The DOE announced the names of the projects selected to receive funding for carbon capture and sequestration projects. The funding is from the American Recovery and Reinvestment Act.

ConocoPhillips received approximately $3,000,000 for its project to capture and sequester CO2. The project is part of its petcoke-based 683-megawatt IGCC power plant adjacent to its existing refinery in Sweeny, Texas. Its projected that 85% of the CO2 from the process stream will be captured and sequestered.

Leucadia Energy received funding for two projects: the Lake Charles Cogeneration project received approximately $540,000 and the Mississippi Gasification received approximately $840,000. The Lake Charles Cogenertion project convert petcoke-to-chemicals (methanol) project to be located near Lake Charles, La. The Mississippi Gasification
facility will gasify petcoke and produce substitute natural gas (SNG).

Both Leucadia projects will transport compressed CO2 for enhanced oil recovery in Texas oil fields via the Denbury Green Line pipeline system.

The remaining Recovery Act funding will be awarded to the most promising projects during a competitive phase two selection process.

The Department of Energy will prepare an Environmental Impact Study (EIS) for the Indiana Gasification project. The DOE is a lead federal agency for the National Environmental Policy Act, or NEPA, review of the project and the lead agency in the preparation of the EIS. The DOE has requested the Corps of Engineers to prepare the EIS for the Indiana Gasification project to satisfy the NEPA requirements.

A meeting was held on December 3, 2009 to provide local residents an opportunity to comment on the proposed Indiana Gasification coal to substitute natural gas project.

On November, 2009, the DOE issued a notice of intent to prepare an EIS for this project. The scope and comment period officially ends on December 14th, 2009.

During the review of the project the DOE will assemble information from a variety of sources including the applicant, the public, other state, local and federal agencies and their own independent analysis.

The DOE issued a statement that it will support the FutureGen project with funding. The FutureGen site is in Mattoon, IL. The DOE issued a Record of Decision that clears the way for the FutureGen project to continue with site specific work to further the project development.

A National Environmental Policy Act (NEPA) study of the environmental impact of the project had to be conducted. The DOE has issued the NEPA for the FutureGen project and the project is approved to proceed with construction. The project is estimated to have a total cost of $2.4 billion. The DOE has committed $1 billion in Recovery Act funds for the FutureGen project and the FutureGen Alliance has generated $400 to $600 million. The FutureGen Alliance must seek additional funding to fill the gap between the estimated cost of completion and the funds currently committed.

During the next ten months, the project will conduct further planning and engineering, update its cost estimate and prepare to begin the detailed engineering and construction phase. At the end of this ten month period, a decision will be made to either abandon the project or continue the project. The project will be funded in phases.

The DOE through Secretary Chu’s leadership has streamlined the evaluation and approval process for direct loans and loan guarantees for energy projects such as coal gasification plants.

Department of Energy Secretary Chu has made changes to the project application review process that are designed to shorten the time that is necessary to get loan guarantees for energy projects approved. The DOE announced a solicitation for loan guarantees for coal gasification plants on September 22, 2008. The changes are described as broad based organization structure and process changes that are aimed at reducing the length of time the DOE requires before approving direct loans and loan guarantees for energy projects.

Secretary Chu said that the purpose of these changes is to move forward quickly with funding for projects that will put Americans back to work and reduce the United States dependence on foreign oil imports. Secretary Chu has been personally involved in the review of DOE procedures for approving direct loans and loan guarantees.

Secretary Chu’s reforms to the programs include:

Rolling appraisals of applications – instead of delaying the consideration of an application until a far off deadline, the Department will review them when they are submitted so that decisions can be made more quickly.

Streamlining and simplifying loan application forms and other paperwork.

Accelerated loan underwriting by using outside partners.

In cases where up-front fees may deter companies from applying, the Department will offer applicants the opportunity to pay the fees as part of the loan at closing.

Further reduction of up front costs by restructuring credit subsidies so they are paid over the life of the loan.

Additional staff and resources to process applications.

Working with the industry to attract good projects into the loan guarantee program and helping them navigate the process.

A website that will provide increased transparency in both process and results, as well as information to help applicants through the process.

These changes will enable the DOE to issue approval notices for loan guarantees for coal gasification projects with carbon capture and sequestration within months and DOE loan commitments are expected to be issued in April and May 2009.

West Virginia University and Shenhua Group collaborate on coal-to-liquids plant design and operation. West Virginia University met with Shenhua Group officials to discuss collaboration between the two organizations. Shenhua Group is the largest coal operating company in China and is developing a commercial scale direct coal liquifaction plant in China. The plant will convert millions of tons of coal into thousands of barrels of liquid fuel per day.

The meeting was organized by the U.S. – China Energy Center, a program of West Virginia University.

West Virginia University has been working with the Department of Energy and the China National Development and Reform Commission since 2002 on the Protocol on Cooperation in the Field of Fossil Energy Technology Utilization and Development.

Lowell Miller, director of the Department of Energy’s Office of Sequestration, Hydrogen and Clean Coal Fuels, said that even with oil trading about $40 per barrel, we (the U.S.) needs to consider the long term ability to provide a sufficient source of liquid fuels.

Wu Xiuzhang, deputy chief engineer for the Shenhua Group, said that cooperation between China and the U.S. and especially West Virginia University is valuable and has been very successful so far.

Under the agreement, West Virginia University is providing expertise on carbon dioxide capture and sequestration. The Chinese are providing economic and environmental data and operating experience previously unknown to us in building and running a coal-to-liquids plant.

This is quite a coup for West Virginia University considering the fact that Shenhua Group is constructing the world’s largest direct liquefaction coal plant. Congratulations to the Mountaineers!

On January 30, 2008 the DOE announced a “Restructured FutureGen”. On June 24, 2008, the DOE announced a financial assistance funding opportunity. The deadline for submission of applications for the “Restructured Futuregen” funding opportunity was October 8, 2008. The DOE and NETL have not released any information about the number of applications that were received prior to the deadline.

There are many requirements for a project that is submitted for DOE FutureGen classification and funding. One of the key requirements is that the project be a “commercially viable size”. This is characterized by the requirement that the project produce 1 MM tpy CO2. There are many other requirements defined in the DOE Funding Opportunity Announcement Document No. DE-PS26-08NT00496.

The FutureGen project must be followed through with successful funding of projects by the DOE. The DOE support for solids gasification and carbon capture and sequestration (CCS) is crucial for first-to-market projects in this industry. DOE selection for FutureGen will add credibility to the project and open doors that may not have otherwise been accessible. The support is necessary, because of the difficulty in getting lenders to invest in the projects. The technology is proven and the projects are commercially viable, but the sheer capital investment makes it difficult to close on debt financing in a free market system.

DOE support of solids gasification projects during the early phase industry life cycle will provide early first-to-market projects with a chance for funding. These projects in turn will prove the commercial viability of the industry and future projects will have much easier access to capital.

The Department of Energy (DOE) Southeast Regional Carbon Sequestration Partnership and Denbury Resources Inc. are testing CO2 movement when CO2 is injected into geological formations for enhanced oil recovery. The test is being performed at the Cranfield oil field near Natchez, Mississippi. The Natchez, MS CO2 sequestration project will prove the viability of storing CO2 in the Tuscaloosa geological formation in the Gulf coast.

The CO2 is being injected to a depth of 10,300 feet for enhanced oil recovery. The CO2 will be injected at the rate of 250,000 to 500,000 metric tons per year for several years. The geological formation known as the Tuscaloosa formation is considered to be a high quality Gulf Coast formation for CO2 sequestration.

The project involves real-time monitoring of the movement of the CO2. The University of Texas is leading the CO2 monitoring and testing activities. Instrumentation is located beneath the surface that will measure the pressure and temperature of the CO2 injection site. The test will provide data regarding the movement of CO2 within the storage formation, validating storage capacity, and validating retention capacity. The Massachusetts Institute of Technology has estimated that the Tuscaloosa formation can sequester 10 billion metric tons of CO2.

Rentech’s site for a coal and biomass gasification plant is in Natchez, Mississippi.

The DOE through the regional partnerships for CO2 sequestration and testing has funded three large volume sites. The sites are:

The Plains CO2 Reduction Partnership

The Southeast Regional Carbon Sequestration Partnership

The Southwest Regional Partnership for Carbon Sequestration

These three projects double the number of large volume CO2 storage test sites. The projects include participation from 27 states and the Canadian provinces of Alberta, Saskatchewan and Manitoba.

Coal is a vital part of North America’s energy future. Coal is abundant in the United States and the U.S. alone has more coal reserves than any other country in the world, including China. Many opponents of coal gasification technology routinely use the issue of CO2 storage as a technique for instilling fear in the general public.

The success of these three test projects will demonstrate all of the key processes for CO2 sequestration – pre-injection characterization of the geologic formations, injection process monitoring, and post-injection monitoring. The partnerships will develop extensive baseline characteristics and perform simulation ing. Researchers and industry partners will complete the ing, characterization and infrastructure improvements before the injections of CO2 begin. Then, large volumes of CO2 will be injected at the sites. The demonstrations will assess differenct CO2 streams and how the heterogenity of the formation affects the injection and containment. Researchers will monitor and the movement of the CO2 to establish data that can be used for forecasting future sites.

This program began in 2003 and this is Phase 3. Phase 1 and 2 are complete. The data developed from Phase 3 activities is based on large volume storage and will be used for siting and planning additional sites.

North America has the potential to safely store 100 years of CO2 underground. This successful demonstration by the program of the capacity for safe storage of CO2 in deep underground geological formations is crucial to the development of the coal gasification industry and the growth of domestic sources of alternative liquid fuels and chemicals.

The Department of Energy has begun a very important CO2 sequestration test project in New Mexico. The project will inject of CO2 into geoligical formations deep in the earth in New Mexico at the San Juan Basin near Navajo City, NM. This is a test project to develop information regarding long term storage (sequestration) of CO2 underground. The test is being performed with the Southwest Regional Partnership, one of seven regional partnerships that are studying the potential for sequestration of CO2 in the geological formations within each of the seven regions.

This project involves injection of 35,000 tons of CO2 into a methane coal bed. Methane is the main component of natural gas. A lot of coal reserves contain methane, however, the methane can be difficult to impossible to capture, because it has an affinity for bonding with coal. CO2 has a greater affinity for bonding with coal and will displace the methane as it tries to bond with the coal. This makes the methane easier to bring to the surface. This is called enhance methane coalbed recovery – similar to enhanced oil recovery.

The site has excellent characteristics for a long-term CO2 storage field and is considered one of the premium methane coalbed recovery sites in the U.S. One of the reasons for the high ranking, is the permeability of the coal. The other reasons include the presence of recoverable methane, a well developed pipeline system and the availability of CO2 from regional industries.

CO2 is a green house gas widely believed to contribute to global warming. Storing the CO2 underground is oil and gas geological formations is practice that will prevent the CO2 from entering the atmosphere.

The DOE is funding carbon sequestration testing through seven regional partnerships. One of the seven partnerships is the Midwest Regional Carbon Sequestration Partnership (MRSCP). It will perform long term studies to determine if large quantities of carbon dioxide can be safely stored in deep underground geologic formations. Carbon sequestration is important because it allows the use of the abundant coal supplies in the U.S. while protecting the atmosphere from carbon dioxide emissions due to coal gasification and combustion.

Carbon sequestration is the same thing as carbon capture and storage. The carbon dioxide must be ‘captured’ at the gasification plant or power plant before it’s released to the atmosphere. In a gasification plant this is a misnomer, because the CO2 is removed from the syngas in the acid gas unit (AGU) and never leaves the pipeline so it never has to be ‘captured’. The CO2 is then compressed to high density and injected into a deep geological formation that has been determined to be suitable for long term storage. The geological formations are deep so there is a heavy overburden of rock to prevent the CO2 from escaping to the surface.

The MRSCP research will extend over a ten year period. Phase III testing is a much larger scale than Phase II testing that is currently in progress. Phase III testing is beginning and the MRSCP will inject about 1 million tons of CO2 into underground storage formations. Anderson-Marathon Ethanol, LLC has been selected as the CO2 supplier for the test. The CO2 will be injected into the Mount Simon Sandstone. This geological formation has the potential to store more than 100 years of CO2.

An alternate site has been selected also. The Duke Energy Edwardsport coal gasification plant will be the alternate supplier of the CO2.

The testing is being led by Battelle, a non-profit research organization, with more than 30 other partners participating in the program. The purpose of the testing is evaluate the CO2 handling, injection and monitoring systems and validate the injection and long term storage of CO2 can be done safely. This data will be used to develop guidelines for regulatory permitting.