i This page has been intentionally left blank. TABLE OF CONTENTS Summary of Terminology, Abbreviations, and Acronyms ……………………….… i List of Working Group Members ……………………………………………….…… iii I. Executive Summary ………………………………………………..…………… 1 A. Background………………………………………………………………… 1 B. Organization of the Final Report…………………………………….…… 2 C. Feasibility Subcommittee …………………………………………..…….. 2 D. Geology & Technical Committee ……………………………………..….. 4 E. Legal Subcommittee …………………………………………………..….. 6 F. Summary……………………………………………………………..…… 8 II. Details of the Working Group ……………………………………...……..…… 8 A. Meetings …………………………………………........ ………………… 8 B. Resources …………………………………………………………………. 8 III. Statutes of the Regulation of Greenhouse Gases …………………………… 9 IV. Subcommittee Reports ……………………………………………………..… 12 A. Feasibility Subcommittee Report…………………………………………. 12 Question 1: What factors need to be considered in determining if CCS is feasible and beneficial for West Virginia? ……………………… 28 Question 2: What factors need to be addressed to be able to be addressed prior to reaching a decision regarding the feasibility of encouraging CCS in West Virginia? ………………………………..……. 38 Question 3: What are the technical issues (both engineering and geological) that must be addressed to ensure the efficacy of CCS in West Virginia? ……………………………………………………………. 46 B. Geology & Technology Report …………………………………………… 46 Question 4: What legal and liability issues need to be decided before CCS can be pursued in West Virginia? ……………….…………………. 99 C. Legal Subcommittee Report ……………………………………………… 99 V. Proposed Discussion Draft of Legislation……………………………….…… 161 VI. Summary ………………………………………………………………………. 161 VII. Minority Opinions …………………………………………………………….. 162 This page has been intentionally left blank. Summary of Terminology, Abbreviations, and Acronyms ACES American Clean Energy and Security Act ALJ Administrative Law Judge AoR Area of Review ARRA American Recovery and Reinvestment Act BACT Best Available Control Technology CAA Clean Air Act CCS Carbon Capture and Sequestration CO2 Carbon Dioxide DOE U.S. Department of Energy EOR Enhanced Oil Recovery GHG Greenhouse Gas GS Geological Sequestration GW Gigawatt IEA International Energy Agency IGCC Integrated Gasification Combined Cycle IOGCC Interstate Oil & Gas Compact Commission kWh Kilowatt Hour MGA Midwest Governors Association MIT Massachusetts Institute of Technology MRCSP Midwest Regional Carbon Sequestration Partnership MRV Monitoring, Reporting, and Verification MVA Monitoring, Verification, and Accounting i Mt Million metric tonnes (i.e. one billion kilograms) MWh Megawatt Hour NEPA National Environmental Policy Act NETL National Energy Technology Laboratory NOx Nitrogen Oxides NSPS New Source Performance Standards PEA Public Energy Authority PISC Post-Injection Site Care PSC Public Service Commission PSD Prevention of Significant Deterioration RCRA Resource Conservation & Recovery Act SDWA Safe Drinking Water Act SO2 Sulfur Dioxide TWh Terawatt Hour U.S. United States UIC Underground Injection Control USEPA United States Environmental Protection Agency USDW Underground Source of Drinking Water WVDEP West Virginia Department of Environmental Protection WVGES West Virginia Geological and Economic Survey ii WORKING GROUP MEMBERS The Act requires the appointment of certain members to the Working Group by the Secretary of the West Virginia Department of Environmental Protection (“WVDEP”), and the state geologist, the Director of the West Virginia Geological and Economic Survey. The following current members were appointed in compliance with the Act in July 2009 by Secretary Randy Huffman and Dr. Michael Hohn: Experts in carbon dioxide sequestration or related technologies: Grant Bromhal - National Energy Technology Laboratory Cal Kent, Ph.D - Marshall University Ken Nemeth - Southern States Energy Board Richard Winschel - Consol Energy, Inc. Expert in environmental science: Stephanie R. Timmermeyer, Esq. - Timmermeyer PLLC Expert in geology: Tim Grant - National Energy Technology Laboratory Attorneys with expertise in environmental law: David M. Flannery, Esq. - Jackson Kelly PLLC Leonard Knee, Esq. - Bowles Rice McDavid Graff and Love, LLP Expert in engineering: Paul Kramer - Allegheny Energy, Inc. Experts in the regulation of public utilities in West Virginia: Billy Jack Gregg Earl Melton - WV Public Service Commission Representative of a citizen’s group advocating environmental protection: Vickie Wolfe - WV Environmental Council Representative of a coal power electric generating utility advocating carbon dioxide sequestration development: Tim Mallan - Appalachian Power Engineer with an expertise in the underground storage of natural gas: John Leeson - Dominion Transmission Chairman of the National Council of Coal Lessors, Inc.: Nick Carter and Greg Wooten , named as his alternate Representative of the Coal Association: Jim Laurita - MEPCO Representative of West Virginia Land and Mineral Owners Association: Alan Dennis - Penn Virginia Coal Company Representative advocating the interests of surface owners of real property: David B. McMahon, Esq. iii TIMOTHY P. MALLAN JUNE 25, 1947 – DECEMBER 26, 2010 This Report to the Legislature is dedicated to the memory of Timothy P. Mallan, Environmental Affairs Manager, Appalachian Power Company, who served with distinction as a member of the West Virginia Carbon Dioxide Sequestration Working Group and as the Chair of its Feasibility Subcommittee. iv I. EXECUTIVE SUMMARY I.A. BACKGROUND During the 2009 Regular Session, the West Virginia Legislature passed H.B. 2860 which was added to the West Virginia Code as Carbon Dioxide Sequestration, Article 11A of Chapter 22. The Legislature listed among its findings that “[i]t is in the public interest to advance the implementation of carbon dioxide capture and sequestration technologies into the state’s energy portfolio.” Recognizing that there are administrative, technical and legal questions involved in developing this new technology, the Code authorized the West Virginia Department of Environmental Protection (WVDEP) Secretary to establish a Carbon Dioxide Sequestration Working Group (“Working Group”). The Working Group is charged with studying all issues related to the sequestration of carbon dioxide and to submit a preliminary report to the Legislature on July 1, 2010, followed up by a final report on July 1, 2011. The final report addresses the following: A recommendation of the appropriate methods to encourage the development of carbon dioxide sequestration technologies; An assessment of the economic and environmental feasibility of large, long-term carbon dioxide sequestration options; A recommendation of any legislation the working group may determine to be necessary or desirable to clarify issues regarding the ownership and other rights and interest in pore space; A recommendation of the methods of facilitating the widespread use of carbon dioxide sequestration technology throughout West Virginia; Identification of geologic sequestration monitoring sites to assess the short- term and long-term impact of carbon dioxide sequestration; An assessment of the feasibility of carbon dioxide sequestration in West Virginia and the characteristics of areas within the state where carbon dioxide can be sequestered; An assessment of the costs, benefits, risks and rewards of large-scale carbon dioxide sequestration projects in West Virginia; An assessment of the potential carbon dioxide sequestration capacity in this state; Identification of areas of research needed to better understand and quantify the processes of carbon dioxide sequestration; and An outline of the working group’s long-term strategy for the regulation of carbon dioxide sequestration in West Virginia. (W. Va. Code § 22-11A-6(h)(1)-(10)). This Final Report was prepared and submitted in compliance with the Carbon Dioxide Sequestration Act. It describes the efforts of the Group to date and makes recommendations and conclusions. Notably, after the Carbon Dioxide Sequestration Act was passed during the regular session in 2009, a Special Session was held in June 2009. During that session, the Legislature 1 promulgated the Alternative and Renewable Energy Portfolio Standard, Article 2F of Section 24 of the West Virginia Code. This new law states that “[t]o continue lowering the emissions associated with electrical production, and to expand the state's economic base, West Virginia should encourage the development of more efficient, lower-emitting and reasonably priced alternative and renewable energy resources.” “Advanced coal technology” is included in the list of defined “alternative energy resources.” W. Va. Code § 24-2F-3(c)(1). Advanced coal technology is defined as “a technology that is used in a new or existing energy generating facility to reduce airborne carbon emissions associated with the combustion or use of coal and includes, but is not limited to, carbon dioxide capture and sequestration technology, . and any other resource, method, project or technology certified by the commission as advanced coal technology.” W.Va. Code § 24-2F-3(a) (emphasis added). It is clear to the Working Group that passage of the Alternative and Renewable Energy Portfolio Standard almost contemporaneous with passage of the Carbon Dioxide Sequestration Act indicates the Legislature’s high levelly of interest in carbon capture and sequestration technology and its desire for West Virginia to be a leader in deployment of such technology if feasible from an environmental, economical, and legal