Coal Sector Developments in the United States

Transcription

1 Office of Fossil Energy Coal Sector Developments in the United States Clean Coal Day 2017 in Japan International Symposium 5 September 2017 Scott M. Smouse Senior Advisor Acting Director, International & External Partnerships Division Office of Clean Coal and Carbon Management 1 Office of Fossil Energy fossil.energy.gov

2 Price of Natural Gas is Key Factor in Projecting Future U.S. Energy Mix High NG prices Low NG prices Source: EIA Annual Energy Outlook Office of Fossil Energy

3 U.S. Domestic Coal Market Coal industry is simultaneously in period of decline and restructuring M&A activity continues and several initial public offerings loom. Producers becoming better capitalized, but market continues to face challenges but some bright spots: Higher natural gas prices have helped increase coal consumption and draw down coal inventories so far in 2017, but longer-term domestic coal demand remains uncertain. On track to higher annual production this year compared to 2016 National labor shortage persists and equipment typically under maintained. 2 new coking coal mines this year *After Key Coal Messages from CERAWeek 2017 by IHS Markit, 12 April Office of Fossil Energy

4 U.S. Coal Exports As a swing supplier in international markets, U.S. coal has been losing market share since 2012, in face of global oversupply and strengthening of U.S. dollar. U.S. coal exports recovered in the first half of 2017 along with the recovery of international coal prices. Increased U.S. coal exports following severe Cyclone Debbie impacted Australian coal exports to Asia International coal prices, driven primarily by Asian demand, will remain key source of uncertainty for U.S. coal exports in long run. Without dedicated export infrastructure on the U.S. west coast the gateway for lower-cost Powder River Basin coal to Asia opportunity for higher U.S. coal exports is limited. 4 Office of Fossil Energy

5 U.S. coal exports in 2017 on track to reverse steady decline since 2012 peak U.S. share in annual global total coal exports U.S. exports U.S. exports by coal type by coal type million million short short tons tons 16% % Steam 12% Coking 10% 8% 6% 4% 2% % Jan-May'16 Jan-May'17 5 Office of Fossil Energy

6 Top importers of U.S. coal bought less U.S. coal in recent years, except India U.S. coal exports, 2016 U.S. coal exports, Office of Fossil Energy

7 Alaskan Coal Exports Alaskan coal exports by destination Million short tons 1.2 Usibelli Coal mine Seward coal terminal Chile Japan Korea 7 Office of Fossil Energy

8 Advanced Fossil Technology Systems R&D Existing Major Demonstrations First Generation fossil energy technology systems built to validate first-of-a-kind fully integrated projects at full scale for power and industrial sectors Advanced Energy Systems Technologies that greatly improve plant efficiencies, reduce costs, increase plant availability, and maintain highest environmental standards Carbon Capture R&D and scale-up technologies to capture CO 2 from new and existing industrial and power-producing plants Carbon Storage Safe, cost-effective, and permanent geologic storage of CO 2 in depleted oil and gas fields and other formations Cross Cutting Research Materials, sensors, and advanced computer systems for future power plants and energy systems 8 Office of Fossil Energy

9 CCS Activities in the United States Historically Focused on Technology Development and Market Mechanisms Technology Push Market Pull Domestic Oil Supplies and CO 2 Demand (Storage) Volumes from Next Generation CO 2 -EOR Technology R&D focused on cost (capture) and confidence (storage) Demos (integration and learning) International Cooperation Access to world-class R&D researchers and facilities Better, faster, cheaper 9 Office of Fossil Energy Existing Market Mechanisms: Enhanced Oil Recovery (EOR) 65M tons/yr of CO 2 nearly 300,000 barrels/d of oil Regulatory Framework Financing (Tax Credits and Loan Guarantees)

10 USEPA Regulations for storage in place since Office of Fossil Energy

11 Current and Proposed U.S. CCUS Policy Incentives Current U.S. Tax Code 45Q - Credit for CO 2 sequestration 1) $20 per metric ton of qualified CO 2 which is a) captured by taxpayer at qualified facility, and b) disposed by taxpayer in secure geological storage and not used by taxpayer as described in paragraph (2)(B) 2) $10 per metric ton of qualified CO 2 which is a) captured by taxpayer at qualified facility, b) used by taxpayer as tertiary injectant in qualified enhanced oil or natural gas recovery project, and c) disposed of by taxpayer in secure geological storage Additional tax and financial incentives to support CCS deployment being considered Incentives for CO 2 storage-eor, including expanding existing 45Q provisions CO 2 price stabilization Master Limited Partnerships (MLPs) Private Activity Bonds (PABs) Investment tax credits (ITCs) Diverse stakeholder support for proposed CCS legislation 11 Office of Fossil Energy

12 Proposed CCUS Incentives S (Heitkamp, July 2017) For facilities placed in service on or after date of enactment: Credit available for 12 years, beginning when equipment is placed in service $50 for secure geologic storage, with credit increasing annually until full value is reached in 2026 $35 for EOR, EGR or utilized in another qualified manner, with credit increasing annually until full value is reached in 2026 Qualified facilities are defined as: construction begins by January 1, 2024 original planning and design includes installation of carbon capture equipment For facilities that emit less than 500,000 tons of CO 2, capture must be not less than 25,000 tons of CO 2 should be utilized per year For EGUs, capture should be not less than 500,000 tons per year Direct air-capture facilities should be not less than 100,000 tons per year 12 Office of Fossil Energy

13 State Policies for CCS CO 2 Owner: Post-Injection owner of CO 2 Unitization: Minimum % of landowners which must agree to project Primacy: CCS rights granted to mineral rights holders H. Javedan, Massachusetts Institute of Technology 13 Office of Fossil Energy

14 U.S. DOE CCUS Major Demonstration Projects CCPI ICCS Archer Daniels Midland CO 2 Capture from Ethanol Plant CO 2 Stored in Saline Reservoir $208M Total; $141M DOE SALINE ~0.9 MM TPY Started Operations: April 7, 2017 Southern Company Kemper County IGCC Project Transport Gasifier w/carbon Capture ~$7 B Total; $407M DOE EOR: ~3.0 MM TPY Suspended: June 2017 Petra Nova W.A. Parish Generating Station Post-Combustion CO 2 Capture $1B Total; $190M DOE EOR ~1.4 MM TPY Started Operations: January 10, 2017 Air Products and Chemicals, Inc. CO 2 Capture from Steam Methane Reformers EOR in Eastern TX Oilfields $431M Total; $284M DOE Over 3.5 MMT stored as of March 2017! Started Operations: March Office of Fossil Energy

15 Petra Nova NRG Energy s W.A. Parish CCPI-3 Advanced Post-Combustion CO 2 Capture Project at NRG s W.A. Parish power plant near Houston, Texas Post-Combustion CO 2 capture retrofit of existing coal Plant at NRG s W.A. Parish Unit 8 World s largest post-combustion CO 2 capture system Project completed on-budget and on-schedule Delivering and permanently storing around 1.4 M tons of CO 2 per year for EOR 240 MWe slipstream scaled up to improve project economics Fuel: PRB sub-bituminous coal 90% CO 2 capture (KM CDR Process ) EOR at Hilcorp s West Ranch oil field Total Project Cost: ~$1 B (DOE Cost Share: $190 M) NRG Equity - $300 million JX Nippon Equity $300 million JBIC Project Financing - $250 million MHI Technology Provider 15 Office of Fossil Energy Key Dates: Project awarded: May 2010 Air permit: December 2012 NEPA Record of Decision: May 2013 Financial close: July 2014 Complete construction: December 2016 Construction completed on-budget and on-schedule Started operations: January 10, 2017 Project Ribbon Cutting Ceremony: April 13, 2017

16 Southern Company Services, Inc. CCPI-2 Kemper County Advanced IGCC with CO 2 Capture New Coal Plant built by Mississippi Power in Kemper County, MS First Baseload Unit Built in 30 years Built away from Gulf coast after Hurricane Katrina Mississippi Power is PSC Regulated Utility Part of Kemper costs subject to PSC rate recovery Generation: 582 MWe (net) with duct firing 2 TRIG TM gasifiers developed by Southern Co. and KBR Fuel: Local Mississippi Lignite 67+% CO 2 capture (Selexol process) ~3,000,000 metric tons CO 2 /year EOR: Denbury Onshore LLC Total estimated project cost: ~$7B DOE Cost Share: $407MM Key Dates: Project awarded: Jan. 30, 2006 Project moved to MS: Dec. 5, 2008 NEPA Record of Decision: Aug. 19, 2010 Initiate excavation work: Sept. 27, 2010 CC operation on Natural Gas: August 2014 First syngas production: July 14, 2016 Lignite gasification portion of project suspended on June 28, 2017 (facility will continue to operate on natural gas) 16 Office of Fossil Energy

17 Archer Daniels Midland Company ICCS Area 1 CO 2 Capture from Biofuel Plant CCS project built and operated by Archer Daniels Midland (ADM) at existing biofuel plant in Decatur, IL CO 2 is by-product from production of fuel-grade ethanol via anaerobic fermentation Up to 90% CO 2 capture (with >99% CO 2 purity), dehydration (via tri-ethylene glycol) & compression ~900,000 tonnes CO 2 /year captured and stored CO 2 Sequestration in Mt. Simon Sandstone deepsaline formation First new EPA UIC Class VI well permit for CO 2 saline storage Total Project Cost: $208 M DOE Cost Share: $141 M (68%) Key Dates: FEED study completed: April 2011 Construction started: May 2011 Two monitoring wells drilled: Nov UIC Class VI Injection Well Permit: Sept Injection well drilled and completed: Sept Construction complete: Apr Commercial operations: April 7, 2017 Ribbon cutting: September 22, Office of Fossil Energy

18 Air Products & Chemicals, Inc. ICCS Area 1 Steam Methane Reforming with CO 2 Capture Built and operated by Air Products and Chemicals Inc. at Valero Oil Refinery in Port Arthur, TX CO 2 capture added to 2 existing Steam-Methane Reformers (SMRs) for hydrogen production Project achieves 90+% CO 2 capture Vacuum Swing Adsorption (VSA) for CO 2 separation Capturing ~925,000 tonnes CO 2 /year ~30-MWe cogeneration unit makeup steam to SMRs and power to VSA and compressors CO 2 to Denbury Green pipeline for EOR in Texas at West Hastings oil field Total Project cost: $431 M DOE Share: $284 M (66%) Project on time and under budget Operated >100% of design when needed Key Dates: Phase 2 awarded: June 15, 2010 Construction started: Aug Started operations: March M tons of CO 2 delivered Apr M tons of CO 2 delivered May M tons of CO 2 delivered May M tons of CO 2 delivered March Office of Fossil Energy

19 Carbon Capture Small-Pilot Projects up to 1.5 MWe Decrease capital and energy costs 2 nd Generation Technologies 10 post-combustion systems Low degradation rates High permeance/reaction/flux ~$40/tonne Transformational Systems Membrane systems for postcombustion Solvent and sorbent systems for pre-combustion ~$30/tonne Technologies ready for large scale testing 10 to 25MWe $60M for greenfield units hours of testing for commercial viability 19 Office of Fossil Energy

20 Post-Combustion Capture National Carbon Capture Center - Benefits to Program Operated by Southern Company Services, at Plant Gaston, AL DOE funds 80% of operations Over 91,000 test hours Technologies from U.S. and 6 other countries since 2008 founding of NCCC More than 40 carbon capture technologies tested 20+ Post combustion 20+ Pre-combustion Dedicated staff of plant engineers Standard design guidelines Small and large solvent test units 90+% of U.S. developers opt for testing at NCCC 20 Office of Fossil Energy

21 Example of CO 2 Capture Development Timeline Membrane Technology Research, Inc. (MTR) 21 Office of 21 Fossil Energy

22 Accelerating the Rate of RD&D - Transformational Partnership between national labs, academia, and industry Accelerate deployment by 50% in TRL 2-5 range Parallel paths for materials discovery synthesis process design Leverage advanced computing Robotics for rapid synthesis and analytical capabilities Transformational Technology Development 22 Office of Fossil Energy

23 Developing Advanced Materials The Problem New high-temperature structural alloy development and commercialization is time consuming and expensive: >10 years and multi-million dollars for single alloy The Vision Reduce cycle time, cost and failure rate of advanced FE materials development by at least factor of 2X by: o Integrated High-Performance Computational materials design and long-term predictive behavior tools coupled with smarter, more efficient experimental techniques o Data analytics to leverage existing data and knowledge to maximum possible extent Friction stir welding of ¼ -thick dispersion strengthened Sandvik APMT plate Advanced FE systems - Extreme environments - Long-service life (>100,000 h) - Large components Opportunity - New Phase-Stable Alloys - Manufacturing of Alloys, Materials Systems & Components - Build upon successes with Integrated Computational Materials Engineering (ICME) environments 23 Office of Fossil Energy

24 Transformative R&D: Supercritical Carbon Dioxide (sco 2 ) Supercritical CO 2 : A highly efficient working fluid COAL WASTE MFG. HEAT SOLAR NUCLEAR NATURAL GAS Diverse fuel/ heat sources Higher thermal efficiencies, smaller physical footprint, and lower capital costs (than conventional steam-based power generation) Cleaner, more affordable electricity 24 Office of Fossil Energy

25 Industrial sources could be early movers for CCS Chemical and refinery Metals and mineral Other (including ag and waste management) 25 Office of Fossil Energy

26 Industrial CO 2 Capture Opportunities Maintaining U.S. jobs 26 Office of Fossil Energy

27 Storage Infrastructure Small Scale to Large Scale RCSP Development Phase Large-Scale Field Projects Over 10 million metric tonnes stored RCSP Validation Phase Field Projects Completed 18 injection projects (1.35 M tonnes injected) 27 Office of Fossil Energy

28 Storage Infrastructure Addressing Large-Scale Challenges Regional Carbon Sequestration Partnerships Brine Extraction Storage Tests (BEST) Unconventional EOR Offshore Storage Carbon SAFE 28 Office of Fossil Energy

29 Advanced Storage R&D Risk Assessment, MVAA, Well Integrity & Mitigation, Predicting Plume & Pressure Impacts Advanced simulation tools for coupled processes Flow, mechanical deformation/failure, geochemistry in complex, fractured reservoirs and caprock Measurement tools to ensure reservoir conformance Measuring and modeling geomechanical properties and coupled processes in reservoir, caprock, and faults Reduce risk of induced seismic events monitoring and forecasting capabilities Monitoring and mitigating wellbore leakage: bio-mineralization, phtriggered polymers, nanocomposites, mesoporous nanoparticles 29 Office of Fossil Energy

30 Existing U.S. CO 2 Pipeline Network 50 individual pipelines with combined length over 4,500 miles (~7250 km) Roughly 80% of CO 2 transported through pipelines from natural sources Vast majority of pipeline system dedicated to CO2-EOR producing >4% of U.S. crude oil Pipeline regulation is joint responsibility of federal and state governments 30 Office of Fossil Energy

31 CO 2 Infrastructure Opportunities CCUS is capital intensive, faces policy and market uncertainties, and requires long-term commitment, all of which present financial burden and risk for CCUS project developers Regulatory, policy, and financial certainty essential for industry U.S. EOR operations represent commercially demonstrated and Federally recognized form of geologic storage that could provide market pull for the CCUS deployment Need to expand existing CO 2 pipeline network to realize full potential for domestic oil production using CO 2 -EOR A regional CO 2 pipeline network will require collaboration between private companies, investment community, State agencies, Federal regulators, and other interested stakeholders. CO 2 pipeline network showing oil and gas fields. Pipeline data from Energy Velocity, saline reservoir and oil and gas field data from NATCARB. Source: NETL 31 Office of Fossil Energy

32 Integrated System Approach 32 Office of Fossil Energy

33 Office of Fossil Energy Questions? 33