Workshop Summary WRI…

                             Workshop Summary
                WRI Carbon Dioxide Capture and Storage Workshop
                               28 February 2006

This full-day event served to launch a new project that the World Resources Institute is
leading on carbon dioxide capture and storage. Discussions at the workshop were held
under Chatham House rules (not for attribution), so no names are associated with
conversations that followed formal presentations. The agenda for the workshop and color
copies of all presentations can be found at http://carboncapture.wri.org.

Jonathan Lash, President of WRI, gave welcoming remarks and applauded participants
for coming together to cooperate on a topic of critical importance.

Jonathan Pershing, Director of WRI's Climate and Energy Program, then described the
objectives of the workshop and larger project. Despite all the work and interest in carbon
dioxide capture and storage now, there is uncertainty in public acceptability of the
technology. WRI believes much of this uncertainty can be addressed by ensuring safe and
transparent practices in the field. Currently, there are regulatory and institutional voids
that need to be addressed before CCS can be deployed on a large scale. Guidelines,
regulations, best practices and other standards need to be agreed on through consensus
building among industry, public interest, governmental, and research groups. WRI would
like to use its unique experience in convening diverse stakeholders to build consensus on
how to address key shortcomings in CCS governance and produce guidelines that a
critical mass can endorse. Our goal today is to frame the set of CCS questions that need
to be addressed, and begin thinking about a process that stakeholders can use to build
consensus on how they are answered. Specifically, can we form several workgroups to
begin exploring key issues that we define today as a group?

One comment after this overview noted that, although the workshop had good diversity
from industry, governments, NGOs, and researchers, those with less favorable views on
CCS should also be included in future discussions.

Session I ­ Overview

Jim Dooley, Senior Scientist at the Joint Global Change Research Institute, gave an
overview presentation of the role that CCS technologies could play in stabilizing
atmospheric concentrations of CO2. Dooley outlined some of the opportunities and
challenges that would need to be met if CCS technologies were to deploy on a large scale
where annually gigatons of CO2 were routinely being stored in deep geologic reservoirs
around the world. Current research suggests that globally there are sufficient deep
geologic reservoirs to accommodate foreseeable CO2 storage needs over the coming
century but that this CO2 storage capacity is very unevenly distributed around the globe.
Countries that have large CO2 storage potential will likely have more options to power
their economies in a greenhouse gas constrained world than countries which have
relatively small CO2 storage reservoirs. He argued that the range of heterogeneity within
both the capture and storage subsectors will require a broader set of technological and
policy options and greater planning and foresight than we are currently practicing. The
market for CCS extends beyond new coal fired power plants (IGCC) power plants. CCS
technologies are also key emissions mitigation options for the cement, chemical, refining,
and steel industries. However, the largest potential market is new fossil-fired baseload
electricity generation plants. These baseload units will need decades of proven CO2
storage. That will become a key siting criterion for new plants. For all but a very small
group of niche market opportunities, the deployment of CCS technologies will be a
positive cost activity, i.e., CCS technologies will not deploy on a significant scale unless
there is a policy in place that places a value on carbon emitted to the atmosphere.



Session II -Carbon Capture Issues

Ed Rubin, Carnegie Mellon University, started the sectorial focus of the workshop by
framing issues related to carbon dioxide capture. He outlined types of capture systems
and what new issues might result from their deployment. For example, greater use of
amine scrubbing in post-combustion systems would result in at least marginally greater
production of organics, ammonia, and solid hazardous wastes. Higher energy use per unit
of electricity produced would also result in greater fuel and mineral resource
consumption, solid waste production, and increases in some criteria air pollutant
emissions per kilowatt-hour generated. Potential safety issues, such as those associated
with the use of hydrogen and oxygen in capture systems based on IGCC or oxyfuel
combustion, also may have to be addressed. But Rubin stressed that these are relatively
minor challenges that can be dealt with by the existing regulatory system, and that in the
larger framework there are no major regulatory gaps per se within the capture component
of CCS.

Rubin also noted that policy drivers would be required to enable future CO2 capture. How
might different policy measures at the federal or state level (cap and trade system,
performance and portfolio standards, etc.) influence development of the CCS framework?
A combination of carrots and sticks would be most effective in guiding formation of a
well-run system.

Respondents, Discussion, and Questions:
Most of the discussion focused on the need for greater incentives to deploy IGCC and
other technologies to capture carbon dioxide While CO2-enhanced oil recovery (EOR)
might serve as a "lubricant" for capture in the power sector, and may help to finance
needed pipeline transport infrastructure, it is insufficient to drive large-scale capture in
the power sector. The current ambiguity over future carbon regulation is perhaps the
biggest barrier to more IGCC projects. One respondent discussed how a portfolio
standard requiring a portion of total electricity sales from low-carbon sources spreads risk
and minimizes overall costs. Others noted the role of state utility regulators in providing
rate recovery for project-based carbon capturers. Another noted that the EPA was not
providing any clarity to the states, who deferred to it with questions about regulating
CCS. Finally, the lack of performance guarantees for IGCC systems also slowed
development of projects.

Another topic dealt with how pure captured and injected CO2 needed to be. Small
amounts of hydrogen sulfide (H2S) in the CO2 stream, for example, could change the
regulatory requirements immensely. But small amounts of sulfur species might allow
capture costs to come down while having little additional risk during the post-injection
phase. One participant noted that studies analyzing co-sequestering CO2 and H2S show
only a modest cost reduction (3%) but carry a large increase in perceived public risk.
Additional studies on that topic might be useful.

Participants had a lively discussion over the legal definition of CO2: is it a commodity, a
pollutant, or a toxic waste? How we eventually classify it will dramatically impact the
regulatory regime and liability under which it falls. One participant used the example
that oil is defined as a commodity when held in a tank and a pollutant when released into
the ocean. In the same way, carbon dioxide might be a commodity to enhanced oil
recovery practitioners and a toxic waste if it leaked into the basement in a home adjacent
to an injection site.

Several participants noted that two constituencies were not represented at the workshop:
the financial community and the (re)insurance industry.


Session III ­ CO2 Transport Issues

Russell Martin, Vice President for Business Development at Kinder Morgan CO2,
outlined the issues related to transporting CO2 from sources to injection sites. He noted
that there are currently 76 active CO2 enhanced oil recovery (EOR) projects operating in
five countries, with the majority in the Permian Basin of Texas. This year, the one-
billionth barrel of oil using CO2-EOR is expected to be produced. To get one wedge from
CCS, we would need to ship supercritical CO2 equivalent to the current volume of oil that
is distributed by pipeline in the U.S.1

Carbon dioxide pipelines are regulated under Department of Transportation's compliance
law 195. Rights of way for CO2 pipelines are the same as for oil, gas, and liquids
pipelines.

As long as CO2 is kept dry, pipelines are very safe and stable. In transport, this is
relatively easy to ensure. In field production, however, pipelines and related
infrastructure are exposed to wet CO2, so inhibitors are needed to prevent corrosion.
Martin provided U.S. quality specs for pipeline gases used in CO2-EOR (see
presentation). Generally, CO2 is compressed to 1100 psi for transport, but this can be
increased to 2000 psi or higher in many situations. Pipeline inspections are required with
"smart pigs" and by other forms of direct assessment every 5 years.

1
 See S. Pacala and R. Socolow, "Stabilization Wedges: Solving the Climate Problem for the Next 50 Years
with Current Technologies," Science, August 2004.
Environment, health and safety issues include: asphyxiation, noise, frostbite, and high
pressure. Careful monitoring is required, especially in high consequence areas (areas that
are populated, sensitive to environmental damage or near commercially navigable
waterways). Generally, however, any significant pipeline CO2 leak will be evident from
loud noise, pressure drop, or visual signs (white plumes).

To co-dispose of SO2 and CO2, a new specification would probably be required. Co-
disposing of H2S would have a positive impact on CO2-EOR operations because it helps
lower the minimum miscibility of the flood. Whether this would outweigh its drawbacks
as a highly toxic gas was not discussed.

In measuring CO2 for sales, custody transfer currently relies on orifice meters, which are
generally accurate to 1 percent. This is considered sufficiently sensitive. Other
measurement methods provide less accuracy.

Respondents, Discussion and Questions:
Regulations and industrial best-practices that govern existing CO2 transport work well.
Siting of pipelines in high consequence areas require the most care. Current regulations
give much authority to states. If state PUC's are the enforcer of DOT Office of Pipeline
Safety requirements, the system general works well. But many states are currently not
thinking about CO2, only other liquids and gases.

Carbon dioxide is not currently listed as a hazardous liquid under the Safe Drinking
Water Act regulations, so it is always referred to separately as "CO2 and hazardous
liquids". It is also not considered explicitly in the Underground Injection Control
classification. The Resource Conservation Recovery Act covers all non- CO2 hazardous
waste transport.

Siting of new pipelines may require use of a state's power of eminent domain. The issue
of interstate vs. intrastate eminent domain depends on whether a company is considered a
public utility or not. The National Regulatory Research Institute (NRRI) has completed a
comprehensive study on CCS transport issues that is currently under review by DOE and
will be released soon (probably in April 2006). We will help to distribute this work once
it clears the review process, as well as other relevant NRRI research on CCS.

One option could require future pipelines to be "supersized" so that they can grow in
capacity as more capture is undertaken. We also need to consider issues related to making
CO2 pipelines "common carriers" (open access to all users under equal requirements).

Is there a need for additional regulation at valves and compressors if we go to massive
deployment?

While CO2-EOR has relatively small potential for CO2 storage compared to saline
aquifers, it could help to anchor necessary investments in the CCS infrastructure because
it will be the first mover.
Session IV - Siting and MMV

Sally Benson, Senior Scientist at Lawrence Berkeley National Laboratory, discussed
issues related to siting and monitoring of CCS projects. According to the IPCC Special
Report on Carbon Dioxide Capture and Storage, if MMV and siting are done right, then
geological sequestration risk is comparable to that in natural gas storage or enhanced oil
recovery.

Benson delivered the following key messages.

The regulatory frameworks to govern geological carbon sequestration are largely in place
due to our existing work with natural gas storage, oil-field brine disposal, and liquid and
hazardous waste injection. Modifications can address the outstanding issues. There are
definitely new issues introduced with carbon storage due to the large underground plume
size (100km2), reactivity of CO2 with well materials, and specific geographical locations.

Performance specifications regarding CO2 mitigation need to be developed. How good is
good enough? We need to develop criteria for siting acceptability that ensures local
environmental safety and CO2 mitigation effectiveness. Should we measure the latter in
terms of retention rates (> x%/1000 years) or leakage rates (