NRG Energy Inc. and its partner JX Nippon Oil & Gas Exploration Corp. broke ground Friday on a project here that both companies believe will be one for the record books. The 50-50 venture aims to pull carbon dioxide from the waste stream coming from a coal-fired power plant just southwest of Houston and make money by selling the CO2 to nearby oil producers.
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One pilot post-combustion CO2 plant has already been built in Alabama, but on a much smaller scale. The Petra Nova project now under construction scales this same technology up considerably. It will be the first large-scale, profit-oriented carbon capture and storage (CCS) project in the United States.
"What's happening here has global implications," U.S. Deputy Secretary of Energy Daniel Poneman said during a gathering organized to celebrate the start of construction of Petra Nova.
According to data compiled by the Massachusetts Institute of Technology, there are about two dozen power plant CCS projects globally, but nearly all of them exist on paper alone. Aside from a spattering of pilot projects worldwide, CCS technology today is largely insignificant in the power sector and as a means of mitigating climate change in general.
But in the U.S., activity is finally starting to pick up. Last week U.S. EPA approved the FutureGen Alliance's request for a permit to sequester CO2 from a coal-fired plant in western Illinois. The $1.65 billion project has been in development for at least a decade but is just now getting close to a construction start date.
Petra Nova, which will be next to NRG's W.A. Parish coal-fired plant in Fort Bend County, used to be on the "planning" list too but is now officially under construction. Project investors say they hope to have it running by the end of 2016.
Market-based project
Petra Nova differs from FutureGen in that it has mostly secured financing from private sources. Whereas FutureGen is getting a big financial boost from the Department of Energy, the $1 billion project unveiled by executives here Friday is getting some DOE grant support, but the rest is privately financed.
Around $167 million in DOE funds is allocated to Petra Nova. NRG and Tokyo-based JX Nippon are contributing equity of about $300 million each. Japanese banks are financing the rest.
NRG CEO David Crane made clear that his company sees Petra Nova as the beginning of a new business model. The CO2 captured from burnt coal will be sent by pipeline 80 miles southwest to the West Ranch Oil Field in Jackson County, where the aim is to sell it to private oil and gas company Hilcorp. Part of the CO2 stream could be sent to other oil fields for use in EOR in the future.
With Groundbreaking, Large-Scale Carbon Capture Finds a Home in the Oil Patch
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