7/16/2014
CO2 Project: Electricity Firm to Tap Greenhouse Gas for Oil Drilling - WSJ
Dow Jones Reprints: This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your
colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit www.djreprints.com
See a sample reprint in PDF
format.
Order a reprint of this article now
BUSINESS
CO2 Project: Electricity Firm to Tap Greenhouse
Gas for Oil Drilling
NRG Energy Teams With JX Nippon Oil in Carbon-Capture Pilot
By R EBEC C A SMITH
July 15, 2014 2:58 p.m. ET
The Petra Nova project will strip carbon dioxide from flue gases at NRG's W.A. Parish power plant in
Texas and pipe the gas to an oil field. ASSOCIATED PRESS
Carbon dioxide isn't just a greenhouse gas that federal officials want to curb: It is also highly prized
by the energy industry, which injects it into aging oil fields to increase their output.
Coal-fired power plants vent carbon dioxide to the atmosphere, while oil drillers generally have
gotten their CO2 from underground caverns or industrial plants.
But electricity producer NRG Energy Inc. is trying to change that. With a new Japanese partner it
disclosed Tuesday, NRG is planning to capture some of the carbon dioxide produced by one of its
coal-burning power plants outside Houston and then pipe the gas to an oil field about 80 miles
away.
http://online.wsj.com/articles/co2-project-electricity-firm-to-tap-greenhouse-gas-for-oil-drilling-1405450726#printMode
1/3
7/16/2014
CO2 Project: Electricity Firm to Tap Greenhouse Gas for Oil Drilling - WSJ
In return, NRG and partner JX Nippon Oil & Gas Exploration Corp. will get a share of the extra oil
that the carbon dioxide helps produce.
The partners and the U.S. Energy Department, which is putting up $167 million for the $1 billion
Petra Nova Carbon Capture Project, hope the process will serve as a template for other projects
that can reduce pollution from coal-fired power plants while boosting U.S. oil production.
NRG Chief Executive David Crane said his company owns two other coal-burning power plants—
Limestone in Texas and Big Cajun in Louisiana—that would be suitable for similar enterprises. "It's
expensive," he said, "but we hope to do other projects around our plants and other people's
plants."
Utilities' experiences with carbon capture have been painful, however. Southern Co. is finishing a
power plant in Mississippi that will convert coal into a combustible gas and strip out pollutants
including carbon dioxide. But the project is expected to cost $5.5 billion, making it the most
expensive coal plant ever built in the U.S.
Stripping carbon from flue gases after coal is burned also has run into trouble. The process is
complex and the captured carbon dioxide hasn't fetched a high enough price to justify the effort. It
is cheaper to build a new gas-fired power plant than retrofit an existing coal plant. In 2011,
American Electric Power Co. terminated a test project in West Virginia.
What will make NRG project work, its backers say, is that the cost will be recouped by selling extra
oil, not by selling carbon dioxide.
"The economics are being driven by the value of the oil recovered," said Arun Banskota, president
of the project.
Set to be completed in late 2016, the Petra Nova project will strip carbon dioxide from 40% of the
flue gases generated by the newest coal unit at NRG's W.A. Parish power plant and then will pipe
the CO2 82 miles southwest to the West Ranch oil field in Jackson County, Texas.
Injection of carbon dioxide at West Ranch is expected to boost daily oil production to 15,000
barrels from the current 500 barrels. The joint-venture partners will get half the added production.
The U.S. Environmental Protection Agency has proposed new restrictions on the release of CO2
from coal-fired power plants, which is likely to force some to retire. Experts say carbon capture for
use in oil fields could cut pollution enough to keep some plants running longer and help the nation
achieve greater energy independence.
Christopher Smith, a fossil-fuels official at the Energy Department, said his agency is funding eight
major carbon-capture demonstration projects, "but this will be the first that's achieved commercial
scale."
In what the industry calls "enhanced oil recovery," companies pump carbon dioxide into
underground oil reservoirs, where the gas helps push lingering crude up wells to the surface.
http://online.wsj.com/articles/co2-project-electricity-firm-to-tap-greenhouse-gas-for-oil-drilling-1405450726#printMode
2/3
7/16/2014
CO2 Project: Electricity Firm to Tap Greenhouse Gas for Oil Drilling - WSJ
Petroleum engineers have been using the process in Texas oil fields to stimulate production since
1972.
There are about 100 such projects in the U.S. that are credited with extracting 282,000 barrels a
day of extra oil. Federal officials think the technology will boost production by 360,000 barrels a day
by 2020 and 580,000 by 2030, according to study released in April by the DOE's National Energy
Technology Laboratory.
Today most of the CO2 being used in the oil patch comes from natural formations—especially
underground caverns in Colorado, New Mexico and Mississippi—and as a byproduct of industrial
projects such as fertilizer plants and natural-gas processing facilities. The biggest untapped
potential source of CO2 is the power industry because it is the primary user of carbon-intensive
coal and thus the biggest emitter of man-made carbon dioxide.
NRG, which is based in Princeton, N.J., initially looked at carbon-capture technology developed by
engineering company Fluor Corp. but selected technology developed by Mitsubishi Heavy
Industries Ltd. and Kansai Electric Power Co. , of Japan. One reason is that their technology is
being used by a small demonstration plant in Alabama. Texas-based Fluor is working on a
demonstration project in Germany.
Fluor Vice President Don Broeils said a hurdle for marketers of carbon-capture technology is that it
takes a lot of electricity to run the needed equipment. That effectively has meant cutting the output
of the coal plant whose flue gases are being captured.
The Petra Nova project is taking a different approach, said NRG's Mr. Crane. It built a small power
plant fueled by inexpensive natural gas to furnish power for the carbon-capture project.
The $1 billion price tag includes the carbon-capture facility, the 75-megawatt power plant, a
carbon-compression facility and the pipeline. The project is getting $250 million in loans from
Japan Bank for International Cooperation and Mizuho Bank Ltd.
Write to Rebecca Smith at [email protected]
Copyright 2014 Dow Jones & Company, Inc. All Rights Reserved
This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement
and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit
www.djreprints.com
http://online.wsj.com/articles/co2-project-electricity-firm-to-tap-greenhouse-gas-for-oil-drilling-1405450726#printMode
3/3