Curry L. Hagerty
Specialist in Energy and Natural Resources Policy
James C. Uzel
Geospatial Information Systems Analyst
The offshore areas of the Gulf of Mexico provide a setting for domestic and
international energy production, U.S. military training and border
operations, trade and commerce, fishing, tourist attractions, and
recreation. These governmental, commercial, and cultural activities depend on healthy
and productive marine and coastal areas for a range of economic and social
benefits. Consequences of hurricanes and oil spills demonstrate that
offshore areas in the Gulf of Mexico are governed by a number of
interrelated legal regimes, including treaties and international, federal,
and state laws.
A key congressional interest has been the federal role in managing energy
resources in deepwater areas of the Gulf of Mexico, particularly in waters
beyond the U.S. exclusive economic zone (EEZ), more than 200 miles from
shore. In 2012, the United States and Mexico signed an agreement known as
the U.S.-Mexico Transboundary Hydrocarbons Agreement (the Agreement). This
Agreement could mark the start of an energy partnership in an area of
international waters that the U.S. Department of the Interior’s (DOI’s)
Bureau of Ocean Energy Management (BOEM) estimates to contain as much as
172 million barrels of oil and 304 billion cubic feet of natural gas. The
main purposes of the partnership would be to lift a moratorium and to jointly
develop reservoirs of oil and natural gas, referred to as “transboundary
resources,” that exist in areas straddling the marine border of both
countries. The Agreement stems from a series of bilateral treaties
originating in the 1970s. Like other diplomatic measures, for the Agreement to
take effect, it must be placed before each country’s national lawmakers
for review. To date, Mexico has completed review and accepted the
Agreement. The Agreement awaits the passage of implementing legislation in
the U.S. Congress.
In the United States, implementing legislation involves the two main
commitments of the Agreement. First, under the Agreement, the two
countries establish a framework for jointly developing 1.5 million acres
along a 550-mile border. Diplomats on both sides of the border claim that
this framework achieves a mutual goal of greater options for energy production
to help gain greater energy independence for both countries. A concurrent
commitment is to dismantle a treaty-based moratorium on oil and gas
development agreed to in 2000, encompassing 158,584 acres along a 135-mile
portion of the border. Current treaty provisions establish that the ban will expire
in 2014.
Implementing the Agreement faces hurdles in both countries. In the United
States, among other hurdles, is the transitional status of U.S. safety
reforms announced after the 2010 Deepwater Horizon spill. These
reforms are being phased in and full implementation is not anticipated until later
in 2013 and 2014. These regulations are considered by industry and U.S.
regulators to be a more robust set of deepwater drilling standards than
were in place prior to the Deepwater Horizon spill. Until they take
full effect, the treaty-based moratorium is perceived by many as a necessary mechanism
to protect against the risk of oil spills. In Mexico, although the Agreement
has been accepted, implementation poses various constitutional and
regulatory challenges.
U.S. legislation to approve and implement the Agreement includes H.R. 1613 and
S. 812. On June 27, 2013, the House passed H.R. 1613 (H.Rept. 113-101). On
October 14, 2013, the Senate passed S. 812. Absent a deadline for U.S.
approval of the Agreement and consideration of implementing legislation,
if any, it is difficult to predict the timing of further legislative action. Many
in Congress have expressed the view that the expiration of the moratorium in
2014 will prove a catalyst for legislative attention during the remainder
of the 113th Congress.
Date of Report: November 6, 2013
Number of Pages: 31
Order Number: R43204
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Paul W. Parfomak
Specialist in Energy and Infrastructure Policy
Robert Pirog
Specialist in Energy Economics
Linda Luther
Analyst in Environmental Policy
Adam Vann
Legislative Attorney
TransCanada’s proposed Keystone XL Pipeline would transport oil sands crude
from Canada and shale oil produced in North Dakota and Montana to a market
hub in Nebraska for further delivery to Gulf Coast refineries. The
pipeline would consist of 875 miles of 36-inch pipe with the capacity to
transport 830,000 barrels per day. Because it would cross the Canadian-U.S.
border, construction of Keystone XL requires a Presidential Permit from
the State Department. A decision to issue or deny a Presidential Permit is
based on a determination that a project would serve the national interest,
considering potential impacts on the environment, the economy, energy security, foreign
policy, and other factors. Environmental impacts are evaluated and documented
in an Environmental Impact Statement (EIS) under the National Environmental
Policy Act (NEPA).
TransCanada originally applied for a Presidential Permit for the Keystone XL
Pipeline in 2008. The initial proposal included a southern segment from
Oklahoma to the Gulf Coast. A key issue that arose during the permit review
was concern over environmental impacts in the Sand Hills region of
Nebraska. This concern led the Nebraska legislature to enact new state pipeline
siting requirements that would alter the pipeline route through Nebraska.
In January 2012, the State Department concluded that it would not have
sufficient information to evaluate an altered pipeline route before a
deadline imposed by Congress and denied the permit. The southern segment
of the original Keystone XL proposal, now called the Gulf Coast Project, was subsequently
separated from the original proposal because it did not require a Presidential
Permit. It has been approved by the relevant states and is currently under
construction.
In May 2012, TransCanada reapplied to the State Department for a Presidential
Permit to build the northern, cross-border segment of Keystone XL. The new
permit application initiated a new NEPA process. The governor of Nebraska
approved a new route through the state avoiding the Sand Hills on January
22, 2013. On March 6, 2013, notice was published in the Federal Register that the
State Department draft EIS for the reconfigured Keystone XL Project was
available for public comment. The department is in the process of
addressing these comments as it prepares a final EIS. When the final EIS
is issued, a 90-day public review period for the national interest determination
begins. The department has not stated when it plans to complete this process.
Development of Keystone XL has been controversial. Proponents base their
arguments primarily on increasing the diversity of the U.S. petroleum
supply and economic benefits, especially jobs. Pipeline opposition stems
in part from concern regarding the greenhouse gas emissions associated with
the development of Canadian oil sands, continued U.S. dependency on fossil
fuels, and the risk of a potential release of heavy crude.
In light of the State Department’s denial of the 2008 permit application, some
in Congress seek other means to support development of the pipeline. The
Energy Production and Project Delivery Act of 2013 (S. 17) would eliminate
the Presidential Permit requirement for the reconfigured Keystone XL
Project. The Keystone for a Secure Tomorrow Act (H.R. 334) and a Senate bill to approve
the Keystone XL Project (S. 582) would directly approve Keystone XL under the authority
of Congress to regulate foreign commerce. The Northern Route Approval Act (H.R.
3) would eliminate the Presidential Permit requirement for Keystone XL,
among other provisions. The Senate passed an amendment to the Fiscal 2014
Senate Budget Resolution (S.Con.Res. 8) that would provide for the
approval and construction of the Keystone XL Project (S.Amdt. 494). The
North American Energy Infrastructure Act (H.R. 3301) would transfer permit
authority for oil pipelines from the State Department to the Department of
Commerce and would make other changes to the pipeline permitting process.
Date of Report: December 2, 2013
Number of Pages: 43
Order Number: R41668
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Peter Folger
Specialist in Energy and Natural Resources Policy
Carbon capture and sequestration (CCS) is widely seen as a critical
strategy for limiting atmospheric emissions of carbon dioxide (CO2)—the principal “greenhouse
gas” linked to global climate change—from power plants and other large
industrial sources. This report focuses on the first component of a CCS
system, the CO2 capture process. Unlike the other two components of CCS,
transportation and geologic storage, the CO2 capture component of CCS is heavily technology-dependent. For CCS
to succeed at reducing CO2 emissions from a significant fraction of large sources in the
United States, CO2 capture technologies would need to be deployed widely. Widespread
commercial deployment would likely depend, in part, on the cost of the technology
deployed to capture CO2. This report summarizes prospects for improved,
lower-cost technologies for each of the three current approaches to CO2 capture: post-combustion
capture; pre-combustion capture; and oxy-combustion capture. CRS Report
R41325, Carbon
Capture: A Technology Assessment, provides a more detailed
analysis of these technologies.
While all three approaches are capable of high capture efficiencies (typically
about 90%), the major drawbacks of current processes are their high cost
and the large energy requirements for operation. Another drawback is that
at present there are still no full-scale applications of CO2 capture on a coal-fired or
gas-fired power plant; these plants produce over a third of total U.S. CO2 emissions from fossil fuel
combustion. However, a number of large-scale demonstration projects at
both coal combustion and gasification-based power plants are planned or
underway in the United States and elsewhere. Substantial research and
development (R&D) activities are also underway in the United States and
elsewhere to develop and commercialize lower-cost capture systems with
smaller energy penalties. Current R&D activities include development and
testing of new or improved solvents that can lower the cost of current
post-combustion and precombustion capture, as well as research on a
variety of potential “breakthrough technologies” such as novel solvents,
sorbents, membranes, and oxyfuel systems that hold promise for
even lower-cost capture systems.
The future use of coal in the United States will likely depend on whether and
how CCS is deployed if legislative or regulatory actions curtail future CO2 emissions. Congressional
interest in CCS was renewed when the U.S. Environmental Protection Agency
(EPA) re-proposed standards for carbon dioxide (CO2) emissions from new
fossil-fueled power plants on September 20, 2013. These re-proposed
standards would not apply to existing power plants. As re-proposed, the
standards would limit emissions of CO2 to no more than 1,100 pounds per megawatt-hour of production from
new coal-fired power plants and between 1,000 and 1,100 for new natural
gasfired plants. According to EPA, new natural gas-fired stationary power
plants should be able to meet the proposed standards. However, new coal-fired
plants only would be able to meet the standards by installing CCS
technology, which could add significant capital costs.
In general, the focus of most current R&D activities is on cost reduction
rather than additional gains in CO2 capture efficiency. Key questions include: when would advanced CO2 capture systems be
available for commercial rollout; and how much cheaper they would be compared
to current technology. “Technology roadmaps” developed by governmental and
private-sector organizations anticipate that CO2 capture may be available
for commercial deployment at power plants by 2020. Some roadmaps also
project that some novel, lower-cost technologies may be commercial by
2020. Such projections acknowledge, however, that this will require aggressive efforts
to advance promising concepts to commercial viability.
Date of Report: November 5, 2013
Number of Pages: 12
Order Number: R43300
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