Energy Cast Podcast: The future of fossil fuel

Coal First
My guest believes a new "Coal FIRST" from the Department of Energy will make coal plants agile and emission-free enough to have a future both home and abroad.

Energy Cast is a regular podcast featuring some of the top experts across all links in the industry chain. Those include coal, nuclear, efficiency, renewables, oil and gas, as well as top government researchers. Longtime project manager Jay Dauenhauer created it and has been hosting Energy Cast for several years.

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When you include transportation fuels, fossil fuels make up approximately 80% of U.S energy usage.  However, to hear many people tell it, days are numbered for coal, oil, and natural gas.

That may not be entirely accurate, and according to the Department of Energy’s Office of Fossil Energy, these fossil fuels could play an important role in a near-zero carbon future.

Steven Winberg, my guest and Asst. Secretary for Fossil Energy, got his start as an engineer working on coal-fired boilers.  He says coal’s future, especially in the U.S., will focus on three categories:

  1. Coal FIRST (Flexible, Innovative, Resilient, Small, Transformative)—An initiative to make coal-fired units smaller and more flexible.  In the future, coal fired units may be backing up more renewables as wind and solar play a larger role in the mix.
  2. Coal for products—Using coal for its “carbon value” rather than it’s heating value.  Products could include graphene, 3D printing materials, and alternatives to lumber.
  3. Hydrogen production—H2 produced from coal or natural gas (“blue hydrogen”) is more cost-effective than the renewable variety (“green hydrogen”).  Combined with carbon capture utilization and storage (CCUS), this blue H2 could be carbon neutral.

Steve believes the United States can help lower global emission through technologies like Coal FIRST, as well as high-grade coal from the western united states.

“The reality is this,” he says, “With the high-quality coal that the U.S. has, if we export that coal, we will be displacing lower-quality coal from other countries.  The net benefit is there will be lower CO2 emissions.”

I also asked him about the role the Department is playing with CCUS, and how might the U.S. speed up its adoption.  Steve says carbon capture is 75% of CCUS’ cost.  They are trying to cut those costs in half, to about $30/ton capture cost.

“When I got to this job,” he says, “One of the first things that I asked us to get moving on was reducing the cost of carbon capture.”

Listen to more Energy Cast podcasts here.

In fact, Steve believes that enhanced oil recovery, reduced capture costs, and recent 45Q tax incentives can make CCUS attractive without a punitive tax on carbon emissions.  “That starts to make economic sense,” he says.

In addition to carbon capture from coal, the Office of Fossil Energy is nearly equally focused on natural gas CO2 capture.  They are also exploring capture from industrial gases and direct-air capture (DAC).

DAC could be especially effective for enhanced oil recovery in remote areas like oilfields.  “We can install those DAC facilities right on top of the oilfield and then we don’t have to build pipelines,” says Steve.

I also asked Sec. Winberg about recent fluctuations in oil prices, especially following the COVID-19 outbreak.  He blames an “almost unprecedented demand destruction,” yet adds oil markets have been resilient despite this disruption.

“I think we’re seeing volatility in oil—mostly low prices—because there are a lot of producers out there.  That is one of the beautiful things about the unconventional oil and gas plays.”  He adds that the shale revolution has led to many smaller producers entering the market.

Much like we discussed in my episode with the American Petroleum Institute, Steve also pointed to the benefits of the Strategic Petroleum Reserve (SPR).  Steve says Congress declined to authorize fuel purchases in March 2020.  However, the SPR agreed to store oil from small producers in April, less a small percentage of oil to remain as a “rent or lease payment.”

“I don’t think there’s much else that the U.S. government does that would give a return to the taxpayers like that,” says Steve.

What about an eventual Strategic Petroleum Reserve for Hydrogen?  Steve says while he believes hydrogen production will be more distributed than oil & gas production, he says, “Maybe it would be more distributed.  Wouldn’t just be two facilities in Louisiana, and two in Texas [like the SPR].”

As someone who once worked on an integrated Natural Gas Vehicle program, he believes hydrogen could see an easier path to adoption.

“With hydrogen, if the driver is significant CO2 emissions reductions, I could see hydrogen moving forward,” he says, “Maybe with an easier path than NGVs or even electric vehicles.” (This podcast originally aired in August 2020.)

Dauenhauer himself was previously executive director of the Clean Coal Technology Association in Texas. He also has worked as project director in power generation and transmission as well as a media analyst for TXU Energy prior to the $45 billion leveraged buyout of that company in 2007. A Louisiana native and proud graduate of Louisiana State University, his career began as a TV news producer before transitioning into the energy sector. Back behind the mic, Dauenhauer hopes to bring his experience working across several energy sectors to you in a program designed to be accessible to both the public and industry insiders. Dauenhauer also is a member of the POWERGEN International and DISTRIBUTECH International advisory committees. Clarion Energy is the parent company of Power Engineering, POWERGEN, DISTRIBUTECH.

Energy Cast Podcast is hosted biweekly by Jay Dauenhauer. Learn more about the podcast here.

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Jay Dauenhauer is a project manager based in Charlotte, NC. He currently serves as a PM developing transmission projects. For the past 7 years, Jay led water treatment and recycling projects for Oil & Gas operations. Jay's first foray in the energy sector was as a media analyst for TXU Energy during the $45B leveraged buyout of that utility in 2007. He then served as Executive Director of the Clean Coal Technology Foundation of Texas, working with stakeholders to pass clean energy legislation for the state. A Louisiana native and proud graduate of LSU, his career began as a TV news producer before transitioning into the energy sector. Back behind the mic, Jay hopes to bring his experience working across several energy sectors to you in a program designed to be accessible to both the public and industry insiders.

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