U.S. GOVERNMENT PRINTING OFFICE

WASHINGTON : 

For sale by the Superintendent of Documents, U.S. Government Printing Office

Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800

Fax: (202) 512–2104 Mail: Stop IDCC, Washington, DC 20402–0001

41–620 PDF 2008

S. HRG. 110–343

REGULATORY ASPECTS OF CARBON CAPTURE,

TRANSPORTATION, AND SEQUESTRATION

HEARING

BEFORE THE

COMMITTEE ON 

ENERGY AND NATURAL RESOURCES 

UNITED STATES SENATE

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

TO

RECEIVE TESTIMONY ON THE REGULATORY ASPECTS OF CARBON CAPTURE, TRANSPORTATION, AND SEQUESTRATION AND TO RECEIVE 

TESTIMONY ON TWO RELATED BILLS: S. 2323, A BILL TO PROVIDE 

FOR THE CONDUCT OF CARBON CAPTURE AND STORAGE TECHNOLOGY RESEARCH, DEVELOPMENT AND DEMONSTRATION 

PROJECTS, AND FOR OTHER PURPOSES; AND S. 2144, A BILL TO REQUIRE THE SECRETARY OF ENERGY TO CONDUCT A STUDY OF THE 

FEASIBILITY RELATING TO THE CONSTRUCTION AND OPERATION OF 

PIPELINES AND CARBON DIOXIDE SEQUESTRATION FACILITIES, AND 

FOR OTHER PURPOSES

JANUARY 31, 2007

(

Printed for the use of the 

committee on Energy and Natural Resources 

(II)

COMMITTEE ON ENERGY AND NATURAL RESOURCES 

JEFF BINGAMAN, New Mexico,Chairman

DANIEL K. AKAKA, Hawaii 

BYRON L. DORGAN, North Dakota 

RON WYDEN, Oregon 

TIM JOHNSON, South Dakota 

MARY L. LANDRIEU, Louisiana 

MARIA CANTWELL, Washington 

KEN SALAZAR, Colorado 

ROBERT MENENDEZ, New Jersey 

BLANCHE L. LINCOLN, Arkansas 

BERNARD SANDERS, Vermont 

JON TESTER, Montana 

PETE V. DOMENICI, New Mexico 

LARRY E. CRAIG, Idaho 

LISA MURKOWSKI, Alaska 

RICHARD BURR, North Carolina 

JIM DEMINT, South Carolina 

BOB CORKER, Tennessee 

JOHN BARRASSO, Wyoming 

JEFF SESSIONS, Alabama 

GORDON H. SMITH, Oregon 

JIM BUNNING, Kentucky 

MEL MARTINEZ, Florida

ROBERT M. SIMON, Staff Director 

SAM E. FOWLER, Chief Counsel 

FRANK MACCHIAROLA, Republican Staff Director 

JUDITH K. PENSABENE, Republican Chief Counsel 

(III)

C O N T E N T S 

STATEMENTS 

Page

Allred, C. Stephen, Assistant Secretary, Land and Minerals Management, 

Department of the Interior .................................................................................. 24

Anderson, Scott, Environmental Defense, Austin, TX .......................................... 53

Bengal, Lawrence, E., Arkansas Oil and Gas Commission, Little Rock, AK ..... 48

Bingaman, Hon. Jeff, U.S. Senator From New Mexico ........................................ 1

Coleman, Hon. Norm, U.S. Senator From Minnesota .......................................... 7

Domenici, Hon. Pete V., U.S. Senator From New Mexico .................................... 11

Edwards, Krista L., Deputy Administrator, Pipeline and Hazardous Materials 

Safety Administration, Department of Transportation ..................................... 15

Evans, Ronald T., Denbury Resources, Inc., Plano, TX ........................................ 58

Grumbles, Benjamin H., Assistant Administrator for Water, Environmental 

Protection Agency ................................................................................................. 20

Kelliher, Joseph T., Chairman, Federal Energy Regulatory Commission .......... 12

Kerry, Hon. John, U.S. Senator From Massachusetts .......................................... 4

Salazar, Hon. Ken, U.S. Senator From Colorado .................................................. 3

Slutz, James, Acting Principal Deputy Assistant Secretary, Office of Fossil 

Energy, Department of Energy ........................................................................... 27

APPENDIXES 

APPENDIX I 

Responses to additional questions .......................................................................... 71

APPENDIX II 

Additional material submitted for the record ........................................................ 93

(1)

REGULATORY ASPECTS OF CARBON CAPTURE, TRANSPORTATION, AND SEQUESTRATION 

THURSDAY, JANUARY 31, 2008

U.S. SENATE, 

COMMITTEE ON ENERGY AND NATURAL RESOURCES, 

Washington, DC. 

The committee met, pursuant to notice, at 2:05 p.m. in room SD–

366, Dirksen Senate Office Building, Hon. Jeff Bingaman, chairman, presiding. 

OPENING STATEMENT OF HON. JEFF BINGAMAN, U.S. 

SENATOR FROM NEW MEXICO 

The CHAIRMAN. All right. Why don’t we get started here? I’m informed Senator Domenici is on his way. 

We have two of our colleagues here to talk first about the legislation that is the subject of our hearing. Let me give a very short 

opening statementand then turn to them. 

I’d like to welcome everybody and thank the witnesses who are 

testifying before the committee. This is a legislative hearing on two 

bills, S. 2144, that Senator Coleman and some others have introduced, and S. 2323, that Senator Kerry has introduced along with 

several of our colleagues. 

These two bills focus on important policy aspects of carbon dioxide capture, transportation and storage. S. 2144 focuses on the 

issue of expanding the existing carbon dioxide pipeline infrastructure. S. 2323 focuses more broadly on carbon capture and storage 

research, development and demonstration projects and perhaps 

more pertinent to today’s hearing also focuses on developing a policy framework for rapid implementation of integrated carbon dioxide capture and storage systems. 

The topic of reducing greenhouse gases, particularly carbon dioxide emissions is a topic of great concern to myself and to all members of this committee. Carbon capture and geologic storage holds 

promise as a measure that can be used to mitigate global climate 

change while still allowing the use of fossil fuels at electricity generating plants and industrial facilities. Discussion centered on coal 

use in a carbon constrained world, integrated carbon capture and 

storage systems may present the most immediate solution for continued use of coal than other carbon intensive fuels while not contributing further to carbon dioxide emissions and global warming. 

Last December a historic piece of legislation was passed into law, 

the Energy Independence and Security Act of 2007. It included key 

2

provisions for expanding critical research and development programs aimed at bringing integrated carbon capture and storage 

systems to the full technological deployment stage. The new law is 

important for focusing research and development efforts on technologies that are essential for reducing carbon dioxide emissions. 

This legislation was a first step, a key first step, in advancing 

carbon capture and storage projects, but additional legislation will 

be needed to advance these storage projects into full commercial 

deployment. The next phase in fast tracking deployment of these 

technologies is establishing a policy framework that will assist 

early industry movers in selecting the appropriate geologic storage 

sites, in operation of their facilities and in managing the facilities 

for decades following the closure of a geologic storage operation. 

The aim of this hearing is to receive testimony on these two bills 

and their contribution to developing a carbon dioxide capture, 

transport and storage policy framework. 

Let me defer to Senator Domenici for any comments he has before I call on Senator Coleman and Senator Kerry for their comments. 

Senator DOMENICI. Mr. Chairman, considering the time I would 

ask that you let the two witnesses, the two Senators give their remarks and then I will give mine. 

The CHAIRMAN. Alright. We will proceed that way. There’s no 

particular order here. Senator Coleman, you were the first one here 

and Senator Kerry is the taller of the two. Which of you would like 

to go? 

[Laughter.] 

Senator COLEMAN. I’ll certainly defer to my senior colleague, Senator Kerry. 

The CHAIRMAN. Senator Kerry, go right ahead, please. Thank you 

for being here. 

[The prepared statements of Senators Bingaman and Salazar follow:]

PREPARED STATEMENT OF HON. JEFF BINGAMAN, U.S. SENATOR FROM NEW MEXICO

I’d like to welcome everyone here today and thank the witnesses who are testifying before the committee for this legislative hearing on bills S. 2144 and S. 2323. 

These two bills focus on important policy aspects of carbon dioxide capture, transportation, and storage. S. 2144 focuses on the issue of expanding the existing carbon 

dioxide pipeline infrastructure. S. 2323 focuses more broadly on carbon capture and 

storage research, development and demonstration projects, and perhaps more pertinent to today’s hearing it also focuses on developing a policy framework for rapid 

implementation of integrated carbon dioxide capture and storage systems. 

The topic of reducing greenhouse gases, particularly carbon dioxide emissions, is 

a topic of great concern to myself and the members of this committee. Carbon capture and geologic storage holds promise as a measure that can be used to mitigate 

global climate change, while still allowing the use of fossil fuels at electricity-generating plants and industrial facilities. With discussion centered on coal use in a carbon-constrained world, integrated carbon capture and storage systems may present 

the most immediate solution for continued use of coal and other carbon intensive 

fuels while not contributing further to carbon dioxide emissions and global warming. 

Last December a historic piece of legislation was passed into law, the Energy 

Independence and Security Act of 2007, which included key provisions for expanding 

critical research and development programs, aimed at bringing integrated carbon 

capture and storage systems to the full technological deployment stage. The new law 

is important for focusing research and development efforts on technologies that are 

essential for reducing carbon dioxide emissions. This legislation was a key first step 

3

in advancing carbon capture and storage projects, but additional legislation will be 

needed to advance these storage projects into full commercial deployment. 

The next phase in fast-tracking deployment of these technologies is establishing 

a policy framework that will assist early industry movers in selecting the appropriate geologic storage sites, operation of their facilities, and managing the facilities 

for decades following the closure of a geologic storage operation. The aim of this 

hearing is to receive testimony on S. 2144 and S. 2323 and their contribution to developing a carbon dioxide capture, transport, and storage policy framework. 

I would like to begin the hearing by welcoming the original bill sponsors who have 

come to speak on the bills today, Senator Kerry will speak on S. 2323 and Senator 

Coleman will speak on S. 2144. 

PREPARED STATEMENT OF HON. KEN SALAZAR, U.S. SENATOR FROM COLORADO

Thank you Chairman Bingaman and Ranking Member Domenici for holding this 

hearing on the regulatory aspects of carbon capture, transportation, and sequestration. 

Capturing carbon dioxide at its source and safely storing it to avoid its release 

into the atmosphere will be essential to reducing greenhouse gas emissions. I believe carbon capture and storage (CCS) should be a top priority in our nation’s energy policy. There is little doubt that a successful domestic CCS program will boost 

our nation’s coal industry, and that a low-carbon footprint coal industry is critical 

to our nation’s energy and environmental security. 

To make CCS an effective, reliable, and cost-feasible reality, we need to move forward simultaneously on two fronts: we need to aggressively develop both the technical knowledge necessary and the regulatory framework for CCS infrastructure development. 

On the technical front, I sponsored the provision of the new energy bill that directs the United States Geological Survey and the Departments of Energy and the 

Interior to coordinate a national assessment of our carbon dioxide storage capacity. 

I also fought to include the provisions that will expand DOE’s CCS research and 

development programs, with a particular eye towards the large-scale CCS demonstration projects that are crucial to achieving commercial viability. I am looking 

forward to learning about DOE’s most recent progress today. 

I am glad that today’s hearing will focus attention on the second front—the regulatory front. We need to establish a regulatory framework for the transport and storage of carbon dioxide. As you know I am an original co-sponsor of S. 2144, the Carbon Dioxide Pipeline Study Act of 2007, which would instruct the federal agencies 

present today to perform a broad feasibility study of the construction and operation 

of a national CCS infrastructure. 

There are open questions about what it will take to create a national CCS infrastructure. We need a thorough assessment of our nation’s geologic CO2 storage capacity and a critical appraisal of the pipeline network required and the issues of 

transporting carbon dioxide from its sources to storage sites. Even though shorthaul carbon dioxide pipelines already exist in the U.S. for the purposes of enhanced 

oil recovery—we’ve been employing these techniques in my state of Colorado for 

more than thirty years—a more expansive carbon dioxide pipeline network clearly 

raises new issues about pipeline network requirements and regulation, regulatory 

classification of carbon dioxide, and pipeline safety. 

The DOE through its Carbon Sequestration Regional Partnerships, the DOT 

through the independent U.S. Surface Transportation Board with regulatory jurisdiction for transporting carbon dioxide, the FERC with its experience in the regulation of natural gas and oil pipelines, and the EPA through its underground injection 

control program have the necessary expertise to assess the important issues dealing 

with carbon dioxide pipelines that would be needed to handle large-scale carbon sequestration in this country. 

We introduced this pipeline study bill because there has been a void at the federal 

level in the attention given to the infrastructure needed to bring CCS to fruition. 

We believe your agencies have the regulatory authority to begin such a feasibility 

study now, but I am concerned by the lack of coordinated federal action to answer 

these fundamental questions. I look forward to having a frank discussion regarding 

our path forward. 

Thank you, Mr. Chairman.

4

STATEMENT OF HON. JOHN KERRY, U.S. SENATOR

FROM MASSACHUSETTS 

Senator KERRY. Thanks, Mr. Chairman, Senator Domenici and 

the rest of the Senators on the committee. Thank you very, very 

much for giving us an opportunity just to share a few thoughts 

with you. I particularly appreciate the opportunity to talk about S. 

2323 which is a bill that Senator Stevens and I have jointly introduced and I’ll say a word about it in a moment. 

But I just want to remind the committee of the underlying importance of what drives both pieces of legislation and our being 

here today. We all know that last year the Nobel Prize winning 

intergovernmental panel on climate change issued its latest and 

most comprehensive report reflecting the consensus of over 2,000 of 

the world’s most respected climate scientists. That report established beyond any reasonable doubt the urgency of acting to address climate change. 

I had the privilege of representing the Senate for a brief 36 

hours, because of our votes at the end of the year, in Bali at the 

climate change negotiations. I must say I’ve been attending those 

conferences since 1992 when Al Gore, Tim Wirth and a bunch of 

us went down to Rio to the Earth Summit. I’ve met with the various delegations over the course of time including the Chinese. 

This time I found the Chinese transformed, engaged, prepared to 

discuss how to measure what they do, obviously not quite at the 

same rate and same scale. It was an entirely different conversation 

than any that we have had yet and opens the door to what really 

needs to be done because China will be at our levels of emissions 

within 10 years. So, obviously, we’re going to have to find a way 

to achieve this. But this is part of that mosaic, if you will, Mr. 

Chairman. 

The science shows that—and I also found there a sense of urgency among finance ministers, prime ministers, foreign ministers, 

environment ministers, trade ministers, presidents, an unbelievable sense of urgency about this issue. The science also shows that 

coal combustion is one of the greatest contributors to climate 

change. Those of us that seek to deal with this issue understand 

we’re going to have to deal with this component of it. 

Coal is not going to go away in the near term, no matter how 

much we wish that in terms of its negative impact. Not the positive, but the negative. It’s cheap. It’s abundant here in America. 

Countries such as China are using it extensively. They’re building 

approximately one coal fired plant per week, pulverized coal fired 

plant, without modern technology right now. Coal accounts for 80 

percent of their CO2 emissions. 

So they are building infrastructure that’s effectively going to pollute for years to come. We will get the results of that pollution because it blows over us and falls in rain and so forth. Frankly it’s 

my judgment, I think the judgment of a lot of people that the international community needs to be far more concerned about this and 

urgent about this than it is. 

That’s why we have to rapidly develop and implement carbon 

capture and storage technology, which is the purpose of this hearing. It was recommended last year in a similar report by the Massachusetts Institute of Technology. This technology will enable us, 

5

providing it works according to all of the designs and ways in 

which they believe it will, to capture the emissions from power 

plants and other industrial facilities and permanently bury them in 

deep saline aquifers and other geological formations. 

Two recent reports identified carbon capture and sequestration 

as the most promising area for emission reductions in the electric 

power sector. A December 2007 McKinsey study determined that 

by 2030, 9 percent of U.S. electricity could come from coal plants 

equipped with CCS. The Electric Power Research Institute, the research arm of the electric power industry, estimated this number 

at 15 percent. 

I might say that I hope those figures reflect a growth without the 

level of intervention that ought to take place because if it isn’t, it 

isn’t going to get the job done. All of us need to understand that. 

If you believe the scientists and you heed their warnings and you 

have to keep the climate change to a two degree centigrade level 

and 450 parts per million of greenhouse gases. There is no way to 

achieve that at that level of coal fired growth. So we have an enormous challenge ahead of us. 

These studies demonstrate the potential however for the application of CCS. The purpose behind our bill and I think Senator Coleman’s bill is to accelerate this effort so we can let the marketplace 

decide what works. We’re not going to pick a winner or loser. We 

want to get the technology out there. Let the marketplace decide 

which technology in fact works the best and most effectively. 

Now the energy bill that you passed—that we passed in the Senate last summer is a great start. I extend my gratitude to this committee for the provisions to inventory the sequestration capacity 

and to conduct essential demonstration projects. The legislation 

Senator Stevens and I have introduced which is the Carbon Capture and Storage Technology Act of 2007 would establish three to 

five commercial scale sequestration facilities and three to five coal 

fired demonstration plants with carbon capture. 

Now there are benefits to these that are not the purpose of this 

hearing today so I won’t go into those. But today’s hearing is specifically, I gather, focused on one provision of the bill, which is the 

regulatory framework that must be established to oversee carbon 

capture and storage activities. The regulatory framework is as urgent as getting the technology out. Obviously they go hand in hand. 

We have to make sure that we implement these projects correctly. We’ve never conducted sequestration here in the United 

States on the scale that we’re contemplating. In fact only three 

sites in the entire world have projects of this magnitude. 

First and foremost we need to guarantee the permanent storage 

of the CO2 that we inject in the ground. CO2 is naturally buoyant. 

When it’s injected into the earth it will seek the earth’s surface at 

all times. So, all of our aggressive efforts to develop CCS technology would be wasted if we don’t make the right choices about 

where to inject the CO2 to avoid leakage that releases the CO2 back 

into the atmosphere. 

Second, as we advance this technology we’ll be making site specific decisions about appropriate sequestration locations. We need 

to ensure that these injection sites, whether in deep saline formations or oil or gas fields are safe, secure and permanent. We need 

6

to develop national siting guidelines that will provide confidence in 

the injectivity, capacity and effectiveness of storage sites. We need 

to develop consistent and reliable monitoring and verification protocols that will assist with site assessment and planning and baseline and operational monitoring to ensure that the CO2 remains 

permanently sequestered. Finally we need an early warning system 

that will alert us to potential leakage or failure issues at these 

sites. 

Now many of these elements are highly technical, but they are 

all essential to ensuring the success of this technology in addressing climate change and in providing companies, investors and the 

public with confidence that they’re getting what they pay for when 

they invest in carbon credits associated with CCS. Siting monitoring and verification regulation are also necessary to provide us 

with certainty they’re avoiding any potential harmful public health 

or environmental outcome. For example precautions have to ensure 

that CO2 injection sites don’t result in seepage into drinking water 

aquifers and the release of heavy metals. 

As we think through the regulatory framework for CCS, we have 

to be mindful that any CO2 leakage within a contained environment could result in additional health or safety risks if not done 

properly. So for that reason the regulatory scheme is going to be 

critical. It will also determine whether or not this is going to work, 

folks. That is going to determine, very significantly, what our options are with respect to global climate change. So the faster we 

get about this business and the faster we get the demonstration 

projects out there properly, the better we’re going to be able public 

choices for the long term. 

To resolve these issues I’ve developed a provision in this legislation that directs the key agencies, including EPA, DOE and Interior to create a task force to develop comprehensive regulations to 

address the issues of leakage, public safety and environmental protection. These regulations would establish the regulatory framework to oversee the entire CCS process in a comprehensive fashion 

linking the complicated mechanisms for capture, transport, injection and storage of CO2. The task force is specifically directed to 

consult with the industry as well as the technical experts in developing these regulations. The involvement of these experts, who’ve 

been involved in large scale sequestration projects abroad or enhanced oil recovery, which many of you are familiar with. 

We have used this effort to drive oil out and capture oil today. 

So we have it in certain scale. But we need to develop the ability 

for the regulatory scheme to govern this process. Many of those individuals, incidentally, are behind me here testifying today. I’m 

eager to learn about their input as to how we do this most appropriately. I look forward to working with the committee as we try 

to meet this urgent challenge. Thank you, Mr. Chairman. 

[The prepared statement of Senator Kerry follows:]

PREPARED STATEMENT OF HON. JOHN KERRY, U.S. SENATOR FROM MASSACHUSETTS

Chairman Bingaman, Senator Domenici and colleagues—thank you for inviting 

me to testify today. I appreciate the opportunity to introduce an issue and a piece 

of legislation that I believe are critical to our efforts to combat global climate 

change. 

7

Last year, the Nobel Prize-winning Intergovernmental Panel on Climate Change 

issued its latest and most comprehensive report, reflecting the consensus of over 

2,000 of the world’s most respected climate scientists. The report established beyond 

any real doubt the urgency of acting to address climate change. 

In the last 250 years, carbon dioxide levels in the atmosphere have risen from 280 

parts per million to 380—higher today than at any time in the past 650,000 years. 

Scientists tell us that we have to keep CO2 concentration below 450 parts per million—which corresponds to an increase of 2 degrees Celsius—to avoid a large scale 

catastrophe. And we only have ten years in which to act. But unless we take dramatic action, we’re expected to reach 600–700 parts per million by the year 2100. 

This is urgent. It is being driven by facts and by the alarms that scientists across 

the planet are sounding today. 

We who seek to fight climate change must face the reality that, in the foreseeable 

future, coal isn’t going away. It’s cheap and abundant here in America and in places 

like China, which is growing at 11% a year and building one coal-fired power plant 

per week. Today coal accounts for 80% of China’s CO2 emissions, and they and others are building infrastructure that will pollute for decades to come. 

That is why it is critical that we run, not walk, to develop and implement carbon 

capture and storage technology, as recommended last year in a seminal report by 

the Massachusetts Institute of Technology. This technology will enable us to capture 

the emissions from power plants and other industrial facilities, and permanently 

bury them in deep saline aquifers and other geological formations. 

In fact, two recent reports identified CCS as the most promising area for emission 

reductions in the electric power sector. A December 2007 McKinsey study determined that, by 2030, 9% of US electricity could come from coal plants equipped with 

CCS. The Electric Power Research Institute, the research arm of the electric power 

industry, estimated this number at 15%. These studies demonstrate the tremendous 

potential for the application of CCS. Our government should be making significant 

commitments to advancing this technology. 

The Energy Bill was a very good start—and I would like to extend my thanks to 

this committee for its leadership on key provisions to inventory our country’s sequestration capacity and conduct essential demonstration projects. 

In addition, I have introduced legislation with Senator Stevens—the Carbon Capture and Storage Technology Act of 2007—which would establish 3–5 commercialscale sequestration facilities and 3–5 coal-fired demonstration plants with carbon 

capture. 

I would be happy to discuss the benefits of these projects, but today’s hearing is 

focused on another component of the bill—the regulatory framework that we need 

to put in place to oversee carbon capture and sequestration activities. My bill establishes an interagency task force, chaired by the Administrator of the EPA, to develop regulations governing the complicated mechanisms and requirements for the 

capture, transport, injection and storage of carbon dioxide. The task force is specifically directed to consult with industry, as well as technical and legal experts, in developing these regulations—and the individuals who will be testifying this morning 

are some of the leading authorities in the country on these issues. I am eager to 

hear their thoughts. 

I look forward to continuing to work with my colleagues to advance carbon capture and storage technology, and I thank you again for the opportunity to testify 

this morning.

The CHAIRMAN. Thank you very much. 

Senator Coleman. 

STATEMENT OF HON. NORM COLEMAN, U.S. SENATOR

FROM MINNESOTA 

Senator COLEMAN. Thank you, Mr. Chairman. It’s a pleasure to 

be sitting by the side of my colleague Senator Kerry. Both of our 

approaches here proceed with a firm belief that it’s important to 

get the technology out there. I firmly believe in it. 

Thinking about the Chinese experience and what they’re doing. 

The country that gets the technology out there, I think, is going to 

dominate the 21st century on economic terms. The Chinese are 

going to have to buy it. They’re choking to death they’re going to 

have to buy it from us. So we have this, I think, huge incentive to 

move forward and you have to have a framework for that incentive. 

8

When I was a young person I dreamed of being a basketball player. My heroes were guys like Bob Cousy, Oscar Robertson, Earl the 

Pearl Monroe. I’m dating myself here by the way. That all ended 

when a coach told me, Coleman, you may be small, but you can’t 

jump. It is bad when you have two reinforcing problems. 

Our Nation has that. We are highly dependent on foreign sources 

of energy and we produce dangerous amounts of greenhouse gases. 

How do we solve one problem without exacerbating the other? 

Mr. Chairman this committee under your leadership and that of 

the ranking member has boldly moved to address both. You’ve 

crafted two landmark pieces of legislation in the past several years: 

the Energy Independence Security Act of 2007 and the Energy Policy Act of 2005. These comprehensive bills address numerous critical energy and environmental challenges facing our Nation and 

they establish a firm foundation on which to build our Nation’s energy future. 

I firmly believe that a big part of that future is going to require 

figuring out how to utilize America’s 250 year supply of coal in an 

environmentally friendly manner. By taking CO2 produced in coal 

power plants and piping that CO2 to a location where it can be permanently stored, I believe we can greatly add to the country’s economic and even national security. That’s why I’ve introduced the 

CO2 Pipeline Study Act which is another step in this committee’s 

efforts to address these issues in an informed and timely manner. 

I want to thank a number of members of this committee who are 

original co-sponsors of the CO2 Pipeline Study Act for their leadership. Senator Murkowski, who’s here today, Senator Salazar, 

Landrieu, Johnson, Martinez and Bunning, your guidance and assistance were invaluable in drafting this legislation. The fact is we 

have an immense supply of coal available in this country. It is a 

relatively low cost energy source we do not need to import. Accordingly we do not need to send our valuable dollars overseas to hostile regimes in order to keep the lights on. We simply must find 

a way to use coal without jeopardizing the climate. Indeed coal already supplies about half our Nation’s electric power. 

The good news is my colleague Senator Kerry has testified about 

in greater detail is that we can take the CO2 out of the emissions 

of a coal power plant and store it underground. More research 

needs to be done. But the future of CO2 free coal plants looks 

bright. One of the key components of making CO2 free coal is a reality of how to transport this gas from the power plant to the 

ground. 

Currently there are many uncertainties about the rules and costs 

that will exist with the construction and operation of CO2 pipelines. 

The CO2 Pipeline Study Act will answer these questions. It will 

provide certainty to industry and to consumers. The CO2 Pipeline 

Study Act seeks the input of a number of Federal agencies and departments: the Department of Energy, Interior, Transportation, the 

Federal Energy Regulatory Commission, FERC, the Environmental 

Protection Agency. Each of these has expertise about a variety of 

issues associated with the building of pipelines. 

These agencies are required to conduct the study of any technical, siting, financing or regulatory barriers that might prevent or 

impede the development of a carbon dioxide pipeline industry. 

9

They’re also asked to address any safety and integrity issues associated with constructing carbon dioxide pipelines. I anticipate the 

recommendations in their study may well serve as a basis of future 

congressional action on these issues. 

In short, this bill will lay out the groundwork for CO2 free coal 

plants that will allow America to move forward quickly, but carefully and responsibly to its piping CO2. The CO2 Pipeline Study Act 

also works in tandem with and complements the actions on that 

broader carbon dioxide issue taken in S. 2323, Senator Kerry’s bill, 

also the Energy Independence and Securities Act of 2007 and the 

Energy Policy Act of 2005. These bills address carbon capture at 

the point of creation, for example at a coal fired power plant and 

the storage of carbon dioxide at an appropriate geologic formation. 

However unless the coal fired plant happens to be near a suitable storage location, the carbon dioxide will have to be piped to 

an appropriate geologic formation to sequestration. That is what 

the Pipeline Study Act answers. It addresses the issues associated 

with transporting carbon dioxide from its point of capture to its 

point of storage for use in enhanced coal recovery. 

We have an enormous potential domestic supply of energy. It can 

be used to cool and heat our homes, power our businesses and industries and create enumerable new jobs. However, our Nation will 

only realize these benefits if we can produce and use this energy 

in an environmentally sensitive manner. The CO2 Pipeline Study 

Act is an important step in our efforts to develop this energy resource in an environmentally responsible way. We need to have the 

regulatory framework in place if we are going to get the technology 

out in time. Senator Kerry’s bill and my bill begin that necessary 

and important conversation. 

Chairman Bingaman, Ranking Member Domenici and members 

of this committee, I thank you for this opportunity to speak on behalf of S. 2144, the CO2 Pipeline Study Act. With your leadership 

we are turning a national dilemma throwing energy dependence 

and greenhouse gas production into a win-win with the help of our 

people, our economy and ultimately our national security. Thank 

you, Mr. Chairman. 

[The prepared statement of Senator Coleman follows:]

PREPARED STATEMENT OF HON. NORM COLEMAN, U.S. SENATOR FROM MINNESOTA

First, I want to thank Chairman Bingaman and Ranking Member Domenici for 

holding this important hearing today and inviting me to speak on behalf of the Carbon Dioxide Pipeline Study Act. 

When I was a young person I dreamed of being a basketball player like Bob Cousy 

or Earl The Pearl Monroe. That all ended when a coach told me, ‘‘Coleman, you may 

be small, but you can’t jump.’’ It’s bad when you have two reinforcing problems. 

Our nation has that. We are highly dependent on foreign sources of energy and 

we produce dangerous amounts of greenhouse gases. How do we solve one problem 

without exacerbating the other? 

This committee, under your leadership, has boldly moved to address both. You 

have crafted two landmark pieces of legislation in the past several years: the Energy 

Independence and Security Act of 2007 and the Energy Policy Act of 2005. These 

comprehensive bills address numerous critical energy and environmental challenges 

facing our nation, and they establish a firm foundation on which to build our nation’s energy future. 

I firmly believe that a big part of that future is going to require figuring out how 

to utilize America’s 250 year supply of coal in an environmentally friendly manner. 

By taking CO2 produced in coal power plants and piping that CO2 to a location 

10

where it can be permanently stored, I believe we can greatly add to the country’s 

economic and even national security. That’s why I’ve introduced the CO2 Pipeline 

Study Act, which is another step in this committee’s efforts to address these issues 

in an informed and timely manner. 

I want to thank a number of Members of this committee who are original co-sponsors of the CO2 Pipeline Study Act for their leadership: Senators Salazar, Murkowski, Landrieu, Johnson, Martinez and Bunning. Your guidance and assistance 

were invaluable in drafting this legislation. 

The fact is, we have an immense supply of coal available in this country—it’s an 

energy source we do not need to import, and accordingly, we do not need to send 

our valuable dollars overseas to hostile regimes in order to keep the lights on. 

We simply must find a way use coal without jeopardizing the climate. Indeed, coal 

already supplies about half of our nation’s electric power. The good news, as my colleague Senator Kerry has testified about in greater detail, is that we can take the 

CO2 out of the emissions of a coal power plant and we can store it underground. 

More research needs to be done, but the future of CO2-free coal plants looks bright. 

Yet one of the key components of making CO2-free coal a reality is how to transport 

this gas from the power plant to the ground. 

Currently, there are many uncertainties about the rules and costs that will exist 

for the construction and operation of CO2 pipelines. The CO2 Pipeline Study Act will 

answer these questions, it will provide certainty to industry and consumers. 

The CO2 Pipeline Study Act seeks the input of a number of federal agencies and 

departments—the Departments of Energy, Interior, and Transportation, the Federal 

Energy Regulatory Commission (FERC) and the Environmental Protection Agency 

(EPA). Each of these has expertise about a variety of issues associated with the 

building of pipelines. 

The agencies are required to conduct a study of any technical, siting, financing, 

or regulatory barriers that might prevent or impede the development of a carbon 

dioxide pipeline industry. They are also asked to address any safety and integrity 

issues associated with constructing carbon dioxide pipelines. I anticipate the recommendations in their study may serve as a basis for future Congressional action 

on these issues. In short, this bill will lay the groundwork for CO2-free coal plants, 

it will allow America to move forward quickly, but also carefully and responsibly toward piping CO2. 

The CO2 Pipeline Study Act works in tandem with and compliments the actions 

on the broader carbon dioxide issue taken in S. 2323, the Carbon Capture and Storage Technology Act, the Energy Independence and Security Act of 2007 and the Energy Policy Act of 2005. These bills address carbon capture at the point of creation—

for example at a coal fired power plant—and the storage of carbon dioxide at an 

appropriate geologic formation. 

However, unless the coal fired power plant happens to be near a suitable storage 

location, the carbon dioxide will have to be ‘‘piped’’ to an appropriate geologic formation for sequestration. This is what the CO2 Pipeline Study Act answers. It addresses the issues associated with transporting carbon dioxide from its point of capture 

to its point of storage or for use in enhanced oil recovery. 

We have an enormous potential domestic supply of energy. It can be used to cool 

and heat our homes, power our businesses and industries and create innumerable 

new jobs. However, our nation will only realize these benefits if it can be produce 

and use this energy in an environmentally sensitive manner. 

The CO2 Pipeline Study Act is an important step in our efforts to develop this 

energy resource in an environmentally responsible way. 

Chairman Bingaman, Ranking Member Domenici and members of this committee—thank you for this opportunity to speak on behalf of S. 2144, the CO2 Pipeline Study Act. 

With your leadership you are turning a national dilemma—growing energy dependence and greenhouse gases production—into a ‘‘win-win’’ for the health of our 

people, our economy and ultimately our national security.

CHAIRMAN. Thank you both very much. I think you made a contribution by the introduction of these bills and the efforts you’ve 

put into educating us on them. 

Let me now either dismiss these witnesses, unless anybody has 

a question that’s burning that they want to ask. We will allow you 

folks to get on with your other activities. But thank you again for 

being here. 

11

We have two panels. Let me turn to Senator Domenici to make 

his opening statement and then I will call the first panel forward. 

STATEMENT OF HON. PETE V. DOMENICI, U.S. SENATOR

FROM NEW MEXICO 

Senator DOMENICI. Thank you very much, Mr. Chairman. Good 

afternoon. I want to thank Senator Bingaman for scheduling this 

hearing and the witnesses for appearing. I’d like to thank Senators 

Coleman and Kerry for their work in drafting the measures before 

us. 

Carbon sequestration, Mr. Chairman, holds real promise for reducing the emissions of greenhouse gases. Today however, that 

promise is far from realized. The technology has not been commercialized and a massive investment in infrastructure, pipelines, etc. 

is needed. As a result carbon sequestration must be viewed for 

what it is; a small piece of the solution to what is a larger issue 

of global climate change. 

The recently passed energy bill included many provisions on this 

subject. It is recognized that an appropriate Federal role exists for 

researching, developing and commercializing cleaner technologies. 

It will be one thing to implement the Federal laws that we have 

passed, but we must also remember the economic law of diminishing returns. 

Carbon sequestration as we know it is a classic example of that 

concept. The more aggressively we pursue it, the more it will cost. 

Because climate change is very much a global challenge, the benefits we derive will be incrementally smaller. America can be a leader in carbon sequestration. We have experience in the form of enhanced oil recovery to guide our investment and regulatory decisions. 

Yes, if the United States acts unilaterally to reduce its emissions 

we risk saddling taxpayers with a steep price for minimal results. 

Other nations are on the verge of passing the United States in annual greenhouse gas emissions on a per capita basis, some already 

have. As greenhouse gas emissions decrease here at home increases 

in developing countries will more than offset our progress. Discussions of the carbon sequestration process are worthy of our committee’s time. 

I’ll keep an open mind. I hope to learn what more can be done. 

But I also urge that my colleagues not put the cart before the 

horse. While we can and should advance this promising concept, we 

must know for sure that other countries will join us in this effort. 

I look forward to hearing from the witnesses that we have scheduled. I thank you again, Mr. Chairman. 

The CHAIRMAN. Thank you very much. Let me call the first panel 

forward. First we have Chairman Kelliher from the Federal Energy 

Regulatory Commission. Benjamin Grumbles from the EPA. James 

Slutz, who is the Deputy Assistant Secretary in the Office of Oil 

and Natural Gas in the Department of Energy. Krista Edwards, 

Deputy Administrator with the Pipeline and Hazardous Materials 

Safety Administration in the Department of Transportation. Stephen Allred who is the Assistant Secretary for Land and Minerals 

Management in the Department of the Interior. 

12

Thank you all very much for being here. If you could each take 

5 to 6 minutes and just summarize the main points of your testimony for us, we will include your full testimony in the record, but 

I’m sure there will be questions of all of you. 

Let me start with Chairman Kelliher and then Krista Edwards, 

Mr. Grumbles, Steve Allred and Mr. Slutz. So go right ahead Mr. 

Chairman. Thank you for being here. 

STATEMENT OF JOSEPH T. KELLIHER, CHAIRMAN, FEDERAL 

ENERGY REGULATORY COMMISSION 

Mr. KELLIHER. Thank you, Mr. Chairman. Let me say first of all, 

thank you for the opportunity to be here today and the possibility 

of being here. My term of office would have expired at the end of 

last session. But in the waning minutes of the session I was confirmed along with my colleague Jon Wellinghoff. It reminded me a 

little bit like the Georgetown/West Virginia game the other night 

except the shot wasn’t blocked at the last second. So I’m grateful 

for the support of the chairman, Senator Domenici, committee 

members and the staff. 

Mr. Chairman, members of the committee, thank you for the opportunity to speak with you today about the regulatory aspects of 

carbon capture, transportation, sequestration and related legislation. My written testimony offers comments on the legislation before the committee and but in particular I want to say that FERC 

would be pleased to participate in the study required by S. 2144. 

We believe we can contribute to an examination of the regulatory 

barriers and regulatory options relating to the construction and operation of carbon dioxide pipelines. 

I’m going to focus my oral testimony on the regulatory aspects 

of carbon transportation, the area where FERC’s experience regarding pipelines may have the most value to the committee. While 

there are questions about carbon capture and sequestration technology, carbon dioxide transportation has been proven and storage 

of carbon dioxide has taken place for years. A network of carbon 

dioxide pipelines has been developed, mostly since the 1980s to promote enhanced oil recovery in declining oil fields. There is also 

some experience with storage of carbon dioxide. 

Now up to this point the injection of carbon dioxide into oil production reservoirs has been a means of increasing oil production 

rather than an end unto itself. Storage takes place in the oil production fields rather than in reservoirs dedicated to carbon dioxide 

sequestration. Construction of the U.S. carbon dioxide pipeline network began over 25 years ago and that network now spans more 

than 3,900 miles. Siting of carbon dioxide pipelines has been governed by State law and to my knowledge state siting has worked 

well. 

Under current law there is no Federal role in siting carbon dioxide pipelines. While operators of interstate carbon dioxide pipelines 

are free to set their own rates in terms of service, the U.S. Department of Transportation’s Surface Transportation Board may hold 

proceedings to determine that rates are reasonable if a third party 

files a complaint. U.S. Department of Transportation’s Office of 

Pipeline Safety within the Pipelines and Hazardous Material SafeVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00016 Fmt 6633 Sfmt 6602 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
13

ty Administration administers safety regulations governing interstate carbon dioxide pipelines. 

The committee expressed an interest in exploring the regulatory 

aspects of carbon dioxide transportation. FERC is an infrastructure 

agency with nearly 90 years of experience regulating a broad range 

of energy infrastructure projects including oil and natural gas pipelines and related facilities. The United States has used three different regulatory schemes for pipeline transportation that might be 

relevant to congressional consideration of the regulatory aspects of 

carbon dioxide transportation. 

First there is the model that has governed the existing carbon dioxide pipeline network. Under this approach pipelines are sited 

under State law. Transportation rates are set by the Surface 

Transportation Board when a complaint filed regarding rates is 

filed. The Office of Pipeline Safety ensures safety. 

Second there is the oil pipeline model. Under this model oil pipelines are sited under State law. FERC sets the transportation rate. 

FERC has no siting or safety role with safety issues being handled 

by the Department of Transportation Office of Pipeline Safety. This 

model also has worked well for decades. 

The third model is the natural gas pipeline model. Under the 

current version of this model FERC both sites interstate natural 

gas pipelines and sets their transportation rates. It may be useful 

to note however, that the original version of the Natural Gas Act, 

the 1938 Act, provided for state siting of interstate natural gas 

pipelines. 

In 1947 however, Congress reached the conclusion that State 

siting of natural gas pipelines had failed and that it was necessary 

to resort to Federal siting. Congress amended the Natural Gas Act 

and provided for exclusive and preemptive Federal siting of interstate natural gas pipelines. While the Commission, while FERC is 

responsible for safety issues during the siting and construction 

phases, safety jurisdiction shifts to the Department of Transportation through the Pipeline and Hazardous Materials Safety Administration once construction is complete. 

Now in my view any of these three approaches could prove effective in regulating a network of carbon dioxide pipelines. I have no 

reason to believe the existing regulatory scheme administered by 

the Surface Transportation Board is inadequate. In particular I 

would not recommend that Congress preempt the states in siting 

carbon dioxide pipelines by providing for exclusive and preemptive 

Federal siting. The precondition that led Congress to such a course 

for siting natural gas pipelines, the failure of State siting, does not 

appear to exist here. Further I would not recommend that Congress alter the safety role of the Pipeline and Hazardous Materials 

Safety Administration. 

I appreciate the opportunity to testify here today and would be 

pleased to answer any questions you might have. Thank you. 

[The prepared statement of Mr. Kelliher follows:]

PREPARED STATEMENT OF JOSEPH T. KELLIHER, CHAIRMAN, FEDERAL ENERGY

REGULATORY COMMISSION

Mr. Chairman and members of the committee, thank you for the opportunity to 

speak with you today about the regulatory aspects of carbon capture, transportation, 

14

and sequestration and two related bills, namely S. 2144, the ‘‘Carbon Dioxide Pipeline Study Act of 2007’’, and S. 2323, the ‘‘Carbon Capture and Storage Technology 

Act of 2007’’. I commend the committee for holding this hearing. 

CARBON CAPTURE AND SEQUESTRATION TECHNOLOGY

Development of carbon capture and sequestration technology is an important 

need. There are questions about carbon capture and sequestration technology. The 

two bills that are the subject of this hearing address this need by requiring studies 

and funding research and development and demonstration projects. If these efforts 

are successful, carbon capture and sequestration may become a practical reality. 

S. 2144

S. 2144 would direct the Secretary of Energy, in coordination with the Federal 

Energy Regulatory Commission (FERC), the Secretary of Transportation, the Administrator of the U.S. Environmental Protection Agency, and the Secretary of the 

Interior, to conduct a study to assess the feasibility of the construction and operation of pipelines to be used for the transportation of carbon dioxide for the purpose 

of sequestration or enhanced oil recovery and carbon dioxide sequestration facilities. 

FERC has extensive experience in the siting and regulation of a wide variety of 

energy infrastructure projects, and we would be pleased to participate in the study 

required by S. 2144. In particular, FERC can play a helpful role examining regulatory barriers and regulatory options relating to the construction and operation of 

carbon dioxide pipelines, as provided by section 2(b) of the bill. 

S. 2323

As I indicated above, there are questions relating to carbon capture and sequestration technology. This bill would address those questions directly, by funding carbon dioxide capture and storage research and development, and both carbon dioxide 

capture and sequestration demonstration projects. The bill has other provisions relating to establishment of an interagency task force to develop regulations for carbon dioxide capture and storage, an assessment of carbon dioxide storage capacity, 

and technology agreements. 

REGULATORY ASPECTS OF CARBON DIOXIDE TRANSPORTATION

While there are questions about carbon capture and sequestration technology, carbon dioxide transportation has been proven and storage of carbon dioxide has taken 

place for years. A network of carbon dioxide pipelines has been developed, mostly 

since the 1980s, to promote enhanced oil recovery in declining oil fields. There is 

also some experience with storage of carbon dioxide. 

Up to this point, the injection of carbon dioxide into oil production reservoirs has 

been a means of increasing oil production, rather than an end unto itself. Storage 

takes place in the oil production fields themselves, rather than in reservoirs dedicated to carbon dioxide sequestration. Enhanced oil recovery results in the storage 

of carbon dioxide in depleted production reservoirs. 

I am not aware of whether any information has been developed regarding the 

leakage of carbon dioxide from the existing pipeline network or production fields. 

This might be an area worthy of research and development. 

Besides enhanced oil recovery, carbon dioxide has been used for other purposes, 

including refrigeration and cooling, casting metal molds, welding, sandblasting, 

methanol and urea production, carbonation, and medical purposes. 

Construction of the U.S. carbon dioxide pipeline network began over 25 years ago, 

and that network now spans more than 3,900 miles. Siting of carbon dioxide pipelines has been governed by state law, and to my knowledge state siting has worked 

well. Under current law, there is no federal role in siting carbon dioxide pipelines. 

While operators of interstate carbon dioxide pipelines are free to set their own rates 

and terms of service, the U.S. Department of Transportation’s Surface Transportation Board may hold proceedings to determine that rates are reasonable, but only 

if a third party files a complaint. Under the Interstate Commerce Termination Act 

of 1995, the Surface Transportation Board regulates interstate pipelines transporting commodities other than water, oil, or natural gas. The U.S. Department of 

Transportation’s Office of Pipeline Safety, within the Pipelines and Hazardous Materials Safety Administration (PHMSA), administers safety regulations governing 

interstate carbon dioxide pipelines. 

The committee expressed an interest in exploring the regulatory aspects of carbon 

dioxide transportation. FERC has a great deal of experience regulating energy infrastructure. The original mission of the agency was development of energy infrastructure, specifically licensing and regulating non-federal hydropower projects. Our infrastructure role has expanded over time to include natural gas pipelines and associVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00018 Fmt 6633 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
15

ated facilities, oil pipelines, and more recently we have been given a limited role 

in electric transmission siting. 

The U.S. has used three different regulatory schemes for transportation of energy 

resources by pipeline that might be relevant to Congressional consideration of the 

regulatory aspects of carbon dioxide transportation. First, there is the model that 

has governed the existing carbon dioxide pipeline network, namely continuing the 

current regulatory scheme for interstate carbon dioxide pipelines. Under this approach, pipelines are sited under state law, transportation rates are set by the Surface Transportation Board when a complaint regarding rates is filed, and the Office 

of Pipeline Safety ensures safety. 

Second, there is the oil pipeline model. Under this model, oil pipelines are sited 

under state law and FERC sets the transportation rate. FERC has no siting role 

or safety role (safety issues being handled by the Department of Transportation). 

This model has worked well for decades. 

The third model is the natural gas pipeline model. Under the current version of 

this model, FERC both sites interstate natural gas pipelines and sets their transportation rates. It may be useful to note that the original version of the 1933 Natural 

Gas Act provided for state siting of interstate natural gas pipelines. However, in 

1947 Congress reached the conclusion that state siting of natural gas pipelines had 

failed, and it was necessary to resort to federal siting. Congress amended the Natural Gas Act and provided for exclusive and preemptive federal siting of interstate 

natural gas pipelines. While the Commission is responsible for safety issues during 

the siting and construction phases, safety jurisdiction shifts to the Department of 

Transportation, though PHMSA, once construction is complete. 

In my view, any of these three approaches could prove effective in overseeing a 

network of carbon dioxide pipelines. I have no reason to believe the existing regulatory scheme administered by the Surface Transportation Board is inadequate. In 

particular, I would not recommend that Congress preempt the states on siting carbon dioxide pipelines, by providing for exclusive and preemptive federal siting of 

carbon dioxide pipelines. The precondition that led Congress to such a course for 

siting natural gas pipelines—the failure of state siting—does not exist here. Further, I would not recommend that Congress alter PHMSA’s safety role. 

I appreciate the opportunity to testify before you today and would be pleased to 

answer any questions you may have.

Senator Domenici [presiding]: Ms. Edwards, you’re next, ma’am. 

STATEMENT OF KRISTA L. EDWARDS, DEPUTY ADMINISTRATOR, PIPELINE AND HAZARDOUS MATERIALS SAFETY 

ADMINISTRATION, DEPARTMENT OF TRANSPORTATION 

Ms. EDWARDS. Ah, yes. Ranking Member Domenici, members of 

the committee, I appreciate the opportunity to discuss the safety 

programs administered by the Department of Transportation’s 

Pipeline and Hazardous Materials Safety Administration and 

PHMSA’s role in overseeing the safe transportation of carbon dioxide. 

First on behalf of Secretary Peters I want to express PHMSA’s 

strong support for the committee’s efforts. We share your commitment to energy security and environmental protection. We are 

pleased to have a seat at the table as the committee considers the 

transportation requirements associated with carbon capture and 

storage. 

DOT has vast experience managing the risks of CO2 in all modes 

of transportation. Under the hazardous materials transportation 

law the Department has long overseen the movement of CO2 by 

rail, highway, air and vessel. PHMSA’s hazardous materials regulations established standards for the design, testing and filling of 

tanks and other packages used to contain and store CO2 in each 

of its physical states as a gas, liquid and solid. 

Since 1991, DOT has also overseen the transportation of CO2 by 

pipeline. Together with our State partners, PHMSA currently overVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00019 Fmt 6633 Sfmt 6602 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
16

sees the operation of nearly 4,000 miles of CO2 pipelines. We expect that that number will grow as the Nation moves ahead with 

carbon capture and sequestration. So I am pleased to assure the 

committee that DOT existing pipeline safety program will fit new 

CO2 pipelines however they may be configured. 

Congress reauthorized the program only a little more than a year 

ago, we thank you for that, reflecting strong support for PHMSA’s 

mission and approach. Our approach is performance based. We aim 

to protect people, property and the environment by preventing 

pipeline failures and by mitigating the consequences of those that 

occur. Our integrity management programs promote continuous improvement by requiring operators to identify all threats to pipeline 

integrity and to remedy safety problems in priority order, worse 

first. By identifying and reducing defects before they grow to failure our integrity management programs are driving significant improvement in safety performance and reliability. 

Our national pipeline safety program provides seamless oversight 

of pipeline operations through PHMSA’s five regional offices and 

strong partnerships with our pipeline safety programs. The State 

programs play a critical role directly overseeing the vast share of 

pipeline infrastructure including most intrastate pipelines. 

To meet our goals PHMSA also must be more than a regulator. 

We are supporting the development of new technologies such as 

tools for improving assessment of pipelines and non-regulatory initiatives such as the nationwide campaign to promote safe excavation practices. We work with all stakeholders who can contribute 

to safety outcomes including communities near new, existing and 

planned pipelines. As part of a comprehensive approach to pipeline 

safety we believe in preparing communities to make risk informed 

land use decisions and in preparing local first responders to respond to pipeline incidents. 

Although PHMSA has no authority over pipeline siting we work 

closely with FERC and DOI in reviewing designs for pipelines and 

in responding to local concerns about pipeline safety. These efforts 

are paying off in terms of improved safety, reliability of supply and 

public confidence. The number of significant pipeline incidents has 

reached historic lows even as the size of the pipeline network has 

grown. Within these data I’m very pleased to report that the safety 

record for CO2 pipelines is particularly good. There’s been no loss 

of life and no injuries on DOT regulated CO2 pipelines. 

In closing I want to reiterate our strong support for the development of new energy solutions. PHMSA is pleased to work with the 

committee, our Federal and State partners and industry to prepare 

for the safe operation of new and expanded CO2 pipelines. We offer 

our agency’s expertise and experience as the committee considers 

and addresses future requirements for carbon capture and storage. 

Thank you again for the opportunity to testify. I’ll be pleased to 

answer any questions. 

[The prepared statement of Ms. Edwards follows:]

17

* Figures 1–2 have been retained in committee files. 

PREPARED STATEMENT OF KRISTA L. EDWARDS, DEPUTY ADMINISTRATOR, PIPELINE

AND HAZARDOUS MATERIALS SAFETY ADMINISTRATION, DEPARTMENT OF TRANSPOR- TATION

Chairman Bingaman, Ranking Member Domenici, members of the committee: 

Thank you for the opportunity to discuss the safety programs administered by the 

U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA) and our experience in overseeing the commercial transportation of carbon dioxide. 

As the committee considers future requirements for carbon capture and sequestration, I am pleased to confirm that large volumes of carbon dioxide (CO2) are shipped 

safely in the U.S. today, including by pipeline. PHMSA’s existing programs and 

standards governing CO2 transportation provide effective protection to life and property, with due regard for the efficiency and performance of the transportation system. 

As the DOT agency with jurisdiction over the movement of hazardous materials 

by all transportation modes, PHMSA has extensive experience managing the risks 

of compressed CO2, in each of its physical states: gas, liquid, and solid (dry ice). Unlike natural gas and other gases regulated as hazardous materials, CO2 is noncombustible and nontoxic. A colorless, odorless by-product of human respiration, 

CO2 is present naturally in the environment and, at normal atmospheric levels, is 

vital to plant life and poses no immediate hazard to people or animals. In higher 

concentrations, as when CO2 is contained for transport or storage, exposure to CO2

can cause respiratory problems, including suffocation. CO2 reaches its liquid state 

at combinations of high pressure and low temperature. Both variables affect the 

consequence of a release of liquefied CO2 in each case depending on the proximity 

of people and the location and surrounding conditions. In a remote, unpopulated 

area, even a large release of liquefied CO2 will vaporize harmlessly into the atmosphere and is unlikely to cause serious injury. By contrast, a large, sudden release 

of liquefied CO2 could have catastrophic consequences in a populated area. Because 

it is heavier than air, compressed CO2 tends to pool near the ground, displacing all 

oxygen, and form a vapor cloud as it dissipates. 

Because of these properties when compressed and/or in high concentrations, CO2

has long been considered a hazardous material subject to the Hazardous Materials 

Transportation Laws, 49 U.S.C. 5101 et seq., and DOT’s implementing regulations, 

49 C.F.R. parts 171–180, governing transportation by air, rail, highway, and water. 

PHMSA’s Hazardous Materials Regulations (HMR) prescribe a comprehensive risk 

management framework for CO2 transport, covering classification, packaging, handling, and hazard communication (shipping documentation and labeling). The packaging standards for CO2 transport vary based on volume, pressure, and transportation mode; in each case, the HMR mandate the use of an approved cylinder or 

tank, subject to specific requirements for design, testing, certification, and filling. 

The Department assumed oversight of CO2 pipelines in 1988, under legislation directing the Secretary to develop regulations for the safe transportation of CO2 by 

pipeline. Pursuant to the mandate, in 1991, the Department extended its existing 

hazardous liquid pipeline rules (49 C.F.R. part 195) to these operations. CO2 pipelines became subject to additional integrity management requirements when the liquid IM program was adopted in 2000. 

As with liquid operations generally, PHMSA shares oversight of certain CO2 pipelines with authorized State programs. Together with these State partners, PHMSA 

currently oversees close to 4,000 miles of CO2 transmission pipelines (as depicted 

in *Figure 1)—amounting to roughly five percent of all hazardous liquid pipeline 

mileage under our jurisdiction. Of these CO2 lines, approximately 66 percent are 

interstate (crossing State borders) pipelines with the remaining 34 percent classified 

as intrastate (within State borders). Located primarily in the States of Texas, New 

Mexico and Wyoming, these pipelines deliver CO2 for a variety of industrial purposes, including enhanced oil recovery activities. Within the national pipeline network as a whole, the CO2 lines are relatively new: approximately 91 percent were 

constructed after 1980. 

As the Administration and Congress work to enhance our Nation’s energy security 

and protect the environment, we understand the need to extend the transportation 

infrastructure—including the delivery of alternative fuels and the transport of CO2

for sequestration or use in energy production. And we understand the importance 

of pipeline transportation for safe and efficient movement of large volumes of hazardous materials. With the right risk controls in place, pipelines can operate safely 

anywhere—it’s not a matter of ‘‘if,’’ but ‘‘how.’’

18

PHMSA’s pipeline safety program aims to promote continuous improvement in 

public safety, environmental protection, and system performance by identifying and 

addressing all threats to pipeline integrity and mitigating the consequences of pipeline failures. Our regulations cover the design, construction, maintenance, and operation of liquefied natural gas (LNG) facilities and hazardous liquid and natural gas 

pipelines, both interstate and intrastate, including the gas distribution systems that 

directly serve homes and businesses. We work closely with national and international standards organizations and encourage the development of consensus 

standards complementing our performance-based regulations. 

Our integrity management regulations, which currently apply to transmission 

pipelines (liquid and gas), require operators to conduct risk assessments of the condition of their pipelines; develop and implement risk control measures to remedy 

safety problems, worst first; and evaluate and report on program progress and effectiveness. Under integrity management programs, operators are identifying and repairing pipeline defects before they grow to failure, producing steady declines in the 

numbers of serious incidents. 

Along with risk-based standards and practices, technological advances are driving 

significant improvement in the control of pipeline risks. PHMSA administers a cooperative research program that promotes the development of new methods, materials, 

and tools for improving leak detection systems and detecting and preventing corrosion, outside force damage, and other threats to pipeline integrity. We work closely 

with informed stakeholders, including other Federal agencies, our State partners, 

and industry, to target our limited R&D funding on promising technologies to address the most urgent safety issues. Most recently, in preparation for the growing 

use of alternative fuels, our R&D program is focused extensively on technical issues 

associated with the movement by pipeline of ethanol and ethanol-blended fuels. 

As an agency dedicated to the safe transportation of hazardous materials, PHMSA 

must be more than a regulator. Our success depends on our ability to leverage nonregulatory solutions and to work closely with all stakeholders who can contribute 

to safety outcomes, including communities in the path of existing or new pipelines. 

Although PHMSA has no authority in pipeline siting, we work closely with the Federal Energy Regulatory Commission (FERC) in reviewing designs for proposed gas 

transmission pipelines and liquefied natural gas (LNG) facilities and in responding 

to local concerns about pipeline safety. We consult with other Federal and State 

agencies on how our regulatory requirements relate to their permitting decisions 

about pipelines. Recognizing that public decisions affecting transportation and energy supply often must be made at a national level, we believe a pipeline safety program can and must involve local communities, including zoning and planning officials and emergency responders. As part of a comprehensive approach to pipeline 

safety, we believe in preparing communities to make risk-informed land use decisions and in building local capability to respond to pipeline incidents. PHMSA works 

closely with fire service organizations on numerous safety projects, including the development of training standards and educational materials concerning pipeline incident response. 

To carry out our oversight responsibilities, PHMSA operates five regional pipeline 

safety offices and is authorized to employ 111 inspection and enforcement professionals for fiscal year 2008. In addition to compliance monitoring and enforcement, 

PHMSA’s regional offices respond to and investigate pipeline incidents and participate in the development of pipeline safety rules and technical standards. Our regional offices also work closely with PHMSA’s State program partners, which employ approximately 400 pipeline inspectors and directly oversee the largest share of 

the U.S. pipeline network, including most intrastate pipelines. Under our Congressionally-authorized Community Assistance and Technical Services (CATS) program, 

PHMSA’s regional offices provide safety-focused community outreach and education. 

With the current wave of pipeline expansion, and increasing commercial and residential development around existing pipelines, the CATS program is serving a vital 

role in educating the public about pipeline safety and encouraging risk-informed 

land use planning and safe excavation practices. 

With safety our top priority, under Secretary Peters’ leadership, the Department 

is targeting the prevention of all transportation-related deaths and injuries. Although further improvement is needed, the safety record for hazardous materials 

transportation is good and getting better in all sectors, including hazardous liquid 

pipeline operations. Since the introduction of IM programs in 2000, the annual number of serious incidents involving hazardous liquid pipelines has reached historic 

lows, even as the size of the pipeline network has grown. Although the data sets 

are not yet large enough to make statistically significant comparisons, the trend line 

over the past 20 years (as depicted in *Figure 2) is favorable. 

19

Within these data, the safety record for CO2 pipelines is particularly good. Of the 

3,695 serious accidents reported on hazardous liquid pipelines since 1994, only 36 

involved CO2 pipelines. Among the 36 incidents, only one injury, and no fatalities, 

was reported. In all other instances, the accidents were classified as serious based 

on the extent of property damage (including damage to the pipeline facility) or product loss. 

With the benefit of this experience and record, PHMSA is pleased to work with 

the committee, our Federal and State partners, and industry to prepare for the safe 

operation of new or extended CO2 pipelines. The existing pipeline safety program 

administered by PHMSA has provided effective oversight of CO2 pipelines since 

1991 and will accommodate new and expanded carbon dioxide pipelines, however 

they are configured. We are happy to work with the Department of Energy and 

other Federal partners to evaluate the feasibility of particular pipeline configurations and/or plan for their development. 

Likewise, PHMSA is committed to working with any agency or agencies involved 

in siting CO2 pipelines, just as we work with FERC today in connection with the 

licensing of gas transmission pipelines and LNG facilities. We offer our agency’s considerable experience and technical expertise to the committee as it considers and addresses the transportation requirements associated with CO2 capture and sequestration. 

Mr. Chairman, I want to assure you and members of the committee that the Administration, Secretary Peters, and the dedicated men and women of PHMSA share 

your strong commitment to safe, clean, and reliable pipeline transportation. Like 

you, we understand the importance of PHMSA’s mission to the Nation’s economic 

prosperity and energy security, and we look forward to working with the committee 

to address the current challenges. Thank you.

Senator DOMENICI. Thank you very much. Senator, do you want 

me to proceed? 

Senator DORGAN. Why don’t you, the chairman will be here momentarily. 

Senator DOMENICI. All right. Let me ask the two of you who have 

already testified, neither of you made a statement about quality of 

CO2. Could I start with you, Mr. Chairman? Is CO2 dangerous? 

Mr. KELLIHER. Is CO2 dangerous? 

Senator DOMENICI. I said is it dangerous like natural gas? 

Mr. KELLIHER. No, it’s not like natural gas storage. 

Senator DOMENICI. Does it blow up? 

Mr. KELLIHER. No, sir. 

Senator DOMENICI. Will it hurt people? 

Mr. KELLIHER. Not in the way a natural gas leak could hurt people. 

Senator DOMENICI. I imagine if you got too much you would go 

to sleep, right? Does it hurt people, ma’am? 

Ms. EDWARDS. I’m pleased to speak to the hazard, thank you. We 

do regulate CO2 in each of its forms as a hazardous material for 

the purposes of transportation. Certainly there are risks and hazards associated with it that’s why it’s under both of our safety programs. 

On the other hand, as you pointed out, the hazards associated 

with this material are different and in many ways less than the 

hazards associated with other materials that are part of our—that 

we manage the oversight of through pipelines or significantly CO2

in certain concentrations will cause respiratory problems in humans and could cause suffocation in a situation in which, you 

know, a human was exposed to intense concentrations. It tends—

it’s heavier than air as a liquid which is the form in which it’s 

transported in pipelines so a massive release in a populated area 

without the right conditions and there are variables having to do 

with ventilation and temperature, of course, in terms of its vaporVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00023 Fmt 6633 Sfmt 6602 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
20

ization and the rate of vaporization. But, you know, there have 

been, again I reiterate that our safety record for CO2 pipelines has 

been very good. But, you know, it is why we oversee its movement 

in transportation because it poses a hazard. 

Congress directed us to take on this oversight in 1988. 

Senator DOMENICI. Thank you very much, ma’am. 

Proceed, sir. 

STATEMENT OF BENJAMIN H. GRUMBLES, ASSISTANT 

ADMINSTRATOR FOR WATER, ENVIRONMENTAL PROTECTION AGENCY 

Mr. GRUMBLES. Thank you, Senator. 

Senator DOMENICI. You’re welcome. 

Mr. GRUMBLES. Members of the committee I’m Benjamin Grumbles. I’m the Assistant Administrator for Water at the U.S. EPA. 

I really appreciate the opportunity to discuss EPA’s important 

work on the regulatory aspects of carbon sequestration. 

The Administration is committed to taking timely and responsible actions to confront the serious challenges of global climate 

change. EPA, in particular, believes innovative solutions will be 

critical to meeting this long term challenge including technologies 

and practices to mitigate greenhouse gas emissions. Carbon capture and storage is one of a portfolio of innovative technologies that 

could make a significant contribution to reducing greenhouse gas 

emissions. EPA is committed to advancing such efforts in a manner 

consistent with our obligations to safeguard public health and the 

environment as required by the Safe Drinking Water Act. 

Carbon sequestration isn’t a silver bullet, but it may be an ace 

in the hole for mitigating greenhouse gas emissions. We’re very excited at EPA about the recent activities that the Administrator announced in October of last year that the Agency would move forward with a rulemaking under our authorities of the Safe Drinking 

Water Act. Our current schedule is an accelerated schedule. But 

our schedule is to propose regulations under the Safe Drinking 

Water Act’s Underground Injection Control Program by the summer of this year. 

The Agency is engaged in many efforts with our partners in Federal, State and local government and in the private sector on the 

wide array of carbon capture and storage and sequestration matters. But my testimony does focus on the regulatory aspects of injection and sequestration. Over the past several years we’ve been 

coordinating with the Department of Energy, the lead agency for 

research and development, and working with them on in support 

of their efforts on the carbon sequestration technology road map. 

In March 2007, EPA issued technical guidance under our Safe 

Drinking Act authorities to help State and EPA regional managers 

in processing permit applications for experimental well permits for 

carbon sequestration. As I mentioned the Administrator then followed that up with an announcement in October 2007 that we are 

now fully committed to moving forward with a rulemaking, for full 

scale, not just experimental, but for full scale geo- sequestration of 

carbon dioxide recovered from emissions of coal fired power plants 

and other facilities. The proposed regulation which is currently in 

21

development will take into account our UIC program requirements 

that we have for the existing classes under the UIC program. 

The key components of the proposed regulation will include requirements related to geologic site characterization to ensure wells 

are sited in suitable areas to limit the potential for migration of injected and formation fluids into an underground source of drinking 

water. The proposed regulation that we’re working on will include 

well construction and operation requirements to ensure wells are 

properly constructed and managed. Mechanical integrity testing for 

the wells, monitoring for the wells and also, importantly, well closure, post closure care and also financial responsibility requirements regarding the proper plugging and abandonment of injection 

wells. 

Importantly we will also be discussing long term liability and 

seek further comment on the issue as part of the proposed rulemaking. We recognize there will need to be a robust debate on this 

important issue. We’re expecting that once this rule is proposed 

that we will take next steps, coordinate with our Federal colleagues, review public comments. We’re estimating a final rule in 

late 2010 or sometime in 2011. 

The rule will embrace the concept of adaptive management. 

We’re using an adaptive approach that will allow the agency to collect information and use data from DOE demonstration and other 

early projects to inform the final regulation and any subsequent revisions, if necessary. The hallmark of progress for us on this is continued coordination at the Federal level, but also at the State level 

with our State partners, whether it’s IOGCC or the Ground Water 

Protection Council and at the local level and the national laboratories and with the private sector. 

Mr. Chairman, I would just underscore the importance of this. 

It’s one of the Administrator’s priorities in our agency’s own climate change clean energy strategy. I look forward to answering 

questions members of the committee might have. Thank you, Mr. 

Chairman. 

[The prepared statement of Mr. Grumbles follows:]

PREPARED STATEMENT OF BENJAMIN H. GRUMBLES, ASSISTANT ADMINISTRATOR FOR

WATER, ENVIRONMENTAL PROTECTION AGENCY

Thank you, Chairman Bingaman and Members of the committee. I am Benjamin 

H. Grumbles, the Assistant Administrator for Water at the EPA, and I appreciate 

the opportunity to describe the Agency’s important work on regulatory aspects of 

carbon dioxide sequestration. 

This Administration is committed to taking timely and responsible actions to confront the serious challenge of global climate change. EPA believes innovative solutions will be critical to meeting this long-term challenge, including technologies and 

practices to mitigate greenhouse gas emissions. The Administration is actively investigating the prospects for carbon capture and storage (CCS), a process that involves capturing carbon dioxide (CO2) from power plants and other industrial 

sources and injecting it into deep subsurface geologic formations for long-term storage. CCS is one of a portfolio of innovative technologies that could make a significant contribution to reducing greenhouse gas emissions to the atmosphere and EPA 

is committed to advancing such efforts in a manner consistent with our obligation 

to safeguard public health and the environment as required by the Safe Drinking 

Water Act (SDWA). 

EPA staff are evaluating many aspects of CCS technology and deployment, focusing our efforts in two areas: (1) partnering with public and private stakeholders to 

develop an understanding of the environmental aspects of carbon capture and storage that must be managed for the necessary technologies to become a viable stratVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00025 Fmt 6633 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
22

egy for reducing greenhouse gases; and (2) ensuring carbon dioxide storage is conducted in a manner that protects underground sources of drinking water. My testimony focuses on the second of these two areas, EPA’s development of a regulation 

for geologic sequestration (GS) of CO2 and the collaboration taking place to support 

such efforts, all of which are relevant to your consideration of Section 5 of Senate 

Bill 2323. 

Over the past several years, EPA has been coordinating with the Department of 

Energy (DOE), the lead agency for research and development of CCS technology. As 

DOE has developed a Carbon Sequestration Technology Roadmap for the development and deployment of this technology, EPA has been working to design an appropriate management framework for geologic sequestration. By engaging in DOE’s expansive R&D program early and working with stakeholders on all sides of this 

issue, EPA is well positioned to help in the permitting of future carbon dioxide underground injection wells. 

REGULATORY SCOPE, CONTENT, AND TIMEFRAME

EPA has statutory authority under the SDWA to carry out the 

UndergroundInjection Control (UIC) program to protect underground sources of 

drinking water from the injection of fluids for disposal or storage. In March 2007, 

EPA issued technical guidance to help State and EPA Regional UIC managers in 

processing permit applications for GS demonstration projects under the general UIC 

regulations. Recognizing that the technology is rapidly progressing towards fullscale deployment, Administrator Stephen Johnson announced, in October 2007, 

EPA’s plans for developing national rules for full-scale GS of carbon dioxide recovered from emissions of coal-fired power plants and other facilities. EPA will propose 

regulations in the Federal Register this Summer to ensure that carbon dioxide injection is done in a manner that does not endanger underground sources of drinking 

water. 

Under the SDWA, EPA develops minimum requirements for state UIC programs. 

States may develop their own regulations for injection wells in their State. These 

requirements must be at least as stringent as the federal requirements (and may 

be more stringent). Annually, billions of gallons of fluids are injected underground 

through wells authorized under State and Federal UIC Programs. This includes approximately 35 million tons of carbon dioxide that are injected for the purposes of 

enhancing oil and gas recovery. EPA’s proposed regulations will build on the UIC 

Program’s many years of experience in safely injecting fluids, including carbon dioxide, into the subsurface. 

The proposed regulation, currently in development under an accelerated schedule, 

will take into account the EPA’s existing UIC program requirements. Key components of the proposed regulation will include requirements related to: (1) geologic 

site characterization to ensure that wells are sited in suitable areas to limit the potential for migration of injected and formation fluids into an underground source of 

drinking water; (2) well construction and well operation to ensure that the wells are 

properly constructed and managed; (3) well integrity testing and monitoring to ensure that the wells perform as designed; and, (4) well closure, post-closure care and 

financial responsibility to ensure proper plugging and abandonment of the injection 

well. We will also discuss long-term liability and seek further comment on this issue 

as part of the proposed rulemaking. 

Importantly, the proposal will also include public participation requirements that 

would be associated with issuance of permits. We will assess the costs of carrying 

out regulations for geologic sequestration programs as part of the economic analysis 

for the rulemaking. 

EPA is reviewing available data on existing demonstration projects to inform our 

decision-making and development of the rule. Once a proposal is published, EPA 

will review public comments and take into account any new data and demonstration 

project outcomes prior to publishing a final rule by 2011. EPA’s timeframe for the 

proposed rulemaking is consistent with the time frame for the DOE Roadmap, 

which projects fullscale project deployment to begin in the 2012–2020 timeframe. To 

ensure that GS can be deployed as rapidly and safely as possible, EPA is using an 

adaptive approach that will allow the Agency to collect information and use data 

from DOE demonstration and other early projects to inform the final regulation and 

any subsequent revisions, if necessary. 

COORDINATION AND COLLABORATION

Within EPA, the Office of Water and Office of Air and Radiation are working together on all activities related to geologic sequestration in order to conduct technical 

and economic analyses, develop risk management strategies, collaborate with key 

23

stakeholders, and clarify the relationships among various statutes (including the 

Safe Drinking Water Act and Clean Air Act) and EPA regulations. 

EPA is working closely with DOE to leverage existing efforts and technical expertise. EPA and DOE are coordinating with Lawrence Berkeley National Laboratory 

to answer key technical questions regarding impacts on groundwater and underground formations. The Agency is also monitoring the progress of research being 

conducted by organizations such as the Pacific Northwest National Laboratory, Lawrence Livermore National Laboratory, and international projects such as Sleipner, 

In Salah, and Weyburn to help inform the regulatory framework. 

The DOE’s Regional Carbon Sequestration Partnerships are conducting demonstration projects to gather data on the effectiveness and safety of GS. These Regional Partnerships will implement many small and large-scale field tests of carbon 

dioxide injection throughout the country in a variety of geologic settings. One goal 

of the technical permitting guidance EPA issued in March of 2007 is to promote the 

exchange of information to support the development of a long-term GS management 

strategy. 

EPA will also engage with the Department of Transportation, Department of Interior, States, and Tribes during the rulemaking process. EPA has worked closely with 

key organizations such as the Groundwater Protection Council (GWPC) and the 

Interstate Oil and Gas Compact Commission (IOGCC), which represent States that 

implement UIC programs, and we will continue to do so throughout the regulatory 

process. For example, the Agency has reviewed the IOGCC report entitled ‘‘Storage 

of Carbon Dioxide in Geologic Structures: A Legal and Regulatory Guide for States 

and Provinces.’’ The document’s discussion of issues such as permitting and property 

rights may be very useful as we develop regulations. 

In December 2007, EPA established a workgroup on geologic sequestration to provide input to the proposed regulation. The workgroup includes EPA and DOE staff, 

as well as representatives of four state agencies, two of whom were recommended 

by the IOGCC and two by GWPC. Thus far, the workgroup has provided input on 

various aspects of the regulatory framework and has begun to draft issue papers 

on key issues. 

Over the past several years, the Agency has been holding workshops, attending 

conferences and meeting with public and private stakeholders including industry experts, legal experts, technical experts, and environmental advocates to gather useful 

input. Our past experience gives us confidence we can work closely with key stakeholders and experts to develop well-designed regulatory approaches. 

This past December, EPA held a meeting that focused on the potential regulatory 

framework for geologic sequestration. The two day workshop, held in Washington, 

DC, was attended by more than 200 stakeholders representing government, research institutions, industry, public interest groups, law firms, and the general public. Another stakeholder meeting is planned for February 26 and 27, 2008 in Alexandria, Virginia. Additionally, over the past year EPA has held technical workshops 

with researchers and stakeholders to discuss technical considerations for establishing a GS framework. 

CONCLUSION

EPA is committed to working with our public and private partners to accelerate 

the important work underway to realize the significant potential of carbon dioxide 

capture and geologic storage. EPA will continue to engage with other federal agencies and encourage participation of states, associations, public interest groups, industry, and other stakeholders as the Agency moves forward on this critical path 

towards development of a regulatory framework. Consistent with the goal of Senator 

Kerry’s bill, our goal is to develop sound regulations that will enable full-scale CCS 

projects to move forward without endangering underground sources of drinking 

water. 

Thank you, Mr. Chairman and members of the committee for this opportunity to 

describe EPA’s important work on carbon sequestration. I would be happy to answer 

any questions you may have.

Senator DOMENICI. Mr. Grumbles, I just have one question that 

came to my mind. I don’t understand; why does it take 4 years to 

make a rule regarding a substance of like CO2? 

Mr. GRUMBLES. We have a lot of experience with CO2 already 

under the UIC program under the class two category for enhanced 

oil and gas recovery. But this is a whole new approach, a whole 

new opportunity when it comes to long term storage. It’s a complex 

24

issue and it requires public participation and discussion and also 

that 4 years will allow us to take into account lessons learned as 

the demonstration projects occur, whether they are DOE or other 

demonstration projects through the process. 

Senator DOMENICI. All right. Thank you. 

Mr. Allred. 

STATEMENT OF STEPHEN ALLRED, ASSISTANT SECRETARY 

FOR LAND AND MINERALS MANAGEMENT, DEPARTMENT OF 

THE INTERIOR 

Mr. ALLRED. Senator Domenici, members of the committee, it’s a 

pleasure to be here and to represent the Department of the Interior. As you’re aware, we deal with oil and gas, coal, geothermal 

and biomass as well as fish and wildlife issues on Federal lands 

and Federal resources. We’re involved in a number of different 

strategies with regard to carbon sequestration, including the capture and storage through enhanced oil recovery of carbon dioxide 

and into geologic formations and also investigating the capture 

through air and terrestrial biomass, soils and trees of carbon dioxide on our lands. 

One of the things that is probably not well known is the fact that 

currently carbon dioxide is a salable commodity under the mineral 

leasing laws of the United States. We currently collect revenues in 

the form of royalties from the sale of carbon dioxide produced in 

connection with oil and gas production on public lands. In 2007 the 

sale of carbon dioxide generated over 23 million dollars in royalty 

revenues in Colorado, New Mexico and Wyoming. I mention that 

because one of the things that I think as we look forward to carbon 

sequestration is that it may well be a valuable resource for the future that can be recovered as we need it. 

Specifically I would like to talk a little bit more about the opportunity I think that we have to investigate and understand carbon 

dioxide sequestration because of the number of enhanced oil recovery projects that we have. Some of the largest new ones are in Senator Barrasso’s area in Wyoming. I think we have an opportunity 

by adding perhaps another purpose to those projects to learn a lot 

from carbon sequestration that we can then apply to other areas. 

It’s also interesting to note that there are estimates that we have 

the capacity, based on preliminary estimates of carbon dioxide production and volume in our oil reservoirs to sequester, if they were 

in the right places, 20 to 40 years of carbon dioxide production. 

Public Law 110–140, enacted last year, gave the Department of 

the Interior a number of different responsibilities. We are to develop and are currently involved in the process of developing a 

methodology for and to conduct national assessments of geologic capacity for sequestration. We are in the process of preparing a national assessment of storage capacity of oil and gas and saline reservoirs through the USGS. We will conduct that in conjunction 

with the Department of Energy, with the input of the Environmental Protection Agency, and equally as important, the State geological surveys that we work with. 

It is our intent to convene an independent panel of experts and 

stakeholders to provide a technical review of that effort. Upon completion of that review the methodology will be published and proVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00028 Fmt 6633 Sfmt 6602 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
25

vided for public use. There are also a number of other things that 

are ongoing efforts that we’ll also try to answer some of these questions, certainly to identify the criteria to determine candidate geologic sequestration sites in various different types of geologic settings. 

We will also be involved in looking at a proposed regulatory 

framework for leasing decisions on public lands with regard to long 

term sequestration. We also were mandated to determine a means 

by which we can provide for public review and comment and to ensure that we protect the quality of natural and cultural resources 

in those areas. To suggest additional legislation that we feel might 

be important. Again I want to emphasize as we go forward with 

these we will consult with our Federal and State partners and the 

public. 

We believe, in conclusion, that it is extremely important to No. 

1, understand the effect and to determine the complex issues that 

we will have in sequestration and there are many interrelated components to that. Secondly, we believe that it is important to use the 

ongoing activities that are already in place to try to enhance the 

knowledge that we have. The Department of the Interior is looking 

forward to working with other agencies and working with Congress 

to answer these important questions. I’d be most happy to answer 

any questions. I have a couple of experts with me if I can’t answer 

those today. 

[The prepared statement of Mr. Allred follows:]

PREPARED STATEMENT OF STEPHEN ALLRED, ASSISTANT SECRETARY FOR LAND AND

MINERALS MANAGEMENT, DEPARTMENT OF THE INTERIOR

INTRODUCTION

Mr. Chairman and Members of the committee, thank you for the opportunity to 

provide the Department of the Interior’s views on S. 2323, the ‘‘Carbon Capture and 

Storage Technology Act of 2007’’ and S. 2144, the ‘‘Carbon Dioxide Pipeline Study 

Act of 2007.’’ As both bills vest the Secretary of Energy with primary authority and 

the Secretary of the Interior is identified as a cooperator, I will defer to the Department of Energy for specific views on this legislation. My testimony today will address the Department of the Interior’s perspective on carbon capture and storage as 

it relates to future work of the Department’s bureaus, specifically the U.S. Geological Survey (USGS) and the Bureau of Land Management (BLM). 

The challenges of addressing carbon dioxide accumulation in the atmosphere are 

significant. Fossil fuel usage, a major source of carbon dioxide emissions to the atmosphere, will continue for the foreseeable future in both industrialized and developing nations. Therefore, a variety of strategies are being investigated to reduce 

emissions and remove carbon dioxide from the atmosphere. Such strategies include 

the facilitated sequestration of carbon for the capture and storage of carbon dioxide 

by injection into geologic formations as well as capture from the air to terrestrial 

biomass, including soils and trees. 

Carbon injection techniques also have useful practical applications in processes 

known as enhanced oil recovery (EOR), which currently takes place on some public 

lands managed by the Bureau of Land Management. Carbon dioxide is a saleable 

commodity under the Mineral Leasing Act of 1920. The Bureau of Land Management currently collects revenues in the form of royalties derived from the sale of 

carbon dioxide produced in connection with oil and gas production on public lands. 

In 2007, for example, the sale of carbon dioxide generated over $23 million in royalty revenue in the states of Colorado, New Mexico, and Wyoming. 

In addition to enhancing oil recovery, EOR’s utilization of carbon injection may 

yield valuable data that will inform efforts to capture and sequester carbon dioxide 

effectively in geologic formations found on public lands. A critical issue for evaluation of storage capacity is the integrity and effectiveness of these formations for 

sealing carbon dioxide underground, thereby preventing its release into the atmosphere. 

26

GEOLOGIC STORAGE OF CARBON

The current atmospheric carbon dioxide concentration is approximately 380 parts 

per million volume and rising at a rate of approximately 2 parts per million volume 

annually, according to the most recent information from the Intergovernmental 

Panel on Climate Change (IPCC). The 2005 IPCC Special Report on Carbon Dioxide 

Capture and Storage concluded that in emissions reductions scenarios striving to 

stabilize global atmospheric carbon dioxide concentrations at targets ranging from 

450 to 750 parts per million volume, the global storage capacity of geologic formations may be able to accommodate most of the captured carbon dioxide. How much 

of this carbon dioxide storage capacity would be economically feasible (assuming 

some price on carbon), however, is not known. Also, geologic storage capacity may 

vary widely on a regional and national scale. A more refined understanding of geologic storage capacity is needed to address these knowledge gaps. 

Geological storage of carbon dioxide in porous and permeable rocks involves injection of carbon dioxide into a subsurface rock unit and displacement of the fluid or 

formation water that initially occupied the pore space. This principle operates in all 

types of potential geological storage formations such as oil and gas fields, deep saline water-bearing formations, or coal beds. Most of the potential carbon dioxide 

storage capacity in the U.S. is in deep saline formations. 

ONGOING EFFORTS

H.R. 6, the Energy Independence and Security Act of 2007 (EISA), which the 

President signed into law last month, includes provisions on Carbon Capture and 

Storage that the Department is working to implement. The requirement in Section 

7 of S. 2323 directing the Secretary of the Interior, acting through the Director of 

the U.S. Geological Survey (USGS), to develop a methodology for and conduct a national assessment of geological storage capacity for carbon dioxide is very similar 

to Section 711 of EISA and therefore we believe inclusion of this provision in new 

legislation is unnecessary. 

The Department has developed an implementation plan for Section 711. In fiscal 

year 2008, the Department will begin development of a methodology that could be 

used to conduct assessments of carbon dioxide storage capacity in oil and gas reservoirs and saline formations nationally. The methodology development will be conducted in coordination with a number of organizations in order to maximize the usefulness of the assessment for a variety of partners and stakeholders. These organizations include the Department of Energy, the Environmental Protection Agency, 

and State Geological Surveys. In particular, the Department will coordinate its work 

with Department of Energy’s National Carbon Sequestration Database and Geographical Information System (NATCARB). The purpose of NatCarb is to assess the 

carbon sequestration potential in the U.S. and to develop a national Carbon Sequestration Geographic Information System (GIS) and Relational Database covering the 

entire U.S. 

An independent panel, consisting of individuals with relevant expertise and representing a variety of stakeholder organizations, will be convened to provide a technical review of the methodology. Upon completion of the review, the methodology 

will be published and available for public use. The subsequent national assessment 

called for by EISA would need to compete among other administration priorities for 

funding. 

In addition, Section 714 of the EISA directs the Department to develop a framework for geological sequestration on public land and report back to this committee, 

as well as the House committee on Natural Resources, by December 2008. 

This effort, coordinated among several agencies within the Department, is anticipated to result in recommendations relating to:

• criteria for identifying candidate geological sequestration sites in several specific types of geological settings; 

• a proposed regulatory framework for the leasing of public land or an interest 

in public land for the long-term geological sequestration of carbon dioxide; 

• a procedure for ensuring any geological carbon sequestration activities on public 

land provide for public review and protect the quality of natural and cultural 

resources; 

• if appropriate, additional legislation that may be required to ensure that public 

land management and leasing laws are adequate to accommodate the long-term 

geological sequestration of carbon dioxide; and 

• if appropriate, additional legislation that may be required to clarify the appropriate framework for issuing rights-of-way for carbon dioxide pipelines on public 

land.

27

The report will also describe the status of Federal leasehold or Federal mineral 

estate liability issues related to the release of carbon dioxide stored underground 

in public land, including any relevant experience from enhanced oil recovery using 

carbon dioxide on public lands. 

The report will, in addition, identify issues specific to the issuance of pipeline 

rights-of-way on public land and legal and regulatory issues specific to carbon dioxide sequestration on land in cases in which title to mineral resources is held by the 

United States, but title to the surface estate is not. 

This effort will be undertaken in coordination with the Environmental Protection 

Agency, the Department of Energy, and other appropriate agencies. 

CONCLUSION

It is clear that addressing the challenge of reducing atmospheric carbon dioxide 

and understanding the effect of global climate change is a complex issue with many 

interrelated components. The assessment activities called for in the recently passed 

Energy Independence and Security Act of 2007 should ultimately increase the information base upon which decision makers will rely as they deal with these issues, 

and the assessments called for in these bills would duplicate those already mandated. In addition to addressing the challenges presented by carbon dioxide, we 

should also recognize that this commodity presents certain opportunities for future 

knowledge and utilization. As a leasable commodity, our experience demonstrates 

that there is a demand and a value attributable to this resource. As we examine 

undeveloped oil and gas reservoirs, we should consider the potential benefits of accessible sequestered carbon dioxide. It is clear that the discussion on this subject 

will continue and the Department stands ready to assist Congress as it examines 

these challenges and opportunities. Thank you for the opportunity to present this 

testimony. I am pleased to answer questions you and other Members of the committee might have.

The CHAIRMAN [presiding]: Thank you very much. Mr. Slut, go 

right ahead. 

STATEMENT OF JAMES SLUTZ, ACTING PRINCIPAL DEPUTY 

ASSISTANT SECRETARY, OFFICE OF FOSSIL ENERGY, DEPARTMENT OF ENERGY 

Mr. SLUTZ. Ok. Mr. Chairman, members of the committee, it is 

my pleasure to appear before you today to discuss Senate bills 2323 

and 2144. I currently serve as the Acting Principle Deputy Assistant Secretary for Fossil Energy. 

Balancing the economic value of fossil fuels with the environmental concerns associated with fossil fuel use is a difficult challenge. Carbon capture and storage technologies provide a key strategy for reconciling energy and environmental concerns. DOE has 

assumed a leadership role in the development of carbon capture 

and storage technologies and in fact the United States, I would 

argue, is the global leader in this area. Through its carbon sequestration program DOE is developing the technologies through which 

geologic carbon sequestration could become an effective and economically viable option for reducing CO2 emissions. 

Since DOE first investigation into carbon sequestration began in 

1997 with a budget of one million dollars, DOE has spent a total 

of 483 million through fiscal year 2008. Our fiscal year 2009 budget 

request of 148 million is a powerful sign of the continuing importance of this technology to our energy and environmental future. I 

might add that fiscal year 2009 we had a 30 million dollar increase 

over our 2008 request. 

A recent report completed by the National Petroleum Council 

which was a comprehensive landmark study requested by the Secretary of Energy titled, ‘‘Facing the Hard Truths About Energy’’. 

The NPC’s purpose of this report was to increase understanding 

28

about the scale and significance of the energy industries activities 

and to produce sound, balanced strategies to meet today’s challenges and benefit future generations. In the section of the report 

dealing with carbon management, the NPC recommended and I 

quote, ‘‘The United States must develop the legal and regulatory 

framework to enable carbon capture and sequestration and as policymakers consider options to reduce CO2 emissions provide an effective global framework for carbon management.’’ DOE is doing 

precisely that as a few examples more fully described in my submitted testimony illustrate. 

DOE is working to increase the cost effectiveness of carbon capture technologies and to prove the viability of a long term geologic 

and terrestrial CO2 storage. DOE’s regional carbon sequestration 

partnerships are co-funding field tests for large scale CCS demonstrations. DOE is working closely with the Environmental Protection Agencies and the states through organizations such as the 

Interstate Oil and Gas Compact Commission to establish a standardized regulatory framework for CO2 storage in deep geologic formations. 

In December 2007, DOE participated in EPA’s first workshop in 

preparation for a proposed rule for large scale injection of CO2. Fortunately the United States has a large number of geologic formations amenable to CO2 storage. In fact according to the 2006 carbon 

sequestration atlas of the United States and Canada, aggregate 

CO2 sink capacity is estimated to hold several hundred years of 

total domestic U.S. emissions. 

The U.S. Government, DOE and other agencies of the 50 States, 

several Canadian provinces, private industry, environmentalists 

and the scientists and the engineers have expanded great effort, invested heavily and made remarkable progress over the last decade 

in understanding and preparing for an energy and environmental 

future in which carbon sequestration technology will play an integral role. DOE believes regarding the specific bills being considered, DOE does have some specific positions. DOE believes that the 

research and development and demonstration projects prescribed in 

Sections 3, 4 and 6 of Senate Bill 2323 are duplicative of our R&D 

demonstrations underway in our existing program. 

We also believe that Section 5ive which requires interagency task 

force duplicates the task force the EPA has underway. Section 6 of 

the proposed legislation would shift lead responsibility for part of 

the Department’s R&D program from Fossil Energy to the Office 

of Science. DOE opposes this provision. 

Senate Bill 2144 would require a feasibility study related to the 

construction and operation of pipelines and carbon dioxide sequestration facilities and for other purposes. DOE supports this legislation. 

There are many questions and I think it’s useful to consider the 

scale of CO2 issues and CO2 management. Building the infrastructure required to capture and store the CO2 emitted by energy producing activities requires serious, long term commitment on the 

part of government and industry and the public. As an example, in 

the United States all the CO2 from existing coal fired electric generation alone would total, if liquefied, would total 50 million barrels per day. That’s two and a half times the volume of oil handled 

29

daily in the United States. Again I mention that just to scale the 

challenge and illustrates the urgency of moving forward with some 

of these issues. 

Mr. Chairman, thank you for the opportunity to testify today. I’d 

be happy to answer any questions. 

[The prepared statement of Mr. Slutz follows:]

PREPARED STATEMENT OF JAMES SLUTZ, ACTING PRINCIPAL DEPUTY ASSISTANT

SECRETARY, OFFICE OF FOSSIL ENERGY, DEPARTMENT OF ENERGY

Mr. Chairman, members of the committee, it is a pleasure for me to appear before 

you today to discuss Senate bills 2323 and 2144. 

I intend, first, to survey The Department of Energy’s (DOE) overall Carbon Sequestration Research and Development program, our goals and our progress to date. 

I will then describe DOE’s collaboration with the Environmental Protection Agency 

(EPA) in carbon capture and storage. 

Complete knowledge of all these efforts already underway should be of interest 

as the Senate bills under consideration go forward. 

CARBON SEQUESTRATION AND FOSSIL FUELS

The availability of affordable energy is a bedrock component of economic growth. 

The use of fossil fuels, however, can result in the release of emissions with impacts 

on the environment. Of growing significance are emissions of carbon dioxide (CO2) 

which contribute to global climate change. 

Balancing the economic value of fossil fuels with the environmental concerns associated with fossil fuel use is a difficult challenge. Carbon capture and storage technologies provide a key strategy for reconciling energy and environmental concerns. 

Geologic sequestration—the capture, transportation to an injection site, and longterm storage in a variety of suitable geologic formations—is one of the pathways 

that DOE is pursuing to allow the continued use of fossil fuels while reducing CO2

emissions. 

DOE has assumed a leadership role in the development of carbon capture and 

storage technologies. Through its Carbon Sequestration Program—managed within 

DOE’s Office of Fossil Energy and implemented by the National Energy Technology 

Laboratory (NETL)—DOE is developing technologies through which geologic carbon 

sequestration could potentially become an effective and economically viable option 

for reducing CO2 emissions. The Carbon Sequestration Program works in concert 

with other programs within the Office of Fossil Energy that are developing the complementary technologies that are integral to coal-fueled power generation with carbon capture: Advanced Integrated Gasification Combined Cycle, Advanced Turbines, 

Fuels, Fuel Cells, and Advanced Research. Successful research and development 

could enable carbon control technologies to overcome various technical and economic 

barriers in order to produce cost-effective CO2 capture and enable wide-spread deployment of these technologies. 

DOE’S CARBON SEQUESTRATION PROGRAM

Since DOE’s first investigation into carbon sequestration began in 1997 with a 

budget of $1 million, DOE has spent approximately $483 million through Fiscal 

Year 2008 (twelve year cumulative total) on further research and development, a 

powerful sign of the importance of this technology to our energy and environmental 

future. 

The Carbon Sequestration Program, with a Fiscal Year 2008 budget of $119 million, encompasses two main elements of technology development for geologic sequestration: Core R&D and Validation and Deployment. The Core R&D element addresses several focus areas for laboratory technology development that can then be validated and deployed in the field. Lessons learned from the field tests are fed back 

to the Core R&D element to guide future research and development. Through its 

Integrated Gasification Combined Cycle, Fuels, Sequestration, and Advanced Research programs, DOE is investigating a wide variety of separation techniques, including gas phase separation and adsorption, as well as hybrid processes, such as 

ad sorption/ membrane systems. Current efforts cover not only improvements to 

state-of-the-art technologies but also the development of several revolutionary concepts, such as metal organic frameworks, ionic liquids, and enzyme based systems. 

The ultimate goal is to drive down the energy penalty associated with capture so 

30

that geologic sequestration can be done with only a moderate increase in the cost 

of electricity. 

REGIONAL CARBON SEQUESTRATION PARTNERSHIPS

One of the key questions regarding geologic sequestration is the ability to store 

CO2 in underground formations with long-term stability (permanence); this requires 

monitoring and verification of the fate of the CO2, to ensure that the science is 

sound and ultimately gains public acceptance. DOE’s NETL, with the Regional Carbon Sequestration Partnerships (RCSPs) are developing and validating technology, 

and national infrastructure needed to implement geologic sequestration in different 

regions of the Nation. 

The RCSPs are evaluating numerous geologic sequestration approaches in order 

to determine those best suited for specific regions of the country. They are also helping develop a framework to validate and deploy the most promising technologies for 

geologic sequestration. 

A THREE-PHASE APPROACH

NETL’s three-phased approach began with a Characterization Phase in 2003 that 

focused on characterizing regional opportunities for carbon capture and storage, and 

identifying regional CO2 sources and storage formations. The Characterization 

Phase was completed in 2005 and led into the current Validation Phase, which focuses on field tests to validate the efficacy of geologic sequestration technologies in 

a variety of storage sites throughout the U.S. Using the extensive data and information gathered during the Characterization Phase, NETL identified the most promising opportunities for carbon storage in their regions and commenced geologic field 

tests. In addition, NETL is verifying regional geologic sequestration capacities initiated in the first phase, satisfying project permitting requirements, and conducting 

public outreach and education activities. 

The third phase, or Deployment Phase, for large-volume testing is intended to 

demonstrate the feasibility of CO2 capture, transportation, injection, and storage at 

a scale comparable to future commercial deployments. DOE has in recent months 

awarded funds to initiate five large-volume demonstration projects. Depending on 

the results of a scientific needs assessment being conducted in FY 2008 and the 

ability of additional project proposals to meet those needs, additional large-scale 

projects may be initiated. In October, 2007, DOE announced awards totaling $318 

million for two projects with the Plains Carbon Dioxide Reduction Partnership, and 

one project each with the Southeast Regional Carbon Sequestration Partnership and 

Southwest Regional Partnership for Carbon Sequestration. In December, DOE announced a $66.7 million award for a project with the Midwest Geological Sequestration Consortium. 

The geologic structures to be tested during these large-volume storage tests will 

serve as potential candidate sites for the future deployment of technologies demonstrated in FutureGen and the Clean Coal Power Initiative, which plans to complete a solicitation for carbon capture technologies at commercial scale in 2008. 

The NETL, with the RCSPs and the National Carbon Sequestration Database and 

Geographical Information System (NATCARB), has created a methodology to determine the capacity for CO2 storage in the United States and Canada and an Atlas 

from data generated by the RCSPs and other databases, including the United States 

Geological Survey’s (USGS) National Coal Resources Data System, USGS National 

Water Information System Database, and EROS Database. Based on data displayed 

in the 2006 Carbon Sequestration Atlas of the United States and Canada, the aggregate CO2 sink capacity—including saline formations, unmixable coal seams, and oil 

and natural gas formations—is estimated to hold several hundred years of total domestic U.S. emissions. 

MOVING TOWARD COMMERCIAL DEPLOYMENT

Carbon capture and storage can play an important role in mitigating carbon dioxide emissions under potential future stabilization scenarios. The United States has 

a large capacity of geologic formations amenable to CO2 storage. DOE’s Carbon Sequestration Program will continue to help move geologic sequestration technology 

toward readiness for commercial deployment. 

EPA’S ROLE IN THE DEPLOYMENT OF CARBON CAPTURE AND STORAGE TECHNOLOGY

Complementing DOE’s carbon capture and R&D research program is the EPA program for ensuring that underground injection of CO2 is conducted in a manner that 

is protective of underground sources of drinking water (USDWs) in accordance with 

31

section 1421(d)(2) of the Safe Drinking Water Act (SDWA). EPA is initiating work 

to develop proposed regulations to ensure consistency in permitting commercial 

scale geologic sequestration projects. It plans to propose regulations in the summer 

of 2008. EPA is also responsible for reviewing and commenting on environmental 

impacts statements under the National Environmental Policy Act (NEPA). 

As DOE moves forward with its R&D program and geological storage projects, 

EPA is focused on: evaluating risks to human health and the environment; providing guidance on permitting CO2 injection wells for pilot-scale projects; identifying 

technical and regulatory issues associated with field tests and commercial projects; 

and developing an appropriate management framework for permitting. 

DOE-sponsored and industry-sponsored research will help develop data and tools 

to address these issues. It is anticipated that EPA will aggregate and analyze the 

information generated from those efforts and initiate new research where there are 

gaps. 

DOE has also sponsored a five-year, two-phase study by the Interstate Oil and 

Gas Compact Commission (IOGCC), which is reported on in the publication a Model 

CO2 Storage Statute and Model Rules and Regulations. The report provides industry 

perspective on development of regulations governing the storage of CO2 in geologic 

media and an explanation of those regulatory components. EPA will consider these 

and other viewpoints in its regulatory development process. 

PROGRAM COORDINATION

EPA coordinated with DOE in the preparation of its research plan, and is working 

closely with DOE, state regulators and other stakeholders on all geological storage 

activities so as to leverage resources, clarify key questions and data gaps, and ensure that work is complementary and not duplicative. 

EPA and DOE, for example, hold quarterly coordination meetings (at both the 

staff and managerial level) to share progress and discuss key issues. 

EPA, in coordination with DOE, organized a series of technical workshops in 2007 

to help define future research needs. The workshops were focused on technical 

issues that need to be addressed in order to design, operate, and permit CO2 injection wells. Attendees included EPA and state regulators, DOE project managers, 

and DOE-funded researchers. 

In addition, EPA has and will continue to be involved in major DOE/NETL activities such as the National Conferences on Carbon Sequestration and the Regional 

Partnership Annual Review Meetings. 

S. 2323: CARBON CAPTURE AND STORAGE TECHNOLOGY ACT OF 2007

The U.S. Government, DOE and other agencies, the 50 states, several Canadian 

provinces, private industry, environmentalists, and scientists and engineers have expended great efforts, invested heavily and made remarkable progress over the last 

decade in understanding and preparing for an energy and environmental future in 

which carbon sequestration technology will play an integral role. 

The Administration strongly supports research and development of carbon capture 

and storage technology as a solution to reduce carbon dioxide emissions and address 

global climate change. The Administration is currently performing the research and 

development needed to successfully develop this technology. DOE has numerous initiatives looking at decreasing the cost of carbon dioxide capture and proving the permanence of carbon dioxide storage in geologic formations and has success with its 

current structure. DOE believes that the research, development and demonstration 

projects prescribed in Sections 3, 4 and 6 of Senate Bill 2323 are generally duplicative of the R&D and demonstrations underway in our existing program. DOE is currently evaluating some of details of this bill within the context of its existing program, such as the use of competitive grants to fund commercial demonstration of 

carbon dioxide sequestration and the number of projects needed. 

Section 5 of this bill would require an interagency task force to develop regulations for the capture and storage of carbon dioxide. This task force was officially established last year, and is chaired by EPA, with considerable support from DOE. 

Therefore, we believe that this section of the bill is also redundant. 

For the past 10 years, DOE’s Sequestration Program within the Office of Fossil 

Energy has funded research in areas of carbon dioxide capture, storage, monitoring, 

mitigation, and verification (MMV), breakthrough concepts, and infrastructure development through its Regional Partnership Initiative. NETL is researching the 

most suitable technologies, informing regulatory development, and evaluating infrastructure needs for carbon capture, storage, and sequestration in different areas of 

the country. The RCSPs are conducting much of these efforts, and include 41 states 

and over 350 distinct organizations working together for the most cost-effective soluVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00035 Fmt 6633 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
32

tions. Additionally, the Clean Coal Power Initiative and FutureGen are providing 

the demonstration platform for testing larger carbon dioxide capture methods at 

power plants. These activities are currently providing the plan forward and should 

continue along their current path to produce the best results at the earliest time 

so that this technology can be an important option to cost-effectively reduce greenhouse gas emissions. 

S. 2144: CARBON DIOXIDE PIPELINE STUDY ACT OF 2007

This bill would require the Secretary of Energy, in consultation with the Federal 

Energy Regulatory Commission, the Secretary of Transportation, the Administrator 

of the EPA, and the Secretary of the Interior to conduct a feasibility study relating 

to the construction and operation of pipelines and carbon dioxide sequestration facilities, and for other purposes. It also requires that the Secretary provide this report to Congress no later than 180 days after the enactment of this bill. DOE supports this legislation and notes that, although it is the study lead, it will work closely with the other agencies in conducting this study, and in particular with DOT’s 

Pipeline and Hazardous Materials Safety Administration (PHMSA), which will have 

a leading role in evaluating plans for construction and operation of pipelines for carbon dioxide. Mr. Chairman, and members of the committee, this completes my prepared statement. I would be happy to answer any questions you may have at this 

time.

The CHAIRMAN. Thank you all very much. There are a lot of 

questions, obviously. One of the questions that occurs to me is what 

we are talking about when we talk about permanent CO2 storage. 

I know Senator Kerry referred to permanent CO2 storage. 

Mr. Grumbles, I was not here during your testimony. I had to 

step out, but is this an issue? Is EPA planning to clearly define the 

required length of storage time for CO2 in the regulatory work that 

you’re working on these days? 

Mr. GRUMBLES. Senator, I know we will certainly address that 

issue. That is one of the key areas, long term liability, financial responsibility and duration of requirements. So we do intend to seek 

comment on questions such as those about the duration and also 

on the responsibility, financial responsibility requirements. 

Currently much of the UIC program, Underground Injection Control Program, has in place for other types of injections of fluids, financial responsibility requirements that last typically 30 years. So 

one of the questions that is very much going to be at the forefront 

of our debate and discussion is duration. How long of a period to 

ensure that there’s monitoring and responsibility, financial responsibility. 

The CHAIRMAN. Let me ask you, Chairman Kellier, what road do 

you see FERC as appropriately performing here? Is FERC the appropriate entity to regulate transportation rates? Is that something 

that you think is clearly FERC’s responsibility? 

Mr. KELLIHER. I think we could regulate the rate. There are 

three really existing models on how to regulate pipeline transportation either of energy resources or CO2. In two of the three existing models FERC does set the transportation. In the other one the 

rate is—can be set by the Surface Transportation Board upon complaint. Otherwise it’s set through a contract between parties. But 

FERC certainly has set the rate for oil and gas pipelines for decades. 

The CHAIRMAN. Let me ask you, Mr. Allred, if you could just 

elaborate a little bit on what responsibility you would see in your 

agency for the site selection on Federal lands to the extent that 

someone were to determine that they wanted to pursue a carbon 

storage sequestration project on Federal lands. How far are you 

33

from having in place a regulatory framework that would tell them 

how to proceed? 

Mr. ALLRED. Mr. Chairman, members of the committee, I think 

that at this point in time we would have the basic rules that we 

could use in a sequestration project. There will be lots of questions 

as we go forward. One of the things that we have thought about 

are some demonstration projects that would, associated with enhanced oil recovery, help us answer some of those questions. 

But I think the leasing rules and the Mineral Leasing Act and 

the laws that we have with regard to the management of Federal 

lands provide us the basics that we would need. That does not 

mean that as we go forward there won’t need to be enhanced and 

changed. 

The CHAIRMAN. All right. Let me go ahead and call on the next 

Senator on this. 

Senator Barrasso. 

Senator BARRASSO. Thank you very much, Mr. Chairman, and I 

want to first commend Senators Coleman and Senator Kerry for 

bringing this legislation before us today. The carbon capture, transmission and sequestration are enormously important to the people 

of Wyoming. Mr. Allred made some comments about that. 

Wyoming produces about 38 percent of our Nation’s coal. This 

coal provides a substantial portion of America with affordable electricity. Wyoming holds promising geologic formations for coal sequestration. Wyoming has experience in safely moving carbon dioxide and effectively using it for our enhanced oil recovery. Since 

emissions are not always located near appropriate geologic voids, 

carbon dioxide may need to be transported through States like Wyoming. 

So I think we need some additional research to inform us on 

these issues. Congress and State Legislatures must fully explore 

any gaps in the existing legal and regulatory frameworks. The Wyoming Legislature is doing that when it meets next week in Cheyenne for this session. 

I concur with Senator Coleman and Kerry on the urgency of this 

problem—and certainly in light of the current climate change debate and the potential of Congress imposing a price on carbon in 

one form or another. I am hearing a lot about this around the State 

of Wyoming. I’m hearing it from workers, from consumers, and also 

from industry. 

Many of my constituents are increasingly concerned that the 

Federal Government will impose a cap on carbon before we’ve developed the appropriate legal and regulatory framework to address 

carbon dioxide. They’re concerned that Congress is going to act on 

those issues before we act on the technology. So I applaud what 

Senators Coleman and Kerry are trying to do. 

If anything I’m going to be pushing to do more research and 

more analysis, find more certainty for markets and to delve deeper 

into the important areas such as liability of CO2 as it’s transported 

and stored and some of the things that we’ve heard from the Honorable Edwards and to accomplish all of this in a shorter period of 

time. I’m distressed when I hear it’s going to take till the year 2011 

before regulations can be written. I want to thank the Chairman 

for calling this meeting. 

34

I do have a question or two for Mr. Slutz. It really has to do a 

little bit with something along this line but a little different and 

that’s the Future Gen issue from the Department of Energy. We 

talk about public/private partnerships, and when private entities 

put up money and make decisions, business decisions, that they 

want to have confidence that they’re going to have a good partner 

in the U.S. Government. With this change for Future Gen, I think 

that confidence is eroding. 

My question is how can we make sure that commitments by the 

Federal Government are really commitments that the private enterprises can depend upon and rely on? 

Mr. SLUTZ. Thank you, Senator. You know and the, I should say 

the Future Gen decision that was announced yesterday was a very 

challenging and difficult decision. But part of that commitment is 

a partnership and you have to have both—there’s the Federal Government and the industry partners. Both of those have to have 

agreements that they can work through and when a project doubles 

in cost it’s a time to sit down and rework those agreements. In the 

details of that it was decided that the current agreement was not 

in the best interest of the American people and there were—the requirements that would have been in place to go forward would 

have put that project at risk. 

So this issue is very, very important, too important not to allow 

that not to be successful. The decision was made by the Department to—with a new direction. Not a lack of commitment to Future 

Gen or a lack of commitment to furthering research and furthering 

demonstrating the technology of carbon capture and storage on a 

full commercial scale project, but doing it a way, I think, that the 

market could really act and it would be very market based commercial type plans that would be where the success would be very 

likely. That was the foundation for that decision is to make sure 

we have a successful outcome. 

Senator BARRASSO. Mr. Chairman, as a member of both the Energy committee as well as the Environment and Public Works committee we’re looking at using all the sources of energy, but doing 

it in an appropriate way for our environment. We don’t want to put 

the cart before the horse too far. We want to make sure that we’re 

working in unison to try to get things going on developmentally 

and educationally in a way that would help folks and help our environment, but also make sure that we have all the energy that we 

need. Thank you, Mr. Chairman. 

The CHAIRMAN. Thank you very much. 

Senator Tester. 

Senator TESTER. Thank you, Mr. Chairman. I want to thank Senator Barrasso for his comments. I want to dovetail on to them initially. Mr. Slutz, what’s the level of urgency in the DOE as far as 

carbon capture and storage? 

Mr. SLUTZ. It’s the very critical to much of our research programs. A majority of clean coal is about how do we increase efficiency, reduce emissions or actually have carbon capture and storage. I think one of the urgencies that’s communicating if you look 

at part of this decision on Future Gen and to communicate the importance that the Administration places on our clean coal research 

program. 

35

We released our budget numbers early this year and showed a 

very significant increase in coal research which shows how we 

want to move this faster. 

Senator TESTER. Coal research based on carbon capture? 

Mr. SLUTZ. Based on carbon capture and storage. 

Senator TESTER. How close are we to having a large scale carbon 

capture technology available? 

Mr. SLUTZ. The technology exists. The issue is the cost of the 

technology and the costs that it would——

Senator TESTER. How close are we to having to having affordable 

large scale carbon capture technology? 

Mr. SLUTZ. First let me, the technology exists. One of the advantages of this Future Gen approach is to actually get a commercial 

power plant in operation. We’re looking at a date of 2015 that it 

could be operational on this because we don’t know all of the costs. 

We only now can speculate and estimate the costs, but having actual real data on commercial scale, commercial operating power 

plants will be hugely beneficial in making those advancements in 

the future. 

Senator TESTER. Ok. I just tell you I echo Senator Barrasso’s 

comments. We have to have the technology. That technology is 

critically important. Everybody blames the price of food on corn 

ethanol. There’s also a worldwide drought. That probably has more 

to do than any kind of renewable energy policy we put out of here. 

I attribute a lot of that to worldwide global warming. I think that 

if we lead, and we lead in a way that’s there’s urgency, we can 

have our eggs and eat it too, as Senator Coleman said. That is that 

we can develop technology we can sell to other countries and we 

can clean it up on a worldwide basis. But there has to be a level 

of urgency. Because if there’s not a level of urgency, we’ll develop 

the technology and it will be too late. 

I’ve got a question for Mr. Grumbles from the EPA. You talked 

about under any proposed regulation, and I’m reading from your 

written statement, currently under development that geological site 

characterizations to ensure that wells are sited in suitable areas to 

limit potential for migration and injected formation fluids into underground drinking water. Now I know you’re with the drinking 

water area of the EPA, but what about leeching into the atmosphere? Isn’t that also considered insuitable sites? 

Mr. GRUMBLES. It’s a very important issue that is part of our discussions with the Air Office. It’s part of our discussions with all the 

stakeholders so far and all the national workshops and research forums we’ve had. We want to look at the environmental risks but 

from the standpoint of the Safe Drinking Water Act. 

Senator TESTER. Ok. 

Mr. GRUMBLES. We will be focusing on protection of underground 

sources of drinking. 

Senator TESTER. I appreciate that. But so what you’re saying 

here only as it applies to drinking water, but somebody’s got to be 

looking at leeching of the atmosphere because that’s another significant problem. 

Mr. GRUMBLES. Monitoring of these sites it’s very important to 

have post closure monitoring of sites as it is with existing UIC programs. 

36

Senator TESTER. Ok. 

Mr. GRUMBLES. Monitoring can get into releases, surface releases 

as well. 

Senator TESTER. Good. Mr. Allred, I have a question that kind 

of dovetails on the chairman’s question. It deals with storage and 

with the plume that will be created with CO2 storage. I don’t care 

where you put it. That plume may affect not only Federal lands but 

also private lands and private lands where there’s Federal minerals 

underneath them. 

What do you recommend, or do you have a recommendation to 

deal with the liability as it applies to the plume and potential exposure there. Keeping in mind that, we put it under the ground, 

somebody may decide to drill a hole and let it out, that might happen on private lands. So how do you deal with that issue? 

Mr. ALLRED. Mr. Chairman, Senator Tester, I—as I look at the 

Federal land question and I look at most of my background as you 

probably know is not in government. I look at how do you implement projects or how do you cause things to occur. To me one of 

the most important things that we need to look at is, first, to keep 

regulation as simple as it can be because if it is complicated, I 

think that that will deter people and organizations and financial 

resources from being applied to this. 

Second, there’s a big learning curve on this. The more that we 

can use existing legal frameworks to assure that we don’t have unintended consequences or that we provide the ownership and responsibility for these the better off we’ll be. I think that our oil and 

gas laws, both the Federal Government’s and the State’s, perhaps 

provide some of that mechanism. Particularly on Federal lands we 

think that through our leasing requirements and steps that we 

take to assure that oil and gas is properly handled and that the 

United States receives its proper royalty from that. 

If you use the reverse of that, we think that those same processes or same legal applications can work on Federal grounds. I 

think one of the things you really have to consider is who owns 

that carbon dioxide because if you decide that then you probably 

have gone a long way to decide about liability and responsibility. 

If they are on Federal lands or Federal resources we’re either going 

to have an agreement with the lessee to store their carbon dioxide 

or there will be decisions that that will become a Federal resource 

where there’s Federal ownership and before that agreement is ever 

entered into there will be some assurances as to how safe it is to 

have it where it is. 

Senator TESTER. I’ve run out of time, but the other question is 

what happens if it starts on Federal land and moves into private 

land? I don’t want you to answer that because there are other people that have questions but that is a concern. 

The CHAIRMAN. Senator Corker. 

Senator CORKER. Actually I think that is a great question. This 

is an area that I guess I’m somewhat skeptical about just because, 

for a long, long time we’ve been pumping carbon in the air and we 

figure out here recently that’s a problem. I don’t know if we’ve done 

enough work to see what kind of problems will exist underground 

pumping tremendous amounts of carbon in. 

37

But I’d love for you to answer Senator Tester’s question because 

it seems to me that we do get into a lot of mineral rights issues, 

and storage rights issues. Storage can end up taking place under 

somebody’s land and they might want to drill for something else. 

I mean it does seem to me there are a lot of complications that 

exist. So please answer Senator Tester’s question. 

Mr. ALLRED. Mr. Chairman, Senator Corker, to the best that I 

can, I will. But one of the advantages we have with depleted oil or 

even operating oil reservoirs is there’s a tremendous amount of information about that reservoir with regard to its extent and characteristics. That’s a source of data that we don’t have perhaps in 

places that we might seek to sequester where we have not had that 

oil or gas experience. 

Not in all cases will we be 100 percent sure. That’s going to be 

a, I’m mean, there’s got to be a concern about that because we may 

not. But remember why the oil and gas is there. It was captured 

because there was some structure that kept it there. What will be 

a bigger question probably is what have we done to make it not 

suitable because obviously we’ve drilled holes. That is an issue that 

can be dealt with fairly easily although it might be expensive. 

The second question is when you enhance oil recovery, you do a 

thing called fracking and you fracture some of the area in order to 

have oil flow into a well more easily. That will be a real question 

as to how that fracking has affected those reservoirs and their integrity. That is something that we’ll have to understand. 

Senator CORKER. So is it envisioned that if a property, private 

property owner has an area underneath them where oil has been 

recovered and now there’s a cavern there or someplace just to store 

carbon that that person would actually be paid for carbon to be 

stored under their land? 

Mr. ALLRED. Mr. Chairman, Senator, if you were to follow the oil 

and gas laws and that’s a big if, I think. 

Senator CORKER. Right. 

Mr. ALLRED. That has to be decided on non-Federal lands. I 

would assume that there would have to be a lease like an oil lease 

so you could use that. But I think that’s one of the big questions 

about how do you regulate. I think the question on Federal land 

may be more clear than on private lands. 

Senator CORKER. Yes, I would guess so. I actually think that as 

we get into this, while I agree with others there should be a tremendous sense of urgency, I think there are so many complications 

that exist around this that I can see how it might take several 

years to work out this whole process of rulemaking even though 

we’d like to see it happen more quickly. 

In the area of drinking water itself it seems to me that water is 

becoming more and more of an issue even in a State like Tennessee. Talk to us about some of the hazards that exist, that you 

can envision existing storing carbon adjacent to water supplies and 

those types of things. 

Mr. GRUMBLES. Senator we have extensive experience as was already mentioned with the Class two UIC program under the Safe 

Drinking Water Act injecting carbon dioxide for enhanced oil and 

gas recovery. But one of the key areas of focus for us, as we work 

to issue a regulation ensuring there are safeguards for the long 

38

term storage and sequestration of carbon dioxide, is to reduce the 

likelihood of migration of that CO2 into underground sources of 

drinking water. That it can lead to different types of pollution problems. 

I would say one of the areas we’re looking at as potential risks 

to aquifers, potential sources of drinking water, because we recognize that in some areas—data we have indicates that by 2013 at 

least 36 States in this country will experience some form of water 

shortage. That’s not just in drought stricken areas. It’s a combination of growth and population and development or drought. 

So for us as we’re going through this analysis, of CO2 storage, 

we want to make sure that it doesn’t migrate, that it stays in place. 

The experience to date is that it is a very promising technology. 

That it does stay in place for very long periods of time if the geologic siting is done properly, the well construction is done properly 

and it’s monitored. So it is very promising in not producing or posing a significant risk to underground sources of drinking water. 

Senator CORKER. Mr. Chairman, thank you for the time. At some 

point I hope we’ll gain an understanding as to the practicality of 

this. I think that a lot of times we move in a direction and it 

sounds utopic to move there and there’s a lot of political momentum. 

I have to tell you that this still, to me, and I’m not an oil drilling 

State, seems like a fairly impractical thing to do on a mass scale. 

I can see in geographic locations that might be good, but thank you 

so much for this hearing. 

The CHAIRMAN. Senator Dorgan. 

Senator DORGAN. Mr. Chairman, thank you very much. In North 

Dakota we have the only coal gasification plant that was ever completed and it exists now as a technological marvel in terms of its 

production. It produces synthetic natural gas from lignite coal. It 

also is, I think, the world’s largest demonstration of CO2 capture 

and it captures 50 percent of the CO2 from the coal gasification 

plant. It puts it in a pipe and pipes it to Canada to the oil wells 

in Alberta and they use it for enhanced oil recovery. 

So there is a capture process with respect to coal gasification. I 

suspect if we’re taking a look at what’s happening in the oil wells 

up in Canada we can get a sense of some leeching issues and other 

issues about is this sequestration for the long term and so on. But 

I want to ask this question. This is such an important area. Fifty 

percent of our electricity comes from coal. We’re not going to have 

a future without using coal. I mean our future’s going to include 

the use of coal. The question is how do we use coal. 

We’re going to be able to use coal if we can effectively unlock the 

mysteries of capturing carbon and sequestering carbon. How do we 

do that? I’m chairing the appropriations side on the subcommittee 

on appropriations that funds a lot of this. Here’s the way it looks 

to me. 

We’ve got carbon sequestration R&D projects. We’ve put 120 million into that. We have regional organization. So we got 120 million 

dollars in our area. It’s called PECORE. But 120 million dollars 

was for carbon sequestration R&D. 70 million dollars for the clean 

coal power projects. 75 million dollars was put in this year for Future Gen, now I saw your announcement yesterday about that, six 

39

billion dollars for loan guarantees for coal projects that will demonstrate these technologies. 

So we have all of these things happening. You know, it reminds 

me kind of a circus with a bunch of rings. The question is who 

brings it all to the center ring? Who brings it to center stage to decide how all of this works together because we’re in a big hurry? 

The fact is we need to get to center stage soon with technologies 

we know will work. So, Mr. Slutz, who down there at the Energy 

Department is bringing these five or six projects or areas of funding together to accomplish what we want to accomplish? 

Mr. SLUTZ. It is, Senator. We do manage these programs as an 

integrated approach even though it may not look like it all the 

time, but we do. In fact I will use an example in answering some 

of the questions about what’s this going to do in the subsurface. 

That’s why we have those—that carbon sequestration program with 

the seven partnerships and we have four large scale projects underway. Three more will be finalized and ready to announce later this 

spring. 

Those—the four that are announced are each there in the site 

characterization doing those detailed geologic assessments. They 

will when they, a little after that assessment is done and assuming 

the assessment all proves out, they are scheduled—will inject at 

least a million metric tons a year of CO2. They’ll be monitored extensively. It’s to get that information, that detailed information, 

that then working with our partners at EPA and the other agencies 

can use to develop what’s the best rules. 

One side on that this CO2 is not in some big cavern. It’s in the 

pore space of rock. I think that’s an important piece and I’m sorry 

to end——

Senator DORGAN. You know, last year I called down because 

what was happening inside the department is the Department of 

Science was over here and others were over here and the money 

wasn’t being released to the partnerships. So I don’t know that 

both hands were communicating so well. They finally got the 

money but there is an urgency about this. 

Someone just gave me this core sample. This is sandstone and 

this is where you would invest CO2. The question is does it stay 

there? What are the conditions under which it stays there? 

You know, the science is very sophisticated, very important and 

my great concern is we’re moving very quickly on this issue of climate change and our understanding that we have to take immediately no regret steps to deal with it and perhaps more aggressive 

steps. But that doesn’t mean that this country’s going to be able 

to have the kind of energy supply that it wants and needs without 

using our most abundant resource and that is coal. So, when I 

mentioned five or six programs I don’t know that you have this all 

laced up real tight down there. I hope so. 

Because just for example the last six billion dollars we put in 

which would be loan guarantees. I don’t know how you intend to 

use those. I don’t know the announcement you made yesterday. I 

don’t know what that means in terms of the several larger projects 

rather than one in Future Gen. I don’t know how that relates to 

the regional partnerships. 

40

* The graph has been retained in committee file.

So, I hope you can continue to give us as much information as 

possible about how all these things come together and lace up 

something that gets us to a conclusion. Because we can—you know 

one of the things about the government is it just studies things forever. That’s really interesting but not very effective. At some point 

you have to have coordinated studies that get the results you need 

in order to move forward and achieve the goals you have. 

Mr. SLUTZ. Let me answer that as I think it requires a little 

more of an answer that we can provide outside in subsequent to 

the hearing. But it is coordinated even as we work through our 

budget process. In looking we’ve done climate overlays that look at 

things like where can we spend the money to get different benefits 

at different times from the various programs within DOE. Not just 

fossil, but energy efficiency and all those are layered together to 

see how would we address, how would the overall DOE research 

budget address climate change? 

Then as you then work within the programs, for instance the fossil energy, we have the core coal R&D that’s going to move these 

advance technologies. The CCPI program that gets those technology pieces out into a demo environment. The Future Gen project 

that is a full scale powered plant with CCS and then you mentioned you get these proved up in demo. You still have to get them 

deployed into the marketplace and that’s where loan guarantees 

come into play. 

So it is a program that works together. I would be happy to follow up with a little more detail on how that meshes up a little bit. 

[The information follows:]

Attached is a graphic* that outlines the activities of the Office of Fossil Energy’s 

Carbon Sequestration Program and the relationship of those activities to basic research carried out under DOE’s Office of Science. Carbon Sequestration an Storage 

is one of six areas highlighted in the FY 2009 DOE budget request for enhanced 

coordination between basic and applied research and development. Coordination of 

activities between the DOE programs is carried out through program manager-level 

working groups. 

Senator DORGAN. My time has expired. I want to thank all the 

witnesses today. I have to go to another hearing as well, but I appreciate very much your testimony. 

The CHAIRMAN. Thank you. 

Senator Murkowski. 

Senator MURKOWSKI. Thank you, Mr. Chairman. Thank you for 

the testimony here this afternoon. I want to follow on a little bit 

to Senator Dorgan’s comments and those made by Senator 

Barrasso about the Future Gen project and the decision coming out 

of DOE and more specifically to the signal that is sent. 

Again you had a pretty ambitious private/public partnership 

there. A lot of time, a lot of money goes into it and then I understand what you were saying, Mr. Slutz about having to re-evaluate 

and do the cost. But in terms of signals sent, it is not a very encouraging signal sent from the Department of Energy about one of 

these proposals that we’re looking to firmly establish that the technology has worked and we’re making it happen right here. 

Ms. Edwards, I want to ask you a question about just the logistics of how these CO2 pipelines would work. If we were to go to full 

41

CCS for all powers I would imagine we’re going to have to expand 

this pipeline network, not only the numbers of pipelines, but the 

lengths of the pipelines that we’re talking about. The question is, 

as you are pumping the CO2 further distance and in larger volumes, does this cause any problems? You kind of spoke to the safety aspect of the process, but recognizing that it’s going to be more, 

higher volumes going farther distances, does that do anything to 

us? 

Ms. EDWARDS. Again these are the sorts of risks that we regularly manage in transportation. So I would think that the—we 

have a regulatory framework in place that’s ready for CO2 pipelines 

however they were configured. They may be short. They may be 

longer and with more capacity. So I would say that the——

Senator MURKOWSKI. But it does cause the pipe to age more 

quickly? 

Ms. EDWARDS. You know again it would and that would be part 

of the requirements or if it did it would be part of the requirements. You know the operator understands the risks and does the 

monitoring. Of course it’s very consequence phased depending on 

where the segments run and what is the exposure. 

Senator MURKOWSKI. So do we not know yet? 

Ms. EDWARDS. This is material that does not have the same 

types of, you know, certainly environmental risks or even risks of 

life and property as other materials that are moved by pipeline. So 

we, yes, you know those questions—the technology is mature for 

pipelines. So I would say that the core significant issues having to 

do with pipeline transportation are not technical but more economic in terms of siting and investment. 

Senator MURKOWSKI. Let me ask you this, Commissioner 

Kelliher, about the siting you mentioned in your opinion that the 

State siting seem to be working relatively well if you have an increase again in this pipeline network. With the siting issues, does 

it become more complicated with an increased capacity there in 

terms of the siting? Is it something that at some point you might 

say that the Federal preemption is the way to go? Is this something 

to be evaluated later? 

Mr. KELLIHER. I think looking at what Congress did on gas pipeline siting. It started off with state siting and at some point it 

failed. In the views of Congress they concluded that state siting 

had failed. But it was after the failure was demonstrated. Then 

Congress came in and changed the law. Exclusive and preemptive 

siting was the rule. 

The State siting has worked for CO2 pipelines up to this point. 

But the network is much smaller than the oil and gas pipeline networks. The CO2 pipeline network is about 3,900 miles. The natural 

gas pipeline network is about 300,000 miles and the oil pipeline 

network is about 200,000 miles. Last year actually was a very big 

year for gas pipeline additions and we added about 2,700 miles last 

year alone on gas pipelines. 

So it really relates to if this is the path the country goes down 

how big of a CO2 pipeline network are we going to need and how 

quickly are we going to need it? There are varying estimates on 

how big of a network we might need. 

42

Senator MURKOWSKI. So at some point in time you may have to 

evaluate this preemption issue. I would certainly think there would 

be state consultation if that is the route you would go. I want to 

ask you a question a little bit off topic, but since you’re here, Commissioner Kelliher I’d like to ask you about this MOU that I understand this is regarding ocean energy projects. 

You know I’ve been following this and trying to see some 

progress with this. There’s been some competing Federal jurisdiction out there, FERC, saying anything within three miles MMS is 

looking at those projects located on the outer continental shelf. Can 

you give me a status very, very quickly as to what is happening 

with that MOU? 

Mr. KELLIHER. The quick status is that in my view it is final. In 

my view we’re prepared to sign, but the MOU cannot be effective 

with only one agency signature. 

Senator MURKOWSKI. Can we expect the other agency signatures 

shortly? What is the status on that? 

Mr. KELLIHER. I would have to defer to Secretary Allred on that. 

Senator MURKOWSKI. Secretary, can you give me an update on 

where you are on your end? 

Mr. ALLRED. Senator Murkowski, as you are aware we had negotiated an agreement. I think it’s one that was generally acceptable 

to both of us. We were asked by this committee not to proceed with 

that in light of and until there were certain decisions that I assume 

the committee chose to make with regard to the energy legislation. 

One of the things that’s happened in the intervening period of 

time is that our regulations for alternative energy offshore are now 

about ready to be released. While I don’t anticipate that that would 

make a significant change in how we and FERC deal together it’s 

probably premature for us to do that in light of the fact that these 

regulations will go out for public comment. If the regulations themselves don’t deal, and there are some that do deal with some of the 

issues in the memorandum of understanding, it would be my intent 

that we would modify that agreement so that it will be specific to 

the items that we might have yet uncovered in those rules and regulations. 

Senator MURKOWSKI. You’re not giving me any indication in 

terms of timing on this then. 

Mr. ALLRED. I would anticipate that the rules and regulations 

will be out for draft review within the next 2 months. 

Senator MURKOWSKI. We certainly—an awful lot of people that 

are hoping that this gets resolved very quickly and we’re very optimistic when this MOU was announced. So, I’d like to think that 

we’re going to see that sooner than later. My time is up, but perhaps I can have a little follow up after this with you if it’s possible 

to do that. Thank you, Mr. Chairman. 

Mr. KELLIHER. Just 30 seconds or so, Mr. Chairman, thank you. 

I just want to emphasize how important it is that we clarify the 

respective roles of the two agencies. Actually I don’t see that 

there’s conflict between the MMS role and the FERC role. I actually think they’re complementary. It’s just that the two agencies actually have never worked together on projects. We haven’t seen 

ocean projects in the outer continental shelf before that are FERC 

jurisdictional. 

43

So from the developers point of view there’s tremendous uncertainty. I think perpetuating that uncertainty is forestalling exactly 

what we need now on ocean energy demonstration projects. We 

need to demonstrate these technologies and the uncertainty means 

we probably won’t see development of ocean hydro projects. So I 

think we do need to clarify the respective roles to the agencies. 

Senator MURKOWSKI. Mr. Chairman, if there’s anything that we 

on this committee can do to help encourage that along I think it 

would be very, very beneficial for all. Thank you. 

The CHAIRMAN. Thank you very much. 

Senator Menendez. 

Senator MENENDEZ. Thank you, Mr. Chairman. I appreciate your 

leadership here on the committee on this particular issue. It seems 

to me that we need action that matches the sense of urgency that 

we are feeling on climate change. 

We’ve heard testimony here and elsewhere that China is building 

a coal fired plant every week. It seems to me if we have any hope 

of lowering greenhouse gas emissions and avoiding catastrophic climate change we need to act quickly and effectively. But it also 

seems to me if we want technologies like carbon capture and sequestration to flourish in the near future it would appear to me 

that we need to pass a cap and trade bill as soon as possible because when carbon emissions have a price attached to them well 

the coal powered industry will act quickly by investing their own 

money and not just relying on Federal research. 

I was listening to Senator Dorgan’s numbers as he was putting 

them out there and other numbers that we’ve heard projected. 

We’re talking about an enormous amount of money. I think there’s 

a good part of who participates in this process because while we 

need to act quickly, I think we also need to act wisely. 

The issue I’d like to pursue with this panel to some degree is I 

think maybe one of the most important issues in the question of 

the regulatory regime and that’s the question of who pays to oversee and regulate this new effort. I mean I look at Future Gen 

which some of us have believed is has always been Never Gen. I 

look at the statement made by the Deputy Energy Secretary, Clay 

Sell, who said among the reasons why they were dropping and this 

was just as in December the Department was listing this as the 

centerpiece of their strategy for clean coal technologies. One of the 

major reasons is that the price had risen to 1.8 billion dollars. 

That I think goes to the very heart of the question of who participates in this process in paying toward it. You know we have had 

150 years of electric power and fossil fuel that has, yes, it has lit 

up America, but it’s also caused some significant environmental 

damage along the way and a lot of public health concerns including 

acid rain, mercury poisoning, asthma attacks, ozone depletion, particulate matter pollution, just to name a few. There are no apologies, no apologies for any of this. 

Instead now when the industry is under threat they want the 

American taxpayers to save them. I think it has it backward. I’m 

wondering whether one of the views that we should have is that 

in fact an industry that is mature and immensely profitable 

shouldn’t be significantly in the forefront of the concept of polluter 

pays for example is one. 

44

So my question that I wanted to throw open to the panel is if 

we’re likely to have to ensure CO2 stays in the ground for 100 

years or more who’s going to ensure. Who’s going to pay for that 

process of making sure that we have the pipelines, that we have 

the monitoring, that we in essence are going to ensure that something, that we’re going to pursue that course on is going to be one 

that is not born specifically by the American taxpayer. Do we view 

this being born by the American taxpayer? You don’t all have to 

jump to answer the question. 

Mr. GRUMBLES. Just from an EPA perspective we understand 

that is one of the key questions and as we’re moving forward on 

the regulatory piece that relates to safeguards for underground 

sources of drinking water. As I mentioned earlier the financial responsibility question for not only the closure, but the post closure 

and monitoring is one that we’re going to be getting comments 

from the public on in the rulemaking process. Outside of the rulemaking process, we have an established workgroup with DOE and 

with States. 

A key question on that is also the important role of the States 

in this effort. From the Safe Drinking Water Act standpoint, the 

UIC program, 35 States have been delegated the authority to run 

the program and many States are very interested in carbon sequestration, the new frontier. We’re going to be working with States on 

that question of liability. 

EPA continues to embrace the polluter pays principle. When it 

comes to government oversight and management that’s going to be 

one of the key issues; post closure monitoring and financial responsibility. 

Senator MENENDEZ. Many of us find the EPA weakening the provisions of polluter pays by virtue of the fact that Superfund is a 

perfect example of how we have not met that standard. But my 

question is to the rest of you. You know we’re talking about an 

enormous outlay of pipelines, of the sequestration caverns which 

we will put this in, the monitoring for the leaking and just the 

technology. Isn’t there a participation of some significant degree by 

the industry or do we see the American taxpayer putting this all 

out there and ultimately not having a very robust, to say the least, 

participation by the industry at the end of the day. 

Mr. Slutz. 

Mr. SLUTZ. We really how this has developed just like the rest 

of the infrastructure of this country will be by the private sector 

and the market and in the case of DOE technologies the idea is to 

create these technologies so the market can pick them up. One of 

the issues with reference to the Future Gen project that was 74 

percent U.S. Government funded and 26 percent industry. The revised approach that we have come out with while we’re still we 

have a request for information. We’re seeking feedback, but would 

likely the way this comes out would reverse that percentage and 

have a much larger private sector share in a power plant than it 

would be much more commercially oriented. So it is built into that. 

I would add one more thing as we deal with issues of carbon. 

One of the challenges which I know all of you are aware of is how 

do you develop the technology. How do you implement them withVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00048 Fmt 6633 Sfmt 6602 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
45

out dramatically increasing the price of energy because as you say 

that will then impact our economy and impact citizens. 

Senator MENENDEZ. Mr. Chairman I know my time is over, but, 

you know, I find it interesting just two notes here for future reference. Powers affect the price of energy, of course it’s important. 

But by the same token if the government is funding overwhelmingly all of this effort and then the monitoring, that is the taxpayer 

too. They may not see it in their energy bill, but they’re seeing it 

out of their money in enormous fashion, No. 1. 

No. 2, I find it interesting we had a hearing on a different matter, Mr. Chairman on the Banking committee where the whole 

issue is what are we doing to try and help people of this country 

having the American dream not become the American nightmare. 

A lot of those who say don’t get engaged. You know, let the market 

work its forces. 

If we’re not going to solve the problem for people who ultimately 

may be losing their homes was the centerpiece of the American 

dream, then I’m not so sure the American taxpayer can be called 

upon to solve the problems for the coal industry, be responsible, 

overwhelmingly for the problems of the coal industry in trying to 

meet the challenges of the future. I think there has to be some 

symmetry at the end of the day as to what’s our views in terms 

of responsibility. But, thank you, Mr. Chairman. I appreciate the 

opportunity. 

The CHAIRMAN. Thank you very much. We have another panel 

right after this. Let me ask if Senator Corker has any final question to put to this panel? 

Senator CORKER. Mr. Chairman, thank you and Senator Menendez, I agree with you. I think this is what we need to get away 

from is any subsidizing. We ought to figure out the true cost of energy and I hope it will be industry funded. 

We’re all going to be looking at bills. Senator Bingaman has a 

very thoughtful bill. There’s other bills regarding cap and trade. 

Regardless of whether the money is there from the private sector 

to put carbon in the ground or not, the first thing we all have to 

be comfortable with is it is safe to do that. I mean can we, are we 

really solving a problem? Are we not having other unintended problems occur? 

I’m just wondering if you all could give us a guess, if you will. 

We got a lot of departments that work on this. It’s kind of a cluster 

making everything happen sequentially. Do you all have any idea 

when we’re going to know for real, in a way that we can really 

pump some significant resources toward this from this from the 

private sector, when we’re really going to know when it is safe and 

we have the regulations in place? It would be helpful to us. 

We’re going to have to be dealing with credits and allowances 

and all those kinds of things. Just to have an idea of when you 

think on a mass basis we will be able to do that? I would just love 

a number. 

Mr. GRUMBLES. From an EPA standpoint the key part of answering that question is getting in place the safeguards up front. We 

believe that there’s very minimal risk associated with carbon sequestration if you do have the proper geologic siting and well construction and monitoring and post closure monitoring. We’re learnVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00049 Fmt 6633 Sfmt 6602 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
46

ing a lot by the work that is going on around the world in some 

of the demonstration sites. So we’re optimistic about this promising, but still unproven technology. 

IPCC basically has said it’s very promising from their perspective. They say that carbon dioxide could be trapped for millions of 

years in appropriate geologic formations are likely to retain over 99 

percent of the injected CO2 over 1,000 years. So it is a question of 

when you go from the smaller and experimental demonstration 

sites to the larger commercial scale sites. Will you have the basic 

safeguards in place to ensure the proper siting and monitoring and 

measuring? If so, then we’re very optimistic about the safety of this 

long term storage. 

Senator CORKER. That seems vague to me. 

The CHAIRMAN. Does anybody else want to respond? 

Mr. SLUTZ. I will respond. We can get some more information 

with some of the dates from our—we have a carbon sequestration 

research road map that lays out certain milestone dates. Rather 

than throw them out and be incorrect. But we can show some of 

those things. 

One of the challenges is we have a greatly differing and varying 

geology in this country. That’s why we have these seven partnerships to try to get information in different regions, different types 

of geology. One of the challenges we don’t always know, you know, 

it’s research. You don’t know exactly what you’re going to find. But 

I think we can put together some information that will show you 

some of the key milestones on where we’re trying to get with our 

research program and our portfolio to help understandthat. 

I don’t know if it will, it won’t give you that specific date, a year 

or something. But it’ll show you the various milestones that we’re 

getting over the next 5 to 8 years. 

[The information referred to follows:]

Following is the response to information (milestones/dates) as to when a system 

will be in place that assures the safety of carbon sequestration and a regulatory 

framework to allow ongoing mass storage of CO2. DOE agrees with the testimony presented by the Environmental Protection Agency (EPA) on January 31, 2008, which stated as follows: 

In March 2007, EPA issued technical guidance to help State and EPA Regional 

managers in processing permit applications for geological sequestration (GS) demonstration projects under the general UIC regulations. 

Under the SDWA [Safe Drinking Water Act], EPA develops minimum requirements for state UIC [Underground Injection Control] programs. States may develop 

their own regulations for injection wells in their State. These requirements must be 

at least as stringent as the federal requirements (and may be more stringent). Annually, billions of gallons of fluids are injected underground through wells authorized under State and Federal UIC Programs. This includes approximately 35 million 

tons of carbon dioxide that are injected for the purposes of enhancing oil and gas 

recovery. EPA’s proposed regulations will build on the UIC Program’s many years 

of experience in safely injecting fluids, including carbon dioxide, into the subsurface. 

The proposed regulation, currently in development under an accelerated schedule, 

will take into account the EPA’s existing UIC program requirements. Key components of the proposed regulation will include requirements related to: (1) geologic 

site characterization to ensure that wells are sited in suitable areas to limit the potential for migration of injected and formation fluids into an underground source of 

drinking water; (2) well integrity testing and monitoring to ensure that the wells 

perform as designed; and, (4) well closure, post-closure care, and financial responsibility to ensure proper plugging and abandonment of the injection well. We will also 

discuss long-term liability and seek further comment on this issue as part of the 

proposed rulemaking.

The CHAIRMAN. Anyone else? 

47

Mr. Allred. 

Mr. ALLRED. Mr. Chairman, Senator Corker. Just a point that I 

think that there is already a lot of information that is available 

that would show that it can be done. I think we have to be more 

deliberate about how that information is collected, but as Mr. Slutz 

indicated, they have projects where in excess of a million tons of 

CO2 have been injected. We have a number of places where over 

a million tons a year has been injected for enhanced oil recovery. 

So I think there are a lot of those things which either are now 

being done or could be done. The purpose of those, at least the oil 

recovery projects, has not been sequestration, although there may 

have been a significant amount of sequestration occur. One of the 

things I think that we have the potential to do is to add a purpose 

to those, not to eliminate the other purpose, but add a purpose to 

those. Answer a lot of questions that you were just asking. I suspect that those answers will be with proper knowledge and proper 

consideration that we will be safe in can be done fairly quickly. 

The CHAIRMAN. Thank you. Senator Lincoln, did you have questions of this panel? 

Senator LINCOLN. No. 

The CHAIRMAN. Let me thank all the witnesses of this panel and 

we will stay in touch with you and try to continue moving ahead 

on this set of issues. 

Let me call the final panel forward. Lawrence Bengal who is with 

the Arkansas Oil and Gas Commission. Tracy Evans who is with 

Denbury Resources in Plano, Texas and Scott Anderson with Environmental Defense from Austin, Texas. Thank you all for coming. 

Yes. Let me call on Senator Lincoln to make whatever introductions she would like of our witnesses here. I know one of these witnesses is from her home State. Blanche, go right ahead with whatever you would like to say. 

Senator LINCOLN. Mr. Chairman, I apologize that I’ve been absent for the earlier part of the hearing. As most of us know it gets 

over scheduled way too much, but I certainly appreciate your leadership in this area. There’s so much to be done and so much for 

us to learn without a doubt. 

But it is my pleasure to introduce the Chairman of the Arkansas 

Oil and Gas Commission, Larry Bengal. Mr. Bengal has held positions as researcher with the Illinois State Geological Survey as a 

project manager for Geologic and Mining Engineering Consulting 

firm, engaged in projects throughout the United States and as an 

independent counseling or consulting petroleum geologists as manager of the Illinois Class II underground injection control program 

and as a supervisor of the Illinois Oil and Gas division. He is here 

today in his capacity as chairman of the IOGC carbon capture and 

geologic storage task force. We’re certainly appreciative of all of 

what he has done. 

I feel, like you, Larry, we appreciate you being here and appreciate all the both evidence and intelligence that you bring to the 

issue that we’re dealing with here and grateful that you’ve joined 

us. We look forward to continuing to work with you as well. But 

we’re very proud of him in Arkansas and his work in the oil and 

gas issues there and equally proud of his fine work with the CCGS 

48

task force. So thank you, Mr. Chairman and thank you, Larry for 

being here and to all the panelists. 

The CHAIRMAN. Alright. Thank you very much. Mr. Bengal, why 

don’t you start and then Mr. Anderson and then Mr. Evans. 

STATEMENT OF LAWRENCE E. BENGAL, DIRECTOR, ARKANSAS 

OIL AND GAS COMMISSION, LITTLE ROCK, AR 

Mr. BENGAL. Good afternoon and thank you, Senator Lincoln for 

that gracious introduction. 

Mr. Chairman, committee members, my name is Lawrence Bengal. I am the director of the Arkansas Oil and Gas Commission and 

I’m appearing here today in my capacity as chairman of the Interstate Oil and Gas Compact Commissions Task Force on Carbon 

Capture and Geologic Storage. I would like to share with the committee the experience and conclusions of the task force and offer 

brief comments on S. 2144 and S. 2323. 

Funded by the U.S. Department of Energy through the National 

Energy Technology Laboratory, the task force has been engaged 

since 2003 in a two phase effort relating to the regulation of geologic storage of carbon. In phase one the task force undertook a 

thorough review of the technology of geologic storage. In phase two 

developed model regulations. A major conclusion of the task force 

in phase one was that the geologic storage of carbon dioxide or CO2

was not something entirely new or mysterious, but the technological outgrowth of analogs with which the States already have 

regulatory experiences. 

In phase two the task force has produced a clear and comprehensive model regulatory regime for the geologic storage of CO2. Utilizing these model frameworks, States and provinces and indeed 

other nations can begin immediately the process of enacting legislation and promulgating rules and regulations enabling CO2 geologic 

storage projects. In fact a number of States have already begun 

this process. 

By 2010 I fully expect that at least 5, 10 or more States will have 

legal and regulatory systems in place. The EPA carbon storage regulations under the Safe Drinking Water Act and it’s implementing 

underground injection control or UIC programs should also be in 

place within this timeframe. It is my expectation the State regulatory systems will work seamlessly like hand in glove with the 

regulations likely to emerge from the EPA regulatory development 

process. This is largely because of the role States play in the administration of UIC programs under EPA privacy authority. 

As concerns SB, Senate bill 2323 the legal and regulatory framework proposed by the task force does not require in order for our 

program to work effectively any broader, overarching Federal regulation. Framework proposed by the IOGCC task force is comprehensive and contains many aspects that are solely a function of 

State law. Our expectation is that the combination of State and 

EPA UIC regulatory systems will produce a flexible, responsive, 

safe and environmentally sound regulatory framework for CO2 geologic storage that will be more than adequate to get the first 

project planned and safely off the ground. 

We would suggest that before we rush to create a potentially unnecessary Federal and regulatory framework that we observe how 

49

* Document has been retained in committee files. 

this combined State and EPA administered storage framework 

functions. If a need for additional Federal regulatory authority 

manifests, it can be addressed at that time. As concerns SB 2144, 

I would only suggest that the departments and agencies designated 

in the bill to conduct the study be required to conduct it in close 

cooperation and consultation with the States which have much experience in this area. 

Let me now turn to the diagram which you see before you which 

illustrates the cradle to grave regulatory model that was developed 

by the task force and this is what we recommended to States. 

There are three phases you can see. Although I do not have enough 

time at this stage to go over each of the phases, this will give you 

some idea of the breadth of the regulatory structure proposed by 

the IOGCC task force. 

I would note however that only within the project areas indicated 

by the green box does it appear to the EPA has regulatory authority over the Safe Drinking Water Act. The other areas would be 

covered under State law. 

Let me close by noting the obvious that public support for carbon 

storage as a strategy for mitigating the impact of global climate 

change will be crucial. It is important to educate the public about 

this technology including CO2 long history of being transported, 

handled and used in a variety of applications. CO2 is certainly no 

more, if not less, than the hazardous waste of natural gas and calling it such makes it very difficult for public acceptance of CO2 storage. 

It will also be vitally important to include the public in every 

step of the regulatory development process at the State and Federal levels. State laws will ensure public notice and participation 

and the State processes of both legislation and regulation development stages. Thank you for the opportunity to appear here today. 

If I can provide any information, please do not hesitate to ask. I 

would ask though that a copy of the full IOGCC task force be included in the record today.* 

[The prepared statement of Mr. Bengal follows:]

PREPARED STATEMENT OF LAWRENCE E. BENGAL, DIRECTOR, ARKANSAS OIL AND GAS

COMMISSION, LITTLE ROCK, AR 

Good afternoon. My name is Lawrence Bengal. I am the Director of the Arkansas 

Oil and Gas Commission and I’m appearing here today in my capacity as Chairman 

of the Interstate Oil and Gas Compact Commission’s Task Force on Carbon Capture 

and Geologic Storage (CCGS). The Task Force was comprised of representatives 

from IOGCC member state and provincial oil and gas agencies, U.S. Department of 

Energy sponsored Regional Carbon Sequestration Partnerships, the Association of 

American State Geologists, industry experts, as well as representatives from the 

U.S. Environmental Protection Agency (EPA), the U.S. Bureau of Land Management 

(BLM) and the environmental group, Environmental Defense, who attended as observers. 

The member states of the Interstate Oil and Gas Compact Commission (IOGCC) 

produce more than 99% of the oil and natural gas produced onshore in the United 

States. Formed by Governors in 1935, the IOGCC is a congressionally ratified interstate compact. The organization, the nation’s leading advocate for conservation and 

wise development of domestic petroleum resources, includes 30 member states, associate states, and 4 international affiliate provinces. The mission of the IOGCC is 

two-fold: to conserve our nation’s oil and gas resources and to protect human health 

50

and the environment during the production process. Our current chairman is Governor Sarah Palin of Alaska. 

I am here today to share with the committee the experience and conclusions of 

IOGCC’s CCGS Task Force and to offer our comments on S. 2144, the ‘‘Carbon Dioxide Pipeline Study Act of 2007’’, and S. 2323, the ‘‘Carbon Capture and Storage 

Technology Act of 2007’’. 

Funded by the U.S. Department of Energy (DOE) and its National Energy Technology Laboratory (NETL), the Task Force has been engaged since 2003 in a twophase effort relating to the regulation of the geologic storage of carbon. In Phase 

I, the Task Force undertook a thorough review of the technology of geologic storage 

and in Phase II developed a model statute and model rules and regulations for the 

states and provinces to administer regulatory oversight of geologic storage of carbon 

dioxide (CO2). 

A major conclusion of the Task Force in Phase I was that the geologic storage of 

CO2, in addition to conservation, is among the most immediate and viable strategies 

available for mitigating the release of CO2 into the atmosphere. It was readily apparent to the Task Force that carbon storage was also not something entirely new 

and mysterious—but the technological outgrowth of four analogues. These four analogues, in the opinion of the Task Force, provide the technological and regulatory 

basis for storage of CO2 in geologic media: 1) naturally occurring CO2 contained in 

geologic reservoirs, including natural gas reservoirs; 2) the large number of projects 

where CO2 has been injected into underground formations for Enhanced Oil Recovery (EOR) operations; 3) storage of natural gas in geologic reservoirs; and 4) injection of acid gas (a combination of H2S and CO2), into underground formations, with 

its long history of safe operations. 

It was the opinion of the Task Force that given the jurisdiction, experience, and 

expertise of the states and provinces in the regulation of oil and natural gas production as well in regulating the analogues identified above, the states and provinces 

would not only be well able to regulate, but would be the most logical and experienced regulators of CO2 geologic storage. Additionally and importantly, the oil and 

natural gas producing states and provinces are strategically and geologically wellsituated for the geologic storage of CO2. Regulations already exist in most oil and 

natural gas producing states and provinces covering many of the same issues that 

need to be addressed in the regulation of CO2 geologic storage, and consequently 

serve as adaptable frameworks. 

Given these Phase I conclusions, the Task Force, in Phase II, began work and in 

September of 2007 produced, for the first time, a clear and comprehensive model 

legal and regulatory regime for the geologic storage of CO2. Utilizing these model 

regulatory frameworks, states and provinces, and indeed other nations, can begin 

immediately the process of developing and enacting legislation and promulgating 

rules and regulations enabling CO2 geologic storage projects. California, New Mexico, North Dakota, Texas, and Wyoming are, among other states, in various stages 

of developing such a legal and regulatory framework. 

I anticipate that by 2010 there will be at least 5–15 states, encompassing much 

of the country best suited for carbon geologic storage, with legal and regulatory systems in place for the regulation of geologic storage of CO2. I would also anticipate 

that in this same general timeframe that EPA will likewise have in place regulations governing geologic storage of CO2 under the Safe Drinking Water Act and the 

implementing Underground Injection Control (UIC) Program. 

It is appropriate that I now briefly address how the IOGCC anticipates the EPA’s 

CO2 geologic storage regulations will interface with the regulatory systems being developed by the states. Given the incorporation of UIC-like regulatory requirements 

into the proposed IOGCC model regulatory frameworks, there is every reason to anticipate that the IOGCC and EPA frameworks will fit like hand in glove. This is 

largely because of the role that states play in the administration of UIC programs 

under EPA primacy authority. 

In this regard, as you are no doubt aware, the EPA is in the process of developing 

regulations for geologic sequestration under the Safe Drinking Water Act with the 

goal of having draft regulations for public comment by the summer of 2008. The 

IOGCC at the invitation of EPA has two representatives, Berry ‘‘Nick’’ Tew of Alabama and myself, actively participating in the process as state co-regulators. States 

with primacy already play an integral role in administering the UIC program and 

under future rules governing geologic storage, are likely to do so again. Having representatives from states involved in the process helps insure compatibility between 

the state and federal components of geologic storage regulatory oversight. 

What is clear to me, especially given my involvement with the current EPA 

workgroup, is that the state regulatory system for carbon storage proposed by the 

51

* Document has been retained in committee files. 

IOGCC Task Force will in all likelihood work seamlessly with the regulations likely 

to emerge out of the EPA regulatory development process. 

Having made this observation let me now offer brief comment on the two bills 

which are the subject of this hearing today. 

The legal and regulatory framework proposed by the Task Force, which I will discuss in more detail subsequently, does not require, in order to work effectively, 

broader over-arching federal regulation such as that apparently contemplated by S. 

2323. The Task Force strongly believed that what it was proposing was comprehensive and given the number of aspects that are solely functions of state and not federal law (for example ownership of storage rights and means for amalgamating 

those rights through some type of condemnation proceeding) that there was no need 

or in some respects even the possibility of a broader federal role. It is suggested that 

there will be ample time over the coming years to see how the state-administered 

CO2 storage frameworks function in tandem with the EPA UIC storage regulations 

thereby alleviating the need to rush to create a potentially unnecessary federal regulatory framework at this time. If there is need for additional federal regulatory authority, it can be addressed legislatively then. I fully anticipate that what will exist 

during this interim period will be a flexible, responsive, and environmentally sound 

combination of state and EPA UIC regulatory systems, which will be more than adequate to get the first projects planned and off of the ground. Experience with these 

projects will show us rather quickly if weaknesses or problems with the existing 

frameworks manifest. We have absolutely no expectations at this time that they 

will. 

As concerns S. 2144 and the requirement of a study of feasibility relating to construction and operation of pipelines and CO2 sequestration facilities, I would note 

first that the Task Force’s proposed legal and regulatory infrastructure encompasses 

construction and operation of CO2 sequestration facilities. Second, I would suggest 

that given this, that the federal government departments and agencies designated 

in the bill to conduct the study at a minimum be required to conduct the study in 

close cooperation and consultation with states, including representatives of the 

IOGCC Task Force. 

It is now appropriate to supply a little more detail about the legal and regulatory 

system which the IOGCC Task Force has proposed for the geologic storage of CO2

and how, precisely, the proposed EPA regulatory system for CO2 storage would likely fit into this system. This *diagram will be helpful: 

The diagram represents the ‘‘cradle to grave’’ regulatory model which the Task 

Force has recommended to states. There are three phases. 

1. Licensing including amalgamation of Storage Rights 

The first phase is the licensing phase which includes the critical requirement that 

the project operator control the storage rights. 

The Task Force concluded that as a part of the initial licensing of a storage 

project that the operator of the project must control the reservoir and associated 

pore space to be used for CO2 storage. The operator would need to acquire these 

rights from the owners or assume those rights by means of eminent domain, unitization or some other vehicle that either exists in a state or would be created by the 

state uniquely for this purpose. This step is necessary because in the U.S., the right 

to use reservoirs and associated pore space is considered a private property right 

and must be acquired from the owner. It was the conclusion of a Task Force legal 

subgroup that in most U.S. states, for non EOR-related storage, the owner of these 

rights would likely be the owner of the surface estate. It may be prudent, however, 

depending upon the specific property right ownership framework in a given state, 

for an operator to also control the relevant subsurface mineral rights. 

Additionally, as part of the initial licensing of a project the operator would be required to submit for State Regulatory Authority (SRA) approval, detailed engineering and geological data along with a CO2 injection plan that includes a description 

of mechanisms of geologic confinement that would prevent horizontal or vertical migration of CO2 beyond the proposed storage reservoir. The operator would also be 

required to submit for approval by the SRA a public health and safety and emergency response plan, worker safety plan, corrosion monitoring and prevention plan 

and a facility and storage reservoir leak detection and monitoring plan. 

The rules also include requirements for an operational bond that would be sufficient to cover all operational aspects of the storage facility excluding wells which 

would be separately bonded. 

Site licensing and amalgamation of storage rights is generally believed to be outside the scope of the current UIC Program, and given that regulatory involvement 

52

with property rights is a state issue, this phase is best addressed at the state level. 

In addition, given the likely competition for acceptable storage sites, it is in a state’s 

interest to manage these sites to maximize storage capacity and resolve any operator conflicts over the right to use storage resources, thereby maximizing the state’s 

best economic interest in providing storage sites for that state’s generators. 

2. The Storage and Closure Phase 

In this second phase we are talking about the phase, following initial licensing, 

when the storage project is developed, operated, and closed. This includes a short 

time period following plugging of the wells during which time the project is monitored to ensure stability of the injected CO2. 

During the storage component of this phase the model rules specify the procedures for permitting and operating the project injection wells to safeguard life, 

health, property and the environment. The operator would be required to post individual well bonds sufficient to cover well plugging and abandonment, CO2 injection 

and/or subsurface observation well remediation. The rules also specify design standards to ensure that injection wells are constructed to prevent the migration of CO2

into other than the intended injection zone. Provisions in the rules also ensure that 

all project operational standards and plans submitted during the licensing phase 

would be adhered to and that the project and wells are operated in accordance with 

all required operating parameters and procedures. Quarterly and annual reports 

would be required throughout the operational life of the project. The rules also ensure that the wells are properly plugged and the site restored. The individual well 

bonds, maintained during the operational phase of the project would be released as 

the wells are plugged. 

The closure component of this phase is defined as that period of time when the 

plugging of the injection wells has been completed and continuing for a defined period of time (10 years unless otherwise designated by the State Regulatory Authority) after injection activities cease and the injections wells are plugged. During this 

closure period, the operator of the storage site would be responsible for providing 

the required data to ensure the injected CO2 has not migrated beyond the project 

boundaries and the injected CO2 plume has been stabilized. During this time the 

operator is required to maintain an overall project operational bond. 

This phase is primarily where EPA is developing proposed rules to ensure the operation and plugging of the wells are protective of the groundwater resources under 

the UIC Program. 

3. Long-Term ‘‘Care Taker’’ Phase (long-term monitoring and liability) 

The last phase is the Long Term or Post-Closure Period and is referred to as that 

period of time when the operator of the project is no longer the responsible party 

and the long-term ‘‘care taker’’ role is assumed by a government entity or government-administered entity. The major issue faced by the Task Force was how to deal 

with long-term monitoring and liability issues. The formula settled upon by the 

Task Force is the following: 

At the conclusion of the Closure Period, the operational bond would be released 

and the regulatory liability for ensuring that the site remains a secure storage site 

would transfer to a trust fund administered by the state. During the Post-Closure 

Period, the financial resources necessary for the state or a state-contracted entity 

to engage in future monitoring, verification, and remediation activities would be provided by this state-administered trust fund. 

The Task Force concluded that such a state-administered trust fund would be the 

most effective and responsive ‘‘care-taker’’ to provide the necessary oversight during 

the Post-Closure Period. The trust fund would be funded by an injection fee assessed to the site operator and calculated on a per-ton basis. 

In summary, the EPA Regulations under the SDWA and the UIC Program primarily deal with the Storage and Closure Phase as illustrated by the green box in 

the diagram, for it is only in the project areas within that box that EPA has authority under the SDWA. In addition to EPA’s mandate to protect drinking water under 

the SDWA, the IOGCC regulations cover other public health and safety issues that 

need to be a part of a comprehensive regulatory framework. As previously stated, 

almost all of the well operational standards proposed in the IOGCC model regulations are already UIC requirements of one form or another. 

What I anticipate is that the proposed EPA regulations, whatever they end up 

being, will yield a set of uniform national standards, which superimposed on whatever state regulations may be in place will result in national consistency of application so as to ensure that drinking water resources are protected. Again as previously 

stated, given most states (those with primacy) already administer the existing UIC 

program, they will continue to do so, conforming their state regulations as they perVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00056 Fmt 6633 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
53

tain to the geologic storage of carbon to the minimum standard set by the new EPA 

regulations. 

Unless the EPA regulations end up being unnecessarily proscriptive and onerous, 

the systems should work together perfectly and as I’ve already stated, ‘‘seamlessly’’. 

Certainly this is the hope and current full expectation of the IOGCC. 

I will note that with regard to federal lands (surface and/or mineral interests), 

that federal regulations emanating out of the BLM will undoubtedly be necessary. 

However, what emanates out of BLM would in all likelihood be more akin to what 

the states have done with regard to state and private lands rather than an overarching and broader national regulatory scheme. 

Additionally, our model regulatory system does not address the regulatory issues 

involving CO2 emissions trading and accreditation for the purpose of securing carbon credits. The Task Force concluded that the issue of CO2 emissions trading and 

accreditation would likely best be addressed in the marketplace and/or at the federal government level and was beyond the scope of the Task Force’s mandate. In 

any event, the Task Force strongly believes that development of any future CO2

emissions trading and accreditation regulatory frameworks should utilize the experiences of the states. 

As concerns long term ‘‘care taker’’ liability, what the Task Force has proposed 

will have to be addressed by each state and province as they develop their own 

framework. It remains to be seen if states will agree with the Task Force or propose 

something new. There may indeed be a need for a federal role here at some point 

in the future but it is suggested that federal action in this area await a clear need 

manifesting itself in the years ahead. 

Additionally and very importantly, states and provinces are likely to continue to 

regard CO2 geologic storage reservoirs as a valuable resource that should be managed using resource management frameworks, therefore avoiding the treatment of 

CO2 storage as waste disposal. The Task Force strongly believes that treatment of 

CO2 as a waste under waste management regulatory frameworks will diminish significantly the potential of carbon storage technology to meaningfully mitigate the 

impact of CO2 emissions on the global climate. The energy consuming public and 

the industry which produces that energy share a common goal in coming up with 

a workable solution. 

Let me close by noting the obvious—that public support for carbon storage as a 

strategy for mitigating the impact of global climate change will be crucial. It will 

be important to educate the public about this technology including CO2’s long history of being transported, handled, and used in a variety of applications. It will also 

be vitally important to include the public in every step of the regulatory development process, state and federal. State open meeting laws will ensure public notice 

and participation in the state process at both legislation and regulation development 

stages. 

Thank you for the opportunity to appear here today. If I can provide any additional information, please do not hesitate to ask.

The CHAIRMAN. We’ll be glad to include that in the record. Thank 

you very much for your testimony. 

Mr. Anderson. 

STATEMENT OF SCOTT ANDERSON, ENVIRONMENTAL 

DEFENSE, AUSTIN, TX 

Mr. ANDERSON. Thank you, Mr. Chairman. We’re pleased to be 

here today as the committee considers how to create a regulatory 

framework regarding carbon capture and storage so that CCS can 

play a role in the fight against climate change. Climate change is 

the most significant environmental issue of our generation. The 

Senate is doing important work in this area. Cap and trade legislation if adopted would do a lot to commercialize CCS by creating a 

market value for voiding CO2 emissions and considering the measures you have before you today it is vital work as well. 

Without a sound regulatory framework uncertainty will prevail 

and the marketplace will not be able to move CCS forward in a significant way. Public acceptance will happen only if the public is 

confident that rigorous and credible regulatory oversight is in 

54

place. The fact that Environmental Defense supports deployment of 

CCS does not mean that we are champions of coal. 

We believe that business as usual for coal is over. Public opinion 

is shifting and conventional coal plants are being delayed or canceled at a rate unimaginable a year ago. People are increasingly 

recognizing that energy efficiency and renewables should play a 

leading role in energy and climate policy. 

We’re not champions of coal at Environmental Defense but we 

are realists. Coal will continue to be used for the foreseeable future 

and we believe that CCS can play a significant role in helping coal 

to reduce its greenhouse emissions. Even today in the absence of 

a full fledged private market it’s possible where the economics arrive to begin deployment. 

The Texas legislature passed a bill in 2007 that provided a severance tax incentive for oil producers who use CO2 to produce oil and 

then sequester the carbon afterwards, defining permits as meaning 

99 percent retention for 1,000 years or more. So at least in Texas 

the legislature has made a determination that CCS is ready for deployment now. 

I’ll turn now to Senate bill 2144 and section 5 of Senate bill 

2323. Senator Coleman’s Senate bill 2144 would require a feasibility study that we believe is sound. We endorse this measure. 

Section 5 of Senator Kerry’s bill would establish an interagency 

task force to develop regulations and we believe that with some 

modification this is worthy of passage as well. Section 5 has several 

notable strengths. It assures that the development of a regulatory 

framework will move forward expeditiously that includes the Departments of Energy and Interior in the process. It appropriately 

names the administrator of the EPA who has key responsibilities 

of the Safe Drinking Water Act to be chairman or chairperson of 

the task force. 

Finally the legislation builds on existing regulatory authority on 

an incremental as needed bases. Subsection (a)(5) requires regulations to take into account the existing UIC program and then continues to provide additional requirements that regulations must 

satisfy. We believe such a step by step approach is prudent for first 

generation CCS rules. As the need for additional grants of jurisdiction or congressional guidance become apparent additional provisions can be enacted through supplemental legislation. 

There are also several areas of Section 5 that we feel could be 

improved. I’ll only touch verbally on one of those. We are confident 

that the bill is intended to accelerate adoption of carbon sequestration regulations, but EPA is already engaged in rulemaking and 

there’s a risk that the bill can actually slow down adoption of the 

first set of regulations. We recommend adding a provision indicating that Congress does not intend to discourage rulemaking in 

the near term, but rather intends that regulations should reflect 

the interagency process spelled out in the bill. If EPA adopts rules 

based on existing procedures in the meantime in a rules developed 

pursuant to this bill would become the second generation of rules. 

The final portion of my prepared testimony discusses the appropriate design of geologic sequestration regulations. We suggest that 

rules generally should be flexible and performance based and that 

they should adapt to evolving knowledge and best practices. At the 

55

same time we say that it’s not enough to be flexible, adaptive and 

performance based. It’s essential that rules be grounded in a thorough scientific understanding of the risks involved and the rules 

assure that the risk will be managed properly. Some aspects of the 

rules such as site characterization and selection requirements will 

need to be relatively more prescriptive than others. With that I’ll 

close. Thank you. 

[The prepared statement of Mr. Anderson follows:]

PREPARED STATEMENT OF SCOTT ANDERSON, ENVIRONMENTAL DEFENSE, AUSTIN, TX 

We appreciate the opportunity to speak to you today as the committee considers 

how to create a regulatory framework that will enable carbon capture and storage 

(CCS) to play a role in the fight against climate change. Climate change is the most 

important environmental issue of our generation and successful development and 

deployment of CCS is a critical path for taking coal, the world’s most abundant but 

carbon-intensive fossil fuel, and accommodating it to a carbon-constrained future. 

Environmental Defense is a national non-profit organization representing more 

than 500,000 members. Since 1967, we have linked science, economics and law to 

create innovative, equitable and cost-effective solutions to urgent environmental 

problems. My personal background includes more than 20 years representing independent oil and gas producers in Texas, and so I have some appreciation for many 

of the issues and concerns related to the underground storage of carbon dioxide. 

The Senate is doing important work to address the threat of climate change. The 

single most important thing the Senate can do to commercialize CCS is to take 

quick action on cap and trade legislation, since such legislation would create a market value for avoiding carbon dioxide emissions. Given the right incentives, we believe that the market will be far more effective and efficient in discovering necessary 

technologies of all types, including CCS, than any suite of government mandates or 

subsidies, however well intentioned. 

Consideration of regulatory measures such as those before you today is vital work 

as well. Without a sound regulatory framework to govern carbon capture, transportation and storage, uncertainty will prevail and the marketplace will not be able to 

achieve the kind of deep and sustained reductions necessary to avoid the worst consequences of greenhouse gas build-up. Similarly, public acceptance of CCS will happen only if the public is confident that rigorous and credible regulatory oversight 

is in place. 

The fact that Environmental Defense supports the deployment of CCS does not 

mean that we are champions of coal. We believe that business as usual for coal is 

over. Public opinion is shifting and conventional coal plants are being delayed or 

canceled at a rate unimaginable even a year ago. In states like Texas, Florida, Oklahoma and Kansas, people are beginning to realize that it is environmentally irresponsible and fiscally imprudent to proceed with building new coal plants, absent 

a concrete plan to reduce and avoid CO2 emissions. We are also pleased that people 

are increasingly recognizing that energy efficiency and renewables should play a 

leading role in energy and climate policy. 

Although we are not champions of coal at Environmental Defense, we are realists. 

Coal will continue to be used for electricity production for the foreseeable future. 

Therefore the nation and the world need technologies that enable coal to be used 

in a manner that avoids significant greenhouse gas emissions. According to an IEA 

study released in 2006, CCS could rank, by 2050, second only to energy efficiency 

as a greenhouse gas control measure. The Intergovernmental Panel on Climate 

Change projects that CCS could, by 2100, contribute 15 to 55% of the greenhouse 

gas reductions needed to avert catastrophic climate change. Just last week in a proposed directive on CCS, the Commission of the European Communities noted that 

efficiency and renewables are the most sustainable supply options in the long run 

but that ‘‘we cannot reduce EU or world CO2 emissions by 50% in 2050 if we do 

not also capture CO2 from industrial installations and store it in geological formations.’’

While different analysts come up with somewhat different scenarios, it is clear 

that coal is not going to disappear anytime soon and therefore effectively capturing 

and sequestering carbon dioxide emissions from coal can make a real difference in 

whether mankind will be able to solve climate change problems. We are fortunate 

that early sequestration projects, together with over 30 years of experience with injecting CO2 into oilfields, have provided confidence that long-term sequestration in 

properly selected geologic formations is feasible. 

56

In fact, even today, when large-scale commercialization of CCS is hampered by 

the absence of price signals that could be provided by a market in trading allowances, it is possible to begin deployment and start making real reductions in CO2

emissions. McKinsey & Company’s recent study, ‘‘Reducing U.S. Greenhouse Gas 

Emissions: How Much at What Cost?,’’ provides a sense of the costs involved. My 

fellow panelist Tracy Evans of Denbury Resources can speak from direct experience 

about the feasibility of deploying CCS in the oilfield context. 

SUMMARY OF COMMENTS ON S. 2144 AND S. 2323

I would like to cover several things this morning. I will touch briefly on S. 2144, 

which would require a study of the feasibility of constructing and operating carbon 

dioxide pipeline and sequestration facilities. I want to focus most of our remarks, 

however, on Section 5 of S. 2323, which would establish an interagency task force 

to develop regulations for CO2 capture and storage. Our remarks on Section 5 will 

focus on regulations for geologic sequestration, rather than capture. Finally, we will 

offer comments on the appropriate design of sequestration regulations. We will mention why it is important for CO2 storage regulations, especially in the early years, 

to be relatively performance-based rather than prescriptive and why it is important 

for the regulatory framework to adapt as knowledge improves. 

We believe that it would be useful to adopt S. 2144, and Section 5 of S. 2323 if 

modified in several respects, as stand-alone measures. These measures would be 

most useful, however, if enacted as part of or in concert with comprehensive cap and 

trade legislation that would create a market value for avoiding CO2 emissions and 

thereby encourage market participants to engage in the activities that these measures are intended to address. 

S. 2144

Senator Coleman’s S. 2144 would require the Secretary of Energy, in coordination 

with certain other agencies, to study the feasibility of constructing and operating 

carbon dioxide pipelines and sequestration facilities. We believe that the scope of 

the contemplated study is sound and that the study is likely to yield important information. Without prejudice to the possibility that others may have valuable suggestions on improving the scope of the study, we generally endorse this bill as proposed. 

SECTION 5 OF S. 2323

Section 5 of Senator Kerry’s S. 2323 would establish an Interagency Task Force 

‘‘to develop regulations providing guidelines and practices for the capture and storage of carbon dioxide.’’

Section 5 has several notable strengths:

1. The most fundamental benefit of Section 5 lies in assuring that the development of a regulatory framework for CCS will move forward expeditiously. The 

intent is clearly that issuance of regulations should be accelerated, not delayed. 

2. Including the Departments of Energy and Interior in the regulatory development process is worthwhile. DOE has significant expertise in carbon capture 

and sequestration that can benefit the rulemaking process. The Department of 

Interior’s Geologic Survey also has significant expertise and is in a position to 

offer useful input. 

3. The bill appropriately names the Administrator of the Environmental Protection Agency as the chair-person of the task force. This is appropriate given 

that EPA, in addition to having its own significant expertise in CCS, has responsibility under the Safe Drinking Water Act’s Underground Injection Control 

Program to protect underground sources of drinking water from contaminants 

that might cause a violation of a national primary drinking water regulation or 

otherwise adversely affect the health of persons. 

4. The legislation builds on existing regulatory authority on an incremental, 

as-needed basis, i.e. subsection (a)(5)(A) requires that the regulations ‘‘take into 

account existing underground injection control program requirements’’ and then 

provides additional requirements that regulations must satisfy in subsections 

(a)(5)(B)-(F). We believe it is prudent to take such a step-by-step approach to 

authorizing and overseeing the development of ‘‘first generation’’ rules for CCS. 

Both industry and regulators will ‘‘learn while doing’’ in the early years of this 

technology. For now, most observers (ourselves included) appear to find the Safe 

Drinking Water Act’s Underground Injection Control Program to be generally 

adequate as a basis for initial federal regulations. As the need for additional 

57

grants of jurisdiction and/or Congressional guidance becomes apparent, additional provisions can be enacted through supplemental legislation.

There are also several aspects of Section 5 where the committee has an opportunity to make improvements:

1. As noted above, subsection (a)(5)(B)-(F) builds on the Safe Drinking Water 

Act by requiring that carbon dioxide capture and storage regulations satisfy 

several objectives that are not part of the existing underground injection control 

program. However, in our judgment, two more requirements ought to be added. 

These are (to borrow language from the proposed Lieberman-Warner Climate 

Security Act): (a) a requirement to regulate the ‘‘long-term storage of carbon dioxide and avoiding, to the maximum extent practicable, any release of carbon 

dioxide into the atmosphere;’’ and (b) a requirement that the carbon dioxide 

storage regulations protect not just underground sources of drinking water and 

human health, but ‘‘the environment’’ as well. In order to fill these two gaps, 

we recommend borrowing the language just quoted from section 8001 of S. 2191. 

2. We are confident that S. 2323 is intended to accelerate the adoption of carbon sequestration regulations (while at the same time broadening the regulatory development process beyond EPA). There is a risk, however, that the bill 

could actually slow down adoption of EPA’s first set of regulations, which the 

agency currently plans to propose in the Federal Register by this fall. Publication and adoption of rules in the near term would be likely to have a positive 

effect on the development of early CCS projects. It would be extremely unfortunate if passage of S. 2323 served to convince EPA to wait for the conclusion of 

the S. 2323 process before adopting the first set of regulations. Accordingly, we 

recommend that a provision be added to the bill indicating that Congress does 

not intend to discourage earlier CCS rulemaking but rather desires to make 

sure that regulations growing out of an interagency process are adopted in the 

near-term. If EPA adopts rules based on existing procedures in the meantime, 

the regulations developed pursuant to S. 2323 would become the second generation rules. 

3. Subsection (a)(5)(C) requires carbon dioxide storage regulations to ‘‘address 

the potential appropriate transfer of liability to governmental entities.’’ We 

would prefer that any regulations transferring liability to governmental entities 

be postponed until after the task force report called for in Section 8004 of S. 

2191. If such regulations are authorized sooner, however, we think additional 

guidance is desirable in order to assure that those who develop the regulations 

recognize that shifting liability to the taxpayers affects the taxpayers differently 

depending on whether or not monitoring has demonstrated that the storage 

project in question is performing as expected. The current proposal in Europe 

regarding the transfer of liability, released January 23 by the Commission of 

the European Communities, would transfer liability to the government only ‘‘if 

and when all available evidence indicates that the stored CO2 will be completely 

contained for the indefinite future.’’ (Proposed Article 18, Proposal for a Directive of the European Parliament and of the Council on the Geological Storage 

of Carbon Dioxide). Perhaps that would be a good policy for the United States 

as well. It would protect the taxpayer and assure that project developers maintain an incentive to operate projects safely and effectively. At a minimum, however, we recommend that subsection (a)(5)(C) of Section 5 be amended so that 

those who draft regulations addressing liability will do so ‘‘taking into account 

whether or not particular projects have demonstrated a reasonable likelihood 

that virtually all the CO2 stored will remain sequestered permanently.’’

4. Subsection (a)(4) of Section 5 calls on the Interagency Task Force to consult 

with industry, legal and technical experts. We suggest that consultation be expanded to include experts from non-governmental public interest organizations. 

APPROPRIATE DESIGN OF GEOLOGIC SEQUESTRATION REGULATIONS

Geologic sequestration of carbon dioxide is feasible under the right conditions. It 

has been successfully demonstrated in a number of field projects, including several 

large projects. The Intergovernmental Panel on Climate Change (IPCC) Special Report on Carbon Capture and Storage concluded in 2005 that the fraction of CO2 retained in ‘‘appropriately selected and managed geological reservoirs’’ is likely to exceed 99% over 1000 years. The IPCC also concluded that the local health, safety and 

environmental risks of CCS are comparable to the risk of current activities such as 

natural gas storage, enhanced oil recovery and deep underground storage of acid gas 

if there is ‘‘appropriate site selection based on available subsurface information, a 

58

monitoring programme to detect problems, a regulatory system and the appropriate 

use of remediation methods to stop or control CO2 releases if they arise.’’

While there is little doubt that geologic sequestration is feasible, and little doubt 

that successful projects are technically achievable today, knowledge and understanding are expected to increase dramatically as the technology begins to be deployed on a large scale. Current projects are highly customized. There are gaps in 

our knowledge and neither government nor industry have yet developed standard 

protocols for fundamental aspects of the process such as site characterization and 

monitoring. The IPCC Special Report projects that increasing knowledge and experience will ‘‘reduce uncertainties’’ and ‘‘facilitate decision-making.’’

In other words, we know enough to get started but we can expect to experience 

a lot of ‘‘learning by doing.’’

What are the implications of this for the regulatory system? We believe at least 

four recommendations are in order to account for the fact that increasing knowledge 

and experience will facilitate rational decision-making in different ways over time:

1. Lean toward a performance-based system. ‘‘Performance-based’’ regulations 

and ‘‘command-and-control’’ regulations do co-exist—they are two poles on a 

continuum; 

2. Be reasonably flexible. Different projects will present different risks and 

uncertainties, and the uncertainty presented by a single project will tend to decline over time; 

3. Require projects to employ an iterative process, informed by monitoring results and perhaps even by experience gained from other projects, in order to reduce uncertainty and drive improvements in site characterization, site suitability assessment, models, model inputs, field operations, the monitoring plan 

itself, and the remediation plan; 

4. Write ‘‘adaptive’’ rules. Look for language that automatically accommodates 

evolving best practices. Also structure rules to make use of evolving knowledge 

at each particular site. Be willing to amend rules when needed to protect the 

environment, giving due regard to the fact that it generally is in the public interest for the regulatory framework to give the regulated community the certainty needed to make investment decisions.

At the same time, it is not enough for rules to be flexible, adaptive and performance-based. It is essential that rules be grounded in a thorough, scientific understanding of the risks involved and that rules assure that the risks will be managed 

properly. In order to accomplish this, some aspects of the rules (e.g. site characterization and site selection requirements) will need to be more prescriptive than others. 

CONCLUSION

In a carbon-constrained world where market forces are harnessed to make sure 

that society’s carbon footprint is reduced in an economically rational fashion, Environmental Defense foresees a dramatically increased role for renewable energy and 

for energy efficiency. At the same time, since any complete transition away from fossil fuels is likely to take a very long time, we foresee a long-term need to deal with 

CO2 emissions from coal-based facilities. The sooner we begin to deploy CCS technology on a large scale the better. We applaud you for working on measures to make 

this a reality.

The CHAIRMAN. Thank you very much. 

Mr. Evans. 

STATEMENT OF RONALD T. EVANS, SENIOR VICE PRESIDENT, 

RESERVOIR ENGINEERING, DENBURY RESOURCES, INC., 

PLANO, TX 

Mr. EVANS. Thank you Chairman Bingaman and members of the 

committee for the opportunity to share our views on the policy aspects of carbon capture and storage for CCS. As Denbury Senior 

Vice President I oversee all reservoir engineering, land, acquisitions and purchases of anthropogenic CO2. Denbury’s primary focus 

is enhanced oil recovery utilizing CO2. We are currently the largest oil producer in the State of Mississippi and one of the largest injectors, if not the largest injector 

59

of CO2 in terms of volume in the United States. Since 1999 we 

have produced over 15 million barrels of oil from CO2 flooding from 

ten active EOR projects in Mississippi and Louisiana. We are currently participating in several demonstration projects and DOE’s 

regional carbon sequestration partnership program. I will briefly 

address what we at Denbury believe are the most important policy 

aspects of carbon capture and storage: cost, taxation and the question of pipeline access and the legislation before the committee 

today. 

Cost. Perhaps the single largest obstacle to developing CCS beyond a limited number of projects currently in operation is the significant cost involved with carbon capture and storage. The cost of 

capture stem from variations in the quantity and the quality of the 

CO2 produced by hydrocarbon combustion, gasification or other industrial processes. The cost to purchase the compressors and the 

power to generate the compression necessary to pressure the gas 

significantly to enter the pipeline or sequestration, the lower the 

percentage of CO2 in the stream of gases and the greater amount 

of impurities in the streams the greater the cost of capture. 

In addition most technologies capture CO2 at a lower pressure 

than the pressure required to enter a typical CO2 pipeline or to inject into a deep saline reservoir or EOR project. The cost of the 

compressors and the power necessary to drive them are significant. 

One example approximately seven dollars and fifty cents per ton or 

just over one third of the estimated total cost of 20 dollars per ton 

for carbon capture and storage from the least expensive sources 

when transported only moderate distances. 

The costs of transportation are also significant. Installation costs 

for CO2 pipelines have increased dramatically in recent years. 

From about 30,000 dollars per inch mile for Denbury’s free State 

pipeline to an estimated 100,000 dollars per inch mile for 

Denbury’s proposed green pipeline due to rising steel prices, rising 

energy prices and construction costs doubling our effective CO2

pipeline transportation rate. Without some means of reducing the 

cost of carbon capture and storage infrastructure, significantly development, will likely remain stagnant. 

Senate bill 2144 directs the Secretary of Energy to study technical and financing issues related to the construction and operation 

of CO2 pipelines. While further studies should prove useful, Congress can act now to address carbon capture and storage costs. 

Congress should amend section 7704, the tax code to clarify that 

section (d)(1)(E) covers man made as opposed to just naturally occurring CO2. 

A substantial portion of all the CO2, natural gas, oil and product 

pipelines in the United States are owned and operated by publicly 

traded partnerships under section 7704 whose lower cost of capital 

lowers the cost of development and transportation of natural resources. Because of the current uncertainty in section 7704 much 

of the existing CO2 pipeline capacity cannot be used and new capacity may not get built to transport anthropogenic CO2. The Senate Finance committee approved a clarification last June, but Congress failed to include it in the Energy Independence and Security 

Act. We strongly urge members of this committee to work with 

their colleagues to pass this clarifying amendment. 

60

Pipeline access. The natural gas, oil and product pipeline systems today consist of hundreds of thousands of miles of pipelines 

with significant interconnects between individual pipeline systems. 

There also exists a huge retail market or oil and natural gas with 

a large number of users. This situation stands at market contrast 

to CO2 pipelines. In addition to CO2 not being explosive, flammable 

or poisonous there currently exists no large interconnected system 

nor are there reasonable prospects for development of a retail market for CO2 with a large number of users. 

Only a limited number of regional CO2 shippers and users exist. 

CO2 pipeline systems are only a tiny fraction of the size of the oil 

and gas network. CO2 pipelines should be given room to grow before FERC like regulation, including regulating access, is contemplated. 

To conclude the U.S. economy will continue to require massive 

amounts of energy well into the future and thus this country needs 

to use all of its resources to produce the energy it requires given 

economic and environmental realities. EOR is already playing an 

important role in this regard and can do so by far greater scale 

with the right policies. EOR is the only currently active, actual on 

the ground method for CO2 injection and sequestration. 

While we agree that the additional research and studies proposed 

in Senate bills 2144 and Senate bill 2323 are worthwhile. We do 

not believe there’s a need for comprehensive Federal regulation as 

section five of Senate bill 2323 proposes. Congress should provide 

necessary incentives in mechanisms to foster the development of 

CCS allowing states to continue to oversee various aspects with 

which they already have significant experience. Thank you. 

[The prepared statement of Mr. Evans follows:]

PREPARED STATEMENT OF RONALD T. EVANS, SENIOR VICE PRESIDENT, RESERVOIR

ENGINEERING, DENBURY RESOURCES, PLANO, TX 

Denbury Resources, Inc., (‘‘Denbury’’) appreciates this opportunity to share with 

Members of the Senate committee on Energy and Natural Resources its views on 

policy aspects of carbon capture, transportation, and sequestration (hereinafter collectively referred to as ‘‘CCS’’). As Senior Vice President, Reservoir Engineering for 

Denbury, I oversee all reservoir engineering, land functions and acquisition activities; am responsible for securing and contracting sources of anthropogenic CO2; and 

coordinating our government relations. Denbury is currently the largest oil producer 

in the State of Mississippi and the one of the largest injectors of carbon dioxide 

(‘‘CO2’’) in terms of volume in the United States. Denbury’s primary focus is enhanced oil recovery (‘‘EOR’’) utilizing CO2. At the present time we operate ten (10) 

active CO2 enhanced oil projects, nine in the State of Mississippi and one in the 

State of Louisiana. 

Denbury also owns the largest natural deposit of CO2 east of the Mississippi 

River, called Jackson Dome in central Mississippi, which we extract and transport 

through approximately 350 miles of dedicated CO2 pipelines for use in EOR. 

Denbury is also in the process of designing or constructing an additional 375 miles 

of CO2 pipelines in order to expand our operations into additional fields throughout 

the Gulf Coast of the United States. Finally, the committee may be interested to 

know that Denbury is working with the federal Department of Energy and various 

research universities on several Phase II and Phase III demonstration projects in 

the Regional Carbon Sequestration Partnership Program. While our business model 

focuses primarily on the transportation and sequestration components of CCS, we 

also are very familiar with the capture component both in terms of (1) the compression demands of transportation and sequestration and (2) our enhanced oil operations, which recycle large volumes of CO2 in order to recover additional volumes 

of oil. Given this background, Denbury is pleased to share its perspective on various 

policy aspects of CCS and the proposed legislation before the committee today. 

61

1Total costs of CCS varies substantially by source of CO2—to upwards of $70/ton—and even 

across proposed gasification projects because of variances in each process. This figure represents 

an estimate of the lowest-cost industrial-sourced CO2. 

A thorough understanding of both (1) the physical processes by which CO2 is obtained, transported and injected for purposes of EOR and/or permanent storage, and 

(2) the economics that underlie existing and future EOR-related use of CO2 is essential to any consideration of potential policy issues. The significant and varying costs 

associated with CCS—whether in conjunction with EOR or not—are perhaps the 

single largest obstacle to developing CCS infrastructure beyond the limited, discrete 

projects currently in operation. From Denbury’s perspective, it is critical that any 

contemplated state or federal regulation not increase these costs and impede private 

sector development of the CCS infrastructure necessary to meet the demands of our 

energy hungry and potentially carbon-constrained world. As explained in greater detail below, the current regulatory structure surrounding CO2 consists of state and 

federal provisions that cover discrete aspects of CCS. For instance, the over 3,500 

miles of dedicated CO2 pipelines currently in use were constructed and are operating under rules and guidelines for safety issued by the Department of Transportation’s Office of Pipeline Safety; with pipeline siting issues significantly impacted 

by state eminent domain laws; and with CO2 injection wells permitted and approved 

by individual state government divisions or departments of Underground Injection 

Control, utilizing the standards and policies issued by the Environmental Protection 

Agency. While this system may appear patch-work and noncomprehensive, the current structure is entirely appropriate, as CCS is very much still in its infancy. This 

predominantly state-law-based system should suffice for many years to come. Thus, 

Denbury supports the recommendations of the Interstate Oil and Gas Compact 

Commission’s 2005 Regulatory Framework for States. With few exceptions, such as 

funding research and further study of the issues involved as both bills propose, and 

given the current system of regulations and natural physical and economic constraints likely to exist for years to come, federal policymakers might best further 

national energy and carbon capture goals by deferring broad legislation or regulation while CCS is in this nascent phase. 

I. CAPTURE / COMPRESSION

In thinking about the policy aspects of CCS, it is useful to separate the various 

components of CCS and to identify what issues within each merit particular attention, distinguishing between EOR-related CCS and CCS in saline or other formations where appropriate. The starting point for any type of CCS is to capture the 

CO2. Denbury currently obtains all of its CO2 from its natural deposit at Jackson 

Dome. Certain existing and some evolving technologies allow CO2 emitted from various manufacturing processes to be captured. The combustion or gasification of hydrocarbon-based fuels such as coal, petcoke or other hydrocarbons produces particularly large volumes of CO2 at varying levels of quality and purity. As new captureinclusive projects are constructed, Denbury plans to acquire thousands of metric 

tons of CO2 each day for use in EOR. 

Aside from the threshold questions of how to properly classify CO2 and whether 

and to what extent to restrict emissions, from Denbury’s perspective, the capture 

of CO2 presents no policy issue. Rather, the capture component presents a significant economic issue: First, capture technology is expensive. The byproduct of hydrocarbon combustion or gasification is a stream of gases and other impurities that contains various quantities of CO2. In order for CO2 to be usable in EOR it must be 

injected in a relatively pure form. Similarly, CO2 injected into deep saline reservoirs 

must be in a relatively pure form to maximize the storage space available to be 

filled with CO2. Thus, a significant component of the capture cost is the cost to separate and purify the CO2 to be injected. The lower the percentage of CO2 in the 

stream of gases and the greater the amount of impurities in the stream the greater 

the cost of capture. Second, most technologies capture the CO2 at a lower pressure 

than is required to either enter a typical CO2 pipeline or to inject into a deep saline 

reservoir or EOR project. The costs of the compressors and the power necessary to 

drive them are significant—approximately $7.50/ton of the estimated $20/ton total 

cost1 for CO2 that is transported moderate distances. Therefore, the compression 

costs associated with CO2 capture are slightly more than one-third (33%) of the total 

CCS cost for the least expensive sources of anthropogenic (man-made) CO2. Additional compression costs are incurred to maintain pressure in pipelines and again 

when CO2 is pressured up to sufficient level for EOR reservoir injection. In sum, 

without some means of reducing the cost of captured anthropogenic CO2 significantly, infrastructure development will likely remain stagnant. 

62

To address this issue, last year the Finance committee approved a tax credit for 

the capture and sequestration of CO2 of $10.00/ton in connection with EOR and $20/

ton for non-EOR projects for up to 75,000,000 tons sequestered. From Denbury’s 

perspective, this would be sufficient to incentivize construction of additional pipelines from emission sites to geologic sequestration sites in connection with EOR activities. Unfortunately, this provision was not included in the energy legislation ultimately signed into law in December. We hope that Congress will address the issue 

of CCS costs in 2008, especially those associated with capture and compression, and 

note that proposed projects from gasification through to sequestration have the potential to create hundreds and perhaps thousands of jobs across the country. On this 

point, S. 2144 directs the Secretary of Energy to study technical and financing 

issues related to the construction and operation of CO2 pipelines and sequestration 

facilities. While this will be helpful to policymakers, the legislation should also direct the Secretary to consider these same issues in relation to CO2 capture, separation, purification and compression. 

II. TRANSPORTATION

The most economical way to transport CO2 is through pipelines at pressures in 

excess of 1100 psi so that the CO2 is transported as a supercritical fluid (dense 

phase). At pressures in excess of 1100 psi and temperatures common for CO2 pipelines, CO2 is a supercritical fluid which means that the CO2 has properties of both 

a liquid and a gas. Larger volumes of CO2 can be transported through CO2 pipelines 

in this dense phase than can be transported as a gas. Given the pressure requirements to maintain CO2 in the dense phase, CO2 pipelines are generally operated 

at pressures greater than 2,000 psi. This pressure is well in excess of the average 

operating pressure of a natural gas pipeline, though the material used to manufacture both types is the same. 

A. Safety 

CO2 is not as dangerous to transport as some other gases, such as hydrogen and 

natural gas because it is not explosive, flammable or poisonous. The primary safety 

issue with transporting CO2 is asphyxiation caused by a leak in a pipeline. Although 

there have been a few accidents, releases and leaks reported, none of the dozen 

leaks that occurred from 1986 to 2006 resulted in significant injury. The characteristics of anthropogenic CO2 and natural CO2 are essentially the same. Thus, whether natural CO2 or anthropogenic CO2 is being transported in a CO2 pipeline for the 

purposes of being delivered to an enhanced oil recovery project or being delivered 

to a deep saline reservoir sequestration project is irrelevant to the safe construction 

and operation of a CO2 pipeline. At the present time there exist over 3,500 miles 

of dedicated CO2 pipelines, most of which have been transporting CO2 for over 20 

years—and some for over 30 years—with an excellent safety record. We do not see 

any evidence to suggest that the current regulatory framework that oversees construction and operation of CO2 pipelines should be modified. To the extent that consideration of safe handling, transportation, and sequestration issues by the Department of Energy, as S. 2144 directs, will address any lingering misconceptions about 

the relative safety of dense phase CO2, it will facilitate public understanding and 

acceptance of CO2 pipelines and sequestration projects. 

B. Siting 

At the present time federal eminent domain authority does not extend to CO2

pipelines. Several states have provided eminent domain authority to CO2 pipeline 

owners to assist in getting CO2 pipelines constructed. While this is helpful in constructing intrastate pipelines, individual state eminent domain powers may not extend to interstate pipelines that are just traversing through a state with no origin 

or terminus there. For this reason and due to the long distances across state lines 

that separate potential CO2 emission capture sites from potential EOR locations, 

federal eminent domain authority may ultimately be required to develop a nationwide CO2 pipeline infrastructure. In addition, some mechanism may be necessary 

to address the siting of pipelines and CCS generally on federal lands. S. 2144 directs 

the Secretary of Energy to study CO2 pipeline siting issues, which should facilitate 

a thoughtful approach by policymakers. 

C. Rates 

Any contemplation of federal regulation of CO2 transportation rates and pipelines 

similar to the regulations that currently exist for natural gas, oil or products pipelines is premature, as there is no interconnected system of CO2 pipelines to which 

to apply any such regulation, nor prospects for development of one for many years, 

nor reasonable prospects for development of a ‘‘retail’’ market for CO2 with large 

63

numbers of ‘‘users’’ of the CO2. At the present time there are very limited areas with 

existing CO2 pipelines and limited industrial CO2 emissions being captured (North 

Dakota Gasification). The vast majority of the existing CO2 pipelines are transporting natural CO2 from natural underground CO2 production sources that are 

owned and operated by the CO2 pipeline owner—generally for use in enhanced recovery projects also owned and operated by the CO2 pipeline owner. In cases where 

the owner of the CO2 pipeline has CO2 production volumes in excess of its own EOR 

requirements, the excess CO2 volumes are sold to EOR operators in other projects 

or to industrial gas suppliers. This limited number of regional CO2 shippers and 

consumers stands in marked contrast to the numerous and geographically widespread producers and consumers of oil and natural gas products. 

It would be a substantial mischaracterization to suggest that the U.S. has an integrated CO2 pipeline system similar to the fully integrated natural gas, oil or hydrocarbon products pipeline systems which have their transportation rates regulated by 

the Federal Energy Regulatory Commission (‘‘FERC’’). The natural gas, oil and 

product pipeline systems today consist of hundreds of thousands of miles of pipelines with significant interconnects between individual pipeline systems to accommodate the transfer of natural gas, oil or products from one pipeline system to the 

other. In contrast, existing CO2 pipeline systems are a tiny fraction of that size 

(3500 miles) and are not interconnected. (see Attachment No. 1) Several pipelines 

delivering CO2 for enhanced oil recovery in the Permian basin of west Texas are 

interconnected at Denver City, where CO2 can be transferred from one pipeline to 

another. The other CO2 pipeline systems in Wyoming, North Dakota, Oklahoma, 

and Mississippi are not connected to the Permian basin pipeline system or to each 

other. Thus, today no national CO2 pipeline system exists and no federal regulation 

to ensure access is necessary. 

Natural gas, oil and hydrocarbon products pipelines were constructed in a similar 

manner to today’s CO2 pipeline systems. Individual pipeline systems were developed 

to transport natural gas, oil or products from production sites to consumption sites 

in their infancy. Only after a significant period of time, were these individual systems eventually interconnected to allow the transfer from one pipeline system to the 

other. Although the Federal Power Commission and eventually the FERC was 

granted jurisdiction over the transportation rates for natural gas, oil and hydrocarbon products, the combination of regulating rates and requiring open access has 

only existed since 1985. Several decades passed between the time that individual 

pipelines were constructed and eventually interconnected to create an integrated 

intrastate pipeline system. CO2 pipelines should also be given room to grow before 

FERC-like regulation is contemplated. 

D. Costs 

The construction and installation of CO2 pipelines is a capital intensive effort, the 

costs of which have increased in recent years for a variety of reasons, including rising steel prices, construction costs and energy prices. By way of example, Denbury’s 

93 mile, 20 inch Freestate pipeline (see Attachment No. 2) completed in 2006 cost 

approximately $30,000 per inch-mile, resulting in an effective transportation rate of 

approximately $3.50/ton at full capacity. The initial 37 mile segment of Denbury’s 

24 inch Delta pipeline was completed in 2007 at a cost of approximately $55,000 

per inch-mile. We estimate that our planned 314 mile, 24 inch Green Pipeline that 

will run from Donaldsonville, Louisiana to Hastings field in southeast Texas will 

cost approximately, $100,000 per inch-mile resulting in an effective transportation 

rate of approximately $7/ton at full capacity. While the length (pumping stations to 

maintain adequate pressure add an additional $1 to $2 per ton to transportation 

costs), route obstacles and type of terrain all added to the estimated cost of the 

Green pipeline, the fact remains that such endeavors, even under the best of circumstances are extremely costly and take years of careful planning. As stated 

above, S. 2144 directs the Secretary of Energy to study technical and financing 

issues related to the construction and operation of CO2 pipelines. Such information 

should prove useful to policymakers seeking to understand the significant costs involved in developing the infrastructure of CCS. Also, any study of CO2 pipeline financing issues will undoubtedly encounter the tax code impediment discussed in the 

next section. 

E. Taxation 

Today, a substantial portion of all CO2, natural gas, oil and products pipelines in 

the U.S. are owned and operated by companies that are organized as Publicly Traded Partnerships commonly referred to as Master Limited Partnerships (‘‘MLPs’’), 

which through their lower cost of capital have been an important financing source 

for building these assets. Section 7704 of the tax code permits MLPs to be taxed 

64

so that income and tax liabilities are passed through to the partners, even though 

the MLPs are large public entities, provided 90 percent or more of the MLP’s gross 

income is derived from certain qualifying activities. These activities include exploration, development, processing and transportation of natural resources, including 

pipelines transporting gas, oil, or products thereof (see Sec. 7704(d)(1)(E)). While 

this provision covers the processing and pipelining of ‘‘natural’’ CO2, it is unclear 

whether it covers anthropogenic CO2. Because of this uncertainty, much of the existing CO2 pipeline capacity (that owned by MLPs) cannot currently be used to transport anthropogenic CO2 from emissions sites—at least not without significantly 

higher tax costs than other pipeline assets in the industry. 

Last year, as part of its energy tax package, the Senate Finance committee adopted a modification to include industrial source CO2 in the definition of qualifying income (see Sec. 817 of the Energy Enhancement and Investment Act of 2007, June 

19, 2007). However, Congress ultimately failed to include that package of provisions 

in the Energy Independence and Security Act of 2007 (P.L. 110-140). Without this 

modification of the tax code, a substantial 6 portion of the pipeline industry will 

most likely not contribute capital to the construction of the CO2 pipeline infrastructure necessary to facilitate CCS through transportation of anthropogenic CO2. We 

strongly urge Members of the Energy and Natural Resources committee to work 

with their colleagues on the Finance committee and the House Ways and Means 

committee to accomplish this important clarification. 

III. INJECTION / SEQUESTRATION

Enhanced oil recovery utilizing CO2 requires multiple injection wells throughout 

a unitized field or reservoir. CO2 injection wells are permitted and approved by each 

State’s division or department of Underground Injection Control utilizing the standards and policies issued by the EPA. CO2 injection wells utilized in tertiary oil recovery (a.k.a. EOR) are permitted and approved as Class II Injection wells. Such 

wells have been in existence for over 30 years. The CO2 sequestration commercial 

demonstration projects proposed in S. 2323 and enacted in the Energy Independence 

and Security Act of 2007 should yield additional helpful data on the ability of EOR 

and saline reservoirs to sequester CO2. 

In 2005, the Interstate Oil and Gas Compact Commission (‘‘IOGCC’’) issued its 

recommendations concerning CO2 injection wells in EOR and non-EOR applications. 

The IOGCC has recommended that future CO2 regulation should build upon the primarily state-based regulatory framework already in place, due to states’ decades of 

experience with CO2 EOR, natural gas storage, and acid gas injection. We concur 

with their recommendation that for future CO2 injections in EOR projects, the existing regulatory framework should not be modified. The IOGCC recommended that for 

non-EOR CO2 injections, additional regulatory requirements may need to be considered since these types of applications may not have a defined period of injection as 

does EOR. We also concur with the IOGCC recommendation that CO2 injection 

wells for non-EOR applications should be permitted and approved as a sub-class of 

Class II injection wells or a new classification but not permitted as Class I or V injection wells. 

Generally, every CO2 well drilled is required by state regulations to set and cement a surface casing string below the Underground Source of Drinking Water 

(USDW) depth to protect the fresh water and ground water intervals. Cement is required to be circulated back to the surface to insure that all potential zones above 

the USDW depth that contain freshwater are protected. Only after setting the surface casing are wells drilled to the depth required to produce oil and gas or to inject 

CO2. Once the well reaches total depth an additional casing string is cemented in 

the well to provide additional protection to the freshwater intervals and to produce 

or inject through. We believe existing laws and regulations provide sufficient protection of the fresh water and ground water reservoirs from the injection of CO2 in 

EOR operations or, for that matter, in deep saline reservoirs. 

The potential for significant migration or leakage from an EOR operation is extremely remote due to the geological nature of oil and gas reservoirs and the existing mechanism that has trapped the oil or gas. At the present time oil and gas operators are required under their mineral leases and state regulations to properly plug 

and abandon wellbores within a reasonable period after oil and gas operations cease. 

Responsibility for re-plugging an improperly plugged well remains with the oil and 

gas operator for an extremely long period of time and, in practice, remains as long 

as the oil and gas operator is in existence. Such responsibility should be essentially 

the same for deep saline reservoir injection. However, the detailed geologic and engineering information required by states for EOR projects does not exist for saline reservoirs. Thus, information about deep saline reservoirs will have to be developed, 

65

taking into account that CO2, being less dense than saline water, will segregate due 

to gravitational forces and migrate to the highest subsurface position in the reservoir. As noted above, S. 2323 proposes, and the Energy Independence and Security 

Act of 2007 provided for, commercial demonstration projects, as well as a national 

CO2 storage capacity assessment. These undertakings should yield important data 

currently lacking on saline reservoirs. 

IV. CONCLUSION

The U.S. economy will continue to require massive amounts of energy well into 

the future and thus the country needs to use all of its resources to produce the energy it requires given economic and environmental realities. EOR is already playing 

an important role in this regard—taking a waste product and using it to increase 

domestic energy production—and can do so on a far greater scale, with little action 

required by federal policymakers. The most important step Congress can take at 

present is to amend Section 7704(d)(1)(E) of the tax code to make clear that anthropogenic CO2 is included. 

The two bills being considered by the committee today, S. 2144 and S. 2323, are 

clearly intended to provide meaningful vehicles to better understand the issues central to CCS and we commend the committee for focusing on them. While we agree 

that additional research and further study are worthwhile—as both bills propose—

we do not believe there is a need for comprehensive federal regulation, as Section 

5 of S. 2323 proposes. Of course, there are areas where federal oversight will likely 

be necessary, such as management of CO2 on and under federal lands. For the most 

part, however, Congress should simply provide necessary incentives and mechanisms to foster the development of CCS, allowing states to continue to oversee various aspects with which they already have significant experience.

The CHAIRMAN. Thank you very much. Thank you all for your excellent testimony. 

Let me start with you, Mr. Bengal. I think you make a point in 

your testimony which is fairly key to our consideration of this 

whole subject and that is that you say States and provinces are 

likely to continue to regard CO2 geologic storage reservoirs as a 

valuable resource that should be managed using resource management frameworks therefore voiding the treatment of CO2 storage as 

a waste disposal. I gather that what you have put together, your 

task force as you see it, deals with this not as a pollutant but rather as a resource that should be managed in that way. Could you 

clarify that for me? 

Mr. BENGAL. The CO2 in and of itself may be not the resource 

as much as the pore space you would be putting it into. Primarily 

there’s only so many places that would be good for CO2 storage. 

Not every State has good geologic sites and there’s some States 

that you should not store CO2 in because of the nature of the geology. It’s just not safe and sound. 

So there will be a competition for that pore space for those places 

where it is good that would be an economic benefit to a State who 

has that pore space to effectively manage that pore space. Ensure 

that No. 1, the maximum amount of CO2 is put into that storage 

area so it’s not wasted, the space is not wasted, to keep other entities from encroaching upon that area so it can be set aside just for 

a particular project. There’s a question about drilling through that 

site. If you had an entire site permitted and set aside for any particular project the State would then ensure that there’s no other 

penetration to the well bores to that site. 

So what we’re really talking about is we’re looking at the management of the pore space where you put the CO2 as basically the 

resource. The CO2 placed in that resource management frameworks 

deal with that because we deal with natural gas storage maximizing pore space to store the natural gas. With oil and gas you 

66

maximize recovery by managing the pore space much the same way 

here. 

In a waste framework you’re just looking at a place to inject 

something to get rid of it. You’re not managing effectively what 

you’re using and where it’s going. So that’s the way we want to 

look at it. It’s more regulatory framework issue as opposed to the 

CO2 itself. 

The CHAIRMAN. Let me ask, with my very limited knowledge of 

this subject at this point, it seems to me that a big problem is that 

much of the production of CO2 from power plants is not going to 

be particularly near the storage locations that we’re going to try to 

store or sequester this CO2 in. So we’re going to be talking about 

quite a few pipelines that are transferring this CO2 across several 

states. So there’s going to be a Federal responsibility once you get 

an interstate pipeline. 

What do you see? I know you have a thing here saying that 

broader, overarching Federal regulation that’s like that contemplated in 2323 is not appropriate in your view. How do you see 

the Federal Government regulating that transportation if I’m right 

that the significant amount of interstate transportation is going to 

be required? 

Mr. BENGAL. What we’re referring to basically is the storage site 

itself and not the transportation system. That would be a Federal 

role. The pipelines and the infrastructure for that would remain a 

DOT role as it is or a FERC role. 

We’re basically talking about the regulation of the site, the licensing of the site, the long term storage and things like that is 

what we’re referring to and the Federal regulations that would deal 

with that. With respect to the location and the cost of CO2 from existing power plants, you’re absolutely correct. The cost of right now 

to retrofit an existing power plant to concentrate the CO2 from that 

emission stack and then transport it somewhere, a distance for 

storage which is many years off in the future for sure. 

What we’re looking at is initially, I think the first projects would 

be basically a plant built for that purpose at a storage site where 

you have minimal transportation. Those are the kinds of projects 

we need to get going on first and right away as opposed to planning for this massive retrofitting of all existing power plants and 

a massive pipeline system which we don’t need to do first. We need 

to get some major projects going right now. The technology exists. 

The regulatory frameworks are in place right now to do that. 

The CHAIRMAN. Senator Corker. 

Senator CORKER. Yes, sir, Mr. Chairman. Thank you for your testimony, all of you. Mr. Anderson, you talked about how coal is 

going to be moving into a new era. I can’t help but think, based 

on all the complications that center around either the cost of transport that Mr. Evans talked about and just the geographic differences that exist between where carbon is produced and where 

it’s going to be stored, that really, unless there’s huge allowances 

that are laid out for coal on the front end, that basically coal is 

going to go through a really, really tough period of time beginning 

in 2012 if a bill does pass regarding carbon cap and trade which 

I’m not saying is a plus or minus. I’m just making an observation. 

Do you have any comment on that? It just seems to me that the 

67

price of coal, the cost of coal produced electricity is going to skyrocket in the beginning as some of these other more complicated 

things are worked out. I wonder if you have any comment in that 

regard. 

Mr. ANDERSON. The studies that I’m familiar with project a very 

large role for coal based CCS in the future under regimes like this. 

The International Energy Agency for example has estimated that 

by 2050 that CCS could rank second only to energy efficiency as 

a contributor to solving global warming. There are other estimates 

that project a 15 percent to 55 percent contribution. 

So while I think that business as usual is over for coal, I think 

coal has a very bright future. 

Senator CORKER. That it has a bright future just at a different 

cost structure? 

Mr. ANDERSON. Yes, sir. 

Senator CORKER. Mr. Evans do you have any comments in that 

regard? 

Mr. EVANS. The comments I have, Senator, would be that the actual cost of transportation when you look at it although it’s one 

third of the cheapest sources, it becomes a much, much lower component of say from an existing coal fired power plant. It may be 

as low at 10 percent of that cost. So really the cost on conventional 

coal today is primarily in the capture side not the transportation. 

As we develop sequestration in general with EOR the oil and gas 

companies can build pipelines to capture the CO2 and transport to 

their oil fields. We can cover that cost of the transportation and the 

sequestration side. It’s how much of the capture cost in addition to 

that are we able to cover. 

Senator CORKER. What kind of commercial market for carbon 

other than for use in enhanced oil recovery do we see 15, 20 years 

out? What part of the carbon that will be produced can actually be 

used for other commercial uses other than enhanced oil recovery? 

Mr. EVANS. If I do a comparison in Mississippi we produce almost 550 million cubic feet a day of CO2. About 80 million cubic 

feet of that goes into industrial uses to make dry ice, freeze chickens, industrial uses of CO2 so there you’re looking at around 20 

percent. That market has only been growing about two to 3 percent 

a year. So I don’t know that there’s going to be without significant 

discoveries of other uses for CO2 much use of it other than EOR 

or permanent sequestration. 

Senator CORKER. Mr. Chairman, thank you. 

The CHAIRMAN. Thank you. 

Senator Lincoln. 

Senator LINCOLN. Thank you, Mr. Chairman. Again welcome 

gentlemen. We appreciate your expertise in working with us. 

Mr. Bengal you mentioned some states have begun the process 

of beginning a legal and regulatory structure for carbon storage. 

What are some of those or who are some of those States? 

Mr. BENGAL. California, New Mexico, Wyoming, North Dakota, 

Texas and several other States. 

Senator LINCOLN. So there are a few. 

Mr. BENGAL. Yes, they’re working on legislation as well as rules 

to move CO2 storage along in their States. 

68

Senator LINCOLN. What was the other or whoever was on your 

task force? Was there other expertise there? 

Mr. BENGAL. Yes. The task force consisted of actually of two task 

forces through phase one and phase two. But it was State oil and 

gas regulators from various oil and gas States, representatives 

from the various DOE partnerships, the Association of Professional 

or state geologists, State geologic surveys, representatives from 

DOE, EPA, BLM and Environmental Defense was an observer during the process of our rules development. 

Senator LINCOLN. So you had quite a wide——

Mr. BENGAL. Yes. There were industry experts as well. 

Senator LINCOLN. I don’t know that you’ve gotten into this yet 

today and maybe I’m being redundant. I hope not. But you might 

explain to me the issue regarding storage rights. 

Mr. BENGAL. Much like natural gas if you’re going to store something underground like you do natural gas the pore space is owned 

by someone. It’s mineral right. It’s a property right and you can’t 

just use that without the property rights authority to do so. 

That has to be acquired and that’s generally, probably akin to 

the natural gas storage industry where it belongs to the surface 

owner. So in order to store these amounts of CO2 we’re talking 

about even though you may have a very large area an operator will 

have to acquire the right to store it in that area. There was a question before where’s the plume going to go? How are you going to 

manage the plume for future liability? 

You’re going to know that before you start because that operator 

is going to have to own and control the entire area where that 

plume will go. That’s a very large undertaking to do to acquire 

those rights. So that will be worked out prior to injection what the 

ultimate static disposition of that plume will be because it will be 

owned and controlled by owning those property rights. 

Senator LINCOLN. That seems like that would be quite the 

lengthy process. I know just with the Fayetteville shale drilling 

that is going on in Arkansas the mineral rights and property rights 

and how they’ve gone in there has taken quite a bit of time. 

Mr. BENGAL. It will be in a natural gas storage setting. States 

do that through eminent domain condemnation proceedings. You 

get a certain percentage of the site locked up and then you would 

go to the State and condemn the rest to move that project forward. 

Senator LINCOLN. In terms of the—maybe you can help explain 

a little better too, more detail, how you see the state framework 

working with the EPA framework? Is that kind of like a MOA or 

how do they do that? 

Mr. BENGAL. Right now the UIC program, the Underground Injection Program, most states have the authority through privacy 

from the U.S. EPA to administer that program at the State level 

for the U.S. EPA in each state. 

Senator LINCOLN. So they’ve already got that? 

Mr. BENGAL. They’ve already got that. In a few States, a direct 

implementation State, the EPA does on its own. But for those 

States that do have privacy whatever EPA changes the regulations 

to be they’re automatically incorporated into the State functions 

that exist and are ongoing now. 

69

Senator LINCOLN. Is there something special about Federal land. 

Is there something that—does there need to be regulations of CO2

storage specifically on Federal lands? 

Mr. BENGAL. They probably will have to develop a similar type 

of framework for regulation that we would have on private lands 

within the States. The State would probably be involved in that. 

I don’t see why it would have to be much different than what the 

States would do on private lands. The one benefit of Federal lands 

is you have one mineral owner or one surface owner for the entire 

project. You could actually site projects very succinctly and not 

have to deal with the property issue at all. 

Senator LINCOLN. Last just about emissions trading or accreditation of storage projects for the purposes of securing the carbon 

credits. Does your proposed infrastructure cover that as well? 

Mr. BENGAL. No. We do not do that. We dealt with just the technology and the legal framework for the storage itself. That’s probably going to be worked out at the marketplace or be federally—

under the cap and trade system and you’ll have to figure that out. 

We will fit in whatever it is. 

Senator LINCOLN. We’re always grateful for any suggestions or 

models you might have already come up with. 

Mr. BENGAL. Just don’t do more than you have to. 

Senator LINCOLN. Ok. Thank you, Mr. Chairman. 

The CHAIRMAN. All right. I think that’s the end of our questions, 

and thank this panel very much. This was very useful testimony 

and we think it is a useful hearing. Thank you. 

[Whereupon, at 4:25 p.m. the hearing was adjourned.] 

(71)

APPENDIXES 

APPENDIX I 

Responses to Additional Questions 

RESPONSES OF SCOTT ANDERSON TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Many people have called for ‘‘permanent’’ storage in introduced legislation (e.g. all the introduced climate bills), but do not go so far as to define permanence. Can any one of you elaborate on a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? 

Answer. We suggest using retention of at least 99% for at least 1000 years as the 

standard for ‘‘permanence.’’ The Intergovernmental Panel on Climate Change has 

indicated that it is feasible to meet such a standard in well-selected, well-managed 

sites. 

Question 2. What is the appropriate amount of time that CO2 should be stored 

in the subsurface, as means of mitigating CO2 emissions? Will storage times of that 

magnitude be burdensome on CCS projects? 

Answer. We are hopeful that a 1,000 year standard as suggested above will assure 

that any material leakage that takes place will occur well beyond the era of fossil 

fuels and therefore at a time when climate change due to emissions of greenhouse 

gases such as CO2 is no longer an issue. We do not expect such a standard to be 

burdensome and in fact we expect that well-executed projects will have minimal 

leakage for even longer times. Studies at the Weyburn project, for example, indicate 

a 95% probability that 98.7 to 99.5% of the sequestered CO2 will remain in the geosphere after 5,000 years and that there will be even less leakage as time goes on. 

The longer CO2 is contained underground the more likely it is to stay contained due 

to mineralization, dissolution in formation water, and residual trapping in pore 

spaces. See Whittaker, S., White, D., Law, D, and Chlaturnyk, R., IEA GHG 

Weyburn CO2 Monitoring & Storage Project Summary Report, Petroleum Technology Research Center, Regina, 273 (2004); Damen, K., Faaij, A., and Turkenburg, 

W., Health, Safety and Environmental Risks of Underground CO2 Storage—Overview of Mechanisms and Current Knowledge (Springer 2006). 

Question 3. Is there any amount of leakage that is acceptable? The IPCC suggests 

that storage should be on the order of 1000 years in a geologic formation, with less 

than 1% leakage of the volume of CO2 that is injected over the life of the storage 

project. Is this a reasonable expectation? How can we enforce such a requirement? 

Answer. Some have calculated that leakage rates as low as .01% per year, implying 90% retention over 1000 years, might be acceptable from the perspective of climate change policy. Hepple, R. and Benson, S., Implications of Surface Seepage on 

the Effectiveness of Geologic Storage of Carbon Dioxide as a Climate Change Mitigation Strategy, in Gale, J. and Kaya, Y. (eds), Sixth International Conference on 

Greenhouse Gas Control Technologies, vol. I, 261–266 (2003). We believe that the 

99% for 1000 years standard is feasible and provides a better margin of safety. 

In order to enforce such a requirement, it will be necessary to: (1) require that 

sequestration projects take place only at well-characterized, properly selected sites; 

(2) require project developers to define the containment system and explain why it 

is reasonable to expect the system to contain the appropriate amount of CO2 for the 

appropriate time frame; (3) require the developer to model and project the fate of 

the CO2 in the containment system; (4) require monitoring to confirm or modify the 

definition of the containment system and to confirm or modify the projections regarding the fate of CO2 in the system; (5) require that operations be modified if 

monitoring indicates that a risk of unacceptable leakage is developing; and (6) reVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00075 Fmt 6601 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
72

quire remediation where problems develop that cannot be adequately resolved 

through modification of operations. 

Question 4. In your written testimony, you support the coordinated efforts of the 

EPA, DOE, and DOI that are specified in Senator Kerry’s bill (S.2323). Would there 

be any additional agencies, organizations, or individuals who you feel should be involved in the interagency task force? (e.g. in the case of ultimate liability of storage 

sites the Department of Justice may need to be consulted, DOT & FERC for pipelines issues, etc.) 

Answer. Yes, the Department of Justice, DOT and FERC could all have valuable 

roles to play. 

Question 5. You also state in your testimony a need to specify ‘‘permanent’’ geologic storage. In your opinion and that of Environmental Defense, how would you 

define permanent storage? 

Answer. Please see answer to question 1 above. 

RESPONSES OF SCOTT ANDERSON TO QUESTIONS FROM SENATOR DORGAN

Question 1. I also think it’s important that the general public have an understanding of how vastly important an issue this will be to our energy future. In your 

judgment, what will it take for the general population to better understand and support the approaches associated with carbon capture and storage? 

Answer. Education is important in order to achieve public understanding and support. A sound, rigorous regulatory framework is also essential. In addition, the public is more likely to support CCS if it views the technology as only one tool among 

many for combating climate change, as opposed to viewing CCS as being in competition with renewables and energy efficiency. 

Question 2. Coal and oil & gas are two different sectors that traditionally have 

little history of working together. Today, through enhanced oil recovery opportunities, we are seeing these partnerships beginning to take shape. What kind of new 

relationships and partnerships will have to be established in order to achieve larger 

scale carbon capture and storage projects? How can we build on these and other 

public and private sector relationships to expand this into an industry (regional or 

national)? 

Answer. Putting a market value on carbon sequestration by passing cap and trade 

legislation is the single most important thing Congress can do in order to encourage 

these relationships. Once this is done, the market will be able to become the primary driver for answering questions about the types of relationships and partnerships that ought to arise. 

RESPONSE OF SCOTT ANDERSON TO QUESTION FROM SENATOR MENENDEZ

Question 1. Mr. Anderson, I agree with your testimony that carbon capture and 

sequestration technology needs to be advanced and I agree with you that a cap and 

trade bill would be the best way to make sure this technology is developed quickly. 

But I also do not want us to lose focus on the fact that we need to eventually transform our economy from one based on fossil fuels to one based on renewables. I am 

curious about your views on what the balance between funding for CCS and renewable should be. For instance, the Administration is asking for more funding for research on the technology than they are asking for in solar research. Is this the correct balance in your opinion? 

Answer. We support the proposed level of CCS funding because it seems proportionate to current RD&D needs. This funding level should not be permanent, however. Once these investments have been made, the investment incentive in the future will need to come from the price signal induced by cap and trade legislation. 

Publicly-funded research needs for renewable energy are likely to remain large for 

a longer period of time, and accordingly we hope that the balance between CCS investments and investments in solar and other renewable energy will improve as 

time goes on. 

RESPONSES OF BENJAMIN H. GRUMBLES TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Many people have called for ‘‘permanent’’ storage in introduced legislation (e.g. all the introduced climate bills), but do not go so far as to define permanence. Can any one of you elaborate on a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? 

Answer. There is currently not a precise definition of ‘‘permanent CO2 storage.’’ 

Effectiveness of geologic storage is contingent on CO2 remaining stored underground 

for a long period of time. A desirable timeframe for geologic storage of CO2 is on 

73

the order of thousands of years or longer. However, effectively sequestering CO2 for 

even a few hundred years could provide valuable flexibility in reducing CO2 emissions and contribute to reducing the costs of mitigating climate change. 

Accumulation of CO2 in natural geologic formations has been underway as a natural process in the earth’s upper crust for hundreds of millions of years. In most 

proposed carbon capture and storage (CCS) projects, the goal is to remove CO2 from 

the atmosphere, and store it in the subsurface for significant periods. Thus, ‘‘permanent’’ means some long period of time that provides a reasonable assurance that the 

majority of the CO2 will stay in place over a number of years (100’s to 1,000’s). 

Eventually, an increasing portion of CO2 stored in the subsurface will be trapped 

through processes such as formation of minerals, and hydrodynamics with the result 

that this portion of the CO2 would be sequestered at a geologic time scale of millions 

of years. As we gain knowledge from geologic storage projects, a more precise understanding of ‘‘permanent CO2 storage’’ should emerge. 

For the purposes of EPA’s proposed rulemaking under the Underground Injection 

Control (UIC) program, we have not defined this term. However, CO2 will be stored 

for long periods of time (e.g., centuries) and EPA’s regulations will ensure that CO2

storage is conducted in a manner that does not endanger underground sources of 

drinking water. 

Question 2. What is the appropriate amount of time that CO2 should be stored 

in the subsurface, as means of mitigating CO2 emissions? Will storage times of that 

magnitude be burdensome on CCS projects? 

Answer. DOE and others are conducting pilot scale geologic sequestration projects 

to help better understand these questions and others. CO2 storage in geologic formations can mirror the timescale of oil and gas deposits in formations containing naturally occurring carbon dioxide gas. These formations have held these fluids for millions of years. A desirable timeframe for geologic storage of CO2 is on the order of 

thousands of years or longer. 

Demonstrating storage over these timeframes should not be overly burdensome. 

For well-selected, designed, constructed and managed geologic storage sites, the vast 

majority of CO2 will gradually be immobilized by various trapping mechanisms and, 

in that case, could be retained for up to millions of years. Because of these mechanisms, storage could become more secure over longer timeframes (IPCC 2005). 

Question 3. Is there any amount of leakage that is acceptable? The IPCC suggests 

that storage should be on the order of 1000 years in a geologic formation, with less 

than 1 % leakage of the volume of CO2 that is injected over the life of the storage 

project. Is this a reasonable expectation? How can we enforce such a requirement? 

Answer. EPA is currently deliberating on several of these issues as the Agency 

works to develop a regulatory proposal under the UIC program. EPA anticipates 

that some CCS projects will exhibit a certain amount of leakage within the subsurface, however, safeguards such as leak detection and monitoring will protect 

against leakage that endangers underground sources of drinking water. The Agency 

is considering requiring monitoring for leakage to the atmosphere as it is an indicator of potential leakage to or endangerment of underground sources of drinking 

water. 

Question 4. In the context of the national regulations that you are developing for 

carbon storage, have/will you make a clear definition of the appropriate storage time 

for CO2 in the subsurface? Will you be proposing acceptable leakage rates and be 

mandating a minimum storage time? If so, how will you enforce this regulation? 

Answer. EPA is currently deliberating on these issues as it works to develop a 

proposed regulation. 

Question 5. In the case of other ‘‘pollutant’’ storage, the EPA has mandated 10,000 

years residence time for the pollutant (or waste product) in the geologic subsurface. 

Do you anticipate proposing this sort of mandatory time restriction? In the case of 

Yucca Mountain this has proved to be very burdensome in the permitting/regulatory 

process. 

Answer. EPA is in the middle of a deliberative process as it develops its proposed 

regulations and is considering this, among many other issues. 

Question 6. According to a study conducted by Argonne labs, there is a perception 

from state EPA employees that they are currently inadequately trained, underfunded, and understaffed for handling the existing UIC program. After you complete 

the new regulations that you have described in your written testimony, do you anticipate that the state and regional EPA offices will have enough manpower, fiscal 

resources, training, and expertise to effectively implement these new rules? Should 

new staffing be required? How will this be funded? 

Answer. While CO2 storage raises new technical considerations, EPA is committed 

to continuing to support regional and state regulators for the purposes of implementing the UIC program. Currently, EPA provides nearly $11 million annually to 

74

assist primacy states and EPA regions where states do not have primacy with UIC 

program implementation. EPA directly implements programs in 10 states and 

shares responsibility in 7. The FY 2009 President’s Budget requests $10.9 million 

for this work. 

We would note that the Clean Air Act Advisory committee’s (CAAAC) Advanced 

Coal Technology Work Group, which recently issued its final report, developed a recommendation regarding this topic. Specifically, the Work Group recommended that 

EPA, working with other agencies, ‘‘sponsor education and training programs for 

regulators and other officials involved in the permitting and monitoring of carbon 

capture and sequestration projects’’ (more information is available at http://

www.epa.gov/air/caaac/coaltech.html). EPA is currently preparing a more indepth 

evaluation of this issue in order to respond to CAAAC. The President’s Budget requests a total of $3.9 million for UIC regulatory work in FY 2009, which the Agency 

could partially target to help address the CAAAC recommendation. 

RESPONSES OF BENJAMIN H. GRUMBLES TO QUESTION FROM SENATOR DORGAN

Question 1. It seems to me that we need to much more quickly begin establishing 

and defining the ‘‘rules of the road’’ when it comes to carbon management. As we 

begin to unlock the opportunities for capturing, moving and storing larger amounts 

of CO2, it is fair to say that the federal government will likely play a greater role. 

It will be better if we begin to better define appropriate roles for local, state and 

federal government. What are the most critical near-term issues that your agency 

can address so that developers can begin demonstrating CCS projects? 

Answer. EPA understands the importance of clearly defining roles and responsibilities. Under the Safe Drinking Water Act, EPA develops minimum requirements 

for state and tribal Underground Injection Control (UIC) programs. Primacy states 

may develop their own regulations for injection wells in their state. These requirements must be at least as stringent as the federal requirements (and may be more 

stringent). 

EPA has been working closely with DOE over the past several years as they implemented their CCS research and development program. The Agency recognized 

the critical near-term issue associated with facilitating UIC permits for demonstration projects to ensure that projects are carried out in a manner that does not endanger underground sources of drinking water. To address this, in March 2007, EPA 

issued guidance on permitting experimental projects as Class V injection wells. EPA 

plans to propose regulations in the summer of 2008 to ensure consistency in permitting fullscale CO2 geologic sequestration projects. Final regulations would be issued 

by 2011. As with our other regulations, when EPA publishes new federal regulations 

with specific criteria and standards for constructing, operating, and closing CO2

wells, a primacy state would need to adopt these standards and classes of wells and 

seek approval from EPA. In the interim, states will be able to permit CO2 wells 

under existing EPA regulations and guidance. 

Question 2. Creating an infrastructure to capture, transport, store, and monitor 

CO2 will take greater federal resources including staff, technology and other elements. Do you think your agency is well-equipped to begin to undertake this enormous challenge? 

Answer. There are several federal agencies that will play a role in establishing 

a national program to carry out carbon dioxide capture and storage (CCS) on the 

scale that will be needed to address climate change. While EPA itself will not undertake infrastructure projects, the Agency is responsible for implementing environmental statutes and other programs that may affect deployment of CCS. EPA has 

been and continues to thoroughly examine its CCS-related statutory and programmatic responsibilities in order to prioritize Agency efforts. 

Along those lines, establishing a regulatory framework for geologic sequestration 

(GS) under the UIC program is an integral step towards creating an enabling framework for CCS. EPA is committed to continuing to provide funding and resources for 

regional and state regulators for the purposes of implementing the UIC program. 

Currently, UIC programs receive nearly $11 million annually to assist in implementing their programs. 

The UIC Program has regulated over 800,000 injection wells for over 35 years. 

While the GS of CO2 is a new technology that poses a unique set of risks to underground sources of drinking water and human health, EPA believes that GS can be 

a safe and effective tool when wells are properly sited, operated, monitored, and 

closed. We believe the UIC program provides an appropriate regulatory framework 

within which to manage the injection of CO2 to ensure protection of underground 

sources of drinking water. 

75

Question 3. Many of the introduced climate change bills have called for ‘‘permanent’’ storage, but do not go so far as to define ‘‘permanence.’’ Since the EPA may 

have a role in monitoring CO2, does the agency have a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? Would there be any amount of 

leakage that is acceptable? What is reasonable? How can we enforce such a requirements? 

Answer. Effectiveness of geologic storage is contingent on CO2 remaining stored 

underground for a long period of time. A desirable timeframe for geologic storage 

of CO2 is on the order of thousands of years or longer. However, effectively sequestering CO2 for even a few hundred years could provide valuable flexibility in reducing CO2 emissions and contribute to reducing the costs of mitigating climate change. 

For the purposes of EPA’s proposed rulemaking under the UIC program, we have 

not yet defined this term. Generally, the CO2 will need to be stored for long periods 

of time (e.g., centuries or millennia) in a manner that does not endanger underground sources of drinking water. 

EPA is currently deliberating on several of these issues as the Agency works to 

develop a regulatory proposal under the UIC program. EPA anticipates that some 

CCS projects will exhibit a certain amount of leakage within the subsurface, however, safeguards such as leak detection and monitoring will protect against leakage 

that endangers underground sources of drinking water. The Agency is considering 

requiring monitoring for leakage to the atmosphere as it is an indicator of potential 

leakage to or endangerment of underground sources of drinking water. 

Question 4. Could you elaborate more about how the EPA could work with state 

regulations to monitor CO2? Would there be similarities to how you monitor the UIC 

program? 

Answer. The Safe Drinking Water Act, 42 U.S.C. 300h-1, allows States to apply 

to EPA for primary enforcement responsibility to administer the UIC program; those 

States receiving such authority are referred to as ‘‘Primacy States.’’ For UIC Class 

I,111, IV and V wells, states must meet EPA’s federal minimum requirements for 

UIC programs, including minimum construction, operating, monitoring and testing, 

reporting, and closure requirements for well owners or operators. Where states do 

not seek this responsibility or fail to demonstrate that they meet EPA’s federal minimum requirements, EPA is required, by statute, to implement a UIC program for 

such States (42 U.S.C . 300h–1(c)). We expect that states who wish to implement 

a CCS program would be subject to similar requirements for primacy and would 

need to demonstrate that they meet EPA’s federal minimum requirements for CCS. 

RESPONSE OF BENJAMIN H. GRUMBLES TO QUESTION FROM SENATOR MENENDEZ

Question 1. Mr. Grumbles, CCS technology does not necessarily address other environmental problems with coal fired power plants. Coal is a major source of air pollution, with coal-fired power plants spewing 59% of total U.S. sulfur dioxide pollution and 18% of total nitrogen oxides every year. Coal-fired power plants are also 

the largest polluter of toxic mercury pollution, the largest contributor of hazardous 

air toxics, and release about 50% of the nation’s particle pollution. In addition, mining coal itself can pollute groundwater and devastate landscapes. Do you agree that 

even with an effective carbon capture and sequestration program that other environmental harms from coal need to be addressed before CCS technology can truly usher 

in an era of ‘‘clean coal?’’

Answer. EPA is committed to addressing environmental challenges associated 

with the use of coal, which is an abundant domestic energy source that is important 

to U.S. energy security. Under the Clean Air Act, EPA has made and will continue 

to make significant achievements in reducing major pollutants from coal fired power 

plants, including sulfur dioxide, nitrogen oxides, and mercury. Reductions in air pollution, since the 1990 Clean Air Act Amendments, have moved significantly further 

through policies such as the Clean Air Interstate Rule. The proposed rulemaking 

under the Underground Injection Control (UIC) Program is an important step towards ensuring protection of U.S. drinking water. EPA is also working under the 

Clean Water Act (CWA) with other Federal agencies, the States, and the coal mining industry to significantly reduce adverse impacts to the Nation’s waters from surface coal mining activities. We are using our CWA regulatory tools to ensure mining 

impacts to streams and wetlands are avoided wherever possible, and where impacts 

can not be avoided, we are requiring more effective mitigation and reclamation to 

offset these impacts. 

76

RESPONSES OF RONALD T. EVANS TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Many people have called for ‘‘permanent’’ storage in introduced legislation (e.g. all the introduced climate bills), but do not go so far as to define permanence. Can any one of you elaborate on a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? 

Answer. The only definition or measure of permanent storage of which I am 

aware is that set forth by the Intergovernmental Panel on Climate Change (IPCC) 

which states that storage should be on the order of 1,000 years in a geologic formation, with less than 1% leakage of the volume of CO2 that is injected. 

Question 2. What is the appropriate amount of time that CO2 should be stored 

in the subsurface, as means of mitigating CO2 emissions? Will storage times of that 

magnitude be burdensome on CCS projects? 

Answer. I am not an expert on climate change and thus not in a position to recommend the appropriate length of time CO2 should be stored underground to mitigate emissions. 

Whether or not storage times will be burdensome on CCS projects—specifically on 

projects undertaken in conjunction with enhanced oil recovery, Denbury’s area of operations—will depend on the nature and scope of any post-injection monitoring requirements. Denbury currently monitors and verifies CO2 volumes we inject in enhanced oil recovery projects in order to properly manage the project. When it is determined that all of the economically producible oil or gas has been recovered, the 

projects are generally abandoned by properly plugging the wells. However, to date, 

we have not sequestered any volumes of CO2 for permanent storage and thus have 

no experience managing long-term monitoring requirements. Further, we are not 

aware of any companies, or governments for that matter, that have been in existence for 1,000 years. Thus, the 1,000 year period being suggested by the IPCC 

seems difficult to envision, much less manage, particularly without knowledge of 

what will be required to satisfy regulatory agencies overseeing CCS projects. 

Question 3. Is there any amount of leakage that is acceptable? The IPCC suggests 

that storage should be on the order of 1000 years in a geologic formation, with less 

than 1% leakage of the volume of CO2 that is injected over the life of the storage 

project. Is this a reasonable expectation? How can we enforce such a requirement? 

Answer. I am not an expert on climate change and thus not in a position to recommend the amount of CO2 leakage that is ‘‘acceptable.’’

It is difficult to say whether 1% leakage of the volume of CO2 that is injected over 

the life of the storage project is a reasonable expectation. Based on our experience, 

we believe that CO2 injected into a geological reservoir during and following the successful completion of enhanced oil recovery will remain in the ground permanently 

without leakage, assuming the project is abandoned properly following the recovery 

of the oil or gas. Subsequent events such as improper cementing, the drilling of 

wells through the geologic reservoir seeking additional minerals, or subsurface seismic activities, could cause the trapping mechanism to be breached, leading to some 

leakage. These risks can be properly managed to reduce the potential for leakage, 

but it is impossible to assert a particular percentage amount of leakage that is reasonable to expect from CCS projects generally. 

In the short run, to enforce any leakage limitation, credits for sequestration could 

be withdrawn or withheld proportionate to the amount of leakage from a particular 

site. The best way for the government to enforce such a limit over the long run 

would seem to be for the government to assume control over and/or responsibility 

for the stored CO2. 

Question 4. Is Denbury or other EOR companies concerned that the EPA regulatory effort may be too onerous or prescriptive? Do you think they should be the 

lead agency in developing regulations for CCS (at the State or Federal level)? 

Answer. It is difficult for Denbury to assess the EPA’s regulatory effort until the 

EPA proposes rules for comment. Nonetheless, we are concerned about how the EPA 

will eventually classify CO2 emissions, and subsequently, what requirements the 

EPA will propose concerning how to capture and store CO2. CO2 is not poisonous, 

explosive or flammable and has been vented for many years without incident. In addition, CO2 is currently consumed by individuals, consumed by plants, and utilized 

in the refrigeration of food. Thus, classifying CO2 as any sort of hazardous substance would be inconsistent with its safety and its current uses. 

I am not certain whether EPA is the appropriate lead agency in developing regulations for CCS. As stated in my written hearing testimony, Denbury agrees with 

the recommendation of the Interstate Oil and Gas Compact Commission (IOGCC) 

that future CO2 policies should build upon the state-based framework already in 

place, as this framework has provided an entirely safe development of infrastructure 

for EOR involving CO2. Based on Assistant Administrator Grumbles’ testimony at 

77

the hearing, the EPA plans to address the injection of CO2 emissions for CCS in 

its proposed rules this coming summer. His testimony indicated EPA would be 

working with a variety of government agencies within the existing framework of the 

underground injection control regulations. We believe that in developing proposed 

regulations on Underground Injection Control specific to CCS, EPA should work 

closely with the Department of the Interior’s Minerals Management Service, which 

has significant experience managing the nation’s natural gas, oil and other mineral 

resources. Question 5. Many industry professionals have indicated that for large scale CCS 

to take hold, government must help provide certainty by developing a legal and regulatory framework for the storage of CO2. Besides resolving technological hurdles, 

what are the first steps that the government can take specific to legal, regulatory 

or social elements that will allow more CCS projects to go forward? 

Answer. First, Congress should amend tax code Section 7704 to clarify that subsection (d)(1)(E) covers man-made, as opposed to just naturally occurring, CO2. With 

the current legal uncertainty in Sec. 7704, much of the existing CO2 pipeline capacity cannot be used—and new capacity may not get built—to transport anthropogenic 

CO2. This action would not be providing a new incentive for CCS; it would simply 

remove existing legal ambiguity. 

Second, as discussed in my written testimony, federal eminent domain authority 

may ultimately be required to develop a nationwide CO2 pipeline infrastructure. 

Third, we believe that the current regulatory structure is sufficient with respect 

to (a) CO2 pipeline safety, overseen by the Office of Pipeline Safety in the U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration, (b) CO2 pipeline access, which is not currently federally regulated and need not 

be, due to the small, regional, non-integrated nature of existing and planned CO2

pipelines, and (c) protection of the fresh water and ground water reservoirs from the 

injection of CO2, as provided in the Safe Drinking Water Act and by the EPA’s Underground Injection Control Program. 

Finally, we concur with the IOGCC’s recommendation that future CO2 regulation 

should build upon the primarily state-based regulatory framework already in place, 

due to the states’ decades of experience with CO2 EOR, natural gas storage, and 

acid gas injection. 

RESPONSES OF RONALD T. EVANS TO QUESTIONS FROM SENATOR DORGAN

Question 1. I also think it’s important that the general public have an understanding of how vastly important an issue this will be to our energy future. In your 

judgment, what will it take for the general population to better understand and support the approaches associated with carbon capture and storage? 

Answer. For the general population to better understand and support CCS, it is 

important to educate and disseminate information about various approaches to CCS, 

such as EOR, through various forums and Congressional hearings similar to the one 

held by this committee. The general public and legislators need to be educated about 

the various costs, merits and limitations of various energy sources, including the 

costs of CCS, available to the country along with reasonable forecasts of the energy 

needs of this country. 

Capturing and storing CO2 from various sources is technically feasible today, can 

provide additional sources of energy through enhanced oil recovery, and assist in the 

reduction of greenhouse gases. The transportation and sequestration of CO2 related 

to enhanced oil recovery has been safely demonstrated for over 30 years with no loss 

of life due to CO2 leakage. Particularly important is the necessity to distinguish between the relative safety of CO2 in comparison to the other materials transported 

via pipeline such as oil, natural gas, petroleum products and hydrogen. CO2 is not 

poisonous, explosive or flammable and thus poses far less risk when transported. 

Question 2. I have seen reports that indicate that over 200 billion barrels of oil 

may remain as residual oil in geologically complicated, partially-produced or in mature oil fields in the U. S. What can you tell me about the potential for oil recovery 

using CO2 EOR (enhanced oil recovery) that is practiced today versus the potential 

for so called ‘‘next generation’’ EOR technologies? 

Answer. The various technologies associated with EOR (e.g. water flooding, steam 

flooding, CO2 flooding, polymer flooding, advanced well designs, etc.) have been used 

and developed over the past thirty years. The CO2 flooding used by Denbury today 

is state of the art and the most efficient at recovering oil in the proper applications. 

Nonetheless, we continue to refine and improve EOR processes in an attempt to 

yield additional barrels of oil. Future technological advances will likely allow recovery of incremental volumes of oil, rather than result in a quantum leap or step 

change in amounts recoverable. 

78

In general, less than 50% of the oil discovered in this country was or will ever 

be produced, and thus a significant volume of oil is still in the ground and unable 

to be recovered without some sort of additional investment. The U.S. Department 

of Energy commissioned a study of the potential amount of oil that could be recovered from CO2 enhanced oil recovery. The results of this study, completed by Advanced Resources International in 2006, indicated that approximately 390 billion 

barrels of the 580 billion barrels of oil originally discovered will remain in the 

ground after primary and secondary methods are applied. Using current technologies it is technically possible to recover approximately 89 billion barrels via CO2

enhanced oil recovery. These technically recoverable barrels are based on several assumptions within the report concerning CO2 prices, oil prices and other variables. 

The report can be found at: http://www.fossil.energy.gov/programs/oilgas/eor/

TenlBasin-OrientedlCO2-EORlAssessments.html 

Question 3. Many industry professionals have indicated that for large scale CCS 

to take hold, federal and state governments must help provide certainty by developing a legal and regulatory framework for the storage of CO2. Besides resolving 

technological hurdles, what are the first steps that the government can take specific 

to legal, regulatory or societal elements that will allow more CCS projects to go forward? 

Answer. Please see my response to Senator Bingaman’s question #5. In addition, 

the Coal Fuels and Industrial Gasification Demonstration and Development Act, S. 

2149, which you introduced on October 4, 2007, includes the necessary clarification 

of Section 7704(d)(1)(E) to cover man-made CO2 and Denbury commends your leadership on this issue. 

Question 4. I believe that in the near term we need to find ways to create certainty for investors to deploy CCS projects. I introduced a bill called the Clean Energy Production Incentives Act (S. 1508) earlier this year that among other things 

includes a 10-year production tax credit for the storage of CO2. Developers receive 

a higher credit for permanent storage and slightly lower credit for using enhanced 

oil recovery techniques. The bill also included accelerated depreciation and tax credit bonds for CO2 capture and storage property. Can you talk more about the scale 

of incentives and how these incentives can accelerate development of large scale carbon capture and storage? Are the incentives adequate to incentivize near-term and 

long-term storage options? 

Answer. I agree that we need to find ways to create certainty for investors to deploy CCS. The production tax credits and accelerated depreciation of pipelines proposed in the Clean Energy Production Incentives Act introduced by you are meaningful incentives to encourage the development of large scale CCS. The proposed 

level of incentives should be sufficient to encourage the capture of the lowest cost 

emissions currently and a significant number of proposed gasification projects. Our 

analysis of the costs to capture, transport and store the lowest cost emissions indicates total costs of approximately $20/ton. Thus a $20/ton tax credit should be 

meaningful to projects that will be required to sequester their emissions in deep saline reservoirs. The corresponding lower amount, $10/ton for CO2 sequestered in 

EOR projects, is sufficient to encourage the development of additional enhanced oil 

recovery projects using volumes of captured anthropogenic CO2. These tax credits 

would encourage the development of CCS projects in the near term. 

Technological solutions will have to be developed in coming years to decrease the 

costs of CCS for many additional existing sources of CO2 emissions. The cost of CCS 

for many of these sources is up to $70/ton and potentially higher. The current proposed production tax credits are not sufficient to encourage or incentivize the capture and storage of these emissions. Necessary technology will only be developed, 

and the costs of CCS driven down for these sources, by getting the lowest cost CCS 

projects up and operating. As the lowest cost emissions get captured and research 

and development progresses, we are convinced that technological and cost breakthroughs will occur. However, delay in incentivizing the lowest cost CCS projects 

will delay the overall timeframe of the technology development necessary to ultimately address the higher cost emissions. 

RESPONSE OF RONALD T. EVANS TO QUESTION FROM SENATOR MENENDEZ

Question 1. You claim that government incentives are necessary to promote the 

use of man-made carbon dioxide in enhanced oil recovery [EOR] projects. I find this 

claim troubling on a number of levels. EOR was economically viable even back when 

we had cheap oil. Why isn’t $90 a barrel oil all the incentive needed? In fact, there 

are several existing projects which do in fact capture man-made carbon dioxide for 

use in EOR. The process is economically viable right now, without any government 

incentives. More importantly, using CO2 to recover more oil won’t stop global warmVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00082 Fmt 6601 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
79

ing because we may be putting some CO2 in the ground, but the extra oil we extract 

will lead to more emissions of CO2 when that oil is used. Why should EOR operations get credit for reducing greenhouse gas emissions, when the process is probably a wash at best in terms of the reduction of net CO2 reductions? 

Answer. In my written testimony, I stated that ‘‘without some means of reducing 

the cost of capturing anthropogenic CO2 significantly, infrastructure development 

will likely remain stagnant.’’ As explained therein, the cost of capturing and compressing anthropogenic CO2 is significant. EOR can indeed absorb a portion of the 

capture and compression costs, but the percentage of the capture and compression 

costs that EOR can cover is dependent upon the level of oil prices. The total cost 

of CCS from different industrial sources varies widely from $20/ton to over $70/ton. 

EOR can cover the costs of transportation and sequestration, which have seen significant increases over the last few years, and cover a portion of the capture and 

compression cost. Unfortunately, even with oil at $90 per barrel, EOR cannot cover 

100% of the CCS costs for a significant number of current emitters. 

Naturally occurring CO2 is generally priced as a percentage of oil prices. Thus, 

when oil prices were low, CO2 prices were reduced in order to keep projects economic, but at very low oil prices almost all of the projects were uneconomic. As 

prices have increased, the cost of naturally occurring CO2 has also increased. In addition to increasing CO2 costs, the capital costs associated with CO2 facilities and 

well work have increased substantially and in some cases the costs have more than 

doubled. 

The only significant use of man-made CO2 in EOR at present is EnCana Corporation’s use of CO2 from the North Dakota Gasification Project, which was made possible with significant support from the Canadian government. The other anthropogenic sources of CO2 currently captured and used in EOR in the United States, primarily in the Permian Basin of West Texas, are produced along with natural gas 

from underground reservoirs. The reason this CO2 is available at a relatively low 

cost is because the CO2 must be separated from the natural gas in order to sell the 

natural gas. This separation results in a relatively pure stream of CO2 that then 

only has to be compressed and transported short distances to the oil field. 

The reason EOR should qualify for whatever credit may eventually exist for reducing green house gas emissions is straightforward: First, America will continue 

to rely on fossil fuels to meet a substantial portion of its energy needs for the foreseeable future and a molecule of CO2 stored, whether in EOR or non-EOR sequestration, is a molecule that will not get vented to the atmosphere. Second, use of 

EOR to produce oil domestically avoids the significant emissions and potential spills 

associated with shipping oil from overseas. Third, according to a recent study of CO2

storage in connection with EOR commissioned by the U.S. Department of Energy’s 

National Energy Technology Laboratory, advances in technology could enable storage of 1.6 times as much CO2 in oil reservoirs as the CO2 content in the recovered 

oil. (See: http://www.netl.doe.gov/energy-analyses/ pubs/

Storing%20CO2%20w%20EORlFINAL.pdf) At present, EOR is the only viable process that can accept and use productively large volumes of anthropogenic CO2 that 

would otherwise be emitted. 

In addition, EOR benefits U.S. energy security by producing additional volumes 

of oil in the United States and displacing the necessity for imports from foreign 

countries. The barrel of oil produced by U.S. workers in the U.S. is worth significantly more in terms of domestic investment, jobs and energy security than the 

value of an imported barrel of oil. 

Keeping up with America’s ever-growing demands for energy while reducing emissions of greenhouse gases will take an enormous effort across all fields of energy 

development, all manner of industry, and all levels of society. If the twin goals of 

energy independence and a cleaner environment are to have any hope of being 

achieved without significant reductions in our standard of living, the country cannot 

afford to ignore particular resources or technologies; the U.S. must utilize every 

means available to it. EOR is not the answer to all of America’s energy and emissions challenges, but it is one of the only readily available alternatives that is working now and that can be broadly utilized in the near term if policymakers decide 

action is imperative. 

RESPONSES OF KRISTA L. EDWARDS TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Many people have called for ‘‘permanent’’ storage in introduced legislation (e.g. all the introduced climate bills), but do not go so far as to define permanence. Can any one of you elaborate on a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? 

80

Answer. I would respectfully defer to the U.S. Department of Energy and other 

agencies represented at the hearing. The U.S. Department of Transportation’s Pipeline and Hazardous Materials Safety Administration (PHMSA), through its two 

safety programs, prescribes and enforces standards for the design, testing, and 

maintenance of tanks, cylinders, and other containers used in the transportation 

and incidental storage of CO2. But we do not regulate any aspect of the long-term, 

permanent, or geologic storage of CO2 and, accordingly, have had no occasion to consider the requirements for permanent geologic CO2 storage. 

Question 2. What is the appropriate amount of time that CO2 should be stored 

in the subsurface, as means of mitigating CO2 emissions? Will storage times of that 

magnitude be burdensome on CCS projects? 

Answer. I would respectfully defer to other agencies represented at the hearing. 

As I mentioned in response to an earlier question, PHMSA’s oversight extends to 

hazardous materials transportation, including incidental storage, and we have had 

no occasion to consider the requirements for long-term geologic storage of hazardous 

materials. 

Question 3. Is there any amount of leakage that is acceptable? The IPCC suggests 

that storage should be on the order of 1000 years in a geologic formation, with less 

than 1% leakage of the volume of CO2 that is injected over the life of the storage 

project. Is this a reasonable expectation? How can we enforce such a requirement? 

Answer. I would respectfully defer to the other agencies represented at the hearing. As mentioned in response to an earlier question, PHMSA has had no occasion 

to consider standards for permanent or long-term geologic storage. 

Question 4. In your testimony you stated that CO2 pipelines have a strong safety 

record. Does your agency do any sort of public outreach to convey this message to 

the general public? 

Answer. Yes. PHMSA regularly posts safety-related data, including incident statistics, on our public website (http://primis.phmsa.dot.gov/comm/reports/safety/

PSI.html). In addition, PHMSA has several program initiatives focused on safetyrelated public education and outreach. The agency’s Community Assistance and 

Technical Services (CATS) program is devoted to enhancing public understanding 

about pipeline operations and risk controls through direct interaction with local officials and concerned citizens and the development and dissemination of training programs. CATS representatives working out of the agency’s five regional offices participate directly in community meetings and public hearings related to existing or 

proposed pipelines. As experienced pipeline engineers, our CATS representatives are 

uniquely qualified to answer public questions and concerns about pipeline operations and oversight. 

As part of a comprehensive approach to pipeline safety, PHMSA also requires 

pipeline operators to develop and implement system-specific public awareness programs targeting nearby communities. These programs are designed to enhance public understanding about pipeline risks and safety performance and to educate communities about the prevention, detection, and reporting of pipeline events. Together 

with our state partners, PHMSA reviews operators’ public awareness programs and 

enforces requirements under which operators must periodically evaluate their programs’ effectiveness in reaching targeted populations and satisfying information 

needs. 

Building on these efforts, PHMSA’s Pipelines and Informed Planning Alliance 

(PIPA) is bringing together a broad group of stakeholders (including industry, safety 

advocates, and state and local officials) to promote the development of risk-informed 

standards to guide land use and community planning. We launched PIPA in January of 2008 and have arranged working group meetings throughout the year, targeting a final report by January 2009. 

Question 5. Do you envision PHMSA taking on an expanded regulatory role 

should the existing CO2 pipeline network be expanded beyond its current geographic 

distribution? Are there any areas where CO2 pipelines may be more challenging to 

site and regulate? 

Answer. PHMSA’s existing pipeline safety program has provided effective oversight of CO2 pipelines since 1991 and will accommodate new CO2 pipelines, however 

and wherever they are located. From the perspective of public safety and environmental protection, the CO2 pipeline network can be expanded beyond its current geographic distribution using existing technologies and under existing safety standards and oversight arrangements. 

Under PHMSA’s current program, a limited number of states are certified to oversee hazardous liquid pipelines, including CO2 pipelines. To the extent that new CO2

pipelines are planned in other states, we will be prepared to work with state and 

local officials to address information requirements and, as appropriate, help states 

expand their program certifications to encompass CO2 pipelines. 

81

I would defer to other witnesses concerning the economic and regulatory challenges associated with siting of CO2 pipelines. 

RESPONSES OF KRISTA L. EDWARDS TO QUESTIONS FROM SENATOR DORGAN

Question 1. It seems to me that we need to much more quickly begin establishing 

and defining the ‘‘rules of the road’’ when it comes to carbon management. As we 

begin to unlock the opportunities for capturing, moving and storing larger amounts 

of CO2, it is fair to say that the federal government will likely play a greater role. 

It will be better if we begin to better define appropriate roles for local, state and 

federal governments.What are the most critical near-term issues that your agency 

can address so that developers can begin demonstrating CCS projects? 

Answer. PHMSA and our state partners currently oversee nearly 4,000 miles of 

CO2 pipelines under established and effective standards for public safety and environmental protection. The same oversight arrangements and standards will govern 

new CO2 pipelines, however and wherever they are configured and located. Accordingly, PHMSA foresees no significant challenges meeting its statutory responsibilities with respect to CCS projects involving pipeline transportation. We will be prepared to work with communities, prospective operators, and state pipeline safety 

programs to plan for the construction, operation, and oversight of new CO2 pipelines. 

Under our current program, a limited number of states are certified to oversee 

hazardous liquid pipelines, including CO2 pipelines. To the extent that new CO2

pipelines are planned in other states, we will be prepared to work with state and 

local officials to address information requirements and, as appropriate, help states 

expand their program certifications to encompass CO2 pipelines. 

Question 2. Creating an infrastructure to capture, transport, store and monitor 

CO2 will take greater federal resources including staff, technology and other elements. Do you think your agency is well-equipped to begin undertaking this enormous challenge? 

Answer. Yes. Having successfully overseen the operation of CO2 pipelines since 

1991, DOT is well-positioned to carry out its statutory responsibilities with respect 

to future CO2 transportation. PHMSA’s existing pipeline safety programs and standards are established and effective, as reflected in accident trends generally and the 

strong safety record of the roughly 4,000 miles of CO2 pipelines currently in operation. Since we introduced our Integrity Management program in 2000, the annual 

number of serious incidents involving hazardous liquid pipelines has reached historic lows, even as the size of the pipeline network has grown. Within these data, 

the safety record of CO2 pipelines is especially strong, with no incidents involving 

death or serious injury since the inception of DOT oversight in 1991. 

Together with our state partners, PHMSA currently oversees more than two million miles of natural gas and hazardous liquid pipelines, including pipelines carrying crude oil, refined products, highly volatile liquids, anhydrous ammonia and 

hydrogen, in addition to carbon dioxide. Because it is neither combustible, reactive, 

nor toxic, CO2 is the least hazardous of the materials regulated under our pipeline 

safety program. 

The Nation’s pipeline network is expanding, with numerous privately-financed 

pipeline construction projects currently underway and in the planning and permitting stages. Although I would defer to other members of the panel for more precise 

data and projections, we expect this growth to continue, without regard to any pipeline expansion associated with CCS projects. 

In accordance with the Pipeline Inspection, Protection, Enforcement, and Safety 

Act of 2006 and our FY 2008 appropriations, PHMSA is in the process of increasing 

the numbers of federal inspection and enforcement personnel and increasing financial support for state pipeline safety programs. The President’s FY 2009 budget proposes further increases in staffing and state grants, addressing a variety of new 

oversight demands, including the construction of new and expanded energy pipelines and the use of existing pipelines for the transportation of new fuel products 

and blends. 

PHMSA’s existing program can accommodate the expansion of CO2 pipelines, 

without significant new challenges or resource requirements. The current CO2 pipeline network accounts for roughly two percent of the hazardous liquid pipeline mileage under our jurisdiction (and less than 0.2 percent of the total pipeline mileage 

we oversee). Accordingly, even a significant expansion of the CO2 pipeline network 

will only marginally increase the mileage under our jurisdiction and is unlikely to 

necessitate any changes in our standards and oversight arrangements. PHMSA is 

prepared to work with communities and prospective operators to plan for new CO2

pipelines, and we will be prepared to oversee their construction and operation, just 

82

as PHMSA is doing today in connection with the expanding network of natural gas, 

crude oil, and refined products pipelines. 

As I mentioned in response to an earlier question, PHMSA anticipates that state 

pipeline safety programs may play a larger role in oversight of new CO2 pipelines, 

depending on the location and configuration of the new lines. We will be prepared 

to provide financial and technical support to states interested in participating in 

oversight of CO2 pipelines. 

RESPONSES OF LAWRENCE E. BENGAL TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Many people have called for ‘‘permanent’’ storage in introduced legislation (e.g. all the introduced climate bills), but do not go so far as to define permanence. Can any one of you elaborate on a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? 

Answer. Using the term ‘‘permanent’’ when referring to storage of carbon dioxide 

(CO2) unnecessarily identifies CO2 with the disposal of manmade ‘‘wastes’’, which 

essentially remain the same in the subsurface, unlike CO2. CO2 is a ‘‘natural’’ gas 

that, in addition to being part of the air we breathe, can be found naturally in the 

subsurface throughout the world. Naturally stored CO2 is part of the earth’s geologic 

processes. Injected CO2 will likewise become part of the natural earth processes, 

mineralizing, going into solution and eventually reaching a stability as do natural 

CO2, natural gas and crude oil reservoirs, in which CO2, natural gas and oil are 

‘‘stored’’ naturally for millennia. 

It is important also to realize that it is primarily during the active injection phase 

that there is a risk of leakage into the atmosphere. These risks can be significantly 

reduced if not eliminated by injecting the CO2 only into select geologically sound 

storage reservoirs and making certain through subsurface monitoring that the CO2

during the active injection phase is being contained within the storage interval. 

Once the injection ceases and the injection facility is closed, the risks of migration 

from the reservoir decrease exponentially as the CO2 incorporates with the reservoir 

environment. Should a leak be detected during the injection phase, remedial actions 

can be initiated to address the leak until the situation is mitigated. Although monitoring will continue during the post closure phase, it unlikely to reveal leakage that 

hadn’t been detected during and immediately after the active injection phase. 

In summary, at the time a site is closed, the regulator would be expected to have 

a good understanding of how the CO2 is behaving in the storage interval and a good 

deal of confidence that the injected CO2 is likely to remain in that interval over the 

very long term. As I have discussed, however, the term ‘‘permanence’’ seems to be 

more applicable to the situation where a non-natural man-made substance is being 

emplaced into the earth. In this case, in a very real sense, CO2 becomes part of the 

geologic environment into which it is emplaced. It is thus not so much ‘‘permanently’’ contained, as it is incorporated, albeit permanently, into the geologic system 

as are natural accumulations of oil and natural gas. 

Question 2. What is the appropriate amount of time that CO2 should be stored 

in the subsurface, as means of mitigating CO2 emissions? Will storage times of that 

magnitude be burdensome on CCS projects? 

Answer. The answer to the prior question basically answers this question as well. 

If all goes as anticipated in the storage of CO2 in an appropriate geologic reservoir, 

where during the injection, closure and post-closure phases no leakage from the 

storage interval has been detected by monitoring, it can generally be assumed that 

the CO2 has become integrated into the geology of the interval into which it has 

been emplaced. As previously discussed, there is no reason to anticipate post closure 

leakage (see also the answer to question #3), although monitoring will continue indefinitely. The IOGCC-proposed state administered trust fund, to which operation 

of the site would be transferred post closure, would be designed to be more than 

adequate to indefinitely monitor the site and take, should such be deemed necessary, any and all remedial actions. The specification of a ‘‘storage time’’ would not 

be a burden, but an expected part of the post closure regime. Of more importance 

would be the definition of ‘‘leakage’’ and the regulatory burden a strict ‘‘un-measurable’’ standard would impose on a CO2 project (see next question). 

Question 3. Is there any amount of leakage that is acceptable? The IPCC suggests 

that storage should be on the order of 1000 years in a geologic formation, with less 

than 1% leakage of the volume of CO2 that is injected over the life of the storage 

project. Is this a reasonable expectation? How can we enforce such a requirement? 

Answer. In answering this question it is important to be clear what we are trying 

to accomplish in regulation of the storage of CO2. We begin with the assumption 

that first and foremost the reason we are geologically storing CO2 in the first place 

83

is in lieu of ‘‘storing’’ (releasing) this greenhouse gas in the atmosphere where it will 

contribute to global climate change. 

There are three regulatory standards which will determine an acceptable amount 

of ‘‘leakage’’; 1) carbon credits—the leakage threshold in this respect will likely be 

established by the governmental and or commercial entity which is ultimately established to award carbon credits for the underground storage of CO2; 2) public health 

and safety—while there is a threshold of even minimal release into the atmosphere 

which could endanger public health and safety, catastrophic release from underground storage is almost inconceivable, and; 3) drinking water protection—this is 

the purpose of the regulations being developed by the U.S. Environmental Protection Agency (EPA), likely to be administered by states under delegated authority 

from EPA under its Underground Injection Control program. Presumably these regulations will establish this threshold, which is likely to be ‘‘no contamination’’. 

Having said this, it is very clear that the most important factor in assuring that 

stored CO2 remains in the subsurface is to make certain that the geologic sites selected for the storage of CO2 are optimal for that purpose and mirror the ‘‘storage’’ 

capabilities of naturally occurring oil and natural gas reservoirs. I therefore begin 

with the assumption and expectation that CO2 will be stored in formations for which 

the geology indicates a very strong likelihood of long term containment which meet 

the thresholds of all three regulatory interests identified above. I further assume 

and fully expect that the regulatory framework which permits any such storage facility will contain layers of safeguards designed to prevent leakage. However, the 

purpose of subsurface monitoring is, first and foremost, to detect leakage in the subsurface (above the storage interval) well before the CO2 reaches the surface and 

hence the atmosphere. However, even in the very unlikely event that monitoring reveals leakage and that leak is mitigated (mitigation options range from complete 

cessation of injection—including ultimately depressurizing of the storage interval 

until leakage is no longer occurring—to capture and re-injection of the leaking CO2

all while still contained in the subsurface) I am assuming and expecting that any 

escaping CO2 will be unlikely to reach the surface and hence the atmosphere. 

Question 4. In your testimony you outline the operational bond requirements for 

the post-closure phase of the CCS project. Following site closure, the operational 

bond is released the regulatory liability is turned over to a trust fund administered 

by the state. Did the IOGCC consider a period of time whereby private insurance 

companies could manage these sites (post-closure)? 

Answer. No. Based on the states’ long experience with financial assurances in the 

plugging of oil and gas wells and the administration of state administered abandoned oil and gas well programs, the IOGCC Task Force believed that the stateadministered trust fund would offer the greatest flexibility post closure to monitor 

and ‘‘caretake’’ the facility in perpetuity. Private insurance would lack the flexibility 

and responsiveness to be able to immediately respond to potential contingencies. It 

would also require that a regulator adopt inflexible rules setting the parameters 

under which insurers would operate. 

RESPONSES OF LAWRENCE E. BENGAL TO QUESTIONS FROM SENATOR DORGAN

Question 1. I also think it’s important that the general public have an understanding of how vastly important an issue this will be to our energy future. In your 

judgment, what will it take for the general population to better understand and support the approaches associated with carbon capture and storage? 

Answer. I couldn’t agree more. I indicated in my testimony the importance of public support for this technology, but before the public can support this technology, 

they must understand and feel ‘‘comfortable’’ with the process. The U.S. Department 

of Energy has understood this and has required each of the Regional Carbon Sequestration Partnerships to have a strong public outreach component. It has also 

funded the Interstate Oil and Gas Compact Commission to widely distribute the 

findings of the Task Force’s work regarding geologic storage of CO2. The most recent 

publication of the IOGCC entitled Road to a Greener Energy Future—CO2 Storage: 

A Legal and Regulatory Guide for States is being circulated broadly and can be 

downloaded at the IOGCC website at (http://www.iogcc.state.ok.us/PDFS/Road-to-aGreener-Energy-Future.pdf). 

We also firmly believe that a key component of building public support is making 

absolutely certain that states in their process of creating the laws and regulations 

to govern this technology do so in a completely open and transparent manner. It 

is essential that all stakeholders be included in the process if the public is to have 

confidence in the technology. The public must understand that site selection will be 

a very important part of the regulatory process. Not every site will be suitable for 

storage. Only the sites most geologically suitable will be considered. 

84

Also important will be how this issue is presented to the public. As I indicated 

in my testimony, the public needs to be informed about the long history of CO2

transportation, handling and use in a great variety of applications. They need to understand that CO2 is a substance that is part of the air we breathe and that storing 

it underground is not something entirely new and mysterious, but the technological 

outgrowths of things with which states already have regulatory experience, like oil 

and natural gas development, natural gas storage, and CO2 injection for enhanced 

oil recovery. I believe it will be important that the public understand that the production of CO2 is a consequence of the public’s demand for and use of fossil energy 

and that it is arguably in the public’s interest to actively participate along with industry in efforts to reduce CO2 emissions through geologic storage. 

Given the regulatory complexities of CO2 storage including environmental protection, ownership and management of the pore space, maximization of storage capacity and long term liability, geologically stored CO2 should be treated under resource 

management frameworks as opposed to waste disposal frameworks. 

Regulating the storage of CO2 under a waste management framework sidesteps 

the public’s role in both the creation of CO2 and its interest in the mitigation of its 

release into the atmosphere and places the burden solely on industry to rid itself 

of ‘‘waste’’ from which the public must be ‘‘protected’’. Such an approach lacking citizen buy-in with respect to responsibility for the problem as well as the solution 

could well doom geological storage to failure and diminish significantly the potential 

of geologic carbon storage to meaningfully mitigate the impact of CO2 emissions on 

the global climate. 

A resource management framework, as proposed by the Task Force, allows for the 

integration of these issues into a unified regulatory framework and proposes a ‘‘public sector-private sector partnership’’ to address the long-term liability, given that 

the release of CO2 into the atmosphere is at least partially a societal problem and 

that the mitigation of that release is likewise at least partially a societal responsibility and clearly a societal benefit. 

Question 2. Many industry professionals have indicated that for large scale CCS 

to take hold, federal and state governments must help provide certainty by developing a legal and regulatory framework for the storage of CO2. Besides resolving 

technological hurdles, what are the first steps that the government can take specific 

to legal, regulatory or societal elements that will allow more CCS projects to go forward? 

Answer. Echoing a point made above and in my testimony, the technology which 

will be used to store CO2 underground is not something new, but a technological 

outgrowth of things with which states already have regulatory experience, like oil 

and natural gas development, natural gas storage, and CO2 injection for enhanced 

oil recovery. What could kill this technology is regulatory uncertainty in such areas 

as long term liability. If the federal government imposes a Superfund model on storage, the technology is probably dead on arrival as a viable means of mitigating the 

impacts of climate change on the environment. If on the other hand investors and 

companies interested in undertaking the storage of CO2 are reasonably assured that 

a long term regulatory system along the lines of that proposed by the IOGCC Task 

Force is adopted, then such an atmosphere will likely be much more conducive to 

rapid development of the technology. 

OTHER ISSUES OF IMPORTANCE

The IOGCC team clearly understands that there are large numbers of underground sites with effectively no risk of leakage and other sites where CO2 injection 

should not be permitted. States, working with Federal officials, need to develop a 

set of criteria by which the optimal sites are chosen first. Such things as properties 

of primary seals, the presence of secondary and tertiary seals clearly need to be considered in such a ranking. 

Aggregation of sufficient mineral and/or storage rights will be a large obstacle for 

this activity in a large number of places within otherwise suitable areas for sequestration. Both Federal and State rules may need clarification and action to facilitate 

such aggregation activities. 

Many areas with CO2 emissions will be effectively unsuitable for sequestration. 

Pipelines moving CO2 from such areas to suitable ones will therefore be necessary. 

State and Federal legislation could simplify this task. Adoption of an open-access 

status to those pipelines may be appropriate as well. Additionally, it appears that 

some sort of public assistance might prove a useful incentive to a private organization seeking to build a private pipeline. Incentives could come in the form of special 

tax treatment, access to eminent domain provisions, bonding assistance (similar to 

85

the Wyoming or North Dakota Pipeline Authorities), or some private-public arrangement (with the public part designated as open access). 

Avoidance of unnecessary and ominous ‘‘permanence’’ requirements is also essential. 

The post closure transfer of responsibility to a governmental entity is considered 

a necessity. Qualifying a site as low risk and allowing a rapid transfer in a short 

post-closure period would be both appropriate and stimulating for early action. 

Question 3. I believe that in the near term we need to find ways to create certainty for investors to deploy CCS projects. I introduced a bill called the Clean Energy Production Incentives Act (S. 1508) earlier this year that among other things 

includes a 10–year production tax credit for the storage of CO2. Developers receive 

a higher credit for permanent storage and slightly lower credit for using enhanced 

oil recovery techniques. The bill also included accelerated depreciation and tax credit bonds for CO2 capture and storage property. Can you talk more about the scale 

of incentives and how these incentives can accelerate development of large scale carbon capture and storage? Are the incentives adequate to incentivise near-term and 

long-term storage options? 

Answer. Until government imposes a limitation on the amount of carbon that can 

be released into the atmosphere, presumably through adoption of a carbon tax or 

a cap and trade system, no additional incentives are likely to prove particularly efficacious. After that happens, all of the incentives noted in the question would be 

most beneficial indeed. I would caveat that I would question the rationale for 

disadvantaging enhanced oil recovery (EOR). Perhaps the solution is to frame any 

production tax credit so as to advantage the CO2 capturing entity or the pipeline 

entity or both rather than the injector. That effectively makes the CO2 less expensive thus encouraging the sequestration with expanded EOR projects. 

Additionally, the biggest issue today is the cost of separating and compressing the 

CO2 at the source so whatever can be done on that front will be money well invested. 

RESPONSES OF JOSEPH T. KELLIHER TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Many people have called for ‘‘permanent’’ storage in introduced legislation (e.g. all the introduced climate bills), but do not go so far as to define permanence. Can any one of you elaborate on a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? 

Answer. I note, as an initial matter, that the Commission has extensive expertise 

in the storage of natural gas in underground reservoirs. However, the storage of 

natural gas differs significantly from the ‘‘permanent’’ sequestration of CO2. Natural 

gas storage is a dynamic process whereby gas is injected, stored and withdrawn 

with some regularity while the point of CO2 sequestration is to ‘‘permanently’’ inject 

and sequester the CO2 in the reservoir. 

Permanent sequestration would appear to contemplate CO2 remaining in place for 

the long term. ‘‘Permanent’’ sequestration may pose problems similar to those experienced by natural gas storage reservoirs which are not cycled (the process of injecting and withdrawing gas) on a regular basis. In the case of a natural gas storage 

field that does not experience sufficient cycling, and does not have well defined geologic boundaries, gas could migrate through the storage formation into other formations or, in the case of aquifer storage facilities, the gas eventually could dissolve 

into the water and the water eventually could fill the reservoir. If a natural gas 

storage reservoir is cycled, and the physical infrastructure (piping, casing, surface 

facilities) is maintained, there is no reason to believe that the storage field could 

not operate indefinitely. 

Question 2. What is the appropriate amount of time that CO2 should be stored 

in the subsurface, as means of mitigating CO2 emissions? Will storage times of that 

magnitude be burdensome on CCS projects? 

Answer. The Commission has no information regarding the amount of time that 

CO2 needs to be sequestered to ameliorate the effects of climate change. However, 

a study by the Massachusetts Institute of Technology (MIT) titled, ‘‘The Future of 

Coal’’ states, at p. 44, ‘‘ . . . it is very likely that the fraction of stored CO2 will 

be greater than 99% over 100 years, and likely that the fraction of stored CO2 will 

exceed 99% for 1000 years.’’ (footnote omitted). 

Question 3. Is there any amount of leakage that is acceptable? The IPCC suggests 

that storage should be on the order of 1000 years in a geologic formation, with less 

than 1% leakage of the volume of CO2 that is injected over the life of the storage 

project. Is this a reasonable expectation? How can we enforce such a requirement? 

86

Answer. References to leaks in natural storage fields generally apply to leaks in 

the equipment at the storage field including well casings, piping, compressors, and 

other miscellaneous surface facilities, not the storage formation, per se. This lost 

and unaccounted-for gas varies by facility. Gas can also migrate through rock formations and this may be what the referenced IPCC report refers to. Natural gas storage operators drill and maintain observation wells to monitor the migration of natural gas out of the designated boundaries of their storage field. Migration out of designated storage boundaries could occur if the operator does not have a complete understanding of the geology of the storage location. This is not to suggest that the 

operator is at fault—despite advances in technology, it is still impossible to know 

exactly what lies beneath the earth’s surface. However, migration can also occur as 

a result of improper operations or as a result of third party operations outside the 

boundaries of the storage field. 

The MIT study referenced in the previous response addresses CO2 storage leakage 

as follows:

• Importantly, CO2 leakage risk is not uniform and it is believed that most CO2

storage sites will work as planned. However, a small percentage of sites might 

have significant leakage rates, which may require substantial mitigation efforts 

or even abandonment. It is important to note that the occurrence of such sites 

does not negate the value of the effective sites. However, a premium must be 

paid in the form of due diligence in assessment to quantify and circumscribe 

these risks well. [p. 50] (footnote omitted). 

• Even though most potential leaks will have no impact on health, safety, or the 

local environment, any leak will negate some of the benefits of sequestration. 

However, absolute containment is not necessary for effective mitigation. If the 

rate and volume of leakage are sufficiently low, the site will still meet its primary goal of sequestering CO2. The leak would need to be counted as an emissions source as discussed further under liability. Small leakage risks should not 

present a barrier to deployment or reason to postpone an accelerated field-based 

RD&D program. This is particularly true of early projects, which will also provide substantial benefits of learning by doing and will provide insight into management and remediation of minor leaks. [p. 51] (footnotes omitted).

Question 4. In your testimony you mention three models for governing interstate 

pipelines. Are you prepared, as an agency, to implement any of these three models 

for pipeline management? 

Answer. In my testimony, I referenced the oil pipeline model, where the states 

have siting authority, the Commission sets rates, and the Department of Transportation handles safety matters; the natural gas pipeline model, in which the Commission authorizes siting and sets rates, while the Department of Transportation handles post-construction safety; and the current carbon dioxide pipeline model, under 

which pipelines are sited under state law, and rates are set by the pipelines, subject 

to review by the Department of Transportation’s Surface Transportation Board in 

the event a complaint is filed. Should Congress so require, the Commission could 

implement either of the first two models, while the third model would have no role 

for the Commission. However, as I said in my testimony, I would not recommend 

that Congress preempt the states or alter the Department Transportation’s ratemaking and safety roles by providing for exclusive and preemptive FERC siting of 

carbon dioxide pipelines, because the precondition that led Congress to such a 

course for siting natural gas pipelines—the failure of state siting—does not exist. 

Question 5. While you state in your testimony that you feel the siting of CO2 pipelines should stay in the jurisdiction of the state agencies—do you think that they 

are the appropriate entity to regulate transportation rates? This seems like it is well 

within the jurisdiction of FERC to regulate fair and equitable transportation costs. 

Answer. As I mentioned in my written testimony, rates for carbon dioxide pipelines are currently set by the pipelines themselves, subject to the authority of the 

Department of Transportation’s Surface Transportation Board to hold proceedings 

regarding the reasonableness of the rates, if a complaint is filed. While the Commission does possess ratemaking expertise, I have seen nothing to indicate that the current model is not functioning well. I do not recommend granting ratemaking authority over carbon dioxide pipelines to the individual states, because of the prospect of 

a patchwork of inconsistent rate regulation for an interstate pipeline network. 

RESPONSES OF JOSEPH T. KELLIHER TO QUESTIONS FROM SENATOR DORGAN

Question 6. It seems to me that we need to much more quickly begin establishing 

and defining the ‘‘rules of the road’’ when it comes to carbon management. As we 

begin to unlock the opportunities for capturing, moving and storing larger amounts 

87

of CO2, it is fair to say that the federal government will likely play a greater role. 

It will be better if we begin to better define appropriate roles for local, state and 

federal government. What are the most critical near-term issues that your agency 

can address so that developers can begin demonstrating CCS projects? 

Answer. Given that the Commission has no jurisdiction over carbon dioxide pipelines or sequestration facilities, I do not believe that there are issues that the Commission can address directly to speed the development of these projects. However, 

should Congress pass legislation such as S.2144, my staff and I would be pleased 

to work with other agencies to study the feasibility of carbon dioxide capture, transportation, and sequestration projects. As I said in my testimony, FERC can play a 

helpful role examining regulatory barriers and regulatory options relating to the 

construction and operation of carbon dioxide pipelines. 

Question 7. Creating an infrastructure to capture, transport, store, and monitor 

CO2 will take greater federal resources including staff, technology and other elements. Do you think your agency is well-equipped to begin undertake this enormous 

challenge? 

Answer. Should Congress establish a role for the Commission in this area, I am 

confident that the Commission could carry it out. Depending on the nature of the 

responsibilities given to the Commission, and the extent of the CO2 capture, pipeline 

and storage network, the Commission might need additional personnel resources 

were it assigned to regulate these activities. 

Question 8. Your agency has experience siting and regulating interstate pipelines 

for natural gas and oil. I said earlier in my statement that building a new system 

for CCS transportation could be compared to building the Interstate Highway System. This means creating right-of-ways, landowner rights and liability issues and 

others. In terms of siting CO2 pipelines and potentially moving CO2 across state 

lines, which priorities should we as policy makers address in order to help CCS 

projects move forward? 

Answer. Your question poses some of the key issues Congress would need to address if it chose to create a comprehensive federal regulatory regime for carbon dioxide pipelines. Among other things, Congress might want to consider what type of 

ratemaking regime (cost-based or market-based) would be appropriate; whether carbon dioxide pipelines should be common carriers; whether to grant the holders of 

authorization for carbon dioxide facilities the power of eminent domain; and whether there are specific environmental, economic, or other findings that the siting agency would be required to make in connection with authorizing such facilities. 

RESPONSES OF JAMES SLUTZ TO QUESTIONS FROM SENATOR BINGAMAN

Question 1. Many people have called for ‘‘permanent’’ storage in introduced legislation (e.g. all the introduced climate bills), but do not go so far as to define permanence. Can any one of you elaborate on a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? 

Answer. There is currently not a precise definition of ‘‘permanent CO2 storage.’’ 

Effectiveness of geologic storage is contingent on CO2 remaining stored underground 

for a long period of time. A desirable timeframe for geologic storage of CO2 is on 

the order of thousands of years or longer. However, effectively sequestering CO2 for 

even a few hundred years could provide valuable flexibility in reducing CO2 emissions and contribute to reducing the costs of mitigating climate change. 

Geologic storage of CO2 has been underway as a natural process in the earth’s 

upper crust for hundreds of millions of years. At geologic time scales, CO2 forms a 

natural part of the Carbon Cycle and is necessary for life. In most proposed carbon 

capture and storage (CCS) storage projects, the goal is to remove CO2 from the atmospheric portion of the Carbon Cycle, and store it mainly in the subsurface for significant periods. Thus, ‘‘permanent’’ must mean no unacceptable change over some 

long period of time and should provide a reasonable assurance of indefinite storage 

of the majority of the carbon over a defined number of years (100’s to 1,000’s). Any 

leakage from the subsurface to the atmosphere could be mitigated, or the CO2 could 

be recovered and stored elsewhere, if deemed necessary. Eventually, an increasing 

portion of CO2 stored in the subsurface will be trapped through processes such as 

formation of minerals, and hydrodynamics with the result that this portion of the 

CO2 would be sequestered at a geologic time scale of millions of years. As we gain 

knowledge from geologic storage projects, a more precise understanding of ‘‘permanent CO2 storage’’ should emerge. 

Question 2. What is the appropriate amount of time that CO2 should be stored 

in the subsurface, as means of mitigating CO2 emissions? Will storage times of that 

magnitude be burdensome on CCS projects? 

88

Answer. DOE and others are conducting pilot scale geologic sequestration projects 

to help better understand these questions and others. CO2 storage in geologic formations should mirror the timescale of oil and gas deposits in formations containing 

naturally occurring carbon dioxide gas. These formations have held these fluids for 

millions of years. A desirable timeframe for geologic storage of CO2 is on the order 

of thousands of years or longer. 

Demonstrating storage over these timeframes should not be overly burdensome. 

For well-selected, designed, constructed and managed geologic storage sites, the vast 

majority of CO2 will gradually be immobilized by various trapping mechanisms and, 

in that case, could be retained for up to millions of years. Because of these mechanisms, storage could become more secure over longer timeframes (IPCC 2005). 

Question 3. Is there any amount of leakage that is acceptable? The IPCC suggests 

that storage should be on the order of 1000 years in a geologic formation, with less 

than 1% leakage of the volume of CO2 that is injected over the life of the storage 

project. Is this a reasonable expectation? How can we enforce such a requirement? 

Answer. Yes, this is reasonable to expect. Ideally, of course, no leakage will occur 

and any leakage that does occur must be taken in the context of how much CO2

must be sequestered to reach and maintain preferred atmospheric levels. Extensive 

monitoring and modeling will be implemented at each of DOE’s large-scale field 

tests. This monitoring and modeling will occur before, during, and after the CO2 is 

injected, for a period of approximately 10 years. This extensive monitoring will result in the opportunity to mitigate any potential leakage. 

A natural analog is the million barrels of oil and gas deposits, as well as naturally 

occurring carbon dioxide gas, that has been trapped in underground geologic formations for millions of years. Furthermore, with proper construction and monitoring, 

there is a very high probability that the same geologic formations which trap oil and 

gas deposits and naturally occurring carbon dioxide gas will also help to prevent the 

significant leakage of carbon dioxide. Sites will need to be chosen carefully, and only 

the ones with the best geology and proper characterization should be selected for 

storage. I might add that the United States has a great deal of experience injecting 

and storing natural gas (in which gas is injected underground during the summer 

and then recovered to heat homes in the winter) and, though short-term, this experience will also prove useful in developing successful carbon sequestration technologies. 

In all cases, best engineering practices will be developed and used when carbon 

dioxide is injected into geologic formations. The carbon dioxide in the formation is 

trapped in porous rock, like sandstone. Using a variety of tests and mapping activities should help to identify any fractures in the cap rock and other faults which then 

can be avoided. 

In addition to extensive modeling to determine the potential fate of CO2, proper 

site monitoring, measurement and verification (MMV) also can determine if the CO2

is remaining in the formation. The oil and gas industry has extensive knowledge 

of monitoring for leaks of various gases from their wells and also for characterizing 

potential drilling sites for hydrocarbon recovery. This technology along with others 

being developed through research can be utilized for MMV to ensure that CO2 leakage is not an issue. Enforcement via continuous monitoring technology may be implemented through a variety of potential regulatory or other legal frameworks that 

are currently under development. 

Question 4. Is the DOE comfortable with the EPA leading the interagency task 

force described in S. 2323 or would you suggest another organization as the lead 

agency? 

Answer. DOE is comfortable with the EPA leading the interagency task force described in S. 2323. Over the past several years, EPA has been coordinating with 

DOE. As DOE has developed a Carbon Sequestration Technology Roadmap for the 

development and deployment of this technology, EPA has been working to design 

an appropriate management framework for geologic sequestration. By engaging in 

DOE’s R&D program early and working with stakeholders on all sides of this issue, 

EPA is well-positioned to help in the permitting of future carbon dioxide underground injection wells. 

Question 5. As I understand it, one of the chief benefits of the FutureGen approach was that it would demonstrate an integrated design, optimized to maximize 

CO2 capture and overall plant efficiency. How are you going to insure we receive 

this same benefit from a substantially smaller federal investment in a commercial 

facility? 

Answer. The FutureGen program remains a vital component of the Administration’s plan to make coal a part of a cleaner, more secure energy future for America. 

The Administration is restructuring the FutureGen program to accelerate commercial use of carbon capture and storage technology and expand the program from one 

89

project to multiple demonstration projects. The 2009 budget request more than doubles funding for FutureGen, from $74 million in 2008 to $156 million in 2009. 

Rather than investing in the total cost of an experimental facility integrated with 

carbon capture and storage, the revised FutureGen approach will invest in the carbon capture and storage portion of commercial power projects, capturing and sequestering at least double the amount annually compared to the FutureGen concept announced in 2003. This will limit taxpayer’s financial exposure to only a portion of 

the incremental cost of the carbon capture and storage portion of the plant. Furthermore, this new approach will allow us to accelerate nearer-term technology deployment in the marketplace faster than the timetable for the previous approach. In 

order to be successful in competitive power markets (not to mention in the Department’s competitive proposal evaluation process), the underlying power plant projects 

will still need to be efficient, competitive and environmentally sound. The original 

FutureGen approach was targeting a CO2 capture and sequestration level of approximately 90 percent, and that level is also specified in the Request for Information for the re-structured FutureGen program. 

Question 6. I have heard estimates that including large-scale carbon capture and 

sequestration on a typical power plant will increase costs by roughly a third. What 

assurance do you have that the amounts you propose to distribute under this program will be sufficient incentives to lead to commercial-scale demonstration of the 

technology? Will other federal incentives be available to the applicants, and are 

more necessary? 

Answer. Approximately thirty commercial Integrated Gasification Combined Cycle 

(IGCC) projects are in various stages of planning, permitting and design across the 

Nation, which is evidence that a commercially viable basis for IGCC technology already exists. Some are stalled because of uncertainty regarding CO2. Federal incentives, such as loan guarantees and tax credits, are awarded on a competitive basis 

and may also be available to some of these projects. Federal funding for FutureGen 

demonstration projects will help pay for the CCS part of some of these projects this 

provides additional incentives for such projects. Responses to FutureGen’s Request 

for Information are due by March 3, 2008, and should provide further information 

on how to structure the FutureGen solicitation to provide sufficient incentives for 

demonstration projects. Nothing precludes FutureGen applicants from applying for 

other Federal incentives, such as loan guarantees or tax credits. We have considered 

the need for further incentives, but believe that none are necessary at this time. 

Question 7. In recent months we have seen proposed commercial IGCC plants significantly delayed or cancelled. What assurance do you have that there will be sufficient commercial interest in building these plants to give us the demonstrations we 

need? 

Answer. At the present time over 30 Integrated Gasification Combined Cycle 

(IGCC) power plants are in various proposal stages and major barriers to their deployment include the uncertainties regarding future CO2 emissions regulations and 

the actual costs of constructing and operating IGCC-Carbon Capture and Storage 

(CCS) power plants. The restructured FutureGen is designed to help understand, 

address, and solve technical, siting, permitting, regulatory, and fiscal aspects of CCS 

deployment in various commercial settings. Through its Request for Information, 

DOE expects to identify the power producers who would consider participating in 

the revised FutureGen initiative. 

Question 8. The 4 phase-3 large-scale CO2 sequestration tests that have been 

awarded thus far are all expected to inject less than 1 million tons (approx 500,000) 

of CO2 per year—will there be an effort to increase those amounts so that we can 

have information more in line with that FutureGen would have produced? 

Answer. In addition to the four large-scale tests awarded to three of the Regional 

Carbon Sequestration Partnerships (RCSP) in October 2007, a fifth test was awarded in December 2007 to a fourth RCSP. Three of the tests (in the Alberta Basin, 

Lower Tuscaloosa Formation, and Entrada Formation) individually are expected to 

inject at least 1 million tons of CO2 per year for at least one year. Two other tests 

(in the Williston Basin and Mount Simon Sandstone Formation) will inject greater 

than 1 million tons in total, though at a rate of less than 1 million tons of CO2 per 

year. The injection rates will be at a scale that demonstrates the ability to inject 

and sequester several million metric tons for a large number of years. This operation at commercial-scale is as significant as that of higher injections of 1 MM tons 

per year. It is our intention to confirm the design of these injections, including the 

applicability of the injection scale proposed for the demonstrations to operations at 

commercial scale, in a March 2008 technical peer review. 

Question 9. The competition for FutureGen between Texas and Illinois led both 

states to examine the policy framework that would be necessary for CO2 sequestraVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00093 Fmt 6601 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
90

tion. How will the new program create similar incentives for states in which the 

projects will be located? What can we do here to accelerate this deployment? 

Answer. There are major technical and regulatory hurdles to overcome before coal 

with CCS can be commercially deployed, however it is in the best interest of states 

to adopt a posture that would help enable ultra-low emission integrated gasification 

combined cycle (IGCC) plants with CCS, like FutureGen, to provide stable power 

supplies at affordable prices. 

FutureGen will provide early CCS demonstration experience in a commercial setting, which is aimed at accelerating deployment and advancing carbon capture policy. The revised approach would sequester at least double the amount of CO2 than 

the previous approach, generate enough electricity per plant to power 400,000 

households, and have the potential of demonstrating CCS in multiple states. 

FutureGen will help establish commercial feasibility and formulate a model that industry could use to deploy commercial-scale plants that each sequester at least one 

million metric tons of carbon dioxide annually. 

RESPONSES OF JAMES SLUTZ TO QUESTIONS FROM SENATOR DORGAN

Question 1. It seems to me that we need to much more quickly begin establishing 

and defining the ‘‘rules of the road’’ when it comes to carbon management. As we 

begin to unlock the opportunities for capturing, moving and storing larger amounts 

of CO2, it is fair to say that the federal government will likely play a greater role. 

It will be better if we begin to better define appropriate roles for local, state and 

federal government. What are the most critical near-term issues that your agency 

can address so that developers can begin demonstrating CCS projects? 

Answer. The most critical near-term issues DOE can and is addressing through 

its research, development, and demonstration carbon capture and storage (CCS) program are the development of technology for CCS, which in turn will advance public 

acceptance of CCS as a technology for mitigating greenhouse gas emissions. Testing 

the storage of CO2 in deep saline formations and depleted oil fields will enable representatives from industry, states, the U.S. Environmental Protection Agency, and 

others to learn from the field demonstration of site characterization, operations, and 

closure which will lead to the development of best management practices for all aspects of CCS projects. These field activities, which DOE is supporting on a costshared basis, are critical in the deployment of these technologies and will provide 

key information in the development of regulations and policies to support CCS. The 

near-term successes of the field activities will help to support demonstrations 

planned under the restructured FutureGen Program [at 1M tons CO2/yr, FutureGen 

is about the same scale as the field tests]. 

Question 2. Creating an infrastructure to capture, transport, store, and monitor 

CO2 will take greater federal resources including staff, technology and other elements. Do you think your agency is well-equipped to begin undertake this enormous 

challenge? 

Answer. The DOE has a dedicated interdisciplinary team, working to develop and 

demonstrate technologies for carbon capture and storage (CCS) and provide support 

to other agencies in the development of regulatory structures for injection. Additionally, DOE works with other countries through the Regional Carbon Sequestration 

Partnerships (with over 350 entities involved) and the Carbon Sequestration Leadership Forum. DOE also has the ability to add resources from the nineteen national 

laboratories and enter into cooperative agreements with industry and other research 

institutions when necessary. 

Question 3. DOE has been implementing the Carbon Sequestration Regional Partnership program to study carbon management in different regions of the country. 

Also, your agency has been working to identify storage sites for CO2. I think this 

work is important and should continue to help us evaluate where the opportunities 

for CCS demonstrations could take place. 

I do believe that we can find cleaner and more efficient ways to utilize our coal 

resources. However, we must do so in a way that does not jeopardize are ability to 

generate base load power. Your agency has several different areas working on different elements of carbon capture and storage. 

Could you provide me with an explanation of how the Department of Energy is 

coordinating the different research, development, demonstration and deployment 

program areas working on CCS in order to deploy the technology more rapidly? 

Answer. There are several elements of DOE’s Sequestration Program for carbon 

capture and storage (CCS). They include the R&D which fund basic and applied 

basic research for carbon storage and capture technologies. The projects funded 

through these R&D programs represent innovative approaches that can significantly 

reduce the cost and demonstrate the safety and effectiveness of CCS. The second 

91

part of the program consists of large-scale CO2 injection projects, which are designed 

to take the technologies developed in the R&D programs and deploy them in the 

field through programs like the Regional Carbon Sequestration Partnerships. This 

part of the program is also responsible for developing the infrastructure technologies 

and information, such as CCS best practices that could help form a basis for regulations, for CCS deployment through the involvement of representatives from industry, non-governmental organizations (NGOs), universities, and Federal and state 

partners. The final piece of the DOE CCS program will be implemented through the 

clean coal demonstration program (such as the Clean Coal Power Initiative and 

FutureGen demos), which will take the technologies developed from the R&D and 

large-scale injection projects and implement these in full-scale power plant demonstrations that include CCS. Early commercial deployment of plants with CCS can 

benefit from FutureGen demos and other deployment incentives. The Sequestration 

Program, which is managed by the Office of Fossil Energy, also coordinates with 

DOE’s Office of Science to enhance the scientific learning and understanding in the 

field demonstration projects. 

All of the projects awarded through these DOE programs are based on cooperative 

agreements with industry and/or research institutions. Therefore, the success of 

these programs depends upon the success of our partners and DOE’s continued efforts to promote technology transfer. 

DOE is also supporting working groups through other Federal agencies, nongovernmental organizations (NGO), and industry that are working to develop regulations and liability frameworks, and to educate stakeholders about the benefits of 

CCS. 

RESPONSES OF JAMES SLUTZ TO QUESTIONS FROM SENATOR LANDRIEU

Question 1. I learned that the Department of Energy has decided to alter course 

on its ‘‘FutureGen’’ project. In the Request for Information that you released yesterday, you describe that your new approach will target IGCC plants to demonstrate 

carbon capture and storage technology. In Louisiana, we have saline storage formations, and we have a 300 megawatt power plant coming online. At present, it will 

be fueled by Petroleum Coke, but it is not currently slated to be an IGCC plant. 

Will the Department keep an open mind about selecting plants that may not be 

IGCC equipped, but that are nonetheless capable of capturing and storing their carbon? 

Answer. Yes, alternatives to Integrated Gasification Combined Cycle (IGCC) will 

be considered. The Request for Information does seek comments on whether the revised FutureGen approach should allow for advanced coal-based technology systems, 

other than IGCC, that would meet the stated performance requirements for 

FutureGen (e.g., approximately 90 percent CO2 capture and storage, 0.04 lbs/million 

Btu SO2 emissions, less than 0.05 lb/million Btu NOX emissions, less than 0.005 

lb/million Btu particulate matter emissions, and greater than 90 percent mercury 

removal). 

Question 2. Additionally, your Request for Information states that the Department 

will contribute the incremental cost associated with adding CCS technology to the 

facilities power train. Would the DOE cover the costs associated with compressing 

and transporting the CO2? Are these grants only intended to cover capital costs, or 

will they cover certain qualified operating costs as well? 

Answer. DOE will contribute a portion of the incremental cost associated with 

adding CCS technology. Based in part on input obtained through the Request for 

Information, DOE will determine which incremental costs are eligible for cost-sharing, such as compressing and transporting the CO2 and certain operating costs. The 

determination of which costs will be eligible for cost sharing, particularly for any 

equipment that might be shared between the power plant and CCS technology, will 

be articulated in the formal solicitation. 

RESPONSES OF JAMES SLUTZ TO QUESTIONS FROM SENATOR CANTWELL

Question 1. The Energy Bill (Title VII, Section 702) passed in December directs 

the Department of Energy to conduct not less than 7 initial large-scale sequestration tests to study and validate commercial deployment of technologies for CO2 capture and sequestration. Seven regional partnerships have been identified and are 

currently entering Phase III of their projects. I understand the Department has currently awarded 4 of the 7 partnerships with Phase III funding. What is your path 

forward to provide funding for the final three in 2008? 

Answer. DOE has made awards for five large-scale tests to four of the Regional 

Carbon Sequestration Partnerships (RCSP) for Phase III Large Volume Sequestration Testing. Depending on the results of a scientific needs assessment being conVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00095 Fmt 6601 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
92

ducted in FY 2008 and the ability of additional project proposals to meet those 

needs, additional projects may be awarded in FY 2008 or FY 2009. The remaining 

three Phase III projects are in the process of being evaluated. The evaluation process requires finalizing the technical scope of the project along with undertaking a 

scientific evaluation and cost analysis of the proposed projects to verify their appropriateness within the overall objectives of the Sequestration Program. Independent 

cost verification is being undertaken by DOE to ensure the project costs are adequate prior to award. Independent cost reviews of the projects that have received 

awards have been completed. An independent technical review will be conducted at 

the end of March 2008. This technical review, conducted by an internationally renowned group of experts, will compare the proposed test plans against the program 

needs and that required for proper scientific evaluation in order to develop an integrated portfolio of robust tests. DOE is conducting reviews and plans to evaluate 

award of the remaining RCSP Phase III Projects based on the results on the scientific evaluation. The estimated time-frame for evaluating the remaining awards 

is the summer of FY 2008. The Sequestration Program budget is available to fund 

these awards. 

Question 2. Which partnership takes into consideration the geologic formations in 

the Pacific Northwest and what is the status of this project? 

Answer. The Pacific Northwest is shared by two Regional Partnerships, the Big 

Sky Regional Partnership (Big Sky) and the West Coast Regional Carbon Sequestration Partnership (WESTCARB). The Big Sky Regional Partnership is currently evaluating basalt formations in the region. The West Coast Regional Carbon Sequestration Partnership in addition to the West Coast is responsible for working with the 

states in the Pacific Northwest to characterize the geology and terrestrial sinks in 

that region. The WESTCARB project has completed the initial characterization of 

saline reservoirs and coal seams which could be possible storage formations. The results of this characterization is available through the National Carbon Sequestration Database and Geographic Information System online Atlas at the following site: 

http://www.natcarb.org These Regional Partnerships are currently in Phase II, undertaking Field Validation Testing in the region, and are two of the awards that 

are in the process of evaluation for potential award under Phase III. 

RESPONSE OF JAMES SLUTZ TO QUESTION FROM SENATOR MENENDEZ

Question 1. In April, in testimony before this committee, Thomas Shope, Acting 

Assistant Secretary for Fossil Energy at the Department of Energy, estimated that 

Carbon Capture and Sequestration technologies would become deployable and available in 2020 to 2025, but that wide deployment for most projects would not happen 

until 2045. Do you agree with this estimate? If so, won’t this be too late if we are 

going to reduce our greenhouse gas emissions by 80% below 1990 levels by 2050? 

Answer. Widespread deployment of Carbon Capture and Storage (CCS) depends 

on a variety of factors, including success of R&D to drive down the cost of safe CCS, 

particularly the cost of separating CO2 from other gases and compressing it (to a 

supercritical fluid) for injection into geologic formations, and success of demonstration of CCS technologies so that the lowest cost technologies can be identified and 

commercialized in a timely manner. 

The Administration believes that significant reductions in CO2 can be made 

through investment in technology that will lead to a fundamental change in the way 

we produce electricity and power our vehicles. The President’s 2009 budget request 

for research, development and demonstration of advanced clean coal technology, 

when combined with required private-sector contribution, will approach a total investment of nearly $1 billion. With continued support, it could be possible to significantly advance the timing for full deployment of CCS technologies. 

[Responses to the following questions were not received at the 

time the hearing went to press:]

QUESTIONS FOR STEPHEN ALLRED FROM SENATOR BINGAMAN

Question 1. Many people have called for ‘‘permanent’’ storage in introduced legislation (e.g. all the introduced climate bills), but do not go so far as to define permanence. Can any one of you elaborate on a clear definition of ‘‘permanent CO2 storage’’ as it relates to geologic storage? 

Question 2. What is the appropriate amount of time that CO2 should be stored 

in the subsurface, as means of mitigating CO2 emissions? Will storage times of that 

magnitude be burdensome on CCS projects? 

93

Question 3. Is there any amount of leakage that is acceptable? The IPCC suggests 

that storage should be on the order of 1000 years in a geologic formation, with less 

than 1% leakage of the volume of CO2 that is injected over the life of the storage 

project. Is this a reasonable expectation? How can we enforce such a requirement? 

Question 4. In your testimony you mention that the Dept of Interior will have a 

critical role in determining how CO2 is managed on public lands. One area your testimony did not discuss was the site selection criteria that will be necessary in choosing geologic formations suitable for storing CO2. The USGS employs some of the 

world’s leading geologic experts. In your opinion, would the USGS be a good organization to recommend a set of ‘‘best practices’’ for geologic site selection for CO2 storage? By this I mean that they would not be regulators of the site selection, but instead recommend the technical requirements for safe, long-term geologic storage of 

CO2. 

QUESTIONS FOR STEPHEN ALLRED FROM SENATOR DORGAN

Question 1. It seems to me that we need to much more quickly begin establishing 

and defining the ‘‘rules of the road’’ when it comes to carbon management. As we 

begin to unlock the opportunities for capturing, moving and storing larger amounts 

of CO2, it is fair to say that the federal government will likely play a greater role. 

It will be better if we begin to better define appropriate roles for local, state and 

federal government.What are the most critical near-term issues that your agency 

can address so that developers can begin demonstrating CCS projects? 

Question 2. Creating an infrastructure to capture, transport, store, and monitor 

CO2 will take greater federal resources including staff, technology and other elements. Do you think your agency is well-equipped to begin undertake this enormous 

challenge? 

QUESTIONS FOR STEPHEN ALLRED FROM SENATOR SMITH

Question 1. I want to thank you for your response to my December 2007, letter 

concerning the pending Memorandum of Understanding between the Minerals Management Service (MMS) and the Federal Energy Regulatory Commission (FERC) regarding wave and current energy projects on the Federal Outer Continental Shelf 

(OCS). It is my understanding that this issue also came up at the Energy Committee on Thursday. I appreciate the actions taken by MMS, but I remain concerned 

that the potential for environmentally-friendly wave energy development will continue to be delayed on the OCS. Can you tell me when these proposed regulations, 

which have yet to be published for public comment, will be finalized? In the current 

draft of the agency rulemaking, do you address the issue of jurisdiction between 

MMS and FERC, which I understand would have been addressed in the MOU? If 

not, why can’t MMS sign the MOU in order to provide regulatory certainty on agency jurisdiction now, and seek to amend the MOU if the final regulations require 

such a modification? 

Question 2. You stated in your letter and at the Committee hearing that you had 

been asked by the Committee not to sign the MOU. It is my understanding that 

such a request was orignally made when there was Senate-passed language in the 

2007 energy bill that would have specified that FERC did not have jurisdiction over 

kinetic hydropower facilities located in the OCS. However, that language was not 

included in the final version of the bill, which is now P.L. 110–140. Can you tell 

me why, in the absence of this language, it wouldn’t be helpful to those seeking to 

develop projects on the OCS to provide immediate clarity concerning the regulatory 

roles and responsibilities of the two agencies? 

QUESTION FOR STEPHEN ALLRED FROM SENATOR WYDEN

In my State of Oregon and in the State of Washington, western coastal basins 

offer potential carbon sequestration opportunities. Promising basins include the 

Puget Trough, Tofina-Fuca Basin, West Olympic Basin, Whatcom Basin, and 

Willapa Hills Basin in Washington, and the Astoria-Nehalem Basin and Tyee-Umpqua Basin in Oregon. 

Furthermore, Oregon is one of the states that is part of the Big Sky Carbon Sequestration Partnership (BSCSP). Their vision is to prepare its member organizations for a possible carbon-constrained economy and enable the region (Montana, 

Idaho, South Dakota, Wyoming, eastern Oregon and Washington, and adjacent 

areas in British Columbia and Alberta) to cleanly utilize its abundant fossil energy 

resources and sequestration sinks to support future energy demand and economic 

growth. The BSCSP will achieve this vision by demonstrating and validating the region’s most promising sequestration technologies and creating the supporting infraVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00097 Fmt 6601 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
94

structure required to deploy commercial scale carbon sequestration projects. BSCSP 

has the goal of developing an infrastructure to support and enable future carbon sequestration field tests and deployment throughout the BSCSP region. 

This technology is extremely attractive in assisting to address climate change 

issues; assuring the environmental acceptability and safety of carbon dioxide (CO2) 

storage in geologic formations and determining that CO2 will not escape from geologic formations or contaminate drinking water supplies are major concerns. Much 

research is needed to better understand and characterize sequestration of CO2 in 

geologic formations; I understand that researchers are building on the significant 

baseline of information and experience that exists. 

Question 1. During the second panel discussion of the hearing, Mr. Allred of the 

Department of the Interior discussed issues pertaining to land leasing requirements 

and mineral rights, as well as carbon dioxide ownership and eminent domain. While 

this discussion was informative, no resolution was provided on the subject matter. 

Mr. Allred, can you provide details on how carbon capture, transport, and sequestration, as well as the creation of carbon dioxide transport pipelines will impact private 

land owners’ property and mineral rights in Oregon? And what are the federal land 

right impacts of carbon capture, transport, and sequestration on public property 

such as national forests and those supervised by the Bureau of Land Management? 

(95)

APPENDIX II 

Additional Material Submitted for the Record 

AMERICAN PUBLIC POWER ASSOCIATION, 

Washington, DC, January 28, 2008. 

Hon. JOHN KERRY, 

U.S. Senate, 304 Russell Senate Office Building, Washington, DC. 

DEAR SENATOR KERRY: I am writing to express the American Public Power Association’s (APPA) support for Section V of your bill (S. 2323) that establishes an 

interagency task force to develop regulations providing guidelines and practices for 

the capture and storage of carbon dioxide. 

As Congress continues to debate climate change, one of the most frequently discussed technologies is that of carbon capture and storage. While this may be a viable option to address climate change, there are major challenges that must be overcome, both technically and in public policy, before widespread commercial-scale carbon capture and storage can be achieved. APPA believes your bill is a step in the 

right direction to overcoming these challenges. 

Again, thank you for your dedication and hard work on this matter and we look 

forward to working with you as your legislation moves forward. 

Sincerely, 

MARK CRISSON, 

President & CEO. 

STATEMENT OF ROBERT J. FINLEY, DIRECTOR, ENERGY AND EARTH RESOURCES

CENTER, CHAMPAIGN, IL, ON S. 2323

The Illinois State Geological Survey is one of the largest and most diverse state 

geological surveys in the United States. We have been researching carbon sequestration in the Illinois Basin of Illinois, southwestern Indiana, and western Kentucky 

since 2001. In 2003, we submitted a successful competitive proposal that began our 

work as a lead agency for a Department of Energy (DOE), Regional Carbon Sequestration Partnership. Phase I of that work was completed in 2005, and a Phase II 

program was awarded in 2005 that runs through 2009. Our Phase III large-scale 

sequestration test was awarded this past December and we will inject one million 

metric tonnes of carbon dioxide (CO2) into a saline reservoir with the collaboration 

of the Archer Daniels Midland Company who is providing the site and the high-purity carbon dioxide for the test. Other tests we are conducting include injection into 

mature oil reservoirs and into coal seams to evaluate enhanced oil recovery and the 

ability of coal to adsorb CO2. With these efforts we have established a program to 

address the major potential reservoirs for carbon sequestration, as have the six 

other Regional Carbon Sequestration Partnerships in their respective regions 

around the country. The existence of these efforts leads me directly to offer comments on S.2323. 

Section 3 of this bill is essentially duplicative of the work that the DOE Regional 

Carbon Sequestration Partnerships are conducting as part of their Phase III efforts. 

The projects already planned and underway involve 1 million tonnes from a variety 

of commercial sources. For purposes of sequestration, and assessing the safety and 

effectiveness of the process of isolating CO2 from the atmosphere, the Partnership 

tests are addressing the very issues this bill proposes to address. Given the urgency 

in developing responses to climate change, I cannot support initiating a new effort 

that duplicates work that is already in place with similar goals, volumes of CO2, 

and geographic diversity. 

I would also call your attention to Section 6. A significant amount of research has 

already been conducted or is now underway with respect to carbon capture by the 

Office of Fossil Energy within DOE. S.2323 seemingly does not provide for coordinaVerDate 0ct 09 2002 11:09 Apr 18, 2008 Jkt 040443 PO 00000 Frm 00099 Fmt 6601 Sfmt 6621 G:\DOCS\41620.TXT SENERGY2 PsN: MONICA
96

tion between Office of Science and the Office of Fossil Energy with respect to the 

work that already has been accomplished. Thus, the potential for duplicative work 

again arises. 

It is important that Section 7 of S.2323 recognizes the work on capacity assessment that has been completed and is now being updated by the DOE Office of Fossil 

Energy. The initial methodology is already undergoing modification and refinement. 

However, some of the work proposed in this section is likely to be duplicative and 

the required coordination provisions should be strengthened. Certainly, some detailed, recent assessments of the volumes of oil incrementally recoverable through 

CO2 enhanced oil recovery have been made on a basin scale, published, and presented around the nation. With regard to the Geological Verification provision of 

Section 7, I would suggest that this element be dropped. The authorized funding 

will not cover any useful new drilling in its entirety while providing for the other 

aspects of this Section. It would be far more effective to focus on partnerships with 

existing drilling efforts in order to specifically cofund data collection (coring, advanced well logging, and similar) but not make any contributions to actual drilling 

expenditures or footage rates. 

Senator Bingaman and Members, I appreciate the opportunity to submit these 

comments to the committee and would welcome any follow-up communications that 

may be useful to you.

Æ