Remarks of Assistant Secretary for Fossil Energy Steven Winberg as prepared at the 2019 Carbon Capture, Utilization and Storage, and Oil and Gas Technologies Integrated Project Review Meeting in Pittsburgh, PA  on August 26, 2019

Thank you, and good morning.

I want to thank all of you for being here today.  I also want to thank everyone who helped organize this week’s meetings, and all those who are leading and contributing to the various sessions.   

I want to kick things off by taking a look at the big picture – to put in context the work we’re going to focus on this week. 

Thanks to the shale revolution – which early DOE-supported research helped launch – America is the world’s top producer of both oil and gas.  We’re already a net exporter of natural gas, and those exports – including LNG exports – are impacting the global energy trade and changing market calculations around the world.

And we’re on the verge of being a net energy exporter for the first time since 1953 – during the Eisenhower Administration. 

So, the shale revolution, which was made possible by the advanced technology developed through public-private partnerships between DOE and the research community, has truly transformed the energy landscape in America and globally.  It has also led to a renaissance in American manufacturing – a renaissance that is opening new potential and opportunities across the country. 

And, by the way, one of the most exciting and potentially transformational opportunities can be found here in Appalachia, where an abundant supply of natural gas and natural gas liquids – like ethane – makes the region an attractive location for the build-out of a new petrochemical industry. 

As you know, the President was here in Pennsylvania a couple of weeks ago to tour Shell’s ethane cracker plant in Beaver County and to talk about the enormous potential it represents for Pennsylvania and the Appalachia region.

So, the benefits of the shale revolution continue to expand.

Now, looking at coal, even though consumption has declined in the U.S., EIA projects that global coal consumption will remain stable between now and 2040, mainly because of the demand in Asia – which is encouraging news for our coal exports, which, by the way, have been on the rise.

Here at home, coal still provides around 30 percent of our electricity.  And during extreme weather events over the last couple of years, we’ve seen the critical role coal plays as a 24/7 resource for our electric grid. 

At the same time, there is new market potential opening up for coal beyond the power sector – and the National Coal Council highlighted that potential in their recent report called “Coal in a New Carbon Age.” 

At DOE, we have a distinct coal-to-products R&D initiative, where we’re focused on new value streams and markets for coal – things like coal-to-building materials, coal-to-liquids, coal-to-solid carbon products, rare earth elements and coal beneficiation, as well as life science, bio-tech, medical and agricultural applications.

Advancing these new markets for coal can strengthen our national and energy security, expand our economic prosperity, and facilitate a carbon manufacturing “renaissance” and jobs in hard-hit coal state communities.

So, we’re seeing a lot of impressive accomplishments and a host of opportunities for oil, gas, and coal development and utilization – opportunities that are almost as abundant as the resources themselves. 

And it’s worth noting that these energy accomplishments have been helped by the Administration’s policies that focus on unleashing the full potential of America’s fossil fuel resources. 

We are putting innovation ahead of over-regulation.  And by innovating more, and regulating more prudently, by encouraging—rather than discouraging—production, we will ensure our energy security, grow our economy, create jobs, and protect the environment.

That’s really what we’re talking about this week – the power of innovation and technology development to capitalize on what Secretary Perry calls the New American Energy Era – to take advantage of the opportunities that come alongside the challenges, and to say yes to energy diversity and choice.

And thanks to the excellence of the scientists and researchers at NETL and the other National Labs, those in academia and the private sector, and our partners in industry, we’re taking great steps in that direction.

Throughout this week, we’re going to focus in detail on two critical R&D areas that impact our fossil energy systems – especially coal-fired power systems – and the expanded development of our oil and gas resources.  What we’re doing in these spaces is critical to our continued energy security, our economic growth, and good jobs for American workers.

So, first, let’s take a look at our Carbon Capture, Utilization, and Storage program, which is a part of a broader portfolio that will help us meet 21st century challenges to coal – and to fossil energy and industrial systems more broadly.  That portfolio also includes our research and development to increase the efficiency of our current coal fleet and our efforts to lay the groundwork for the modular plants of the future, through our Coal FIRST initiative.

DOE has a robust CCUS R&D program.  We’ve had some impressive successes and we’ve been recognized as the most productive CCUS research institution by the Science of the Total Environment journal.  That recognition is welcomed and, I believe, well-deserved. 

But we’re not resting on our accomplishments.  There are still some technical challenges we need to overcome, and right now, we’re funding more than 100 R&D projects.  One of the most pressing challenges we’re focused on is reducing the cost of carbon capture by about 50 percent, ultimately getting it down to $30 a ton.   

To help get us there, we’re pursuing both Pre-Combustion Capture and Post-Combustion Capture R&D pathways.

And, by the way, we’re also looking at ways that we can leverage our carbon capture work to help develop new Direct Air Capture – or DAC – technologies. 

While DAC is often described as new technology, the chemistry of capturing CO2 is very similar to what we have been developing over the last 20 years or so, and there are many similarities to the R&D of our CCUS technology program. 

We had a very informative Direct Air Capture workshop last month, where we discussed technology requirements and pathways for moving forward.  So, we’re excited about leveraging our existing R&D to help develop Direct Air Capture technologies. 

Looking at storage, we’re focused on a couple of critical areas.  The first is Storage Infrastructure, where we’re identifying storage potential across various onshore and offshore geologies.  We’re also evaluating monitoring technologies and operational methods at the field scale, and validating modeling and simulation tools using field and operational data.

At the same time, we’re exploring a number of promising pathways for carbon utilization to extract economic benefits or additional value from CO2.  Of course, enhanced oil recovery is the most near-term application and represents a great synergy between these two program areas.

EOR has been used in the U.S. for over 40 years, and today over 70 million tons of CO2 per year is used for increasing oil recovery, with approximately 15 million tons coming from sources such as gas processing plants, ethanol facilities, refineries, and coal-fired power plants.

So, the opportunities for using CO2 for EOR in the United States in the future are significant.

We’re also exploring the potential for using CO2 as a feedstock for materials and chemicals, and an even more attractive case for carbon capture begins to emerge.

So, we’re involved in a lot of really important work to advance CCUS.  And I think it’s important to point out that we’re continuing to back up our commitment to CCUS with the funding necessary to advance these technologies.  For example, this year we’ve:   

Selected carbon capture technology projects totaling $24 million;
Announced $30 million for FEED studies for capture systems on both coal and natural gas plants; and
Announced $20 million for a regional initiative to accelerate CCUS.

So, we’re continuing to make critical investments in CCUS.  But, as you all know, commercial CCUS applications are challenging.  It’s very difficult for plant owners to see a business case for taking on the cost of carbon capture technologies.  Reduced capture costs, CO2-EOR, and carbon utilization can provide attractive business cases for CCUS.

Right now, though, there’s a pressing need to develop and implement policies that will provide financing and market certainty needed for deployment, and that will support the development of CCUS supply chains, commercial infrastructure, and private investment.

One promising avenue is the use of the 45Q tax credits that could help mitigate the costs of retrofitting these technologies to existing coal plants. 

At the same time, industry and other investors with climate portfolios all need to find ways to advance these technologies.  And we’ll be discussing those issues during tomorrow’s session.

In the meantime, we’re seeing an encouraging global convergence toward CCUS in the coal and oil and gas industries – something we haven’t seen to this degree in the past. 

The Oil and Gas Climate Initiative – a multinational oil and gas industry group – has been making the business case for CCUS.  They currently have investments in five CCUS projects and they’re looking to invest in additional projects. 

And the National Petroleum Council is working on a study requested by Secretary Perry to define potential pathways for integrating CCUS at scale into the energy and industrial marketplace – specifically, the petroleum industry. 

So, this interest in – and work on – CCUS in the oil and gas industry is extremely encouraging, and I think it could spur broader deployment of these technologies. 

Now, turning to oil and gas, the shale revolution has had enormous benefits in terms of U.S. energy security and impacts on global markets – and make no mistake – this Administration is committed to expanding those benefits and the potential of our oil and gas resources. 

But, that potential also highlights the importance of overcoming the challenges that still remain — both upstream in the development of these unconventional resources, and midstream in terms of infrastructure efficiency.  While smart policies and regulations can go a long way to spur resource development and delivery, a lot of the challenges we face require technology solutions.

And that’s where FE’s research portfolio – our innovation – is playing a critical role.

We learned a lot from our years of unconventional oil and gas R&D – especially about hydraulic fracturing.  So, when it comes to upstream development, one important lesson is that oil and gas development is not just about new technology.  

As you know, drilling is complex, especially in unconventional geologic settings.  Completions have become more complex.  And compared to yesterday’s technology, the latest technology is like going from landlines to smart phones. 

With the application of new technology comes the opportunity to gather more and better – and more insightful – data to understand more deeply the interface between technology and geology. 

So, we’re focused on applying machine learning, artificial intelligence, and data analytics to help improve recovery and operational efficiency, to reduce costs of production, and to strengthen our delivery infrastructure.  And we’re excited about the potential of NETL’s Center for Advanced Decision Science to advance these improvements.

Let’s look first at upstream production and development, where one of the biggest challenges has to do with the rapid decline curve in shale oil and gas production after initial production. 

For example, a well may yield a thousand barrels of oil per day in the first year of production.  By the second year, it drops to 400 barrels, and continues to decline over time.  There will come a point when – if oil and gas prices are too low to justify leaving the well in production – an operator may prematurely plug and abandon the well, leaving valuable resources in the ground. 

And just to remind you, the economic limit of production from unconventional resources also applies to conventional resources, where about two-thirds of the oil remains in the ground.

Right now, for instance, we’re only getting about 10 percent of the resources out of the ground in unconventional oil reservoirs.  Figuring out how to increase that to 20 percent or more would be a huge win.

New and precise applications of machine learning and data analytics may be able to process and interpret complex data streams in real time, to enhance decision making and increase production of our unconventional resources – in effect, another shale revolution without having to drill any more wells.

Another lesson we’ve learned is that the technical challenges to resource recovery vary from basin to basin.  So, we’re pursuing a more targeted “basin-specific” approach to technology development, where we want to be able to look at all kinds of subsurface data – a massive amount of data – to better understand specific basins and develop the technology and improved completion designs to increase unconventional oil and gas production.

To help us do that, we’ve established a network of oil and gas field laboratories to apply the scientific method, generate new data for machine learning, and to demonstrate and test new technologies in actual operating oilfield settings.  And – this is really critical – they will enhance our already very robust collaboration with industry, academia, and the states.

By the way, we recently selected five projects to receive right at $40 million to help advance enhanced oil recovery in unconventional reservoirs.  And that’s on top of the more than $44 million in funding we’re providing for four new field laboratories, plus new projects to enhance the characterization and improve the recovery efficiency of emerging unconventional oil and natural gas reservoirs. 

That means we now have a total of 17 field laboratories across the country. 

So, all of this work has the potential to usher in a paradigm shift in our research portfolio — from being limited to energy production and development, to including smart systems operations.

Now, as you know, water and oil and gas systems are closely interlinked.  As energy and water demands increase, we need to make sure we’re using produced water resources as efficiently as possible.  And one of the things we’re focused on is transforming the oil and gas sector’s produced water from a waste to a resource – even from a cost stream to a revenue stream, through the development of advanced treatment technologies.

We have a number of projects to address produced water challenges.  They run the gamut – from basic science and risk assessment, to water-treatment technology development, to enhanced water disposal options, produced water management, and other focus areas. 

And earlier this year, we issued a $5 million FOA for projects to develop treatment technologies that address produced water to remove constituents that are unique to oil and gas, and to develop techno-economic analyses that link the supply of produced water with industries that could possibly use it on a regional or basin-specific basis.  This FOA advances the Department’s Water Security Grand Challenge’s goal to transform oil and gas produced water from a waste to a resource.

So, we’re excited about moving further into this important research area.

When it comes to midstream resource delivery, we’re pursuing data science and management tools to improve operational reliability and reduce loss from natural gas gathering, transmission, distribution, and storage facilities. 

We’re also beginning to look at cybersecurity, as well as continuing our focus on reducing methane losses.  And we have several R&D pathways to help us meet these goals and to pave the way for the “pipeline of the future.”

Building on our ongoing R&D, the Department of Energy recently made available up to $24 million in federal funding for projects to enhance the safety and efficiency of the Nation’s natural gas infrastructure.  So, things like detecting, measuring, and mitigating methane emissions; and technologies for upcycling of flare gas into value-added products.

At the end of the day, the goal of our midstream portfolio is to develop an entirely new tool set for the marketplace and to lay the groundwork for “smart pipelines” of the future.

This is where we want to go.  But, getting there will require cutting-edge, early-stage R&D — the kind of innovative research and development that plays not only to the strength of NETL and the other National Labs, but also to the strengths of our university and industry partners.

That’s why the collaboration represented and fostered here this week is essential. 

So, I want to close by letting you know that I appreciate all the great minds that are applying their problem solving and innovation skills to tackle the challenges unique to fossil energy resources.  I applaud the good work you’ve all done so far.  And I look forward to this continued collaboration – and to a productive week.