Debating the promise and perils of carbon capture in New Mexico - Albuquerque Journal

Debating the promise and perils of carbon capture in New Mexico

Carbon capture and sequestration technology is rapidly gaining momentum in national and global debate over how best to combat climate change, and New Mexico has a major role to play.

Industry efforts to equip carbon-emitting facilities in both the Northwest and Southeast corners of the state with carbon capture and sequestration, or CCS, systems are steadily advancing, spurred on by federal tax incentives to promote such projects. And Gov. Michelle Lujan Grisham’s administration is aggressively supporting those plans, proposing new rules, regulations and state incentives that could position New Mexico to win a share of billions of dollars in forthcoming federal funding to accelerate the deployment of CCS technology.

In fact, New Mexico is already a leader in national and regional efforts to identify optimal geological formations where CO2 captured from industrial operations could be stored deep underground for at least 1,000 years. The New Mexico Institute for Mining and Technology in Socorro is heading that effort in New Mexico and 12 other western states with financing from the U.S. Department of Energy, not only to pinpoint storage zones, but to help investors test the sites and develop monitoring, reporting and verification plans needed for federal permits to begin commercial operations.

Supporters contend CCS is a critical tool for combating climate change, without which neither the nation nor the world will achieve the intense decarbonization that nearly all scientists and international organizations say is essential to stave off the worst environmental impacts of global warming by mid-century.

“When you look at the massive societal changes needed today, there’s simply not a path to decarbonize our energy infrastructure at the scale called for without continuing to rely on some level of fossil fuels using carbon capture and storage technology,” said Bob Balch, who heads NM Tech’s work on CCS as director of the Petroleum Recovery Research Center.

To meet U.S. energy needs today with renewable generation, developers would have to cover all of New Mexico and Arizona with solar panels, plus all of Texas and half of Oklahoma with wind turbines, Balch said.

“The sheer infrastructure buildup needed is immense,” he said.

Supporters say CCS technology is well-developed and ready for broad deployment, providing a critical bridge to economy-wide decarbonization as the U.S. and other countries continue to construct renewable-based generation.

But most environmental organizations are adamantly opposed to CCS as a “greenwashing” ploy by the fossil fuel industry to perpetuate oil and gas production — and even coal-based generation — well into the future. The technology, they say, has yet to be proven environmentally effective and economically viable on any commercial or utility-scale project to date, and it will require massive investments backed by federal and state subsidies to build out the complex infrastructure needed to make it work.

Even then, success is far from guaranteed, potentially leading to stranded assets, massive financial waste, and a critical loss of time and resources at a moment when society urgently needs to pursue non-carbon technologies like solar, wind and battery storage.

Renewable development should be today’s top priority to both decarbonize the electric grid, and to replace fossil-fuel consumption with clean electricity to power up basic things like transportation or the heating and cooling of homes and buildings, said Noah Long of the Natural Resources Defense Council.

“The good news is, renewables combined with investments in energy efficiency can get us nearly all the way to a zero-carbon economy quickly and cost effectively,” Long told the Journal. “In contrast, carbon capture and sequestration is still largely untested and expensive, and it has real risks.”

Started with coal

Debate over CCS has raged for a long time, starting with industry and government efforts to keep coal plants running by capturing the carbon and sequestering it underground.

Some $8 billion in federal assistance over the last two decades has helped finance nearly a half dozen coal conversion demonstration projects in the U.S., plus other industry applications, such as capturing carbon at chemical plants.

Those federal investments include a subsidy program known as 45Q, which offers industrial operators $50 for every ton of carbon they capture and then inject for permanent storage in underground spaces approved by the U.S. Environmental Protection Agency. 45Q also pays oil producers $35 for each ton of CO2 they sequester through enhanced oil recovery, or EOR, whereby operators pump CO2 into aging oil wells. That creates pressure to push more crude to the surface while leaving the carbon permanently stored underground.

But nearly all U.S. coal-plant conversions to date have failed, with most never even getting built because huge costs undermine commercial feasibility. Only one project, the Petra Nova plant in Texas — which captured carbon and pumped it to the Permian Basin for EOR — did manage to operate for a few years before shutting down in 2020, after oil prices crashed at the onset of the coronavirus pandemic.

A Government Accountability Office report released in December said that, although the DOE provided $1.1 billion in funding for 11 CCS demonstration projects since 2009, only three actually got built, including Petra Nova and two projects at industrial facilities. The report recommends that Congress actively monitor and report on DOE demonstration projects to provide greater oversight and accountability.

“Absent such a mechanism, DOE is at risk of expending significant funds on CCS demonstration projects that have little likelihood of success,” the report said.

Still, efforts to convert coal plants to CCS continue, including in New Mexico, where Enchant Energy Corp. wants to apply the technology to keep the coal-fired San Juan Generating Station near Farmington running after the plant’s co-owners abandon the facility in June.

Broadening the field

Now, however, the CCS debate has expanded well beyond coal, because industry and government are aggressively working to apply the technology to many other fossil fuel facilities. That includes capturing and sequestering carbon from oil refineries, gas processing plants, heavy industrial manufacturing such as steel and cement production, and at natural gas-based power plants.

President Joe Biden’s new Infrastructure Investment and Jobs Act, approved in the fall, earmarks about $7 billion for CCS development, including $3.5 billion for demonstration projects at power plants and industrial facilities across the country, and $3.5 billion more for direct air capture systems that pull carbon straight out of the atmosphere.

Another $8 billion will also finance “hydrogen hub” demonstration programs in targeted regions around the nation, inspiring Gov. Michelle Lujan Grisham to promote a new Hydrogen Hub Development Act in the current legislative session with backing from industry and some legislators. The act calls for a slate of new tax incentives to catalyze public-private partnerships to create hydrogen hubs in New Mexico, potentially allowing the state to win some of the forthcoming federal money.

Hydrogen development, however, directly depends on the success of CCS deployment, because hydrogen production today uses natural gas as a feedstock to pull hydrogen molecules out of the methane contained in the gas, and investors now want to apply CCS to decarbonize that process.

Substantial carbon is released during production, and nearly all gas-based hydrogen facilities today simply emit that carbon into the air. But by adding CCS to the system, investors say they can reduce CO2 emissions by 90% or more.

Supporters say massive hydrogen production can help decarbonize critical sectors of the economy, because it’s a relatively clean-burning, non-carbon-emitting fuel that can be used for everything from long-haul trucking, shipping and heavy industrial processes to running turbines at electric generating plants.

But most environmentalists are firmly opposed, because it means perpetuating, and likely increasing, natural gas production to provide the feedstock to produce hydrogen, with methane emissions from mining, processing and transporting the gas potentially offsetting any gains from using hydrogen as a non-carbon fuel.

At its heart, however, the hydrogen controversy is really about CCS, because that’s the foundational technology that could potentially open the floodgates to “low-carbon” hydrogen production. And while much of today’s debate is focused on hydrogen, CCS supporters are now promoting that base technology to clean up all types of fossil-fuel production and consumption across the country.

Projects and plans

The Great Plains Institute — an energy and climate-focused nonprofit that helps lead a national Carbon Capture Coalition — released a report on Jan. 31 that identifies eight potential zones around the U.S. where 14 different “carbon management and hydrogen hubs” could be built using federal assistance to turn them into strategic, low-carbon industrial centers. The institute selected zones based on their high concentration of large carbon-emitting industrial facilities, proximity to fossil fuel production and consumption, and location near geologic formations that provide permanent CO2 storage capability.

The hubs straddle 13 states, including the Permian Basin in southeast New Mexico and west Texas, with 542 facilities identified in all 14 zones as potential candidates for CCS that could take advantage of federal 45Q subsidies. The report specifically identified 35 CCS-retrofit candidates in the Permian Basin.

Natural gas processors there are already working to install carbon-capture technology, including two on the New Mexico side of the Permian, reflecting newfound efforts by the oil and gas industry to lower carbon emissions in their operations.

Piñon Midstream LLC opened a new gas-processing facility with CCS technology in Lea County last fall, and it’s now preparing to open a second one.

Lucid Energy, which already operates gas-processing facilities in both Lea and Eddy counties, is also working to retrofit its Red Hills complex with CCS.

And, in northwestern New Mexico — where Enchant Energy plans to convert the San Juan coal plant to carbon capture — Newpoint Gas LLC and Tallgrass Energy are pursuing a joint project to turn the coal-fired Escalante Generating Station near Grants into a hydrogen production facility. Once converted, Escalante would use the hydrogen to continue running the power plant, while also selling the fuel to other businesses.

CCS: Ready or not?

NM Tech is assisting in the Enchant, Escalante and Lucid Energy projects by testing and evaluating potential underground CO2 storage sites, and by helping the companies develop monitoring, reporting and verification (MRV) plans needed for EPA permits to operate them.

University involvement in those projects is backed by $5 million in annual funding awarded by the DOE to NM Tech for the last three years under a federal program to accelerate CCS deployment nationwide. That program has provided $20 million in DOE funding per year since 2019 to four interstate coalitions covering nearly all geographic regions of the U.S. NM Tech is leading the Carbon Utilization and Storage Partnership, or CUSP, coalition, which covers 13 western states.

“We’re looking at the entire region, including sources of CO2 that can be captured, where it can be stored, and how to move it from point ‘A’ to point ‘B,'” said Balch.

Since 2003, NM Tech has led DOE efforts in the Southwest to identify and analyze optimal CO2 sequestration sites. That included injecting two million tons of carbon into four different underground regional formations to test feasibility, plus development of a users’ manual for CO2 storage operations.

Those efforts paved the way for DOE’s new regional initiatives strategy to directly assist in commercial efforts to move CCS forward. And, under CUSP, 15 regional projects have now been selected for federal assistance, including the three currently underway in New Mexico, Balch told the Journal.

For Enchant Energy, DOE awarded a $17.5 million grant in 2020 to evaluate an underground storage site about 10 miles from the San Juan coal plant, including a test well the university will soon drill to ensure the reservoir’s ability to completely sequester up to seven million tons of CO2 per year from San Juan.

Since 2020, the NM Tech team has been testing capacity of the cap rock above the reservoir to hold carbon by putting rock samples under pressure and temperature environments similar to the storage site, and then running CO2 through it to evaluate carbon injectability rates and the chemical response of the rock to the CO2.

“It’s a complex process,” Balch said. “We take rock samples to the lab to see how much fluid we can put in. And then we have to drill into the formation to prove it can take huge levels of carbon and contain it.”

That site-specific testing and evaluation is required by the EPA for any individual project to move forward.

But through two decades of study, NM Tech has identified enough reservoir capacity in New Mexico to permanently sequester at least 23 billion tons of CO2 in saline acquirers, residual oil zones and depleted gas reservoirs in both the Permian, and in the San Juan Basin in northwestern New Mexico, Balch said.

In fact, oil producers began conducting EOR operations in southeastern New Mexico in the 1970s, providing decades of evidence that carbon storage is safe and effective, Balch said.

“Over the last 40 years, operators have put about 1.3 billion tons of carbon into EOR projects in the Permian Basin,” he said. “They permanently store up to 98% of the CO2. No part of this has not been proven, including ability to capture the carbon, move it, and inject it underground.”

Environmental concerns

Still, despite the success of EOR operations, applying CCS to power plants and industrial facilities must yet be successfully demonstrated on a large commercial or utility scale. It’s one thing to “prove” the technology from an academic, or scientific perspective, but adapting it for full commercial deployment is a difficult hurdle that must still be accomplished, said David Schlissel of the Institute for Energy Economics and Financial Analysis, or IEEFA — an energy think tank that favors renewable resources.

The technology hasn’t worked to date on coal plants, Schlissel said. And today, there’s only testing of CCS underway at a number of gas-based generating facilities across the globe, with no commercial-scale projects operating.

“The process of upscaling small test facilities to commercial scale creates huge problems, both in the costs involved, and the level of carbon emissions actually captured,” Schlissel told the Journal.

Huge cost overruns, for example, killed all previous DOE-backed coal demonstration projects before being built, except for Petra Nova, which then closed when oil prices crashed. And even during the few years that Petra Nova did operate, it apparently captured far less carbon emissions than the 90% capture rate developers had promised, Schlissel said.

The plant did reach 90% sequestration on an intermittent basis during operations. But its overall capture rate before closure was only about 75%, and it had to run a separate, carbon-emitting, gas-fueled turbine to power the CCS system itself, further reducing CO2 capture to about 60%, Schlissel said.

And most other CCS systems at other industrial operations across the globe are also capturing far less than promised. A massive, $3 billion CCS project in Western Australia — built and run by energy giant Chevron to capture and sequester carbon from a gas reservoir to supply a nearby liquified natural gas plant — failed to achieve the company’s goal of an 80% capture rate over five years. The company reported its failure last summer without revealing the actual capture rate achieved, but independent estimates say it reached 30% to 35%, at best.

And last month, the human rights organization Global Report released a new study on Shell’s CCS-based hydrogen-production facility in Alberta, Canada, that showed the operation is emitting far more carbon than it’s capturing. The Quest plant — based at Shell’s Scotford complex and billed as the world’s first commercial-scale carbon capture facility — sequestered five million tons of carbon from 2015-2019. But it emitted 7.5 million tons of greenhouse gasses in the same five-year period, according to the report.

Making CCS technology work successfully on commercial facilities is an engineering issue that can be resolved, Balch said.

“The DOE spent billions over the past 20 years to prove carbon capture and storage,” he said. “We need to use the science we now have and turn it into an engineering problem where we combine experts and proven technology to put all the pieces together to solve the issue.”

But environmentalists say efforts to date show that CCS is not yet ready for prime time. And apart from the carbon capture technology itself, long-term underground storage must still be commercially proven successful at completely sequestering carbon without leaks or other problems, such as seismicity.

Most environmentalists say research and development should continue, particularly for hard-to-decarbonize sectors such as heavy industrial operations, and at natural gas plants, which can offer critical support to offset the intermittency of solar and wind energy once renewable resources provide the majority of power on electric grids.

But those development efforts should be financed through private investment, not public funding, said Tom Singer of the Western Environmental Law Center.

“We don’t object to research and development, but we do object to federal and state subsidies to get projects off the ground while allowing the fossil fuel industry to continue to produce and grow,” Singer told the Journal. “These are expensive capital projects that run the risk of not working as promised, with stranded assets and wasted subsidies left behind.”

In terms of public policy, it’s more important to impose emission limits on industry to reduce greenhouse gasses, said Long.

“There’s no problem investing in a variety of innovations, including carbon capture and sequestration,” Long said. “If the oil and gas industry wants to invest, that’s great — they have the money — so let’s see what they come up with and prove that it works. But we don’t want industry coming to taxpayers asking for handouts.”

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