Remarks by Mark Maddox
Acting Assistant Secretary for Fossil Energy
to the
Third American Petroleum Institute Conference
on
Voluntary Actions to Address Climate Change
Arlington, Virginia
September 29, 2004

Thank you Walt, and good morning everyone. 

At the Department of Energy we appreciate the strong response of the petroleum industry to the President's initiatives to rally voluntary action in moderating U.S. output of greenhouse gases. 

The Climate Vision goal was to lower the intensity of our greenhouse gas emissions by 18 percent through 2012, and one of the primary tools was efficiency and other gains by America's major industries. 

Your participation across a broad range of domestic and international activities is important.  It has been pivotal in the progress of all these efforts and will be critical in their success. 

This is especially true of the items in API's climate action plan that touch on CO2 capture and sequestration.

The climate-related activities of the Office of Fossil Energy are focused on developing the technological ways and means that will enable U.S. industry – especially oil and gas – to remain flexible and competitive in the face of climate and all other future challenges. 

Some relevant near-term activities include development of: 

• Remote sensors to locate natural-gas leaks in transmission and distribution, a means of helping eliminate emissions of the greenhouse gas methane;  and
• Elevated compressor performance through the Micro-Pilot Ignition System for retrofit of as many as 8,000 old compressor engines – the retrofit can enhance operational reliability, extend engine life, raise fuel efficiency and lower carbon intensity. 

Six sensor technologies were field tested earlier this month and the results are being evaluated now.  Field tests for the compressor-engine retrofit are in preparation. 

In addition, the Department will provide technical support to the new international Methane-to-Markets Partnership which will curb worldwide release of this powerful greenhouse gas. 

In fossil-energy use, we are bearing down on efficiency gains through advanced combustion technologies and improved turbines performance.  We are capitalizing on the established rule of thumb that every one-percent gain in the thermal efficiency of power generation equals a 3-to-4 percent decline in carbon-dioxide output per kilowatt-hour produced. 

Each of these is an important activity in its own right.   In ordinary circumstances I would discuss each in greater detail. 

But this morning I want to talk in about the momentum gathering around one of the longer-term efforts – about the Carbon Sequestration Leadership Forum, another international partnership of the United States. 

I've just returned from the Forum's Second Ministerial Meeting in Melbourne, Australia, where it became apparent that: 

• The Forum may be on the verge of establishing advanced fossil-energy technology as an internationally accepted alternative in dealing with greenhouse gases; and 
• The participation of the oil and gas industries at home and overseas in combining sequestration with enhanced recovery will be critical to a successful beginning. 

The existence of the Forum isn't news to anyone here.  But its activities have received scant coverage in the year since it was organized; the membership has grown; and its activities have taken on focus and definition.  

To update everyone's recollection: The Carbon Sequestration Leadership Forum is now comprised of 16 nations and the European Commission.  Other nations have begun to express interest in joining. 

The Forum is based on recognition of the undeniable truth behind the International Energy Agency's projections that say: 

• World economic growth, especially in the developing nations, means a corresponding rise in energy demand that cannot be denied or turned aside;
• That, in the first part of this century, most energy for developed and developing nations alike will have to come from fossil fuels which produce greenhouse gases;
• That all countries will have to struggle to achieve significant reductions in greenhouse gases;
• That something more effective is needed;
• And, that effective action requires an approach which engages all nations in all stages of economic development to the mutual benefit of all. 

Forum members are representative of developed, transitional and developing nations on every populated continent and in most regions of the world. 

In broad approximations the Forum represents:

• More than two-thirds of the world's economic activity and projected growth;
• More than two-thirds of the world's energy demand; and
• More than two-thirds of the world's greenhouse gas emissions whether present or projected. 

In energy resources, the reserves of Forum members are approximately:

• 15 percent of world petroleum;
• 40 percent of natural gas;
• At least 85 percent of coal;
• And, in the aggregate, about 65 percent of all the fossil energy available to the world. 

Forum membership is voluntary, its activities are non-binding and its purposes are:

• Multi-lateral and bilateral partnerships to sponsor rapid research development and deployment of technologies to capture and store large quantities of CO2; 
• To link science and technology with a body of ready-to-use, non-binding concepts in legislation and financial incentives;
• And, to make carbon capture and storage available to all nations in search of a constructive alternative in dealing with greenhouse gases.

Potential benefits include:

• Curbing and eventually eliminating carbon dioxide emissions all fossil-energy power generation, not just coal;
• Enhanced oil and gas recovery on a worldwide scale, which will add to supply;
• Supplementing natural gas supply with methane displaced by storage in unmineable coal seams;
• Further relieving pressures now being felt in petroleum and, by some, in natural gas by making possible and more varied use of coal – the most abundant resource; and
• Bringing on development of the hydrogen economy with fossil-energy feedstock, which ultimately could stabilize all energy markets and de-carbonize economic activity. 

At the Ministerial meeting, the Forum 's activities made the transition from process to product, from promise to practical application.

The Ministers endorsed a comprehensive slate of 10 research and development projects around the world.  Five deal with carbon capture and five with sequestration.  Most involve the participation of the oil and gas industry. 

One of these is Phase Two of the massive CO2 Capture Project. 

Phase One's research programs covered pre-combustion capture, oxyfuel capture, post combustion capture, cost estimates and storage assurance.  It consisted of separate 100 projects. 

And it pointed up capture-cost reductions ranging up to 60 percent and pioneered the risk-based approach to proving sequestration safe, measurable and verifiable. 

Phase One achieved real breakthroughs in both carbon capture and sequestration.  It was a joint effort of the U.S. Department of Energy, the European Commission, the Research Council of Norway and eight petroleum companies. 

Phase One alone proves the petroleum industry's commitment of finding constructive solutions.

Now Phase Two goals include:

• Continued the strong emphasis on capture technologies which are applicable to all fossil fuels across a broad range of industry sectors;
• Further reductions in the costs of capture;
• Establishing the reliability of capture technology's performance and costs;
• And, progressing capture technologies to the point of readiness for pilot-scale demonstrations.

Phase Two will also conduct sequestration activities.  

The other Forum projects that primarily emphasize carbon-dioxide capture involve:

• Post-combustion capture and storage technology in Europe with the eventual objective of handling the emissions of up to 30 percent of large industrial facilities;
• Reducing the costs of removal from combustion sources such as turbines, heaters and boilers;
• Membrane separation from pressurized gas streams; and
• The improved removal from flue-gas streams using chemical solvents.  

The five Forum projects that emphasize sequestration were chosen to produce information on the most promising and widespread geologic reservoirs.  The returns will allow a variety of nations and stakeholders to judge how, when and whether carbon-dioxide capture and storage can be of benefit. 

Carbon sequestration's momentum received a technical boost just before the Ministerial.  

Formal findings were entered on the Weyburn One Project in western Canada.  It has proved that large amounts of CO2 can be safely stored in similar oil-bearing geologic formations. 

One of the new projects is Weyburn Two.  It will measure the performance and assess the risks of enhanced oil recovery on the scale of 95 million cubic feet of CO2 a day.   

This is the perspective from the Office of Fossil Energy. 

In FE, our focus is on leading in the development of low-cost technologies for capture and storage.  

Our work is motivated by awareness:

• That the success of current voluntary efforts to reduce carbon intensity will be assessed after 2012;
• And, that the direction of world events after 2012 may require a different approach to greenhouse gases. 

The real challenge of this decade and the next is how we integrate these new technologies into the ongoing activities and economic evolution of our industries.

The response given in the CO2 Capture Project proves it is a challenge industry can meet. 

Many industries today are transitioning into new technology for reasons of competitiveness.

They face a choice between good, mature technologies that are reaching the apex of potential; and good, emerging technologies that will only get better and more versatile. 

Some new technologies come with more inherent carbon-capture compatibility than others.  Some come with the potential to deliver multiple energy products, others only one.  Retrofits will be easy and low cost for some, more difficult for others. 

Those who opt for mature technologies that can't be adapted to contingencies may also be buying future liabilities.  It's a decision they'll have to live with for 50 years.  Depending on the course of events, some may not last that long.

But those who choose emerging technologies which can be readily adapted will be boosting near-term performance and laying the foundation for continued success deep into the century. 

Decisions made in this decade and the next will be critical to sustaining U.S. competitiveness through the next 50 to 75 years. Government should not try to make those choices.

But, in the Office of Fossil Energy, we believe that government must ensure that the right choices are available at the right time at the right cost. 

We want the United States to have the adaptability and flexibility to deal successfully with all challenges whether they come in climate, the global economy or world energy markets. 

And, with the continued participation of the petroleum industry, I am confident the right choices will be available.

The CO2 Capture Project – Phases One and Two – demonstrate this is this so. 

Thank you for your involvement and your attention.