Comments at Wye River Meeting

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Comments at Wye River Meeting

• Or there must be some way outta here - R.
  Zimmerman, J. Hendrix
• Terry Surles
• Hawaii Natural Energy Institute
• March 17, 2009

2
World Electricity Consumption
Natural Gas 25
Nuclear12
Natural Gas 18
Coal 37
Nuclear 16
Renewables19
Renewables 20
Oil 7
Coal 38
Oil 8
61 Growth
2001 161 Quads
2025 259 Quads
Worldwide electricity consumption is projected to
grow at an average annual rate of 2.3 between
2001 - 2025
Source IEO2004, Table 16
3
U.S. Electricity Consumption
Renewables9
Natural Gas 16
Renewables 9
Coal 55
Natural Gas 14
Coal 53
Nuclear18
Nuclear 21
33 Growth
Oil 2
Oil 3
2005
2025
Source AEO2006, Table 8
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Security Concern Global Oil Consumption
Growth 1/year
Source BP World Energy Review, 2007
5
Proven Oil Reserves (2006)
BP World Energy Review, 2007
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Carbon Management No Silver Bullet, Need to
Track Life Cycles
Carbon Management
Decarbonization CO2 Btu
Sequestration
Efficiency
CO2 atm CO2 emitted
lt
lt
lt
Btu GDP

• Regional Partnerships
• Capture/storage

• End-use Technologies
• Demand response

• Nuclear
• Renewables

7
Regional Partnerships Address Some Key Challenges
to CCS

• Storage capacity
• Cost - primarily capture
• Health, safety and environmental risk short and
  long term
• Impacts of leakage of CO2
• Brine migration and pressure
• Seismicity
• Financial uncertainty
• Liability
• Regulatory uncertainty
• Public acceptance
• Infrastructure

8
The Best News Advances in Key Geoscience
Research Areas

• Reservoir processes behavior of plume and
  reservoir pressure during operation and long term
• Monitoring surface and subsurface increased
  quantification, improved and new approaches,
  integration of techniques
• Risk assessment development of techniques
  quantification
• Seismicity and geomechanical stability
• Storage capacity assessment
• Mitigation methodologies
• Well construction particularly cement
• Site characterization

9
Field Tests Provide Regional Knowledge Base
Essential for Commercial Implementation

• Demonstrate best sequestration options,
  technologies and approaches in region
• Tests involve site-specificity for
• Testing technologies
• Defining costs
• Assessing risks
• Gauging public acceptance
• Exercising regulatory requirements
• Validating monitoring methods

Photos from Frio saline formation CO2 injection
test
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Multiple Field Tests at Multiple Scales are
Needed - Otherwise We End Up with Yucca-lite

• Geologic variability
• Depositional environments
• Structural history
• Lithology
• Regulatory and legal variability
• Small pilots
• Inexpensive
• Seal and reservoir data
• Exercise regulations
• Large volume injections
• Testing of geophysical methods
• Multi-well interactions
• Effects of heterogeneity

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Modeling Helps Understand Relation Between Pore
Geometry and Properties

• Synchrotron-based microtomography at LBNLs ALS
  was used to produce high-resolution images of
  rock pore space and fluids
• MIS method (maximally inscribed spheres) used to
  generate pore model

Comparison of imaged pore space (left) and
MIS-calculations (right) of CO2 (black) and brine
(green) phases in the pore space

11
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Availability of Ideal Structural Traps

• Structural, stratigraphic, and fault traps form
  hydrocarbon reservoirs and ideal CO2 reservoirs

Typical geological structures ideal for trapping
CO2 (Source W Gunter, ARC)
13
Mineralization Enhances Long Term Storage
Above Porosity change due to mineralization at
edge of plume Left CO2 mineralization over time
(T Xu, LBNL)
14
Simulations Show Plume Extent and Immobilization
Over Time - Central Valley
Source C. Doughty, LBNL
15
Seismic Methods Should Be Augmented

• Pressure
• Microseismic monitoring
• PSInSAR
• Electrical
• Gravity
• Processing/joint inversion

Sleipner time-lapse seismic results (Chadwick,
2004)
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Integration of Ground Surface Deformationfor
Monitoring Injection Response at In Salah
Ground surface displacements derived from
satellite-based Interferometric Synthetic Radar
(InSAR) measurements
17
The Region Partnership Program as a Learning
Exercise Its not just about Science and
Technology

• Lessons learned addressing institutional,
  regulatory, and outreach issues - WESTCARB Phase
  II
• Complexities of land access agreements
• Mergers and acquisitions
• Impact of media attention on outreach programs
• Regulation working with multiple permitting
  agencies
• Phase III - new infrastructure issues

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WESTCARB Due Diligence for a Commercial Project
(Courtesy of Schlumberger)
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Plan A Rosetta Resources Saline Formation Gas
Reservoir CO2 Storage Pilots

• Target was Thornton Gas Field, a depleted
  reservoir consisting of a well-defined dome
  small field not unitized
• Drill and complete injection and observation
  wells 120 feet apart truck CO2 to site
• Inject 1000 tonnes CO2 into saline formation
  below gas/water contact (3450 ft below surface)
• Inject 500 tonnes CO2 into depleted small
  depleted gas reservoir (3050 ft below surface)
  narrow confined zone minimizes risk of any
  contamination of residual gas resources
• Framing the Debate and Meeting California Goals
  - but with data-less legislation

Sacramento-San Joaquin River Delta gas fields
shown in purple
Geologic cross-section at Rosetta pilots site
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Numerous factors can screw up land access
agreements and permit flow

• With split estates (separate surface and
  mineral owners), there are more parties to any
  agreement, adding time and cost
• Surface owner (and possibly a tenant)
• Mineral rights owner
• Mineral extraction leaseholder
• When owner is a family trust, all participants
  have to reach agreement
• Public agencies (and corporations) multiple
  tiers of responsibility and changes in personnel
  can delay decision-making

Initial site for the WESTCARB Northern California
pilot test family trust surface owners, tenant,
corporate mineral rights owner, gas production
leaseholder
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Multiple regulatory agencies with jurisdiction
add complexity and time to permitting

• In some states (e.g., Arizona) state and federal
  agencies can both have jurisdiction over CO2
  injection permits
• State and federal agencies can have different
  concerns/requirements
• Coordination/communication between agencies needs
  to be facilitated
• As a potential benefit, one agency may be helpful
  in persuading another on a permit issue

Site for the WESTCARB Arizona Utilities CO2
Storage Pilot
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Lessons from the Real WorldRegulatory One well
two permitting agencies

• California is a shared primacy state

Gas ZoneCA DOGGR (Injectivity Test)
Saline ZoneU.S. EPA Region 9 (UIC Class V)
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Rosetta Resources PilotNext Steps circa 2006

• Permitting redux CA DWR site access approval
  held up, since more environmental analysis was
  required
• Rosetta was ready to build access road and pad
• Driller lined up and ready to go
• CO2 injection scheduled for Fall 2007

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Rosetta Pilot Summary In 2007

• The WESTCARB project has
• Completed the NEPA and CEQA environmental studies
• Prepared a draft UIC permit application for USEPA
  review
• Retained a qualified site test manager
• Purchased CO2 test equipment
• is
• Negotiating site access and CO2 liability
  agreements
• Reaching out to the community through public
  meetings

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Methodical public outreach programs can be
interrupted by media attention

• Logically sequenced outreach strategy well
  planned
• Limited initial outreach
• Ramp up after site access agreement reached
• Had to fast-track meetings with local safety
  officials, business leaders, and the community to
  stay ahead of rumors spawned by reporter
  inquiries

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Stakeholder Consultation
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The wild card of mergers and acquisitions -
what happened next

• WESTCARB entered into original agreement with
  Calpine
• Calpines natural gas assets were purchased by
  Rosetta Resources, Inc.
• Commitment to WESTCARB transferred to Rosetta
• Unresolved legal issues between Calpine and
  Rosetta continued to plague the project as well
  as state agency concerns about the ecosystem
  leading to no go

Natural gas production and storage are prevalent
in the Sacramento Basin
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WESTCARB Plan B Northern California CO2 Storage
Pilot

• Lead industrial partner Shell
• Assess sequestration potential of western
  Sacramento Valley

• Two well test one injection and one monitoring
  well
• Truck in about 2000 tons CO2 and inject
• Monitor CO2 in the subsurface

Source Shell
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Unfolding Dilemma for WESTCARB

• Where so we get the carbon dioxide
• How do we get the gas from source to sink
• Who owns the carbon dioxide through all
  operations
• Who pays for a lot of supporting infrastructure
• Timing for any of these answers
• One big reason for existing program and new
  stimulus funding for industrial sequestration

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Unresolved Issues Opinions Are Diverse on
Policy Issues

• Liability
• Oil and gas companies have different perspectives
  from utilities unfamiliar with subsurface
  activities
• Need to examine true cost of dealing with
  logistics of storage
• Public acceptance
• Some groups supportive (NRDC, Environmental
  Defense), others ant-CCS (Environmental Justice,
  etc.)
• Public education is critical
• Financial/regulatory issues for owners/investors
• Who will own and manage pore space
• Long term monitoring costs
• Nature of final regulations

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True Cost of Cap and Trade (A. Diamant, EPRI)
Price of 1 Tonne of CO2
(CCX)

• 3.50
• 10.00
• 1.50
• 17.50
• All of the above !
• Price of CO2 volatile and varies widely across
  different markets, depending on
• - market-specific conditions,
• - the rules of the game,
• - country-market risks
• - the degree of fungibility between markets.

(CDM)
(Phase 1 EU-ETS)
(Phase 2 EU-ETS)
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EU CO2 Allowance Prices (01/05 2/07) Too Many
EUAs Issued (or too many grandfathers)
Feb. 16 2007 Phase 1 EUA Price was 1.15/tCO2
1.50//tCO2 Phase 2 EUA Price was
13.65/tCO2 17.50//tCO2
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Regulations Are Being ProposedUncertainty
Remains

• Federal EPA has asserted jurisdiction over
  injection of CO2 through its UIC program
• New class (VI) of injection well proposed for
  CO2
• Proposed Class VI rules under review
• Current approach by Region IX EPA is to treat as
  Class V
• Many differences at state level
• Various states (eg. Kansas, Washington) have
  proposed their own geologic storage regulations
• Arizona protects all groundwater regardless of
  quality, making permitting of geologic storage
  very difficult

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Access to the Subsurface for CO2 Storage Remains
Uncertain

• Ownership of subsurface mineral rights and pore
  space adds significant complications
• Saline pore fluids not considered to be a
  mineral
• Current approach develop agreements for access
  on a case-by-case basis
• Outright land purchase
• Lease
• Easements
• Uncertainty over definition of subsurface
  trespass
• Can we use regional partnerships for broader
  lessons learned?

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Implications for Longer-Term Who Has Liability
and Who Pays for Monitoring?

• 1000 year period
• Repeat seismic surveys every 10 years
• 10 increase in cost over and above other CCS
  costs
• Non-financial issues
• Responsibility for monitoring
• Oversight and record keeping
• Responsibility for remediation

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I Knew You Wanted to Hear about Hawaii Heavily
Dependent on Oil for Energy Use
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Well-to-Wheels Analysis Biofuel System
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Big Islands Energy Challenges
Utility Concerns Growing use of wind power is
affecting grid stability overall efficiency
(spinning reserve)
Transmission Congestion Hilo side 60 of load
Kona side 75 of generation
PPAs High cost of renewable energy (PURPA) -
avoided cost plus cost of spinning reserve
Economic Insecurity 3B/yr leaves State economy
each year to purchase fuel
Energy Insecurity 90 State dependence on
imported petroleum
High Energy Costs 145/bbl oil 49/ kWh
electricity in August 2008
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Loss of Four MW in about 15 SecondsOne-hour
Validation on April 3, 2007
Frequency
Time (seconds)
Wind Farm Output Power (disturbance)
Time (seconds)
Following slide
40
The Joys of Working with StakeholdersWhat we may
expect What we hope to get
While there were clear areas of disagreement, we
can get an amount of consensus on objectives,
concerns, and desire for cooperation.
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Higher Wind PenetrationChallenges of increasing
wind penetration in Hawaii
Small, incremental expansions of a wind farm
impact HELCO system frequency
Increasing wind penetration to 40 increases the
inter-hour variability of thermal units. This
reduces efficiency on some units, thereby
increasing fuel consumption.
Increasing wind penetration, increases min-to-min
variability of power system and requires
additional flexibility (fast-starting generation,
load/wind curtailment, storage).
Additionally, contractual arrangements with IPPs
can impact the cost of electricity.
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5MW of energy storage or other fast resources
reduces frequency excursions due to wind power
fluctuations.
At 40 wind penetration, system frequency is
severely affected
Incremental additions of fast energy storage
increasingly stabilizes system frequency

• 5MW of energy storage provided similar frequency
  performance as the baseline scenario.
• Less than 10min of energy was needed for the
  one-hour window.

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5MW of energy storage or other fast
resourcesincreases min-to-hour operational
flexibility

• Operational Flexibility
• Anticipating the wind power production is
  critical to ensuring adequate energy production
  is available.
• Consider the number of hours per year in which
  generation committed at the beginning of the hour
  was insufficient to meet the increase in load
  and/or decrease in wind power (i.e., insufficient
  up reserve) by the end of the hour.
• In this situation, additional generation (likely
  diesels) would be committed and dispatched.
• In this simulation, the addition of 5MW (2MWh) of
  energy storage provided similar operational
  stress as the baseline scenario.

Total number of hours per year
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Higher Wind Penetration

• One potential solution includes
• 5MW of fast energy storage to address
  challenging inter-hour wind fluctuations
• Results in similar frequency performance as
  baseline scenario.
• 5MW of additional dispatchable energy storage,
  20min of energy storage.
• Reduces the hours in which additional generation
  was needed from 358 to 164 hour/yr.
• IPP owned South Point Hawi, HELCO owned
  Lalamilo
• Costs to consumer are only reduced about 3

Comparing Higher Wind Penetration to Baseline
Substantial Reduction in Fuel Use and CO2
emissions
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Strategic SummaryStakeholder Metrics

• In the Baseline scenario, 27 of electricity is
  generated from renewable energy.
• Energy efficiency, load control PHEVs reduced
  variable cost and reduced wind curtailment.
  Enhanced Energy Mgmt results are additive,
  albeit not linearly, to the renewable energy
  scenarios.
• Smarter grid technologies are needed to
  accommodate a substantial penetration of
  as-available generation. These grid technologies
  should reduce variable cost and yield
  environmental benefits.
• New technologies (controls, energy storage,
  coordinating thermal generation, etc) will be
  needed to enable substantial increases in the
  penetration of wind power.
• It is not clear how to pay for these
  technologies. What is the business case and
  regulatory support that is needed?
• Initial analyses have identified some
  technology-related projects that could achieve
  the stakeholder metrics. The team will be
  investigating these in the next phase of the
  project.

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Power Quality and Reliability A Necessity in a
Digital Society
From Imre Gyuk, DOE, 2007
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Fossil-Fired Systems Are Important for Reducing
Stress on Grid Created by As-Available Renewables

• Systems RDD Required
• Technical Standards and Testing
• Power Conversion and Conditioning
• Protection and Load Control
• Communications
• Metering
• Training and Education
• Modeling and Simulation

Bulk Power
Substation
Distribution System
Transmission System
sensors
Load Management
Communication RDD Information Flow, Data
Management, Monitor/Control
Interconnection
Combined Heat Power
Distributed Generation
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Can We Use Better Thermal Generation Management
to Support Grid?
Evidence That Short-Timescale Variability May Be
Smoothed with Coordination of Existing Thermal
Generation
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HECOs Dilemma - one of many

• How do we prepare our existing steam unit fleet
  to be more reactive to mitigate a high
  penetration of intermittent generation
•     a)  Increase existing ramp rates by tuning
  the controls
•     b)  Exploring areas where there may be "ramp
  bursts" (higher ramp rate but across the min and
  max of a unit)
•     c)  Can our existing units designed for
  baseload operation be cycled (including what is
  needed to start a unit as fast as possible) or
  "turned down" to minimum levels that are lower
  than current minimum levels.

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Integration of RDDD Initiatives Need to
Connect Basic, Development, Applied Activities
with Public Policies
Basic and Applied Research
Fundamental Understanding
Technical Needs
Pilot and Demonstration Projects
Fundamental Understanding
Technology
Industrial Scale Projects
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HNEI Linking RD and Public Policy to
Commercialization Process
Institutional Issues Regulations Incentives
Government