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News just out on Restrictions on CO2 will lead to Natural Gas demand picking up dramatically

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May 08, 2009 – Comments (2) | RELATED TICKERS: NGS

US States retooling laws to bury coal's CO2Source: Stateline.Org
Published Friday, 8 May, 2009 - 16:12 If Montana Gov. Brian Schweitzer (D) gets his way, carbon dioxide pollution that now spews from a coal-fired plant in nearby Canada instead would be siphoned off and piped 50 miles south into northeastern Montana. The gas would be compressed and cooled into a liquid and then buried some 6,000 feet below ground, with Canada footing part of the bill.
The carbon dioxide would stay there and not in the atmosphere, where it could otherwise contribute to global warming.

Clearing the way for such “carbon sequestration” projects will be no easy task, even in a coal-rich state like Montana. But sequestration could soon be a hot topic in state capitols because of federal efforts to reduce the amount of carbon dioxide pollution. The Obama administration is pushing caps on greenhouse gas production and will soon dole out more than $1.5 billion in incentives for sequestration projects from its economic stimulus package.

Among projects under serious discussion is a proposal to bury carbon dioxide under the seabed off the coast of New Jersey. Another plan in Missouri calls for burying carbon dioxide at relatively shallow depths. And Illinois politicians are trying to revive a massive federal effort called FutureGen to show coal can be burned with zero emissions, using both new methods of burning coal and sequestration.

The projects are attractive as a way of continuing to burn coal while reducing the damage to the environment. Half of all the country’s electricity is generated by coal burning, which generates 2 billion tons of carbon dioxide a year. (Illustrating the extent of the problem, the Montana-Saskatchewan demonstration project would bury 1 million tons over its first three years).

Right now, there isn’t any financial incentive for polluters to spend the money to store carbon dioxide, said Mike Volesky, Schweitzer’s natural resources policy adviser. And the added environmental protections can increase the cost of power to consumers by at least 25 percent, he said.

The federal stimulus money could jumpstart construction, even as Congress debates whether to enact a national cap-and-trade law that would require polluters to pay a penalty for every ton of carbon dioxide they release into the atmosphere. Schweitzer hopes the Obama administration would contribute $100 million to the proposed project between Montana and Saskatchewan. Canada’s federal government would also pay a share.

Obama promised to work closely with Canada to develop clean energy technologies when he visited the Canadian capital of Ottawa in February, Volesky noted.

Most states have a long way to go before they’re ready for such projects. Before private companies can start the projects, legislators need to write laws to regulate them. Lawmakers who are more used to writing rules for how to take minerals out of the ground find themselves in new terrain while crafting laws about how to put chemicals back into the ground.

Douglas Henderson, a lawyer with the Atlanta firm of Troutman Sanders LLP, notes that Wyoming, the biggest coal-producing state in the country, is the only state so far to determine who would be liable in case something goes wrong. Whoever’s liable for the carbon dioxide could be on the hook for contaminated drinking water, interference with mining rights and even causing minor earthquakes.
Some states are more prepared than others, from a legal standpoint, to deal with such issues, Henderson said. Oklahoma, Texas and Wyoming have plenty of mining activity already, so their mineral law is well-developed. But other regions, like the Southeast, don’t have the legal framework to handle sequestration.

The seemingly arcane details of oversight, ownership and liability were enough to launch fierce legislative battles in the Montana Capitol. Last year, lawmakers commissioned a study on the issue but ended up deciding not to pass a bill.
This year, Republicans killed two Democratic proposals and pushed their own instead. Schweitzer, who supported the measures, attacked a Senate Republican who sponsored a bill that Schweitzer thought was too friendly to mining interests. He said the senator   “doesn’t know CO2 from Coca-Cola.”

Part of the problem in crafting legislation is that most people don’t know much about how carbon sequestration would work, Volesky said.
The carbon dioxide would not be pumped into an empty cavern underground, he explained. Instead, it would be injected into porous rock, where it would mingle with super salty water — 10 times saltier than the ocean — and oil residue already in the ground.

Some of the carbon dioxide would react with chemicals underground and form new solids. But the rest that remains also should stay buried, because it would be trapped by layers of rock, preventing it from seeping up higher, where it could contaminate drinking water sources, Volesky said.

Carbon dioxide in high concentrations can be deadly to humans but most of the time it is quite harmless, used in everything from making dry ice to fire extinguishers. In liquefied form, it is even used to decaffeinate coffee beans.
Drillers use it to flush out hard-to-capture oil and gas, but they use far less carbon dioxide than a coal-fired plant would generate, Volesky said.

Another tricky part for legislators is sorting out the property rights of everybody involved. After all, the owner of the gas could be different than the owner of the land. And someone else may own the rights to drill for oil and gas on the property.
After dozens of changes to the Montana bill, it looks as if lawmakers have finally sorted through those issues and reached a deal.

The compromise puts state oil and gas regulators in charge of overseeing sequestration efforts, but requires companies to take responsibility for 30 years to ensure the safety of the project before the state takes over.

Giving the state eventual ownership was necessary to get companies to start using sequestration, said Rep. Mike Phillips (D), the bill’s House sponsor. Without it, companies would worry about being forever liable for any damage the carbon dioxide might cause. And local residents might not get any protection at all if the company later disappears.
“How many companies last until the end of time?” Phillips asked. “Governments tend to have longevity.”

2 Comments – Post Your Own

#1) On May 08, 2009 at 1:10 PM, IBDvalueinvestin (99.66) wrote:

The news above is bad news for the Coal industry but its good news for cleaner burning Natural Gas and thos companies that supply parts and equipment to natural gas companies. Mainly one that comes of my mind quickly is Natural Gas Services, NGS

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#2) On May 08, 2009 at 2:32 PM, jstegma (29.17) wrote:

Burying CO2 is an idiotic idea that won't last long. 

Sooner or later things will move around down in there and the CO2 will come back out and cause a catastrophe locally anyway.  I don't really want to live near some place where they've been pumping millions of tons of carbon dioxide into the ground year after year.  This is one of those ideas where everyone will end up saying "fine, but not in my backyard" just like with nuclear waste dumps.

CO2 isn't really pollution as long as it isn't concentrated.  You can live near a coal plant and the CO2 coming out of the stack will never hurt you.  However, it's different when the stuff is pure.  You pump it down in the ground and then eventually the rock fractures or there's a minor earthquake or something and the damn stuff starts coming out ground and it won't be easy to stop it.  CO2 is heavier than air, and it chokes you in seconds.  At that point it is definitely pollution and you don't really care so much if the earth heats up a few degrees.

 

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