Carbon storage faces costly hurdles
HOUSTON (Reuters) - The CEO of Kinder Morgan Energy Partners LP said on Tuesday that the pipeline giant will not enter the market to sock away heat-trapping greenhouse gases in underground reservoirs unless the U.S. government settles who is legally liable if the gas leaks out.
Houston-based Kinder Morgan, which already owns the biggest U.S. pipeline network to transport carbon dioxide, could easily build more pipelines to allow power plants, refineries and other industrial facilities to pipe captured emissions into underground storage, Chief Executive Rich Kinder told the Reuters Global Energy Summit in Houston.
Carbon sequestration could be a key component in U.S. President Barack Obama's plan to put first-ever limits on carbon dioxide emissions, but there is no proven method of capturing emissions from giant industrial facilities.
Offering to sequester the carbon without legal assurances would open companies up to a raft of legal liability, Kinder said.
"I would be remiss and probably hung out to dry if I said I'm taking on that," Kinder said. "This is a plaintiff lawyer's dream."
In theory, carbon dioxide emissions could be stored in salt caverns in Louisiana and Texas, Kinder said.
But the U.S. government must find a way to indemnify companies from being sued for environmental violations if the carbon dioxide bubbles to the surface and causes damage, Kinder said.
Kinder Morgan is not "willing to sign up for guaranteeing to the U.S. government or to whomever that it will forever stay in the ground in this salt dome in Louisiana -- and if it doesn't -- just come back and see ole Kinder Morgan and we'll make you good for it," Kinder said, referring to the gas that has been blamed for global warming.
"We're not going to do that, and no right-thinking person would."
The U.S. Environmental Protection Agency is expected to finalize a carbon dioxide sequestration rule that could address the liability issue.
Without new agreements to foster technology needed for carbon sequestration and boost solar and wind power, global emissions of the CO2 could hit 40.4 billion tonnes by 2030, up from 29 billion tonnes in 2006, according to U.S. government data.
Many scientists say emissions of greenhouse gases must be cut by 80 percent or more by 2050 to avoid heat waves and severe drought.
A carbon storage operation has been in place since 1996 in porous rocks under the seabed off Norway, where operator StatoilHydro ASA has stashed some 10 million tonnes of carbon dioxide. Last year the oil-rich Canadian province of Alberta set aside C$2 billion ($2.04 billion) for carbon capture and storage programs.
Carbon dioxide is already being injected into the ground in the United States to help energy companies recover more oil and natural gas, a process known as enhanced oil recovery.
Finding additional markets to use CO2 for enhanced oil recovery is also difficult, Kinder said.
Kinder Morgan's Cortez pipeline moves 1.3 billion cubic feet per day of CO2 through a 1,300-mile pipeline network from Colorado to Texas where it is injected to boost oil output from older fields in the Permian Basin.
(For summit blog: blogs.reuters.com/summits/)
(For more on Reuters Global Energy Summit see [ID:nL1138940])
(Reporting by Eileen O'Grady, editing by Chris Baltimore and Matthew Lewis)
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