Will Carbon Capture and Storage Save Oil and Gas?

This week, former Department of Energy Secretary Steven Chu announced that he was joining the board of Inventys Thermal Technologies, a Canadian firm specializing in carbon capture and storage, or CCS. This Thursday, the Environmental Protection Agency removed an important obstacle from CCS development by exempting certain types of underground injections from the Resource Conservation and Recovery Act. It sure seems as though CCS' star is rising.

Great hope or false promise?
Many energy experts hold CCS to be the technology that will allow the world to continue developing fossil fuels while reducing their climate change impact. But does CCS really deserve all this adulation?

Southern (NYSE: SO  ) and General Electric (NYSE: GE  ) sure seem to think so. Southern is developing what will likely be the world's first large commercial carbon plant, if the project's delays and cost overruns don't derail it. Given how much skin Southern has in the game, it's perhaps no surprise that the company questions the viability of Inventys' technology.

General Electric makes compressors for carbon capture and storage applications and has added carbon capture capacity to its natural gas-fired turbines. The company is one of the partners on a CCS project in Lake Charles, La., which is expected to come online sometime in 2014. GE is also a member of a government-university-business consortium tasked with developing carbon-sequestration projects in China with funding from the DoE.

With growing global urgency to control carbon dioxide emissions, any company that gets CCS right stands to enjoy a windfall. But there's a looming risk that could undermine the entire proposition.

A series of recent studies have linked underground injection of gas and fluids with an increase in the number and intensity of earthquakes in particular regions in the United States. The phenomenon is called "induced seismicity," and it could dramatically undermine CCS' prospects. Watch the following video to learn more about these developments and their implications.

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