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44–637—PDF 2007

S. HRG. 110–527

COAL: A CLEAN FUTURE

HEARING

BEFORE THE

SUBCOMMITTEE ON ENERGY, NATURAL RESOURCES,

AND INFRASTRUCTURE

OF THE

COMMITTEE ON FINANCE

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

FIRST SESSION

APRIL 26, 2007

(

Printed for the use of the Committee on Finance

COMMITTEE ON FINANCE

MAX BAUCUS, Montana, Chairman

JOHN D. ROCKEFELLER IV, West Virginia

KENT CONRAD, North Dakota

JEFF BINGAMAN, New Mexico

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

CHARLES E. SCHUMER, New York

DEBBIE STABENOW, Michigan

MARIA CANTWELL, Washington

KEN SALAZAR, Colorado

CHUCK GRASSLEY, Iowa

ORRIN G. HATCH, Utah

TRENT LOTT, Mississippi

OLYMPIA J. SNOWE, Maine

JON KYL, Arizona

CRAIG THOMAS, Wyoming

GORDON SMITH, Oregon

JIM BUNNING, Kentucky

MIKE CRAPO, Idaho

PAT ROBERTS, Kansas

RUSSELL SULLIVAN, Staff Director

KOLAN DAVIS, Republican Staff Director and Chief Counsel

SUBCOMMITTEE ON ENERGY, NATURAL RESOURCES, AND INFRASTRUCTURE

JEFF BINGAMAN, New Mexico, Chairman

KENT CONRAD, North Dakota

JOHN F. KERRY, Massachusetts

BLANCHE L. LINCOLN, Arkansas

RON WYDEN, Oregon

MARIA CANTWELL, Washington

KEN SALAZAR, Colorado

CRAIG THOMAS, Wyoming

GORDON SMITH, Oregon

ORRIN G. HATCH, Utah

JIM BUNNING, Kentucky

TRENT LOTT, Mississippi

MIKE CRAPO, Idaho

(II)

(III)

C O N T E N T S

OPENING STATEMENTS

Page

Bingaman, Hon. Jeff, a U.S. Senator from New Mexico, chairman, Subcommittee on Energy, Natural Resources, and Infrastructure, Committee

on Finance ............................................................................................................ 1

Thomas, Hon. Craig, a U.S. Senator from Wyoming ............................................ 2

Kerry, Hon. John, a U.S. Senator from Massachusetts ........................................ 15

WITNESSES

Waddington, Steve, executive director, Wyoming Infrastructure Authority,

Cheyenne, WY ...................................................................................................... 3

French, Dr. Nina, director, Clean Coal Combustion, ADA–ES, Littleton, CO ... 4

Diesch, John, president, Rentech Energy Midwest Corporation, East Dubuque, IL ............................................................................................................... 6

McPherson, Dr. Brian, research scientist, Petroleum Recovery Research Center, New Mexico Tech; and manager, Carbon Engineering Group Energy

and Geoscience Institute, University of Utah, Salt Lake City, UT ................. 8

Townsend, Bill, CEO, Blue Source, Holladay, UT ................................................ 10

ALPHABETICAL LISTING AND APPENDIX MATERIAL

Bingaman, Hon. Jeff:

Opening statement ........................................................................................... 1

Diesch, John:

Testimony .......................................................................................................... 6

Prepared statement with attachments ........................................................... 31

‘‘Well-to-Wheel Analysis of Greenhouse Gas Emissions of Automotive

Fuels in the Japanese Context,’’ Toyota Motor Corporation study, November, 2004 ................................................................................................. 64

French, Dr. Nina:

Testimony .......................................................................................................... 4

Prepared statement .......................................................................................... 195

Kerry, Hon. John:

Opening statement ........................................................................................... 15

McPherson, Dr. Brian:

Testimony .......................................................................................................... 8

Prepared statement .......................................................................................... 205

Thomas, Hon. Craig

Opening statement ........................................................................................... 2

Prepared statement .......................................................................................... 217

Townsend, Bill:

Testimony .......................................................................................................... 10

Prepared statement .......................................................................................... 218

Waddington, Steve:

Testimony .......................................................................................................... 3

Prepared statement .......................................................................................... 229

COMMUNICATIONS

Bardin, David J. ....................................................................................................... 235

Clean Air Task Force ............................................................................................... 240

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COAL: A CLEAN FUTURE

THURSDAY, APRIL 26, 2007

U.S. SENATE, SUBCOMMITTEE ON ENERGY, NATURAL RESOURCES, AND INFRASTRUCTURE, COMMITTEE ON FINANCE,

Washington, DC.

The hearing was convened, pursuant to notice, at 1:09 p.m., in

room SD–215, Dirksen Senate Office Building, Hon. Jeff Bingaman

(chairman of the subcommittee) presiding.

Present: Senators Kerry, Salazar, Hatch, Thomas, and Bunning.

OPENING STATEMENT OF HON. JEFF BINGAMAN, A U.S. SENATOR FROM NEW MEXICO, CHAIRMAN, SUBCOMMITTEE ON

ENERGY, NATURAL RESOURCES, AND INFRASTRUCTURE,

COMMITTEE ON FINANCE

Senator BINGAMAN. All right. Thank you all for coming. Why

don’t we go ahead with the hearing? I am sorry we are starting a

little late. We were completing a vote over on the Senate floor.

This is a hearing of this new Finance Committee Subcommittee

on Energy, Natural Resources, and Infrastructure, and we are very

much looking forward to testimony on advanced coal technologies.

As we discuss energy policy and how to best use coal—a natural

resource we obviously have in abundance—to enhance our energy

security, it is important that we learn more about the feasibility of

various advanced clean coal technologies that allow for carbon capture and storage and sequestration.

In our current tax code we have several tax incentives for these

technologies. There is an investment tax credit for investments in

advanced coal technologies; there is an accelerated depreciation to

address capital costs involved with these technologies.

We hope that we will hear in today’s testimony about the impact

of those and what else is needed. In particular, I think we asked

for testimony about clean coal and gasification projects, including

the newly-announced Wyoming Coal Gasification Project. It is of

particular interest, of course, to Senator Thomas. It is a private/

public partnership formed to develop an Integrated Gasification

Combined Cycle, or IGCC, power plant, as I understand it.

Also, we need to know more about the coal-to-liquids prospects,

also about refined coal production tax credits, and also the cost of

establishing new facilities, as well as retrofitting existing coal-fired

electric utilities.

We’ve got a great group of witnesses here to talk to us about

these important issues, and obviously figuring out how to effecVerDate 11-MAY-2000 15:24 Oct 10, 2008 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 44637.000 SFIN1 PsN: SFIN1
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tively capture and sequester carbon is going to be essential as we

deal with greenhouse gas emissions and meeting our energy needs

in the future. So, thank you all for being here.

Senator Thomas, go right ahead.

STATEMENT OF HON. CRAIG THOMAS,

A U.S. SENATOR FROM WYOMING

Senator THOMAS. Thank you, Mr. Chairman. Thank you for holding this hearing. I think it is very important.

I welcome all the witnesses here. I look forward to your comments. I especially want to welcome Steve Waddington, the executive director of the Wyoming Infrastructure Authority, and we are

delighted to have you here.

We are all in an environment where we are concerned about the

prospects of global climate change, as we should be, and focused on

the finite fossil fuels resources, and many are focused on alternative sources. I understand that, and I am looking forward to alternative sources as well.

But I understand that some of those are a ways off, and what

we need to do is work on those things that are going to be available

to us immediately, and are available, that we know how to do, and

to be able to provide the incentives to move forward to making

those things available for all of us.

The renewed technologies are not ready for mass development

but, by contrast, coal already provides more than 50 percent of our

country’s electricity. So I think, frankly, coal gets kind of a bad rap.

We see those full-paged ads with the dirty faces. I have never seen

quite so many ads in my life.

In any event, that kind of reinforces the myth that coal necessarily belches out in harmful amounts. These days we can burn

coal cleanly to produce electricity, and we can gasify it, liquify it

into diesel, and we can even turn it into plastic or ethanol.

So in any event, I am concerned about carbon emissions, of

course, and actually there are other things that are involved in

that as well. As humans, we breathe and we emit carbon dioxide

ourselves, so I hope we do not have to wear a mask here pretty

soon.

In any event, there are a lot of economic benefits to coal, and we

are going to hear today about how we might best use it in an environmentally sound way, and I thank you so much for being here.

Thank you, Mr. Chairman.

[The prepared statement of Senator Thomas appears in the appendix.]

Senator BINGAMAN. Thank you very much.

We will go from our left to our right across the table here. Our

first witness is Mr. Steve Waddington, who is the executive director

of the Wyoming Infrastructure Authority out of Cheyenne. Thank

you for being here.

Why don’t you go ahead? If each of you could give us 5 to 6 minutes and describe the main points you think we need to be aware

of, we will include your full statement in our hearing record, but

that will give us a chance to ask a few questions.

3

So, Mr. Waddington, why don’t you go ahead? Then we will hear

from all five of the witnesses before we ask questions. But go right

ahead.

STATEMENT OF STEVE WADDINGTON, EXECUTIVE DIRECTOR,

WYOMING INFRASTRUCTURE AUTHORITY, CHEYENNE, WY

Mr. WADDINGTON. Thank you, Mr. Chairman, for inviting me to

appear before you today.

The Wyoming Infrastructure Authority is an instrumentality of

the State of Wyoming. Our mission is to diversify and expand the

State’s economy through improvements in the electric transmission

grid and by stimulating advanced coal technology development for

electricity production.

My testimony today on ‘‘Coal: A Clean Future’’ is based upon two

equally important premises. The first premise is that the United

States and other governments will take action to restrict the emission of CO2 and other greenhouse gases.

The second premise is that coal must, and will, continue to play

an indispensable role as a source of energy for the United States,

and the world, in our carbon-constrained future.

Government has a crucially important and large role to play to

support commercial-scale emergence of advanced coal technologies,

including gasification, other technologies that can convert coal to

energy while capturing CO2, and large-scale, permanent sequestration.

Last week, the Wyoming Authority announced a partnership

with a major electric utility, PacifiCorp, to develop an Integrated

Gasification Combined Cycle commercial demonstration plant.

This will be the first of its kind, an IGCC plant designed and

built to use lower-rank western coals at altitude, to include the

capture and sequestration of CO2, and to operate on a long-term

commercial basis.

The Wyoming Authority and PacifiCorp are seeking significant

Federal financial support, including appropriations for a provision

of the 2005 Energy Policy Act, section 413, that authorizes Federal

funding for a western goal gasification commercial demonstration.

Investment tax credits and other Federal support will also be

sought for the Wyoming IGCC plan.

Adequate Federal support for the Wyoming demonstration is but

a small step in what is needed nationally. While IGCC is, today,

a leading candidate for electricity production with CO2 capture, it

is critically important to demonstrate this and alternative coal combustion and conversion technologies that also can include capture

capability. Federal R&D support in this area should be significantly increased.

The sequestration of CO2 will be a key enabling technology that

can reduce emissions significantly and allow coal to continue to

contribute to the world’s energy needs. Yet, today large-scale geological sequestration is, for the most part, a theory, not a commercial practice.

What is needed is large-scale demonstration of sequestration in

multiple geological environments. Here again, continued and increased Federal R&D support is vitally important. There may also

4

be an appropriate Federal role in indemnifying companies for longterm sequestration liability risk.

Congress should also consider tax incentives to encourage the

private sector to deploy sequestration. For example, a volumetric

tax credit for CO2 that is permanently stored in a geologic formation or used for enhanced oil recovery could be a significant market-moving incentive.

Adequate transmission infrastructure will also be vital for a

clean future using coal. This is especially true in the west, where

coal plants can be located at or near mine mouth, producing electricity that is shipped by wire to load centers.

The institutional impediments to adequate transmission investment go beyond the scope of this hearing, but suffice it to say that

many western States recognize this as a profound problem and are

taking proactive measures to address it.

In 2004, Wyoming created the Infrastructure Authority with

tools to catalyze transmission investment, including $1 billion in

bonding capacity. Today, five additional States have joined Wyoming, including most recently, Mr. Chairman, New Mexico, and at

least three additional States are actively considering creating State

transmission financing authorities.

These western States want to invest in transmission to facilitate

energy resource development. Yet, under IRS rules, the bonds for

these State entities are not exempt from Federal tax.

I strongly advocate that this subcommittee consider legislation to

relax the so-called ‘‘private use’’ restriction and allow State transmission financing entities to issue tax-exempt bonds for interstate

infrastructure needs.

This will help to empower States that are trying to make a difference, provide an incentive for needed transmission investment,

and ultimately lower costs to end consumers.

This concludes my summary statement, Mr. Chairman. I would

be pleased to answer any questions when the time arrives. Thank

you very much.

Senator BINGAMAN. Well, again, thank you for being here. Thank

you for your testimony.

[The prepared statement of Mr. Waddington appears in the appendix.]

Senator BINGAMAN. Next, is Dr. Nina French. She is the director

of Clean Coal Combustion for ADA–ES in Littleton, CO. Thank you

very much for being here. Please go right ahead.

STATEMENT OF DR. NINA FRENCH, DIRECTOR,

CLEAN COAL COMBUSTION, ADA–ES, LITTLETON, CO

Dr. FRENCH. Chairman Bingaman and members of the subcommittee, it is my privilege to come here today to talk to you

about clean coal and how Federal support, both in tax incentives

and technology development, are necessary and effective catalysts

to stimulate development.

My name is Dr. Nina French. I am the director of Clean Coal

Technologies at ADA. We specialize in emissions control from coalfired power plants, and we have over 30 years of experience in

bringing environmental technologies from concept to commerVerDate 11-MAY-2000 15:24 Oct 10, 2008 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 44637.000 SFIN1 PsN: SFIN1
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cialization, so I can speak firsthand about what it takes to develop

new ideas in this industry.

First, everything is big, and the cost of failure is high. I can

speak personally to that. Second, electricity is a commodity. The

market for anything new is driven by cost and regulation. Third,

we have a juggle between regulations and technology, and the timing. You cannot endorse regulations without technology, but it is

hard to invest in technology without regulations. Fourth, each coalfired power plant is different. There is no one-shoe-fits-all solution.

Yet, we have an opportunity. The United States has more coal

than any country in the world. We have invested billions of dollars

in infrastructure and, as a result, we have reliable, inexpensive

electricity.

So our challenge is, how do we develop clean coal that will endure through the next century? We have done a lot already, although it is small compared to what we still have to do.

We started with just boilers and turbines, and then in the 1950s

we developed particulate control emissions. In the 1980s and

1990s, regulations motivated us to develop sulfur dioxide (SO2) control, and nitrogen oxides (NOx) control.

Now mercury control is available. Twelve States have already

implemented stringent mercury control. Early on, the industry for

mercury control was faced with the same technology regulation

hurdle, but Federal support stepped in and made mercury control

available for a fraction of predicted costs.

Federal support has also incentivized refined coal. In response to

the section 45 tax credit, ADA is developing a pre-combustion

treatment to burn Powder River basin coal. This tax credit works

because it is goal-oriented, not technology-specific.

It also includes a 50-percent market value test that is workable

with legislative clarification. Through this tax incentive, we can

provide clean coal technology for smaller, older power plants that

might not otherwise stay open.

Our next challenge is carbon. The scale is enormous. Industry

agrees on two approaches for reducing carbon. The first is efficiency. If we can increase a coal-fired power plant’s efficiency from

the current 38 percent to 48 percent, we take 25 percent of the carbon out, that’s 25 percent less carbon that we have to store and sequester.

Technologies are available for both new plants and existing

plants to improve efficiency, but there is no incentive to spend the

extra money. A more efficient plant costs more money, and we need

to incentivize adding that additional cost.

The second, longer-term approach that you will hear about from

the other witnesses is carbon capture and storage. A number of

promising concepts are available, but they are in their infancy, and

to develop them will require a massive R&D investment. History

tells us the timeframe is probably long—10 to 20 years—but the

success is likely.

If we use Federal support to reduce technology risk for coal-fired

power plants, the commercial market can, and will, leverage these

solutions across the entire 320,000-megawatt industry. This is an

incentive, not a subsidy.

6

To accomplish this, we need your leadership. Recognizing the

magnitude of the CO2 challenge, we need you to consider the following: coordinating incentives such as tax credits and technology

development funding with regulations; second, focusing on environmental goals, not specific technologies; and third, drafting clear,

enforceable tax credits. Use industry experts if you need to, to help

define details such as baselines and improvement metrics, to purposely design what you want.

In closing, I believe that, with a wise and diligent plan, we can

trust coal to be a clean source of electricity, now and in the future.

Thank you for your attention.

Senator BINGAMAN. Thank you very much. We appreciate the excellent testimony.

[The prepared statement of Dr. French appears in the appendix.]

Senator BINGAMAN. Next, Mr. John Diesch. Is that the correct

pronunciation?

Mr. DIESCH. That is correct.

Senator BINGAMAN. John Diesch, the president of Rentech Energy Midwest Corporation in East Dubuque, IL. Thank you for

being here.

STATEMENT OF JOHN DIESCH, PRESIDENT, RENTECH

ENERGY MIDWEST CORPORATION, EAST DUBUQUE, IL

Mr. DIESCH. Thank you, Chairman Bingaman, Senator Thomas.

My name is John Diesch. I am president of Rentech Energy Midwest, a subsidiary of Rentech. Rentech is a leading U.S. developer

of FT fuel plants. FT fuels are ultra-clean synthetic diesel and jet

fuels that can be made from coal, petroleum coke, natural gas, and

biomass.

I am here today to request your support to, number one, include

FT specifically in the investment tax credit; number two, increase

the tax credit for carbon capture and sequestration; and three, support long-term contracting authority for the U.S. military, who

have expressed great interest in FT fuels.

You should have a sample of the Fischer Tropsch fuels. Do we

have that?

Senator BINGAMAN. We do.

Mr. DIESCH. All right. If you want to pull the cap off.

Senator BINGAMAN. Shall we dab it behind our ears? [Laughter.]

Mr. DIESCH. If it smells like wax, it is because it is a paraffin.

That is what it is: a paraffin, a wax.

What is unique about it is, it is better for the environment than

conventional fuels. It can be used in any diesel engine. Last fall,

the Air Force flew a B–52 on the jet fuel version of FT. Our fuel

has major advantages over conventional fuels. FT can be made

from abundant U.S. sources, cutting our dependence on foreign oil.

FT runs far cleaner than conventional diesel, cutting regulated

emissions by up to half. FT is biodegradable and has a shelf life

up to 10 times longer than conventional diesel, making it ideal for

strategic and military reserves.

When manufacturing is optimized to capture and sequester carbon, FT greenhouse gas emissions—that is wells-to-wheels—is less

than conventional diesel and much better than gasoline.

7

Right now, I manage an ammonia plant in East Dubuque that

makes fertilizer from natural gas. Most of our fertilizer goes to corn

farmers in Iowa, Illinois, and Wisconsin. Like most U.S. fertilizer

plants, we are struggling.

Let me show you the economics. We use 31,800 million Btus per

day of natural gas. The U.S. has the highest gas price in the world.

A simple 10-cent increase adds $1 million per year to our operating

costs.

Do you know that over half the nitrogen fertilizer used to grow

our food in the U.S. is now imported because so many U.S. plants

have shut down? My plant would have shut down 3 years ago if

it were not for converting to clean coal technology.

During that conversion we are also adding an FT fuels plant.

Why? Because synthesis gas from coal gasification is the building

block for many products, including FT fuels. We will begin construction later this year with an investment approaching $1 billion,

and nearly 1,000 construction workers will be employed at the peak

of construction. Permanent plant jobs will double. By 2010, we will

be making fertilizer from coal in East Dubuque. We will also have

the Nation’s first commercial-scale FT fuels plant.

Active support from both State and Federal governments is critical to jump starting this industry. We were able to move East Dubuque forward because of help from Illinois. We had hoped to use

the provisions of EPAct 2005, including the 48B investment tax

credit. That program was capped at $350 million, but applications

totaled $2.7 billion. Unfortunately, that meant a lot of great applications like ours got nothing.

From this, we have two recommendations. First, raise the cap on

the credit. We strongly recommend a significant increase, at least

double. Second, clarify that gasification for FT is included. In fact,

we suggest designating a portion of the tax credit for FT projects.

Next, fund basic research into promising carbon capture and storage applications that will benefit industries across the board.

In East Dubuque, we already capture carbon. We use some to

make the urea fertilizer that we produce. We also capture more as

carbon dioxide, CO2, which is used for food products. Rentech’s engineers are working on recycling configurations that maximize the

capture of CO2. Our proposed Natchez, MS plant is near oil fields where the CO2

will be used for enhanced oil recovery. It would be helpful to significantly increase the 15-percent tax incentives for companies like

Rentech that are taking the lead on carbon capture and sequestration (CCS) and their plant designs. These tax incentives, paired

with longer military contracting authority, could set the stage for

rapid development of this industry.

I invite you to visit us. We are proud of our products, proud of

our workforce, and proud that we are good neighbors to the Mississippi River and the Tri-State region. Thank you very much for

your time.

Senator BINGAMAN. Thank you very much. Thanks for your excellent testimony.

[The prepared statement of Mr. Diesch appears in the appendix.]

Senator BINGAMAN. Dr. Brian McPherson is next. He is a research scientist with the Petroleum Recovery Research Center at

8

New Mexico Tech, and also manager of the Carbon Engineering

Group Energy and Geoscience Institute at the University of Utah.

Thanks for being here.

STATEMENT OF DR. BRIAN McPHERSON, RESEARCH SCIENTIST, PETROLEUM RECOVERY RESEARCH CENTER, NEW

MEXICO TECH; AND MANAGER, CARBON ENGINEERING

GROUP ENERGY AND GEOSCIENCE INSTITUTE, UNIVERSITY

OF UTAH, SALT LAKE CITY, UT

Dr. MCPHERSON. Thank you. Thank you, Mr. Chairman, Senator

Thomas, and other members of the committee. Thanks for the opportunity to testify about potential incentives and barriers associated with carbon capture and sequestration.

My name is Brian McPherson, and I specialize in geology, geophysics, and subsurface hydrology. For the past 10 years, I have

served as a professor of hydrogeology at New Mexico Tech, and for

the past 31⁄2 years I have served as PI and Director of the Southwest Regional Partnership on Carbon Sequestration, a consortium

sponsored by the U.S. Department of Energy, along with six other

regional partnerships.

The general premise of geological CO2 sequestration is to, firstly,

separate CO2 from power plant flue gases, then capture that CO2

in a separate stream, compress the CO2 to elevated pressures to

maximize its density, and then inject the CO2 into subsurface geological formations ranging from 2,500- to 20,000-feet depth, and

then monitor the fate of that CO2. Target storage reservoirs are porous and permeable rock layers

overlain by low-permeability confining layers, and such geologic

reservoirs contained brine, oil and natural gas for millennia, thus,

using these reservoirs for storing CO2 is a very viable concept.

Target reservoirs are commonly classified by what type of fluid

they hold, including depleted oil and gas fields, deep unmineable

coal seams, and deep saline formations. With a robust confining

layer, sequestration duration can be maximized and risk minimized.

With respect to engineering, such CO2 injection has been done

for decades in many areas of the U.S., primarily for enhanced oil

recovery, but also for other purposes. Thus, the engineering and

technological details are relatively mature.

At the moment, 25 field geologic sequestration demonstration

tests are being designed and scheduled for deployment in the

United States over the coming 3 years. An additional 20 or so are

scheduled for deployment soon in other countries. Most of these

tests are using different technologies, including different engineering designs, different monitoring approaches, different risk assessment protocols, and different mitigation strategies. Most of these

tests are relatively small in scale. Small injection rates compare to

typical power plant emissions output. The uncertainties associated

with evaluation and design of large-scale sequestration operations

are fairly significant.

For large-scale geologic sequestration to be deployed and sustainable over the long term, a realistic field-based evaluation of uncertainties and how these uncertainties affect risk assessment and

mitigation strategies must be carried out.

9

Additionally, the community also needs a meaningful assessment

of CO2-trapping mechanisms and the physical and chemical factors

that may cause the mechanisms to lose efficacy under realistic field

conditions.

Next year, the United States will begin deployment of several

commercial-scale deployment demonstrations. These will sequester

up to one million tons of CO2 per year, the scale of a typical power

plant.

The duration of these tests is 5 or more years. These tests will

provide a good deal of the data required to maximize storage capacity and minimize uncertainty associated with commercial-scale sequestration, but not all of it.

Therefore, I suggest that incentives may be needed to provide the

huge amount of data needed to ensure that commercial sequestration is robust and safe. Furthermore, I suggest that new incentives

are needed to motivate industry to take on commercial sequestration as a routine part of business.

I list these suggestions here. First, I recommend incentives that

will stimulate sequestration operations, with some assigned greater

priority than others. Specifically, I suggest that the greatest priority incentives be assigned to deep saline formations underlying

oil and gas fields to maximize relevant characterization data availability and the monitoring opportunities.

Next in the priority list would be deep saline formations not underlying oil and gas fields. Finally, the priority list and incentive

ranking should include CO2 injection in oil and gas reservoirs, with

maximized sequestration and minimized CO2 recycling.

Next, I recommend incentives that will assist with providing

data necessary for liability risk and capacity assessments and other

factors associated with sequestration. Specifically, oil and gas and

other private entities hold a huge amount of data privately, and

these data are essential to providing robust assessments of capacity

and risk.

The DOE’s regional partnerships, in collaboration with State Geological Surveys and the USGS are gathering a great deal of data

and assembling them for public use in the form of NATCARB, a

national carbon sequestration database.

If added, privately held data would likely more than double the

size of that database, and as well would double our ability to assess

capacity and risks of sequestration.

Next, I recommend that areas of the country that lack CO2 pipeline infrastructure be provided incentives for building such pipelines. For commercial-scale sequestration to move forward, infrastructure will be necessary.

I recommend incentives for State, Federal, or privately sponsored

indemnification. The States of Illinois and Texas assembled comprehensive indemnification plans for FutureGen, and these plans

may serve as a template for future liability associated with commercial sequestration.

Lastly, the U.S. lacks a fully resolved regulatory framework. Any

planned incentives for sequestration and enhanced oil recovery

should factor in the evolving regulatory framework being developed

by the EPA, the Interstate Oil and Gas Compact Commission, the

regional partnerships, and individual States.

10

Thanks again for this opportunity to speak to you today. I look

forward to any questions that you may have.

Senator BINGAMAN. Thank you very much for your good testimony.

[The prepared statement of Dr. McPherson appears in the appendix.]

Senator BINGAMAN. Mr. Bill Townsend is our final witness. He

is the CEO of Blue Source out of Holladay, UT. Thank you for coming.

STATEMENT OF BILL TOWNSEND, CEO, BLUE SOURCE,

HOLLADAY, UT

Mr. TOWNSEND. Mr. Chairman and members of the committee,

thank you for the opportunity to appear before you today on the

subject of carbon capture and storage as it relates to clean energy

from coal and on the topic of potential incentives related to accelerating the development of carbon infrastructure.

My name is Bill Townsend. I am the chief executive officer and

co-founder of the Blue Source companies. This topic is near and

dear to my heart because, for the last 10 years, we have been developing companies specifically around carbon capture and storage

long before it became the topic of the day.

Blue Source operates at the intersection of energy and climate

change. Our companies and the management team they represent

are in the unique position of having developed, designed, constructed, operated, and owned, in one form or another, all of the

commercially-developed anthropogenic CO2 pipeline systems for enhanced oil recovery in North America for the last 20 years.

In addition to developing anthropogenic CO2 pipelines, Blue

Source is the leading portfolio of greenhouse gas, or ghg, emission

reductions. Our company has ghg offsets on public registries

throughout North America, sourced from 11 different types of

projects in 45 of the lower 48 States. With offset sourcing agreements through 2019, we are the largest ghg pool of this type in the

world.

In the case of carbon capture and geologic sequestration, Blue

Source has led in the development of carbon market protocols and

sold, with one minor exception, 100 percent of the greenhouse gas

emission reductions marketed from geologic sequestration.

The most recent example of our leadership in this area is as a

steering committee member of the global voluntary carbon standard, which will be bringing quality assurance for buyers of offsets.

Today, Blue Source is in various stages of evaluating and developing 13 different vent stack-sourced CO2 pipelines in North America. Over the past 10 years, the company and its affiliates have

evaluated close to 100 such projects.

The primary reason only 5 percent of the projects that we have

evaluated during the last 10 years has gone to construction phase

is because, even with enhanced oil recovery efforts or oil-related

revenues, the projects typically still yield a lower-than-accepted investment return.

Though higher crude oil prices in recent years have certainly

helped that, a case in point is our La Veta CO2 pipeline. For the

last 5 years there were no sound economics to construct it, but with

11

recent improvements in crude oil values and expected carbon offset

sales, in 2006 we completed construction, and we expect to flow

CO2 on June 1 of this year. We have been venting CO2. As I describe in my written testimony, if Blue Source could have

found additional financial incentives as small as 60 cents per MCF,

or $10 a metric ton, we would have likely constructed another 15

projects with new carbon dioxide infrastructure of about 400 miles.

From our operating history and knowledge of CCS and building

carbon infrastructure, we have a view of how to bridge the gap between the timing of current and expected CCS technology and the

current and expected sources of vent stack CO2 from power plants

and other industries.

We believe the answer of managing the gap is a step process.

First, over the next 5 years, financial incentives and regulatory influence should be used to accelerate CCS for CO2 from non-power

generation industries. This would primarily be ethanol, natural

gas, refining, and fertilizer production.

Second, over the next 3 to 10 years, financial incentives and regulatory efforts would be directed towards CO2 produced from the

power generation sector for enhanced oil recovery.

Finally, we should immediately direct efforts to minimizing the

potential regulatory and commercial barriers in developing CCS,

including efforts to label CO2 as a hazardous product and manage

it as such.

It is clear that the long-term answer to single-point industrial

CO2 emissions, like power plant generation, is capture and storage

in saline aquifers, not enhanced oil recovery.

That being said, there is a very strong, cost-effective interim answer for the next 10 years that employs the oil-based revenues and

enhanced oil recovery to subsidize the infrastructure build-out and

prepare the foundation for a carbon highway for the next generation of cost-effective carbon capture and power generation.

Today there exists 3,500 miles of CO2 pipelines in North America

that transport CO2 to EOR sinks that were built on the back of oil

revenues. Though originally built for underground sources of CO2, today these pipelines carry both underground and vent stack CO2

built from our projects.

We estimate that an additional 2,000 miles of anthropogenic CO2

pipelines will be developed over the next 5 to 7 years in the U.S.

by providing $10 per metric ton incentives, so long as crude oil

prices stay reasonably at your current levels.

New power plant construction with IGCC or superamine-type

retrofits, when combined with enhanced oil recovery projects, materially lowers the cost of capture. We estimate that, with incentives

of $20 a metric ton, about 2,500 miles of CO2 infrastructure would

be added to the existing 3,500 miles over the next 10 years.

Our company and its affiliates have sold offsets from geologic sequestration since 1996 and we have heard about every reason why

CCS-based offsets should or should not be included in a carbon offset trading program.

Accelerating the market acceptance that CCS is a valid ghg emission reduction is a direct benefit to further development of carbon

infrastructure. Congress, citing geologic sequestration with or without enhanced oil recovery as an official part of its plan to manage

12

the country’s carbon footprint, would send a clear signal to voluntary and evolving State regulatory markets that value needs to

be given to transactions of this type.

Clearly, the best long-term answers for CCS in the U.S. involve

assessing saline aquifers, developing cost-effective separation technologies, and then bridging that gap with economic and financial

structures.

That being said, we believe there are very meaningful steps that

can be taken today and over the next 10 years that will bridge the

gap significantly. In fact, the gap is bridged in much the same way

that the 3,500 miles of existing CO2 structure has been developed

over the last years, relying on oil-related revenues and only accelerating that with regulatory incentives and forces.

This concludes my verbal testimony, Mr. Chairman and committee members, and I would be pleased to answer any questions.

[The prepared statement of Mr. Townsend appears in the appendix.]

Senator BINGAMAN. Well, thank you very much. Why don’t we

each take 5 minutes here and ask some questions, and then we

may have a second round of questions after that.

One of the suggestions which a couple of you have made, or several of you, relates to putting in place what I would guess you

would call a sequestration tax credit. Mr. Waddington, you make

reference to that and talk about how, if there were a $20 per ton

sequestration tax credit, that would incentivize a more aggressive

effort to capture and store, or capture and sequester the coal.

Is it your view that that is adequate to actually cause companies

that are producing power from coal to retrofit their operations or

to go forward with new plants that would contain that technology?

Mr. WADDINGTON. Mr. Chairman, we have not done analysis to

know whether the $20 per ton that we proposed would be the tipping point to your question. It certainly would make a difference

and cause companies to look more seriously at CO2 capture going

forward. Whether it would cause them to retrofit existing plants,

I rather doubt that, Mr. Chairman.

The reason we picked $20 per ton was to draw an analogy with

the renewable portfolio tax credit that is on the books that Congress has provided. A $20 per ton CO2 sequestration tax credit

would be about the same level of subsidy, if you will, as the renewable credit. That is why we picked that dollar amount.

Senator BINGAMAN. Do any of the rest of you have a view as to

whether this is the right kind of a mechanism, a tax credit of this

type, for us to try to incentivize action in this area, or does this

not get the job done, or miss the mark? Do any of you have a

thought?

Mr. TOWNSEND. Mr. Chairman?

Senator BINGAMAN. Yes, Mr. Townsend?

Mr. TOWNSEND. There are a number of studies that have been

done over the last 2 years, UNIPCC, I believe IEA, estimating the

capture cost for IGCC and for retrofits on existing plants, and

those numbers run from $25 to $45 per metric ton, depending upon

the type of plant and the type of capture technology.

The reason we have landed on $20 as a basis for power generation is that, when you add that, plus $10 a ton that that CO2 would

13

receive from being sold into enhanced oil recoveries—because there

is a value for the CO2 in enhanced oil recovery as well, and that

value can subsidize the carbon capture costs—our thought was that

$20 for power plants, plus $20 for the actual value of CO2- enhanced oil recovery, leaving the balance as the risk for the industry to take, was a pretty strong bridge to get somebody. We were

two-thirds to 75 percent of the way there under most studies, and

the balance can be taken on by industry.

Senator BINGAMAN. All right.

Mr. Diesch, let me ask you, you testified that some of the CO2

emissions that you produce at your operation are, in fact, captured

and sold, as I understand it.

Mr. DIESCH. That is correct.

Senator BINGAMAN. Well, what percent of the CO2 emissions that

you are responsible for there are captured and sold, and what is

the current price of a ton of CO2?

Mr. DIESCH. We have the opportunity to capture all of the CO2

that comes off the process side. Now, there is CO2 that comes off

of boilers, because we use a lot of natural gas to actually heat the

process. We do not have the capability at this time to be able to

capture that, but we have the ability to capture 100 percent that

comes off the ammonia process.

We sell our CO2. It is food grade, so we clean it up to be able

to sell to, like, Pepsi-Cola and Coca-Cola and such, and that typically runs between $30 and $40 a ton, the value of it.

Senator BINGAMAN. That is after it is cleaned up.

Mr. DIESCH. After it is cleaned up and liquified.

Senator BINGAMAN. All right.

What would it take, by way of tax incentive or otherwise, to persuade your company to capture all the CO2?

Mr. DIESCH. Well, in an ammonia plant, we are moving in that

direction currently, because with a retrofit utilizing coal gasification, we have the capability of capturing much more.

The technology allows us to capture much more of the CO2 off

the process, because it is inherent in gasification processes that you

can do that. It is a concentrated stream. So, we are already moving

in that direction and will have the capability.

Senator BINGAMAN. So you are not arguing that additional tax

incentives by the Federal Government are needed at least to

incentivize your company to do what should be done here?

Mr. DIESCH. Well, for us to move forward, of course, the economics have to be there. With the products we produce, there is significant value on ammonia and the nitrogen products, plus the fuels

products, that allows us to move forward. But not all projects may

have the economics.

Senator BINGAMAN. Right.

Mr. DIESCH. So there has to be an incentive to kick-start the industry, as I said earlier. You need to kick-start the industry.

Now, we have been moving forward with our project. We have

gotten some help from the State of Illinois that has assisted us in

our initial engineering studies, but for the most part, this plant is

going to stand on its own. Now, future plants may not be that way,

depending on economics and the location, construction, and design

of the facility.

14

Senator BINGAMAN. Very good.

Senator Thomas?

Senator THOMAS. Thank you.

First of all, let me tell you how much I appreciate you all being

here and talking specifically about how we can do something in

this area, because I think it is so important, with your solutions.

I might mention to Mr. Diesch, in our energy bill that we introduced last year, we did have long-term contracting authority, and

we will try to do that again.

Mr. Waddington, are you aware of any Wyoming IGCC projects

that applied for tax credits under the energy bill, and were any

awarded?

Mr. WADDINGTON. Mr. Chairman and Senator Thomas, I am

aware that there was at least one application. I have been told that

PacifiCorp applied to be certified as eligible. My guess is, there

were other projects in Wyoming that applied, but I do not know

that for sure.

Senator THOMAS. What was the primary difficulty or obstacle, do

you know?

Mr. WADDINGTON. Mr. Chairman and Senator Thomas, we actually do not know for sure, because the Department of Energy has

not disclosed its evaluations. But we suspect, and it is generally

thought, that the 99-percent SO2 removal standard that was in the

Energy Policy Act was a pretty tough hurdle for using western subbituminous coal. That has been fixed now, with your leadership

and the Chair’s leadership, so we hope in the second round that

Wyoming projects will be given a better shot.

Senator THOMAS. I see. I guess my point is, we are talking a lot

about what we need to do, and the fact is, we have some things

that could be done that are not being done. So, we need to move

forward with that.

Dr. French, you mentioned the possibility of changing existing

power plants so they could work with this extraction of CO2. Is that

practical?

Dr. FRENCH. There were two things I mentioned. The first is increasing efficiency, both for existing plants and for new plants. The

technology is available today to increase efficiency. So then you are

making less carbon to start with, and that is what the industry believes is the number-one place to start.

The problem is, a higher-efficiency plant costs more and electricity is a commodity, so we need to incentivize the people who

have existing plants and new plants to spend more to upgrade to

increase efficiency.

Senator THOMAS. Can you upgrade an existing plant for efficiency?

Dr. FRENCH. You can. You cannot get the very, very high efficiency that you can from new boiler technology or highly efficient

IGCC, but there are a lot of things you can do at both the boiler

stage and the turbine stage to increase efficiency. Every 1 percent

makes a big difference in the amount of carbon you have to treat

later on. There is no incentive right now for that, and I really believe those technologies are available.

Senator THOMAS. FT fuels. Are you in the marketplace now? Can

you compete in the marketplace for FT?

15

Mr. DIESCH. No, we are not in the marketplace. The first commercial-scale production facility will be East Dubuque, and it will

be 2010 before we will actually be in the marketplace.

Senator THOMAS. And you will be competitive then?

Mr. DIESCH. Oh, absolutely. Absolutely. Yes.

Senator THOMAS. Dr. McPherson, you mentioned capturing and

using CO2 to recover. How are you going to get it to the oilfields?

Dr. MCPHERSON. That is probably one of the greatest obstacles.

In the States of New Mexico, Colorado, and western Texas, and

also in Wyoming to a great extent, there are existing CO2 pipelines

for transporting CO2 to different fields, from source to sink, so to

speak.

For those areas of the country that do not have such a nice infrastructure for transporting CO2, it would be terrific to have some incentives available to motivate that new infrastructure.

Senator THOMAS. Well, obviously Mr. Townsend has said how we

can do that, but there is a little problem in the difference between

where coal production and the use for recovery for oil are close

enough that it would be practical to do that. I guess that is the

fact.

Oil recovery. Can we make that economically possible to get that

through your pipelines to where the oil is?

Mr. TOWNSEND. Senator, yes, I think we can. I think oil prices being above about $40, $45 offers a really strong base. CO2 prices

in west Texas today are about 2 to 2.5 percent of the Oil Price

Index, so that runs 80 cents to $1.50, or $10 to $15 a metric ton.

Senator THOMAS. Where is the coal production?

Mr. TOWNSEND. That is the sink. And so to connect the sink and

the source, the power plant is put somewhere between the sources

of coal in the Rockies or in the Midwest. The sinks—if you look at

an ARI study that was recently done identifying the sinks in the

U.S., both oil sinks and saline sinks, they are substantial. In fact,

one thing the U.S. has is not a shortage of sinks.

Senator THOMAS. So, you mean you would just sequester.

Mr. TOWNSEND. Yes, sir.

Senator THOMAS. All right. Not for recovery of oil.

Mr. TOWNSEND. Well, our suggestion is to use oil revenues as the

basis for starting the infrastructure build-out, pay for part of it

with that so that the saline aquifers can then be done cheaper.

Senator THOMAS. Okay. Thank you.

Senator BINGAMAN. Senator Kerry?

OPENING STATEMENT OF HON. JOHN KERRY,

A U.S. SENATOR FROM MASSACHUSETTS

Senator KERRY. Thank you very much, Senator Bingaman.

Thank you for this hearing.

This morning in the Commerce Committee we had a similar

hearing on the issue of clean coal technology. We had two witnesses, Joseph Chaisson, the director of Research and Technology

for the Clean Air Task Force, and Dr. Gregory McRae, who is a

chemical engineering professor at MIT and one of the authors of

the Coal Report study. Then we had a number of other folks out

of the industry, from Siemens and elsewhere, American Electric

Power.

16

It was interesting because, first of all, they all concluded that we

have to do this urgently. Some of the years you were talking about,

5 years to get here, 10 years for that, the indicators are, we do not

have that kind of time to wait until we have an ability to burn

clean, if you accept the science.

This is an issue where, as we said this morning, you cannot be

half pregnant on this issue. If you accept the science and you believe what the scientists are telling us, then you have to accept sort

of the framework that they are offering us within which we prevent

catastrophe. Do you accept that, all of you?

Mr. WADDINGTON. Yes.

Dr. FRENCH. Yes.

Mr. DIESCH. Yes.

Dr. MCPHERSON. Yes.

Mr. TOWNSEND. Yes.

Senator KERRY. All right.

So as a starting point, we have to get more serious than we have

been, which means we need some pretty big incentives, correct?

Give me an order of magnitude. What are we talking about that

we need to think about on this committee? They said we need at

least a billion dollars a year that has to go straight into clean coal

to augment just the capture and sequestration issue. Where do you

come down on that figure?

Mr. WADDINGTON. Mr. Chairman, Senator Kerry, I would be

happy to provide my opinion on that. I think you are absolutely

right. If we are going to take climate change seriously, we have to

recognize that the solutions are going to be expensive, they are

going to be large-scale.

It is going to take time. There is a significant role for the Federal

Government to incentivize, match, buy down the risk, and move

ahead, both with coal conversion technologies that allow for the

capture of CO2 and large-scale geologic sequestration at multiple

sites.

Senator KERRY. You used the word ‘‘if’’ we are going to take it.

Do you have any doubts whether we ought to?

Mr. WADDINGTON. Well, the current Department of Energy coal

program, which has been in a diminishing decline for a number of

years, if you set aside FutureGen, the fiscal year budget is about

$200 million. Can we increase that to a billion dollars a year?

Senator KERRY. No, no, no. What I am saying is, I agree, it is

minimalist and it is anemic, and we are not getting the job done.

What I am saying is, you said if we are going to take the climate

change thing seriously. I am just saying to you, do you believe we

have to?

Mr. WADDINGTON. I personally believe we have to, Senator

Kerry.

Senator KERRY. All right. So do I, and I think the consensus of

the scientists is that we do, but I wanted to just get that as a baseline.

Now, in the 1930s when electricity first began to be distributed

in America, Franklin Roosevelt made the decision that every home

in America ought to get it as fast as possible because it was an urgent part of our economic development and future.

17

We did the TVA. Government became involved. I think we invested about $5 billion back then in infrastructure to make it happen. Is there any reason that similarly, now, given the 10-year window that our chief climatologist, Jim Hansen, has given us and the

increased feedback on this——

I mean, every scientist I have talked to, and I have talked to a

bunch of them lately—Bob Correll, Ed Miles, University of Washington, John Holdren, Harvard, and so forth—they all say the evidence, the feedback, all of their predictions are coming back now

at a faster rate and in a greater quantity than they anticipated. So

they have refined their own judgment of what we have to do.

We cannot, now, have an increase of three degrees Centigrade,

we have to hold it to two degrees Centigrade. We cannot, now, have

an increase of 550 parts per million in the greenhouses gases, we

have to hold it to 450. Now, if you accept that, do you not have to

put in place an incentive that is absolutely clearly going to get you

the marketplace behavior that you need? That is the first part of

the question.

The second part, does that incentive need to be broad-based so

that you take the 15 or 20 clean coal technologies out there and

you let any of them emerge within that, or do you take the 4 or

5 most promising? Go ahead.

Dr. MCPHERSON. Thank you, Senator Kerry. There is some ‘‘lowhanging’’ fruit out there. There are two issues that I think need to

be addressed: one is capture, the other is storage, and they are

completely separate. As Mr. Townsend mentioned, the cost of separation and capture ranges anywhere from $25 to probably even $50

or $60 per ton. The cost of storage, depending on the depth and the

type of formation used, ranges anywhere from 50 cents to $10 per

ton.

So there needs to be, as I mentioned earlier, infrastructure to

provide the storage, but firstly, some incentives to motivate the

capture. The capture is by far the most expensive portion, but also

the country does not have the necessary extensive infrastructure

required for distributing CO2 to the sinks, to the different oil and

gas reservoirs for enhanced oil recovery or the deep saline reservoirs.

One argument that I would like to make is, if we can focus on

oil and gas fields and deep saline storage underneath oil and gas

fields where there is existing infrastructure, there are extensive

data sets available for characterizing risk and capacity and those

kinds of things, and you can incentivize and have a priority ranking of different storage sites.

I suspect, as you have already alluded to, there are different

rankings and priorities for capture types. So if incentives are provided, if they are ranked and prioritized and given different

weights, that might be a way forward.

Senator KERRY. We know we can capture. We have the technology to capture. We simply have never done it to scale, correct?

Dr. FRENCH. The capture technologies are very expensive.

Senator KERRY. But we have never done it to scale.

Dr. FRENCH. And we have never done it to scale.

Senator KERRY. But we know we at least can capture.

Dr. FRENCH. Yes.

18

Senator KERRY. If the economics do not work and you cannot do

this, can you build a coal-fired plant? Should we? If you cannot capture and you cannot sequester, should we build a coal-fired plant?

Dr. FRENCH. I think we can capture and we can sequester.

Senator KERRY. If we cannot, should you build a coal-fired plant

without it? If you do not, though. I am saying, if you do not spend

the money, if you do not get the economics here. We know we can

if we spend the money, but we have not indicated that we are willing to spend the money yet to do this. I am just asking the question. If you do not do it, it is an important threshold from which

we need to operate.

Senator BINGAMAN. Anyone would like to respond, please do so

quickly. Then we will go the next question. No one wants to respond?

[No response.]

Senator BINGAMAN. Senator Bunning?

Senator BUNNING. Let me make a statement, first of all, then ask

some questions.

Would you consider this statement true or false, all members of

this panel: The United States can get to zero emissions, and, if we

get to zero emissions in all the things that Senator Kerry is talking

about and we do not do something about the fact that China and

India do not have some kind of an agreement to do likewise, we

will have no effect on climate change?

Mr. WADDINGTON. Mr. Chairman, Senator Bunning, I am not a

climate change expert.

Senator BUNNING. All right. Then do not answer the question.

Next?

Dr. FRENCH. I am not a climate change expert either, but I would

like to say the National Coal Council is completing a report that

talks about the global impact of CO2. The drafts are almost finished. It will be out very shortly. There is an excellent summary

of exactly that question, but it would not be fair for me to try to

paraphrase it.

Senator BUNNING. All right.

Anyone?

Mr. DIESCH. I am not an expert. I am a fertilizer guy. So, I will

pass.

Dr. MCPHERSON. I would suggest that India and China, if we

take the lead, might follow along. I am not sure if they will.

Senator BUNNING. In other words, we should go and take the

lead and get to zero emissions if possible without any agreement

on China and India doing likewise? Would that have an effect on

our economy?

Dr. MCPHERSON. Carbon is evolving into its own industry and I

think—

Senator BUNNING. I mean, but would it have an effect on our

economy?

Dr. MCPHERSON. It could be positive.

Senator BUNNING. All right.

Sir?

Mr. TOWNSEND. I am definitely not a climate change expert, but

I do think we need to take a leadership role in this area.

Senator BUNNING. Without anybody else signing on?

19

Mr. TOWNSEND. I think other people will sign on. They have in

the past.

Senator BUNNING. You have not been dealing with China very

long then.

Mr. TOWNSEND. No, I have not.

Senator BUNNING. All right.

Dr. FRENCH. Senator Bunning, Thomas Friedman, who is an oped contributor for the New York Times—I think you are familiar

with him—has some very interesting answers to that question also.

He points out that we are a country that has gone through its

growth cycle. These are countries that have not gone through the

same growth cycle, they are at the earlier stage. We went through

our growth cycle with power production and CO2 emissions, and

now we are coming to clean them up.

He points to the fact that these countries, as they go through

their growth cycle, there is a very good chance that they will come

and catch up with us, but that we are the leader and have the ability to provide that leadership by coming first. Do we go to zero? I

do not think so. But do we take a leadership role? I think we can.

Senator BUNNING. I hope you all visit China during the 2008

Olympics so you can spend a week in Beijing, like some of us on

the Finance Committee did about a year ago, and cry as you sit in

your hotel and as you walk down the street. The emissions are

such that you cannot even see. Believe me, I was a professional

athlete and played in Los Angeles as a professional athlete in 1969.

If I got up before noon, I could not see Los Angeles. I have news

for you. If you get up before noon now, we have done a great job

in cleaning up a lot of the emissions in Los Angeles so you can see

before noon, and the haze lifts.

Mr. Diesch, I want to ask you one specific question. You highlighted two tax incentives as top priorities, a coal-to-liquid tax credit like the gasification tax credit in section 48B, and a carbon capture credit.

I have introduced legislation, S. 155, the Coal-to-Liquids Fuel

Promotion Act, which Senator Thomas has co-sponsored, that

would create a new section 48C tax credit for coal to liquids and

provide a 50-percent tax credit for carbon capture and sequestration equipment. Are you aware of this legislation, and do you think

it provides the right incentive for the technology?

Mr. DIESCH. I am somewhat aware of the initial legislation. I do

not know all the details. But, absolutely, I think that is extremely

important to kick off the industry, because carbon capture and

cleanup is an absolute requirement in the process of producing

Fischer Tropsch, because you have to have a very clean gas stream.

So the technology that we were using, the best technology today is

called Rectisol, it cleans the gas streams up extremely well.

In order to produce Fischer Tropsch fuels or liquids, you have to

utilize those technologies. So it will incentivize the further-on development of the industry moving forward. I definitely believe that

is going to help.

Senator BUNNING. My time has expired, Mr. Chairman.

Senator BINGAMAN. Thank you very much.

Senator Hatch?

20

Senator HATCH. Well, thank you, Mr. Chairman. As you know,

we have two witnesses at today’s hearing with ties to my home

State of Utah. We have Dr. Brian J. McPherson, director of the

Southwest Regional Partnership on Carbon Sequestration, and he

does work for both New Mexico Tech and for the Energy and Geoscience Institute at the University of Utah. I will not ask him in

public which of the two jobs he prefers the most.

We also have Bill Townsend with Blue Source Energy from Holladay, UT. As you know, Mr. Chairman, Blue Source Energy is one

of the Nation’s leaders in CO2 pipeline systems, one of the most

critical technologies for capturing and sequestering CO2. Now, Mr. Chairman, I thank you for inviting these two experts

to testify today. And I welcome all of you, as well as my two folks

who have ties to Utah, in helping us to understand one of our Nation’s most vexing problems, and that is capturing and sequestering CO2. This is an important hearing.

Let me turn to you, Mr. Townsend, first. It appears that the

pipelines that your company has been involved with are geared towards enhanced energy production. Have any CO2 pipelines been

built in this country strictly for the purpose of geologic sequestration of CO2?

Mr. TOWNSEND. No, sir. There may have been two small pilot

projects done, but not for commercial purposes.

Senator HATCH. All right.

You mentioned the need for more pipeline infrastructure to

transport CO2. Today it appears that it comes down to economics

because of the number of pipelines that have been built to transport CO2 for the purpose of enhanced oil and gas production without any government assistance that I am aware of.

Other than subsidies, what are the potential market drivers that

would make CO2 pipelines economically feasible when their purpose is not to enhance oil and gas recovery, but simply to put CO2

into the ground?

Mr. TOWNSEND. I am not aware of any additional economic drivers to putting CO2 in a saline aquifer besides the climate change

impact, Senator Hatch.

Senator HATCH. All right.

Now, Dr. McPherson, you talked about commercial-scale sequestration demonstration projects that will be coming online in the

near future and the importance of the data that will be collected

during these projects.

Currently, we have no regulatory scheme for the sequestration of

CO2. What types of information does the government need to have

before we will be in a good position to set up a meaningful regulatory scheme for sequestration?

Dr. MCPHERSON. Well, the current regulatory framework for oil

and gas serves at least as a good model. I mean, it is effective for

oil and gas. Oil and gas obviously are a commodity. CO2, at least

in the western U.S.—well, throughout the U.S. but more so in the

western U.S.—is a commodity as well, a very strong commodity,

and regulating it as such might be helpful by mimicking what already works for oil and gas.

Focusing on oil and gas fields and deep saline reservoirs below

oil and gas fields might be a way to start because, in those areas,

21

the regulatory structures and detailed issues, unique issues specific

to those areas, have already been worked out. So, there are many

reasons why focusing on those areas might be helpful. Also, the infrastructure for CO2, the rights of way for pipelines, exists in those

areas.

Senator HATCH. Now, you talked about the need for government

incentives to promote the infrastructure needed for large-scale CO2

sequestration in our country. Even with government assistance,

though, will there not have to be some natural market incentives

to drive this activity? Could you talk about what incentives would

be in the market for this type of investment?

Dr. MCPHERSON. Yes. As Mr. Townsend mentioned earlier, starting with enhanced oil recovery, that would build the motivation,

build the impetus, if you will, for driving the initial early stages

of commercial-scale sequestration, if we tie enhanced oil recovery

with sequestration per se, use that tax base, use that profit base

to develop infrastructure for sequestration rather than just oil recovery.

Then also at those sites for oil and gas recovery, maximize subsequent storage of CO2. Give incentives for not just recycling CO2,

which is typically done at an oil field—it is injected into a deep oil

reservoir underneath a confining layer that is used to break up the

viscosity of the oil and reproduce it; the CO2 is reproduced and recycled. If that CO2 is then re-injected for storage, then that is,

again, another follow-on with what is already happening with oil

and gas and that experience.

Senator HATCH. Well, thank you.

Dr. French, you referenced the large differences among the various coal resources in this country, and clearly some coal is cleaner

than others in terms of criteria pollutants.

In terms of CO2 per Btu, though, does some of our coal produce

more greenhouse gases than other types of coal? If so, where do you

find our Nation’s cleanest coal in terms of CO2?

Dr. FRENCH. Senator Hatch, that is an excellent question. From

a combustion point of view, carbon is carbon. It does not matter if

you make the energy from gasification or an old plant or new plant,

carbon is carbon.

If you take the carbon out of coal, we call that sand, and you cannot burn it and make electricity. So carbon is carbon. So the

amount of carbon that is put out from a low-rank coal or a highrank coal is still the same.

The question is, for gasification, the CO2 that comes out is concentrated so you do not have to take the nitrogen out of the system

to start with, so that makes capture, perhaps, more amenable in

gasification.

But there are some efficiency differences also, so there is no one

answer. The most important thing that we are going to have to

deal with in carbon capture and storage is the recognition that

there will be a different set of technologies required for each application, and we need multiple technologies in order to bring the cost

down and move forward.

Senator HATCH. I am sorry I ignored you, Mr. Diesch, and you,

Mr. Waddington.

Are you related to Thorpe Waddington?

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Mr. WADDINGTON. Senator Hatch, no, I am not.

Senator HATCH. All right. I just wanted to know if you were. He

is a Utahn, a great natural resources guy who died a few years ago.

Thank you, Mr. Chairman.

Senator BINGAMAN. Thank you.

Let me ask a couple of other questions here, and I am sure some

of the other members will have additional questions as well.

Let me ask you, Dr. McPherson, is there currently a standard for

the purity of CO2 that is transported in pipelines?

Dr. MCPHERSON. Mr. Chairman, I hope I do not misquote the

standard. I believe it is 97 percent, but I could very well be wrong.

I know that the purity of CO2 in the Cortez and Sheep Mountain

pipelines, those going from Southern Colorado through New Mexico

into Texas, is approximately 97 percent.

Senator BINGAMAN. And who establishes the standard?

Dr. MCPHERSON. That is borne by UIC (Underground Injection

Control) regulations, but also oil and gas, local State regulations

for injection and production of oil.

Senator BINGAMAN. So you think it is a State-level standard instead of a Federal standard?

Dr. MCPHERSON. I believe it is governed by the States.

Senator BINGAMAN. Should we have a Federal standard in place

as to the purity required for CO2 to be transported in pipelines or

is that something that—I mean, if this is going to become a significant activity, it would seem appropriate to have something like

that. Maybe not. I do not know. Maybe Mr. Townsend has a

thought on that. Either one of you?

Dr. MCPHERSON. My opinion is, 90 percent purity, minimum,

would be appropriate. Depending on the type of capture used, there

are going to be different expenses for getting that additional 5 to

7 percent of the 97.

Senator BINGAMAN. Did you have any thoughts on that, Mr.

Townsend?

Mr. TOWNSEND. Mr. Chairman, there is an industry specification

for CO2. It is based on the use of CO2 to capture oil, and that specification is, in most contracts, 95 percent pure CO2, certain percentages of nitrogen and oxygen as well, and H2S.

The reason it is 95 percent, although there are some injections

done at 94 percent, is that when the CO2 is injected into the

ground and it mixes with oil, it is miscible. It mixes with it cleanly

and then it sweeps the oil off the face of the reserve.

As the percentage of CO2 decreases, the amount of pressure required to have the CO2 and the oil mix and become miscible grows

and grows and grows and you need more and more horsepower to

cause CO2 that is miscible at 90 percent than at 92, 93, 94, 95.

So the underground sources of CO2 that Dr. McPherson was just

mentioning are very high purity forms. Out of Colorado, the Four

Corners area, and Eastern New Mexico, they run 97 to 98 percent

pure CO2, but actual work in the field suggests that 95 percent,

which is what most contracts are written at, is the minimum specification for CO2.

Senator BINGAMAN. I am trying to get in my head, Dr. McPherson, you talked about how there is a big difference between capVerDate 11-MAY-2000 15:24 Oct 10, 2008 Jkt 000000 PO 00000 Frm 00026 Fmt 6633 Sfmt 6633 44637.000 SFIN1 PsN: SFIN1
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turing and sequestering, and the cost of capturing the carbon is

substantially greater per ton than the cost of sequestering it.

If we were to try to put some kind of tax credit in place, how

would you structure that? Would it make sense to have a tax credit

just for the capture or should there be a separate tax credit for capture and a different one for sequestering it?

I mean, I would think that if the practice of capturing becomes

widespread, and storing or sequestering carbon from coal plants becomes widespread, there are going to be people in the business of

just doing one rather than the other.

I mean, maybe the plant would do the capturing and then someone would come along and sign a contract that they would take

what was captured, transport it, sequester it, get paid.

Do you have a thought as to how you would structure the tax

credit?

Dr. MCPHERSON. Yes, Mr. Chairman. I would recommend that

your idea of separating them, one for separation, one for storage,

actual injection and sequestration, would be appropriate, simply

because ethanol plants and some other plants, the technologies for

separating CO2—with IGCC, it is very different.

So depending on the type of plant, whether it is a chemical plant

or a coal-fired power plant, et cetera, depending on the type of

plant, there will be different needs and different technological requirements for separating and capturing the CO2, and therefore

different cost structures. Whereas, sequestration is, by itself, by

and large, a known technology, a known engineering approach

through the existing oil and gas—

Senator BINGAMAN. Of course, we really do not have any policy

reason to want them to just capture it. I mean, the whole idea is,

we want it not in the atmosphere. So they have to do both in order

to accomplish the objective we are trying to accomplish through the

tax code here.

My time is up. Let me see if Senator Thomas has other questions.

Senator THOMAS. Just very quickly. Dr. French, you commented

that we need to provide incentives based on achievement of goals

rather than specific technologies. How do you suggest we best do

this without opening the door to all kinds of activities that may or

may not be productive?

Dr. FRENCH. Senator Thomas, that is a good question. I am not

a tax policy expert, but I do understand technologies, I understand

energy, so what I can speak to is what I have seen in the past.

That is, if we carefully define what our goal is and set clear baselines and clear guidelines, metrics to measure those goals, we will

end up with strong tax incentives that do actually accomplish

things.

That comes from understanding the industry and the quirks of

the industry. It is one thing to say we want to improve efficiency.

The devil is in the details of, how do you define a baseline efficiency such that the credit actually does what it is meant to do?

Senator THOMAS. All right.

Dr. FRENCH. Does that answer your question?

24

Senator THOMAS. The concern, often, when we get into, sort of,

the incentives, is we end up more in research than we do in productivity.

Dr. FRENCH. I agree.

Senator THOMAS. I think we are at a point now where we know

pretty much how to do some of these things and we ought to be

incentivizing those things we know how to do.

Dr. FRENCH. And my understanding of that, what I see is, when

you write an incentive that is a production incentive, that the tax

credit comes in when you actually accomplish it. Then you stay

away from subsidizing research and development.

Senator THOMAS. Good.

Dr. FRENCH. And I think that has been shown to be very effective.

Senator THOMAS. Mr. Waddington, we have talked a little bit

about it, but the fact is, coal is one place basically and the markets

are other places, so we need to get transmission in order to be able

to do these things.

How do you suggest that we get transmission capacity going?

Mr. WADDINGTON. Senator Thomas, at least in Wyoming, we are

doing a lot to try to get transmission wires in the air. We would

like to see mine mouth coal plant development in Wyoming. It is

lower cost because you are proximate to the coal.

In the future as we move to sequestration, those plants will also

be more proximate to the best sequestration opportunities. So, we

think that is the way to go, but transmission will be required.

There are several transmission projects that we are involved in,

looking at proximate markets such as Denver, Salt Lake, Phoenix,

and ultimately California. The infrastructure authority was created

to be a proactive catalyst for getting transmission built, and I think

will be successful.

Senator THOMAS. Yes. Well, I think one of the examples we need

to keep in mind as we talk about this, in this instance the largest

supply of coal currently is in Wyoming. The largest market for electricity is in California.

So, it is much safer for the environment to be able to get it there

on a transmission line than it is on a railroad car, and so we need

to make sure that we get these incentives happening where we can

get all these factors together.

I am a little disappointed, for instance, that we have been working at it in Wyoming, getting some incentives for the coal production where the coal is, and we have yet to be successful. So, thank

you.

Senator BINGAMAN. Senator Kerry?

Senator KERRY. Well, picking up on what Senator Thomas said,

I agree with Senator Thomas that it is important to get the incentives for the full package: for the transmission as well as for the

production as well as for the capture or the sequestration.

But in addition, I agree with him that we do not want to encourage activity that somehow is not productive. That is always tricky

if you are trying to excite creativity and innovation.

That is what I asked earlier about this question of, there are 15

or 20 different technologies out there, but there are only about 5,

25

I think, that are ‘‘in use,’’ though not to scale, but which people

think might be brought to scale, effectively.

So, where do we put our incentive here? Do we go for the full

20 and let us see what happens and let the marketplace decide?

Because if we get narrower, then we are doing the very thing that

most people say do not ever do, which is to start picking winners

and losers. Is there a way to frame this so we are not picking them,

but still not wasting money? Does anybody want to respond?

Dr. MCPHERSON. If the standards are benchmarks based on production rather than a specific technology, then the market would

drive the winners versus losers.

Senator KERRY. So the standard ought to be X amount of CO2

captured.

Dr. MCPHERSON. Some efficiency. Yes.

Senator KERRY. Efficiency standard, period, within that. But that

is going for production. So you are not for putting any of the

money—what about the R&D component of this?

Dr. MCPHERSON. Certainly there are, as you already suggested,

some technologies that are winners, clearly, some that are not. As

far as I know, there are significant funding mechanisms in place

right now in R&D to move forward, as you and Senator Thomas

suggested, to action.

Senator KERRY. There are. But at the same time, I have heard

from a lot of folks, including the panel this morning, that there is

a significant need for increased R&D, particularly on the sequestration side, but also even on the capture.

Mr. Diesch?

Mr. DIESCH. Senator Kerry, I assume you are talking about different gasification technologies and clean-up technologies, I assume, for cleaning out the gas and removing the CO2. I think the

marketplaces will dictate that because it is depending on its use.

We are a Fischer Tropsch fuels production, so we have to have very

clean gas streams because of our catalysts and contamination

issues.

So the gasification technology we use is dictated by two things.

Number one, what is the component of the gas streams that are

coming off the gasifier? Number two, what type of coal are you

going to use? There are different gasification technologies that

work better on different types of coals.

If we are going to be using Illinois #6 coal, we are going to use

ConocoPhillips gasification technology because we get the most

heat recovery, we get the most efficiency out of the coal, and it gets

us the components in the gas stream that allow us to produce the

products we need to produce.

Senator KERRY. Let me ask you about that for a moment, because you are involved in both coal to liquids and gas to liquids,

correct?

Mr. DIESCH. No. The plant in East Dubuque produces diesel fuel

and fertilizer, nitrogen fertilizer.

Senator KERRY. So you are not doing any coal to liquids?

Mr. DIESCH. Yes. The two major liquid components you are going

to get from Fischer Tropsch is, you can either produce diesel fuel

or jet fuel, the easiest products you can produce, and most costeffective.

26

Senator KERRY. Fair enough.

Now, why should we give an incentive to that, given that a lot

of people are telling us that the well-to-wheels rate for conventional

petroleum-derived fuel is about 27 pounds of CO2 per gallon of fuel,

whereas the coal to liquid is about 50? And even if you capture it,

if it is fully captured, you still are at a higher percentage than you

are for the other forms by about 10 percent, 8 to 10 percent.

Mr. DIESCH. That is incorrect. There have been a number of

studies. Toyota did a study in 2004. The U.S. Army has done some

studies on efficiencies and CO2 emissions. The quickest way to reduce emissions on vehicles is to switch from gasoline to standard

diesel fuel. That will give you about a 21-percent reduction of CO2

emissions.

Now, if you take Fischer Tropsch and you have gone through optimizing the CO2 removal, you will reduce that even further compared to gasoline, up to a 30-percent reduction, but you will have

to optimize the CO2 removal, again, from wells to wheels.

Senator KERRY. And what is the emissions and energy use, comparatively, in the process of doing that?

Mr. DIESCH. It is comparable. It is comparable.

Senator KERRY. It is?

Mr. DIESCH. Yes.

Senator KERRY. Well, I would like to see that study, Mr. Chairman, if we could get that and make it a part of the record. I would

like to get a comparison with some others I have had and examine

that a little further, because I guess there is a conflict in the data

there.

[The study appears in the appendix on page 64.]

Dr. FRENCH. Senator Kerry?

Senator KERRY. Yes.

Dr. FRENCH. There is data in the National Coal Council report

on this also, and it backs up what Mr. Diesch was saying.

Senator KERRY. I would not be surprised if it did. I do not mean

to be disrespectful, but I just want to check it, that is all. I would

like to get at it. I would like to understand it, that is all. I just

want to know. Because if you read one thing and it says one thing,

you want to understand how it does get refuted, that is all. I would

like to understand it, so we will try to get at it.

I think it is important to make sure, if we are providing incentives and spending the money, that we are not negating somehow

or making more complicated the whole picture of what we are

going after. But whatever is legitimate, is legitimate and should be

on its face.

If I could just say to Senator Bunning on the China thing just

for a moment, I have been involved with their delegations, and others, for 17 years now. We met with them early on during the early

negotiations on the voluntary exchange.

We also met again during the Kyoto negotiations. I managed the

Kyoto piece on the floor when we did Byrd-Hagel. There was a universal acceptance here that we needed to get the world involved;

less-developed countries, other countries have to be involved.

Most recently, we had a meeting here in Washington with a very

large Chinese delegation, the Global Legislators for a Balanced Environment. Japanese, Europeans, and a lot of people were there.

27

There is a strong consensus between Europeans and a lot of

other folks who are moving down this road that we need to take

some action. We may not get to zero, but if we take action, the Chinese are poised to also take action, as are the Indians.

In fact, they are planning to shut down their plants. There was

a big article in the New York Times a few weeks ago about their

concern for the professional athletes during the Olympics.

They are well-aware of the problem, and they are planning to

take steps, unilaterally, obviously, to try to deal with that problem,

as Atlanta did, I might add. Atlanta, during the Olympics, did an

entire transportation plan and reduced the emissions so the athletes would be able to perform at a higher level.

So, there is precedent for it. I think it is the judgment of most

people that, if the United States is 25 percent of the world’s emissions, we are going to have to start down that road and take the

lead. We have enough market power and enough leverage, I think,

that in the end the Chinese are going to be interested in buying

our technology and sharing in this effort.

Obviously, if they do not do it, we are all hurt. But if we do not

do it either, nobody is going to do it. Up until now, they have

viewed our reluctance as kind of a western conspiracy against their

ability to develop, and that is a view of a lot of less-developed countries. And you may laugh about it, but the fact is—

Senator BUNNING. I am not laughing. I am smiling because I

went there and had to deal with it.

Senator KERRY. You have to deal with people’s perceptions. I

think if we start down the road, we have enough market lift, together with Europe, that we could make it pretty uncomfortable for

them if they do not go down the road with us.

Senator BINGAMAN. Senator Bunning?

Senator BUNNING. Well, I know that they are going to shut down

their power plants for the Olympic Games and use a transportation

setup, at least that I have heard of, that will be similar to Atlanta.

You will not see one car on the road in Beijing during the Olympic

Games. You will see transportation by buses and by other vehicles.

But still in all, if you weigh the 94 coal-fired generating plants

that China is opening this year—this year—comparatively speaking to what we are doing as far as opening new plants this year,

we have a much better handle on our emissions than they do.

Going down the road, if we are going to approach climate change

and climate control, we are going to have to do it. If we take the

lead and hope somebody follows, that is not the answer. We have

to make sure that they follow us.

Senator KERRY. Of course. But you have to have clean hands in

that discussion.

Senator BUNNING. Well, I mean, what is clean hands?

Senator KERRY. It is making a legitimate, bona fide effort to

prove that you are going to do these things.

Senator BUNNING. Thank you.

Dr. French, you said that technology development will be the key

to clean coal technology. I have watched as many of our tax incentives we wrote into the Energy Policy Act in 2005 have led to dramatic pollution reductions in sulfur, nitrogen, and particulate matters, emissions. Do you agree that expanded tax incentives for

28

clean coal can address the need to improve power plant efficiencies

and decrease carbon emissions?

Dr. FRENCH. Senator Bunning, yes, I do believe that. I think that

the efficiency improvements are closer than full-scale commercial

carbon capture and storage for coal.

But I think we need to work carefully with the regulations, with

the technology development support that Senator Kerry was talking about to move forward with that as quickly as we can. I think

the tax incentives would work ideally for efficiency improvements

in both existing plants and new plants, because the higher efficiency will cost more. We need to level the playing field.

Senator BUNNING. All right.

Would you, Mr. Diesch, mind repeating what you said about liquids that are obtained from coal through the Fischer Tropsch process and the possibility of cleaner fuel being a result of that process,

and the ability to capture carbon? Now, South Africa is doing this

on a much larger scale than we ever hoped for.

Mr. DIESCH. That is correct.

Senator BUNNING. So we do not have to reinvent the wheel. Can

you enlighten us on that?

Mr. DIESCH. I think, Senator Bunning, you are asking me to kind

of give you a quick description of how the process works?

Senator BUNNING. Well, I know how the process works. I am

talking about, as you produce the liquid from the coal, you can capture the carbon.

Mr. DIESCH. Yes.

Senator BUNNING. And after you capture it, you can do other

things with it. You can sell it. You can sequester it. There are

many uses for carbon at 95 percent, as I have heard before.

Mr. DIESCH. That is correct.

Senator BUNNING. Go right ahead.

Mr. DIESCH. First of all, let me tell you, there is a feeling that

Fischer Tropsch requires coal. That is false.

Senator BUNNING. No, it does not. We know that.

Mr. DIESCH. You can produce it from natural gas, biomass, multiple products. Through the gasification process, the two products

you want to produce the fuel are carbon monoxide and hydrogen,

and that has to be in the proper ratio.

During the gasification process you also have an opportunity to

clean up. It has to be very clean gas because you cannot have sulfur, you cannot have mercury, so you have to remove all those

products, where in standard combustion, you do not remove it. It

is much more expensive and difficult.

So you have removed all of the criteria pollutants out of the gas

stream that makes the fuel, so that makes this a much cleaner

fuel. If you look at the criteria pollutants that come off of combustion of this, it is 50 percent less overall on particulate matter, NOx,

SOx, and there is no sulfur. That comes out of the fuel itself when

you combust it.

So I know we have been talking a lot about the carbon dioxide

side of things, but we ought to remember that this is a much cleaner fuel with the pollutants that are regulated today. That is another very positive thing with the fuel.

Senator BUNNING. Thank you, Mr. Chairman.

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Senator BINGAMAN. Well, thank you very much.

Let me thank all of the witnesses. I think it has been very useful

testimony. We will try to go through your written statements in detail and understand your points of view better before we proceed

in this area. But again, thank you for being here, and that will conclude the hearing.

[Whereupon, at 2:39 p.m., the hearing was concluded.]

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