Statement of
Mr. George Rudins
Deputy Assistant Secretary for Coal and Power Systems
U.S. Department of Energy
to the
Subcommittee on Energy
Committee on Science
U.S. House of Representatives
November 6, 2003

Madam Chairman and Members of the Subcommittee:

I am pleased to appear before the Subcommittee today to discuss the great potential that new technology, especially carbon sequestration technology, will play in helping the Nation meet ever increasing demands for energy in the most efficient and environmentally responsible manner possible.

With much of the Nation's attention again focused on the security of global energy supplies, it is important to remember that we remain an energy-rich country.

Today, coal is an indispensable part of our Nation's energy mix. Because of its abundance and low cost, coal now accounts for more than half of the electricity generated in this country.

Coal is our Nation's most abundant domestic energy resource. One quarter of the entire world's known coal supplies are found within the United States. In terms of energy value (Btus), coal constitutes approximately 95 percent of U.S. fossil energy reserves. Our nation's recoverable coal has the energy equivalent of about one trillion barrels of crude oil - comparable in energy content to all the world's known oil reserves.

At present consumption rates, U.S. coal reserves are expected to last at least 275 years.

Coal has also been an energy bargain for the United States. Historically it has been the least expensive fossil fuel available to the country, and in contrast to other primary fuels, its costs are likely to decline as mine productivity continues to increase. The low cost of coal is a major reason why the United States enjoys some of the lowest electricity rates of any free market economy.

America produces over 1 billion tons of coal per year. Nearly all of it (965 million tons) goes to U.S. power plants for the generation of electricity.

According to the Energy Information Administration, annual domestic coal demand is projected to increase by 394 million tons from the 2001 level of 1.050 billion tons to 1.444 billion tons in 2025, because of projected growth in coal use for electricity generation.

Largely because of improving pollution control technologies, the Nation has been able to use more coal while improving air quality. While annual coal use for electric generation has increased from 320 million tons in 1970 to more than 900 million tons, sulfur dioxide emissions from coal-fired power plants have dropped from 15.8 million tons annually to 10.1 million tons in 2001, the most current year available. In addition, particulates from coal-fired plants declined some 60 percent over the same period, according to the Environmental Protection Agency.

Because coal is America's most plentiful and readily available energy resource, the Department of Energy (DOE) has directed significant R&D resources at finding ways to use coal in a more efficient, cost-effective, and environmentally benign manner. New government-industry collaborative efforts are getting underway pursuant to the President's Coal Research Initiative. These programs will continue to find ways to limit emissions from power generation, at lower costs. The goal for FutureGen, discussed later in my testimony, is to remove environmental issues, including greenhouse gas emissions, from the fuel choice equation by developing a coal-based zero emission power plant.

The Next Generation of Power Plants

In the 1970's, the technology for coal-fired power plants was generally limited to the pulverized coal boiler--a large furnace-like unit that burns finely ground coal. As part of DOE's Clean Coal Technology Program, DOE and industry have demonstrated higher fuel efficiencies and superior environmental performance. For example, coal could be gasified - turned into a combustible gas. In gaseous form, pollutant-forming impurities can be more easily removed. Like natural gas, gasified coal could be burned in a gas turbine-generator, and the turbine exhaust used to power a steam turbine-generator. This "combined cycle" approach raised the prospects of unprecedented increases in fuel efficiency. Gasification combined cycle (IGCC) plants built near Tampa, Florida (TECO Project), and West Terre Haute, Indiana (Wabash River Project), are among the cleanest, most efficient coal plants in the world. The Wabash River Project, which is a repowering of an existing coal-fired unit, resulted in a 30-fold decrease in SO2 and a 5-fold decrease in NOx emissions. These projects have recently completed their demonstration phases and are entering commercial operations.

The progress to date in developing these two IGCC demonstration projects -- now in commercial service -- has laid the foundation for broader application of IGCC.

FutureGen - Zero Emissions From Cutting Edge Technology

Earlier this year, President Bush and Secretary of Energy Abraham announced plans for the United States to build -- with international and private sector partners -- a cost-shared fossil fuel power plant of the future called FutureGen. It is one of the boldest steps toward a pollution-free energy future ever taken by our nation and has the potential to be one of the most important advances in energy production in the first half of this century.

This demonstration power plant will accommodate some cutting-edge technologies to the core demonstration facility. FutureGen will be a cost-shared $1 billion venture. While there has been no final decision on the appropriate cost-sharing, and 80/20 cost-share may be appropriate for those FutureGen activities that are prototype or basic research in nature and do not involve commercial demonstration. Demonstration activities would be cost-shared at 50/50. FutureGen will combine electricity and hydrogen production with the virtual elimination of emissions of such air pollutants as sulfur dioxide, nitrogen oxides and mercury, as well as carbon dioxide, a greenhouse gas.

The Department envisions that FutureGen would be sized to generate the equivalent of approximately 275 megawatts of electricity, roughly equal to an average mid-size coal-fired power plant. It will turn coal into a hydrogen-rich gas, rather than burning it directly. The hydrogen could then be combusted in a turbine or used in a fuel cell to produce clean electricity, fed to a refinery to help upgrade petroleum products, or used as a fuel for a future hydrogen economy.

It will provide other benefits as well. FutureGen could provide a zero emissions technology option for the transportation sector -- a sector that accounts for one-third of our nation's carbon dioxide emissions.

In the future, the plant could become a model for the production of coal-based hydrogen with zero emissions to power the new fleet of hydrogen-powered cars and trucks envisioned as part of President Bush's Hydrogen Fuel Initiative. Using our abundant, readily available, low-cost coal to produce hydrogen -- an environmentally superior transportation fuel -- would help ensure America's energy security.

Carbon sequestration will be one of the primary features that will set the FutureGen plant apart from other electric power projects. Engineers will design into the plant advanced capabilities to capture the carbon dioxide. No other electricity power plant in the world has been built with this capability.

Once captured, carbon dioxide will be injected deep underground, into brackish reservoirs that lay thousands of feet below the surface of much of the United States, or into oil or gas reservoirs, or into unmineable coal seams or volcanic basalt formations. Once entrapped in these formations, the greenhouse gas would be permanently isolated from the atmosphere.

The project will seek to sequester carbon dioxide emissions at an operating rate of one million metric tons or more of carbon dioxide sequestered per year. We will work with the appropriate domestic and international communities to establish standardized technologies and protocols for carbon dioxide measuring, monitoring, and verification.

The FutureGen plant will pioneer carbon sequestration technologies tied to power plants on a scale that will help determine whether this approach to 21st century carbon management is viable and affordable.

What are the Most Important Outstanding Technical Issues Associated With Geological Sequestration?

Integrated operation of energy production and sequestration in the FutureGen facility is required to establish that technical issues associated with sequestration are of no concern or can be readily managed during operation. Potential issues include downtime of CO2 separation processes, and corrosion or plugging of the sequestration pipeline, wellbore, and formation, and leakage of sequestered CO2.

Geologic Sequestration can be divided into four overarching categories: Transport; Storage; Measurement/ Monitoring/Verification (MM&V); and Infrastructure. For each of these areas, a brief description of R&D approaches being taken to overcome outstanding technical issues is provided. For Transport, R&D is developing an increased understanding and best practice strategies to minimize corrosion. For Storage, R&D is developing best practice strategies to identify optimal locations for candidate geologic reservoirs and reservoir management practices to maximize CO2 storage.

This R&D will provide FutureGen with site selection guidelines and reservoir management practices throughout the lifespan of FutureGen. MM&V is critical to ensure permanence and safety of CO2 sequestration. R&D is developing technologies to minimize leakage and ensure permanent storage to below 0.01% leakage per year. Developments in sub-surface tracking relative to seismic, gravitational and logging technologies are evolving to where movement of very small amounts of CO2 in reservoir can be tracked. Methods to track surface leakage are being developed to identify small surface leaks at nearly any point above the surface of a geologic formation.

Lastly, for Infrastructure, the Carbon Sequestration Leadership Forum and Regional Carbon Sequestration Partnerships are developing the infrastructure, regulatory framework, and other sequestration protocols that are critical to both FutureGen deployment and, more importantly, subsequent widespread deployment of the integrated FutureGen powerplant.

What Technical Questions Will the Future-Gen Project Be Designed To Address?

FutureGen will focus on integrating and demonstrating the technology needed to economically remove the environmental constraints associated with producing energy from coal, especially those associated with the CO2 emissions. The FutureGen project will demonstrate the technical and economic feasibility of zero-emission power plants by integrating the production of electricity and hydrogen from coal with the capture and permanent sequestration of CO2 generated in the process. FutureGen will employ coal gasification technology, integrated with combined-cycle electricity generation, hydrogen production, and capture and sequestration of CO2.

The goal of FutureGen is to conclusively show that using coal to produce electricity and hydrogen with zero or near-zero carbon emissions is a viable approach for carbon management. To prove viability, the sequestration technology needs to be demonstrated at a meaningful scale under real-world conditions. This requires the operation of a large scale, integrated system. FutureGen may also accommodate some cutting-edge technologies to produce electricity and hydrogen, which would need to be integrated with CO2 sequestration technologies. Monitoring and verifying the permanence of CO2 sequestration is a key part of the project. The geologic formations into which the CO2 will be sequestered will be heavily instrumented to monitor and verify the permanence of CO2 storage. Monitoring and verification of the amount of CO2 sequestered are critical issues in public acceptance of sequestration. Other elements are to: maximize storage potential; track CO2 movement in the geologic formation; monitor for and mitigate surface leakage, if it occurs; and integration of CO2 capture and storage with the coproduction of hydrogen and electricity.

Is Our Current State of Knowledge Sufficient To Proceed With A Large Scale Demonstration Project?

Our state of knowledge is sufficient to proceed with a large scale demonstration project. The use of sequestration to reduce CO2 emissions is a relatively new idea. DOE's sequestration program is only six years old-a short time for a major technology development program. However, for more than 40 years the petroleum industry has injected CO2 into depleted oil and gas fields for enhanced oil recovery and the disposal of acid gases that are produced from some gas and oil wells. The primary components of acid gas are CO2 (typically up to 90 percent), hydrogen sulfide, and other trace contaminants. Hydrogen sulfide is lighter than CO2 and has a strong smell even at concentrations of a few parts per million, making it easy to detect. No significant leaks of hydrogen sulfide have been reported over the years. Over 70 CO2 enhanced oil recovery projects inject more than 8 million tons of CO2 per year into oil reservoirs throughout the United States and Canada. Many of these projects have been injecting at these levels for more than 20 years. The risk of catastrophic release of CO2 is almost non-existent. No known hazardous CO2 leaks have ever been associated with leakage from a geologic formation.

Two large-scale carbon sequestration projects exist today. The first project is the offshore Sleipner facility, owned and operated by Statoil, Norway's state oil company. Located beneath the North Sea, the Sleipner field is one of the world's largest natural-gas fields, and is characterized by a high concentration of CO2, typically around 9 percent. To produce pipeline-quality natural gas, Statoil strips the excess CO2 from the recovered gas on its offshore production platform. The CO2 is then injected into a saline reservoir 1,000 meters below the seabed. Since 1996, Statoil has injected 1 million metric tons of CO2 per year. The project is partially driven by a Norwegian tax credit of up to $35 per metric ton of CO2 sequestered.

The recently initiated Weyburn Project is the only other large-scale CO2 sequestration effort in existence. This project, organized by the Department of Natural Resources of Canada, has the dual purpose of enhanced oil recovery and carbon sequestration. Carbon dioxide from the Great Plains Synfuels plant in Beulah, North Dakota is pumped 200 miles to the Weyburn oil field in southeastern Saskatchewan. Over the project's 20-year lifetime, 20 million metric tons of CO2 will be injected into the Weyburn field. DOE's sequestration program is supporting extensive measurement, monitoring, and verification efforts for both the Sleipner and Weyburn large-scale projects.

How Did the Department Choose The Scale and Scope of FutureGen?

FutureGen will be designed to operate at a nominal 275 MW (net equivalent output), and may accommodate some cutting-edge technologies into the demonstration plant to produce electricity and hydrogen integrated with CO2 sequestration technologies. This size is driven by the requirement for producing relevant data and by the requirement for producing one million metric tons per year of CO2 to adequately validate the integrated operation of the gasification plant and the receiving geologic formation. Full scale demonstration is necessary to adequately address the integration issues including sequestration.

Since FutureGen is a first-of-a-kind project, the key cost risks include integration of advanced technologies for power and hydrogen generation with sequestration, and technologies at full-scale to capture and sequester large quantities of CO2.

How Did the Department Determine the Cost of This Project?

Estimated project cost is based on cost experiences with other projects including ongoing large-scale sequestration projects as described earlier, and past coal gasification projects of similar size. DOE also accounted for the cost associated with using advanced technology, built-in flexibility features to accommodate possible testing of cutting edge subsystems and components, required instrumentation, the integration aspects between the power facility and the sequestration facility, and finally the operational costs for the demonstration period. On the basis of prior experience with first-of-a-kind power projects, DOE projects a total project cost of $1 billion.

What Levels of Funding Will Be Provided by Industry and International Partners?

The funding required to accomplish FutureGen is expected to be $1 billion. A private-sector share of 20 percent will be required for those activities that are prototype or basic research in nature and do not include commercial demonstration while those activities that are commercial demonstration will be cost-shared at 50/50. DOE is also pursuing funding participation from domestic (e.g., states) and foreign government entities.

What Factors Will the Department Consider Regarding Site Selection For Geological Sequestration Projects and Experiments?

Site selection must consider many factors. Three considerations are the feedstock, use of the products (electric power, hydrogen, and other by-products), and sequestration options. The ideal location requires geologic formations that may be the best suited candidates for large-scale facilities. However, final site selection will be based on comprehensive criteria derived from detailed geologic assessment.

The reservoir(s) selected for sequestration will be representative of geologic sites commonly available throughout the United States. The candidate geologic formations include unmineable coal seams, depleted oil and natural gas reservoirs, deep saline reservoirs, or other formations. Geologic sequestration may be coupled with resource recovery in projects such as enhanced oil recovery or coalbed methane recovery.

What Work Should Be Done Prior to FutureGen Site Selection?

DOE plans to perform due diligence activities prior to site selection. The Sequestration R&D program, Regional Partnerships and Carbon Sequestration Leadership Forum will work to identify the most appropriate areas of the country for candidate sequestration formations. A Programmatic Environmental Impact Statement (PEIS) will be initiated in fiscal year 2004 which will identify environmental issues related to geologic site selection and provide guidelines for geologic site selection activities to support FutureGen.

Conclusion

The ultimate goal for the FutureGen project is to show how advanced coal-based generation using carbon sequestration technology can eliminate environmental concerns over the future use of coal and allow the nation to realize the full potential of its abundant coal resources to meet our energy needs. FutureGen will show that coal, an environmentally challenging energy resource, can be an environmentally sustainable energy solution.

The fact that coal will be a significant world energy resource during the 21st century cannot be ignored. Coal is abundant, it is comparatively inexpensive, and it will be used widely, especially in the developing world. Global acceptance of the concept of coal-based systems integrated with sequestration technology is one of the key goals of FutureGen.

Thus, FutureGen will demonstrate the commercial viability of a coal-fired power plant that not only will be emission-free but also will operate at unprecedented fuel efficiencies and coproduce low/cost, clean hydrogen from coal.

This completes my prepared statement. I would be happy to answer any questions you may have.