NRG Spending $1B to Show Cost Effective Carbon Capture for Coal Power Plants

The dream of pollution-free coal plants is getting a boost from growing demand for carbon dioxide used to revive old oilfields.

In one of the first projects to harness the C02 waste of a coal plant for oil drilling, power generator NRG Energy Inc. (NRG) announced Tuesday that it’s beginning construction on a $1 billion retrofit of its East Texas coal plant.  NRG will pump carbon dioxide pollution from the plant deep into a nearby oil field that it partially owns.  The idea is to loosen trapped crude deposits, making old wells flow like new while burying the harmful greenhouse gas. Cash from the increased oil production will help pay for the project, NRG said in a statement. 

The East Texas plant will be the largest of its kind to supply CO2 for oil exploration from coal-powered utilities.  Oil companies have long relied on natural sources of underground carbon to goose output with a technique called carbon flooding.  As demand has risen, drillers have snatched up those supplies, causing a shortage of natural carbon and creating a market for recycled CO2 from coal plants.

Crude prices averaging more than $90 a barrel for half a decade are spurring investment in carbon flooding and raising demand for the gas needed to refresh the aging fields.

After wells peter out, liquefied C02 is injected into the reservoir to mix with the remaining crude, allowing the oil to flow more easily into wells where it can be pumped out.  About half the CO2 remains in the reservoir, and the remainder is reused.

Although U.S. shale formations currently produce eight times more total crude, carbon flood output is forecast to grow 3.6 percent annually during the next 25 years, compared to 1.3-percent for shale.  Carbon flooding is Occidental’s most profitable U.S. business, generating a 43 percent after-tax profit margin based on an oil price of $100 a barrel, said Vicki Hollub, the executive vice president who oversees all of the company’s U.S. operations.

There are 160 billion barrels of crude sitting under what were once considered depleted wells. Virtually all of that oil could be tapped with CO2, estimates Chirag Rathi, a principal at consulting firm Frost & Sullivan.  That would be a $17 trillion haul at current prices.

NRG Spending $1B to Show Cost Effective Carbon Capture for Coal Power Plants