coal sector developments in the united states scott m. smouse
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1 | Office of Fossil Energy fossil.energy.gov
Office of Fossil Energy
Coal Sector Developmentsin the United States
Clean Coal Day 2017 in Japan International Symposium
5 September 2017
Scott M. SmouseSenior AdvisorActing Director, International &
External Partnerships Division Office of Clean Coal and Carbon
Management
energy.gov/fe2 | Office of Fossil Energy
Price of Natural Gas is Key Factor in Projecting Future U.S. Energy Mix
Source: EIA Annual Energy Outlook 2017
High NG prices
Low NG prices
energy.gov/fe3 | Office of Fossil Energy
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 2017
energy.gov/fe4 | Office of Fossil Energy
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.
energy.gov/fe5 | Office of Fossil Energy
U.S. coal exports in 2017 on track to reverse steady decline since 2012 peak
-
20
40
60
80
100
120
140
160
0%
2%
4%
6%
8%
10%
12%
14%
16%
1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016
Steam
Coking
U.S. exports by coal type
million short tonsU.S. share in annual
global total coal exports
Jan-May'16 Jan-May'17
U.S. exports by coal type
million short tons
energy.gov/fe6 | Office of Fossil Energy
Top importers of U.S. coal bought less U.S. coalin recent years, except India
U.S. coal exports, 2016 U.S. coal exports, 2010-2016
energy.gov/fe7 | Office of Fossil Energy
Alaskan Coal Exports
Usibelli
Coal
mine
Seward coal terminal
0
0.2
0.4
0.6
0.8
1
1.2
2008 2010 2012 2014 2016
Chile Japan Korea
Alaskan coal exports by destinationMillion short tons
energy.gov/fe8 | Office of Fossil Energy
Advanced Fossil Technology Systems R&D
Cross Cutting ResearchMaterials, sensors, and advanced computer systems for future power plants and energy systems
Carbon StorageSafe, cost-effective, and permanent geologic storage of CO2 in depleted oil and gas fields and other formations
Carbon CaptureR&D and scale-up technologies to capture CO2 from new and existing industrial and power-producing plants
Advanced Energy SystemsTechnologies that greatly improve plant efficiencies, reduce costs, increase plant availability, and maintain highest environmental standards
Existing Major DemonstrationsFirst Generation fossil energy technology systems built to validate first-of-a-kind fully integrated projects at full scale for power and industrial sectors
energy.gov/fe9 | Office of Fossil Energy
• Existing Market Mechanisms: Enhanced Oil Recovery (EOR) 65M tons/yr of CO2 nearly 300,000
barrels/d of oil
• Regulatory Framework• Financing (Tax Credits and Loan
Guarantees)
• 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
Domestic Oil Supplies and CO2 Demand (Storage) Volumes
from “Next Generation” CO2-EOR Technology
Technology Push Market Pull
CCS Activities in the United States Historically Focused on Technology Development and Market Mechanisms
energy.gov/fe10 | Office of Fossil Energy
USEPA Regulations for storage in place since 2010
energy.gov/fe11 | Office of Fossil Energy
• Current U.S. Tax Code § 45Q - Credit for CO2 sequestration1) $20 per metric ton of qualified CO2 which is—
a) captured by taxpayer at qualified facility, andb) 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 CO2 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, andc) disposed of by taxpayer in secure geological storage
• Additional tax and financial incentives to support CCS deployment being considered Incentives for CO2 storage-EOR, including expanding existing 45Q provisions CO2 price stabilization Master Limited Partnerships (MLPs) Private Activity Bonds (PABs) Investment tax credits (ITCs)
• Diverse stakeholder support for proposed CCS legislation
Current and Proposed U.S. CCUS Policy Incentives
energy.gov/fe12 | Office of Fossil Energy
Proposed CCUS IncentivesS.15387 (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 CO2, capture must be not
less than 25,000 tons of CO2 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
energy.gov/fe13 | Office of Fossil Energy
State Policies for CCS
H. Javedan, Massachusetts Institute of Technology
https://sequestration.mit.edu/pdf/US_State_Regulations_Underground_CO2_Storage.pdf
CO2 Owner: Post-Injection owner of CO2
Unitization: Minimum % of landowners which must agree to project
Primacy: CCS rights granted to mineral rights holders
energy.gov/fe14 | Office of Fossil Energy
U.S. DOE CCUS Major Demonstration Projects
CCPI
ICCS
Southern CompanyKemper County IGCC Project
Transport Gasifier w/Carbon Capture~$7 B – Total; $407M – DOE
EOR: ~3.0 MM TPY Suspended: June 2017
Petra NovaW.A. Parish Generating StationPost-Combustion CO2 Capture
$1B – Total; $190M – DOEEOR – ~1.4 MM TPY
Started Operations: January 10, 2017
Air Products and Chemicals, Inc.CO2 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 2013
Archer Daniels MidlandCO2 Capture from Ethanol PlantCO2 Stored in Saline Reservoir$208M – Total; $141M – DOE
SALINE – ~0.9 MM TPY Started Operations: April 7, 2017
energy.gov/fe15 | Office of Fossil Energy
Petra Nova – NRG Energy’s W.A. Parish CCPI-3 Advanced Post-Combustion CO2 Capture
• Project at NRG’s W.A. Parish power plant near Houston, Texas
• Post-Combustion CO2 capture retrofit of existing coal Plant at NRG’s W.A. Parish Unit 8
• World’s largest post-combustion CO2 capture system • Project completed on-budget and on-schedule • Delivering and permanently storing around 1.4 M tons
of CO2 per year for EOR• 240 MWe slipstream – scaled up to improve project
economics• Fuel: PRB sub-bituminous coal• 90% CO2 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
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
energy.gov/fe16 | Office of Fossil Energy
Southern Company Services, Inc. CCPI-2Kemper County Advanced IGCC with CO2 Capture
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)
• 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 TRIGTM gasifiers developed by Southern Co. and KBR
• Fuel: Local Mississippi Lignite
• 67+% CO2 capture (Selexol® process)
• ~3,000,000 metric tons CO2/year
• EOR: Denbury Onshore LLC
• Total estimated project cost: ~$7B
• DOE Cost Share: $407MM
energy.gov/fe17 | Office of Fossil Energy
Archer Daniels Midland Company ICCS Area 1CO2 Capture from Biofuel Plant
• CCS project built and operated by Archer Daniels Midland (ADM) at existing biofuel plant in Decatur, IL
• CO2 is by-product from production of fuel-grade ethanol via anaerobic fermentation
• Up to 90% CO2 capture (with >99% CO2 purity), dehydration (via tri-ethylene glycol) &compression
• ~900,000 tonnes CO2/year captured and stored
• CO2 Sequestration in Mt. Simon Sandstone deep-saline formation
• First new EPA UIC Class VI well permit for CO2
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. 2012
UIC Class VI Injection Well Permit: Sept.
2014
Injection well drilled and completed:
Sept. 2015
Construction complete: Apr. 2016
Commercial operations: April 7, 2017
Ribbon cutting: September 22, 2017
energy.gov/fe18 | Office of Fossil Energy
Air Products & Chemicals, Inc. ICCS Area 1Steam Methane Reforming with CO2 Capture
• Built and operated by Air Products and Chemicals Inc. at Valero Oil Refinery in Port Arthur, TX
• CO2 capture added to 2 existing Steam-Methane Reformers (SMRs) for hydrogen production
• Project achieves 90+% CO2 capture Vacuum Swing Adsorption (VSA) for CO2 separation
• Capturing ~925,000 tonnes CO2/year
• ~30-MWe cogeneration unit makeup steam to SMRs and power to VSA and compressors
• CO2 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. 2011
Started operations: March 2013
1 M tons of CO2 delivered Apr 2014
2 M tons of CO2 delivered May 2015
3 M tons of CO2 delivered May 2016
3.5 M tons of CO2 delivered March 2017
energy.gov/fe19 | Office of Fossil Energy
Carbon Capture Small-Pilot Projects – up to 1.5 MWe
Decrease capital and energy costs
2nd Generation Technologies
• 10 post-combustion systems
• Low degradation rates
• High permeance/reaction/flux
• ~$40/tonne
Transformational Systems
• Membrane systems for post-combustion
• Solvent and sorbent systems for pre-combustion
• ~$30/tonne
Technologies ready for large scale testing
• 10 to 25MWe
• $60M for greenfield units
• 5000+ hours of testing for commercial viability
energy.gov/fe20 | Office of Fossil Energy
Post-Combustion CaptureNational 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
energy.gov/fe21 | Office of Fossil Energy21
Example of CO2 Capture Development TimelineMembrane Technology Research, Inc. (MTR)
energy.gov/fe22 | Office of Fossil Energy
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”
energy.gov/fe23 | Office of Fossil Energy
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
Developing Advanced Materials
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
energy.gov/fe24 | Office of Fossil Energy
Transformative R&D: Supercritical Carbon Dioxide (sCO2)
Supercritical CO2:
A highly efficient working fluid
Cleaner, more
affordable electricity
Diverse fuel/
heat sources
Higher thermal efficiencies,
smaller physical footprint, and
lower capital costs(than conventional steam-based
power generation)
COAL
SOLAR
NUCLEAR
NATURAL
GAS
WASTE
MFG.
HEAT
energy.gov/fe25 | Office of Fossil Energy
Industrial sources could be early movers for CCS
Chemical and refinery
Metals and mineral
Other (including ag and waste management)
energy.gov/fe26 | Office of Fossil Energy
Industrial CO2 Capture OpportunitiesMaintaining U.S. jobs
energy.gov/fe27 | Office of Fossil Energy
Storage InfrastructureSmall Scale to Large Scale
Completed 18 injection
projects (1.35 M tonnes
injected)
RCSP Development Phase Large-Scale
Field Projects
RCSP Validation
Phase Field Projects
Over 10 million metric tonnes stored
energy.gov/fe28 | Office of Fossil Energy
Storage Infrastructure – Addressing Large-Scale Challenges
Brine Extraction Storage Tests (BEST)
Regional Carbon Sequestration Partnerships
Offshore Storage Carbon SAFE
Unconventional EOR
energy.gov/fe29 | Office of Fossil Energy
Advanced Storage R&DRisk 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 geo-mechanical 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, pH-triggered polymers, nanocomposites, mesoporous nanoparticles
energy.gov/fe30 | Office of Fossil Energy
Existing U.S. CO2 Pipeline Network
• 50 individual pipelines with combined length over 4,500 miles (~7250 km)
• Roughly 80% of CO2 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
energy.gov/fe31 | Office of Fossil Energy
CO2 Infrastructure Opportunities
A regional CO2 pipeline network will require collaboration between private companies,
investment community, State agencies, Federal regulators, and other interested stakeholders.
CO2 pipeline network showing oil and gas fields. Pipeline data
from Energy Velocity, saline reservoir and oil and gas field data
from NATCARB.
Source: NETL
• 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 CO2 pipeline network to realize full potential for domestic oil production using CO2 -EOR
energy.gov/fe32 | Office of Fossil Energy
Integrated System Approach
33
Office of Fossil Energy
Questions?
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