WASHINGTON • A new $1 billion Texas project to capture carbon dioxide from a coal-burning power plant and use it to extract hard-to-get oil out of existing wells may be a breakthrough that a coalition of energy, technological and environmental interests has been looking for.
If successful, the project could have a long-term effect on Missouri and Illinois, among the most coal-dependent states for electrical power generation.
The project’s announcement came just weeks after President Barack Obama proposed reduction of carbon emissions from power plants by 30 percent by 2030. The Environmental Protection Agency estimated that 82 percent of human-caused greenhouse gases in the U.S. in 2012 came from carbon dioxide.
The new Texas facility, a joint venture of the U.S. energy giant NRG and the Japanese oil and gas exploration company JX Nippon, will capture emissions from a coal-burning power plant and pipe the carbon dioxide 82 miles to current oil fields for a process called Enhanced Oil Recovery.
The technology has been around for 40 years, but it has primarily used CO2 found in natural deposits or captured from industrial users of fossil fuels other than power plants.
Vic Svec, senior vice president at St. Louis-based Peabody, which mines coal in Illinois and other states, said his company backed all forms of carbon capture, storage and utilization.
Arch Coal, based in Creve Coeur, has joined a diverse coalition of energy companies, environmentalists and federal and state officials pushing Enhanced Oil Recovery using CO2 from coal-burning plants.
“We believe strongly that there is no path to a low-carbon future in any meaningful time frame without a low-carbon solution for fossil fuels,” said Deck Slone, Arch’s senior vice president for strategy and public affairs.
The Department of Energy estimates that in 2012, an average of 3.1 billion cubic feet of CO2 was used to produce 282,000 barrels of oil a day.
In April, DOE predicted that “significant new volumes of CO2 captured from industrial sources,” along with new pipelines and the availability of natural sources will “enable CO2-EOR based oil production to grow significantly during the rest of this decade.”
When finished, its project with JX Nippon will be the “world’s largest post-combustion carbon capture facility on an existing coal plant,” capturing 90 percent of the CO2 emissions from a coal-fired power plant, the companies said in a joint statement. The captured CO2, once piped to an established Texas oil field, will boost production from 500 to about 15,000 barrels a day, the companies said.
It is the second such project in the world, along with one by SaskPower in Canada, said Brad Crabtree, vice president of Fossil Energy at the Great Plains Institute.
Crabtree has helped organize a diverse, unusual coalition of private and public interests called the National Enhanced Oil Recovery Initiative. Its members range from environmentalists to state officials, to Arch Coal and the global agribusiness giant Archer Daniels Midland.
“All these groups believe in the importance of technology in addressing carbon concerns and believe strongly that Enhanced Oil Recovery has a significant role to play,” Arch Coal’s Slone said.
His company last year sold 140 million tons of coal to power generators and steel manufacturers on five continents. The company’s website says it controls an estimated 5 billion tons of domestic coal deposits.
This summer, the nonprofit Center for Climate and Energy Solutions offered a seminar for Capitol Hill staffers on the merits of capturing carbon dioxide from power plants to boost oil production while storing the gas underground. Speakers included representatives of Arch Coal; the AFL-CIO; the Natural Resources Defense Council’s climate program manager; and former Missouri Democratic Rep. Dick Gephardt.
NEORI is pushing to expand tax credits to accelerate development of the technology the NRG project employs. A bill that would do that has been introduced by Sen. Jay Rockefeller, D-W.Va. Backers acknowledge passage will be difficult in a divided Congress but say they will push for passage in 2015 if it does not pass in the current session.
The NRG-HX Nippon project is getting a $167 million Department of Energy Grant, courtesy of taxpayers. Advocates say grants and tax incentives are necessary to get the first projects off the ground until a wider market develops.
“We lack financial incentives that reduce the cost and financial risk of early commercial-scale deployment of CO2 capture technology,” Crabtree said. “Whether it was the first commercial wind farms or power plant sulfur dioxide scrubbers a few decades ago or solar technology in just the past few years, we know from experience that the costs of technology decline over time, often dramatically, but only if the early innovators and pioneers have the right incentives to undertake the first commercial projects.”
The Energy Department’s $167 million grant “might be less than 20 percent of the overall cost of this project, but it was very important in getting this project started,” said NRG spokesman David Knox.
“We have tremendous potential to replicate this” for adaptation to other coal plants and other older oil fields, Knox said.
If oil prices continue to exceed $100 a barrel, the long-term economic incentives to go after harder-to-get oil will continue, advocates say, and the carbon dioxide that the plants produce will be a marketable commodity in that process, eventually eliminating the need for tax incentives.
“The NRG announcement is extremely important because it will represent the second example in the world ... and first in the U.S. of capturing CO2 at commercial scale through the retrofit of an existing coal-fired power plant,” Crabtree said.
Patrick Falwell, a fellow at the Center for Energy and Climate Solutions, an independent group that seeks solutions for rising energy demands and climate change, said NRG has been working with the Energy Department on the idea since 2010.
“It is also great to see the involvement of Japanese partners, who will presumably learn lessons from this project to apply at home and with other projects around the world,” he said.
What brings environmentalists to the table? While some oppose anything that expands fossil fuel usage or worry that the technology may be years away from commercial viability, others see carbon captured for use in coal fields as a viable push to store more emissions underground without opening new oil fields.
“People are in general agreement that it is better to get our additional oil supply that you are going to need from existing oil fields than having to drill for new ones,” said John Steelman, climate program manager for the Natural Resources Defense Council.
Ameren Missouri, which generates electricity to eastern and northern parts of the state, did not comment directly on the NRG project. In a statement, the company said it was “working to transition in a responsible way to cleaner and more diverse energy sources.
“In October, we’ll file an Integrated Resource Plan that will detail our long-term generation strategy,” the company said. Ameren told state regulators last month that it will shut down its 61-year-old Meramec coal-fired plant in Oakville by 2022.