2 Subpart UU—Injection of Carbon Dioxide for EOR Emission Controls (Arrived) –Best available control technology = CCUS –UIC geologic sequestration rule (Final Dec. 2010) –RCRA exclusion for geologic sequestration (Final Jan. 2014) Emission Limits (Around the Corner) –Draft New Source Performance Standard (Jan. 2014) –Draft Existing Source Performance Standard (June 2014) Limits Controls Accounting CO 2 Emissions Economics No federal climate legislation exists in the US that would help incentivize CCS, therefore, State incentives are needed

5. 5 © 2014 Electric Power Research Institute, Inc. All rights reserved. EOR May Be Around the Bend for New (and existing?) EGU NSPS and Class VI GS rules may have a significant impact on CCS deployment EOR operators must report under Subpart RR if they receive CO 2 from an EGU –File a monitoring, reporting and verification plan with EPA, subject to public comment process –Reopen the plan if significant operational changes occur, which are frequent in EOR operations –Continue monitoring after EOR operations cease EOR operators face legal challenge –Conversion of Class II to Class VI wells –Some State laws prohibit oil and gas field developers from encumbering property in a manner that would preclude future resource recovery –It could trigger renegotiation of hundreds of land use contracts EOR operators have stated they will refuse to take CO 2 from a regulated source rather than attract these legal issues

6. 6 © 2014 Electric Power Research Institute, Inc. All rights reserved. Saline Storage May Arrive Faster than Anticipated in the US The power industry may have to turn to saline storage early Saline storage projects have greater risk compared to oil & gas –Little economic value, so geologic data are scarce for saline aquifers –Storage capacities and injection rates are highly uncertain –Field development costs will be greater with no economic pay back Commercial experience is limited to three large-scale saline storage projects –Sleipner, Snohvit and In Salah –All involve CO 2 separation from natural gas –Each project ~1 Mt CO 2 /yr –A single 1,000 MW EGU will need to store ~3.4 Mt CO 2 /yr to meet the NSPS

7. 7 © 2014 Electric Power Research Institute, Inc. All rights reserved. Is Commercial CCS Around the Corner or Around the Bend? The US is the global leader in CCS research and demonstration projects Commercial-scale projects currently under construction or proposed are heavily subsidized by the US Department of Energy. Examples include: –Southern Co. Kemper County AL (under construction - EOR) –NRG Parrish TX (proposed – EOR) –Summit Energy TX (proposed – EOR) –FutureGen2 Oxy-fired (proposed – saline) It is likely that subsidies will continue to be needed in the future to spur CCS commercialization and reduce CO 2 emissions

8. 8 © 2014 Electric Power Research Institute, Inc. All rights reserved. Together…Shaping the Future of Electricity