Washington, DC - President Obama’s FY 2012 budget seeks $520.7 million for the Office of Fossil Energy (FE) to support improved energy security and rapid development of climate-oriented technology. The request includes $452.9 million for Fossil Energy Research and Development, $121.7 million for the Strategic Petroleum Reserve, -$68.8 million for the Northeast Heating Oil Reserve and $14.9 million for the Naval Petroleum Reserves.
The FY 2012 budget request will allow FE to fulfill its mission: to provide the nation with the best opportunity to tap the full potential of its abundant fossil energy resources in an environmentally sound and affordable manner; and to ensure America’s readiness to respond to short-term energy supply disruptions.
Fossil Energy Research and Development
The President’s FY 2012 budget requests $452.9 million for a fossil energy research and development portfolio focused on advancing carbon capture and storage (CCS) technologies. This program is designed to ensure we can continue to use the nation’s abundant fossil resources through the development of clean energy technologies, with a specific focus on dramatic reductions of global carbon emissions at acceptable cost.
Advancing Toward a Low-Carbon Future
CCS Demonstrations. The CCS Demonstrations program, including the Clean Coal Power Initiative, FutureGen 2.0, and Industrial CCS Demonstrations, enables and accelerates the deployment of advanced carbon capture and storage technologies to ensure clean, reliable, and affordable electricity for the United States. The 2012 budget request does not provide any demonstration funds because these projects are already strongly supported through the 2009 American Recovery and Reinvestment Act. Carbon Capture & Storage and Power Systems. The FY 2012 budget request for the Carbon Capture & Storage and Power Systems program is $291.3 million. This program is leading efforts to develop technologies to enhance the clean use of domestic fossil fuels and to reduce emissions from fossil-fueled electricity generation plants to achieve near-zero atmospheric emissions power production. By developing technologies to decrease the release of carbon dioxide (CO2) into the atmosphere, we can continue to use our fossil energy resources while reducing impacts on global climate change. Carbon capture and storage could play a central role to enable fossil fuels to remain a cost-competitive energy source in a low-carbon future.
Funding for this program will support research activities specific to CCS and Power Systems in Carbon Capture, Carbon Storage, Advanced Energy Systems and Cross-cutting Research.
Carbon Capture. The President’s budget requests $68.9 million for Carbon Capture R&D. This sub-program is focused on the development of post-combustion and pre-combustion CO2 capture technology for new and existing power plants. Post-combustion activities will focus specifically on developments related to advanced technologies that achieve 90 percent CO2 capture at no more than a 35 percent increase in the cost of electricity of post-combustion capture for new and existing conventional coal-fired power plants. Pre-combustion CO2 capture technologies will focus on development of advanced technologies that achieve 90 percent CO2 capture at no more than a 10 percent increase in the cost of electricity for pre-combustion applications, such as Integrated Gasification Combined Cycle.
Carbon Storage. The FY 2012 budget requests $115.5 million for Carbon Storage R&D. The activities conducted under this sub-program will be used to benefit the existing and future fleet of fossil fuel power generating facilities by developing tools to increase our understanding of geologic reservoirs appropriate for CO2 storage and the behavior of CO2 in the subsurface. The Regional Carbon Sequestration Partnerships, which unite public and private entities in an effort to complete and evaluate small- and large-volume CO2 injection tests across the nation, are an essential piece of this program. By the end of FY 2012, the program plans to inject and store a cumulative total of 3.0 million metric tons of carbon dioxide equivalent (MteCO2) since 2009 at all operational large-volume geologic storage sites. In FY 2012, projects focused on the development of innovative, advanced technology and protocols for the monitoring, verification, accounting, and assessment of CO2 storage in geologic formations, as well as projects focused on simulating the behavior of geologically-stored CO2 will continue. Additionally, work on carbon storage will continue to be coordinated between the U.S. and China with the aim of leveraging each country’s investment and accelerating carbon storage technology deployment through sharing of experiences. This coordination will be done under a U.S.-China Clean Energy Research Initiative.
Advanced Energy Systems. The President’s budget requests $64.2 million for Advanced Energy Systems R&D. This sub-program focuses on improving the efficiency of coal-based power systems, enabling affordable CO2 capture, increasing plant availability, and maintaining the highest environmental standards. The sub-program supports gasification and power island related R&D to convert coal into synthesis gas (syngas) that can be used to generate electricity, chemicals, hydrogen, and liquid fuels.
Cross-cutting Research. The FY 2012 budget requests $42.8 million for Cross-cutting Research. This sub-program serves as a bridge between basic and applied research by fostering the development and deployment of innovative systems for improving efficiency and environmental performance through the research and development of instrumentation, sensors, and controls targeted at enhancing the availability of advanced power systems. This program area also develops computation, simulation, and modeling tools focused on optimizing plant design and shortening developmental timelines.
Natural Gas Technologies. The Natural Gas Technologies program developed scientific information and advanced technologies to increase environmentally responsible supplies of natural gas through research and development. Consistent with Administration policy to phase out inefficient fossil fuel subsidies, the program is requesting no funding in FY 2012 for R&D to increase hydrocarbon production.
FE’s Office of Petroleum Reserves manages two programs that provide the United States with strategic economic protection against disruptions in oil supplies. These include the Strategic Petroleum Reserve and the Northeast Home Heating Oil Reserve.
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. The SPR is currently filled to capacity at 727 million barrels of crude oil in inventory. The Department of Energy is requesting $121.7 million for the SPR in FY 2012.
The FY 2012 budget request for SPR is a decrease from FY 2011 funding. The decrease assumes a cancellation of $71 million in balances from prior year appropriations for a 1 billion barrel expansion at the Richton, Miss., site and the use of these balances to partially fund operations and management activities of the SPR.
The FY 2012 budget also proposes a $500 million non-emergency sale of SPR oil for operational purposes. The sale of approximately 6 million barrels will reduce import protection from 75 days to 74 days.
The FY 2012 budget includes funding to continue completion of a replacement cavern at the Bayou Choctaw. La., site as well as for degas operations to begin at the West Hackberry, La., site.
Northeast Home Heating Oil Reserve. The Northeast Home Heating Oil Reserve, 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 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.
In FY 2011, the program sold 1,984,253 barrels of heating oil and will use the receipts to purchase 1 million barrels of ultra low sulfur (ULS) distillate to serve New England and comply with new state environmental requirements; the program will also award new storage contracts. Remaining net balances from the sale are proposed for cancellation in FY 2012. The FY 2012 request is $10.9 million and will be offset due to excess balances of $79.0 million.
The Office of Petroleum Reserves also administers the Naval Petroleum and Oil Shale Reserves.
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. Environmental remediation and equity finalization continues at NPR-1.
The only remaining oil reserve managed by the DOE is the Teapot Dome field (NPR-3) in Casper, Wyo., which is now a stripper field that also serves as an oilfield technology testing center (Rocky Mountain Oilfield Testing Center). Since production costs are expected to exceed oil revenues, production operations at NPR-3 are no longer economic and will be discontinued except for incidental oil production associated with produced water needed for geothermal testing (funded by DOE’s Energy Efficiency and Renewable Energy’s Geothermal Technology Program or by test users). Accelerated environmental remediation will continue and a plan will be developed for the sale or disposition of NPR-3. The FY 2012 budget request for this program is $14.9 million, which will fund the environmental remediation of NPR-1 and activities at NPR-3.