President Requests $881.6 Million for Fossil Energy Programs

FOSSIL ENERGY RESEARCH AND DEVELOPMENT

The Fossil Energy Research and Development (FE R&D) FY 2010 budget request of $617.6 million represents nearly two-thirds of FE’s total FY 2010 budget request. It is comprised of the Fuels and Power Systems and Natural Gas Technologies programs. These programs are designed to ensure that we can continue to use the nation’s abundant fossil resources in a way that will benefit our environment and our economy for years to come.

Using Our Domestic Resources More Cleanly

The FY 2010 budget request for FE’s Fuels and Power Systems program is $403.9 million. Initiatives will focus on research, development and deployment of technologies to use coal more cleanly and efficiently. The core research and development (R&D) efforts of the Fuels and Power Systems program focus on: the creation of a portfolio of technologies that can capture and permanently store carbon dioxide (CO2) from power plants and industrial processes; carbon capture for existing coal-fired power plants; improved gasification technologies; coal-to-hydrogen conversion; development of fuel cells; and improved turbines for future coal-based combined cycle plants.

The Fuels and Power Systems program also supports a robust demonstration program.

Carbon Sequestration

The Department of Energy is requesting $179.9 million for FE’s Carbon Sequestration program. By developing technologies to dramatically decrease the release of CO2 into the atmosphere, we can continue to use our extensive domestic coal resources while reducing the impacts on global climate change. Carbon capture and storage (CCS) will play a central role in fossil fuels remaining a viable energy source for our nation. CCS is the primary pathway that DOE is pursuing to enable the sustainable use of coal as part of the nation’s clean, secure energy portfolio in a carbon-constrained future.

FY 2010 funding will support CCS site selection and characterization, regulatory permits, community outreach, and completion of site operations plans for large-scale, geologic carbon storage tests. It will also fund large-scale injections and infrastructure development. The funding will also pursue research on low-cost/low energy penalty carbon capture technologies for power plants.

Essential to these objectives are the Regional Carbon Sequestration Partnerships, which unite public and private entities in an effort to complete and evaluate small- and large-scale CO2 injection tests across the nation with the aim of developing best practices and supporting the regulatory development process.

Additionally, U.S. engagement and collaboration with the global community will continue through FE’s participation in the Carbon Sequestration Leadership Forum and other international initiatives.

FE will support the Department of Energy’s Energy Innovation Hub for Carbon Capture and Storage. DOE’s multi-disciplinary Energy Innovation Hubs focus on critical science and technology for high-risk, high-reward research to revolutionize how the U.S. produces, distributes, and uses energy. Hubs will strengthen the Nation’s economy by coordinating teams of experts from multiple fields to blend technology development, engineering design, and energy policy. Finally, they will develop the critical areas of expertise needed for the green economy. In FY 2010, the Energy Innovation Hub for Carbon Capture and Storage will focus on enabling fundamental advances and discovery of novel and revolutionary capture/separation approaches leading to transformational capture technologies to dramatically reduce the energy penalty and costs associated with CO2 capture.

Through fossil energy provisions in the American Recovery and Reinvestment Act and annual appropriations, FE aims to accelerate the development of CCS to meet future energy needs.

Innovations for Existing Plants (IEP)

The FY 2010 budget request for the IEP program is $41.0 million. The IEP program is focused on developing post-combustion CO2 retrofit capture technology. Post-combustion CO2 capture technology can be used in pulverized coal power plants, which is the industry standard for coal-fueled electricity generation.

Advanced Integrated Gasification Combined Cycle (IGCC)

DOE is requesting $55.0 million in FY 2010 for the IGCC program. The IGCC program is developing advanced gasification-based technologies to: reduce the cost and energy penalty of near-zero emissions (including CO2) coal-based IGCC plants; improve thermal efficiency; and achieve near-zero atmospheric emissions of all pollutants, including CO2, sulfur dioxide, nitrogen oxides, and mercury. In FY 2010, the program will continue to develop technologies for gas stream purification to: achieve near-zero atmospheric emission goals and meet synthesis gas quality requirements for use with fuel cells and conversion processes; enhance process efficiency and availability; reduce costs for producing oxygen; and system reliability. Accomplishing these goals will boost commercialization prospects of advanced near-zero emissions IGCC technologies for use by utilities, independent power producers, and other industrial stakeholders.

Fuels

The FY 2010 budget request for the Fuels program is $15.0 million. The Fuels program focuses on developing technologies that will facilitate the production of ultra high-purity hydrogen derived from coal. Research will target reducing costs specific to production of hydrogen from coal (versus other hydrogen sources), delivering high purity hydrogen to electric power generation turbines as well as ultra-pure hydrogen for use in the transportation sector (such as proton exchange member (PEM) fuel cells which require purity at the parts per billion level), and increasing efficiency of the coal-based hydrogen systems, from plant gate to consumer.

Fuel Cells

The FY 2010 budget request for the Fuel Cells program is $54.0 million. The program will continue to support R&D that will enable the generation of efficient, cost-effective electricity from domestic coal with near-zero atmospheric emissions of carbon and air pollutants in central station applications. It will also provide the technology base to permit grid-independent distributed generation applications.

Advanced Turbines

In FY 2010, the Advanced Turbines program will continue projects to develop efficient, clean and cost-effective hydrogen fueled turbines for coal-based integrated gasification combined cycle power systems that capture and sequester carbon dioxide. DOE is requesting $31.0 million for this activity in FY 2010.

Advanced Research

The Advanced Research program bridges basic and applied research to help reduce the costs of advanced coal and power systems while improving efficiency and environmental performance. The proposed $28.0 million budget for Advanced Research will fund projects aimed at a greater understanding of the physical, chemical, biological and thermodynamic barriers (including those related to low-cost carbon capture) to the sustained future use of coal and other fossil fuels.

Clean Coal Power Initiative

No funding is being requested for the CCPI program in FY 2010. FE has received an additional $800 million from the American Recovery and Reinvestment Act of 2009 to support CCPI Round III selections of projects with carbon capture.

Tapping the Nation’s Unconventional Natural Gas Resources

FE’s Natural Gas Technologies program continues to focus on science and technology to find and produce natural gas from methane hydrates and reduce the environmental impact of resource development. The FY 2010 budget request for Natural Gas Technologies is $25.0 million. Given recent positive research results, the program in FY2010 will focus on extended duration field tests of gas hydrate production in Arctic regions.

Gas Hydrates

Gas hydrates, located in Alaska and the Gulf of Mexico and other offshore locations of the U.S., contain huge resources of natural gas (for example, Minerals Management Service estimates that the mean in-place gas hydrate resource within the most prospective reservoirs in the Gulf of Mexico is approximately 6,700 trillion cubic feet (TCF), whereas U.S. consumption is about 21 TCF per year). Assuming funding at requested levels, DOE research will provide the knowledge and technology to enable commercial production of gas from hydrates starting in FY 2015 (Alaska) and 2020 (Gulf of Mexico), when more conventional resources decline. Because this research is high risk and long term, and requires unique expertise not resident in most oil and gas companies, there is little incentive for industry to take the lead in hydrate research.

The program will also continue to provide effective coordination of gas hydrate related R&D across seven federal agencies, and provide major international collaborative opportunities (including Korea, Japan, and India).

PETROLEUM RESERVES

FE’s Office of Petroleum Reserves manages programs that provide the United States with strategic and economic protection against disruptions in oil supplies. These include the Strategic Petroleum Reserve, the Northeast Home Heating Oil Reserve and the Naval Petroleum and Oil Shale Reserves.

Strategic Petroleum Reserve

The Strategic Petroleum Reserve (SPR) provides strategic and economic security against disruptions in oil supplies with an emergency stockpile of crude oil. At the end of April, the Strategic Petroleum Reserve inventory was approximately 719 million barrels.

The FY 2010 budget request of $229.0 million maintains the operational readiness of the SPR to ensure a 4.4 MMB/day drawdown rate. No new funding is being requested in FY 2010 for expansion.

Northeast Home Heating Oil Reserve

The Northeast heating oil reserve, which was established in 2000, is capable of assuring a short-term supplement to private home heating oil supplies during times of very low inventories or in the event of significant threats to immediate energy supplies. The two million barrel Reserve protects the Northeast against a supply disruption for up to 10 days, the time required for ships to carry heating oil from the Gulf of Mexico to New York Harbor.

The FY 2010 budget request of $11.3 million continues operation of the Reserve, including lease of commercial storage space, and proposes to use $1.5 million to repurchase the remaining 15,747 barrels of heating oil sold in FY 2007 to finance new storage leases. This repurchase would bring the inventory back to the 2 million barrels authorized by the Energy Policy Act.

Naval Petroleum and Oil Shale Reserves

Today, three of the four original Naval Petroleum Reserves (NPR-1, NPR-2, and NPR-4) have been sold or transferred to the Department of the Interior. The only remaining oil reserve managed by the DOE is the Teapot Dome field (NPR-3) in Casper, Wyoming, which is now a stripper field that also serves as an oilfield technology testing center (Rocky Mountain Oilfield Testing Center).

The FY 2010 budget request for this program is $23.6 million, or more than 20 percent over last year’s funding. The increase reflects additional funding for the environmental remediation of NPR-1 and operations for NPR-3.

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