Power plants try carbon-capture tech
Projects in Texas, Mississippi may offer glimmer of hope to coal industry
The woebegone U.S. coal industry received a rare bit of good news recently as the independent power company NRG Energy announced the completion of a $1 billion venture in Texas.
Called Petra Nova, the project separates more than 90% of the carbon dioxide from 240 megawatts of coal-fired power at a generating plant near Houston.
Petra Nova first captured carbon dioxide in September and has delivered more than 100,000 tons of the gas to an old oil field 80 miles away, where it is injected to produce more crude from the ground.
Most notably, it’s the world’s largest post-combustion system for capturing carbon at a power plant.
“We’re excited about the completion of this project,” said Mauricio Gutierrez, president and CEO of NRG. “We’re very pleased to tell the market and our shareholders that we did this on time and on budget.”
NRG Energy is a partner in Petra Nova with Japan-based JX Nippon Oil & Gas Exploration. The U.S. Department of Energy is providing $190 million to help ad- vance the carbon-capture technology.
This comes as Mississippi Power nears completion of a $6.7 billion carbon-capture project at a 582-megawatt power plant that involves enhanced oil recovery but relies on different technology. The DOE is contributing $270 million to that project.
At a glance, the two projects appear to offer a glimmer of hope to advocates of U.S. coal, including President-elect Donald Trump, who would like to see a resurgence in the mining of American coal and its use in the nation’s power plants. In fact, the success of Petra Nova demonstrates advances in carbon-capture and sequestration technology that have been supported for years by companies such as NRG.
Nevertheless, the challenges confronting carbon capture are daunting, especially outside places such as Texas, where owners of worn-out oil wells can use carbon dioxide to bump up production.
Even in Texas, Petra Nova is barely paying off for NRG and JX Nippon, thanks to low oil prices.
“This project made a whole lot of sense when oil prices were $100 a barrel,” Gutierrez said in an interview. “Today, with oil at just around $50 a barrel, the economics of the project are somewhat challenging. It’s not what we expected initially, but we can cover our costs.”
The oil field where the carbon dioxide is shipped via an 80-mile pipeline is half-owned by NRG and JX Nippon. The rest belongs to Hilcorp Energy, which operates the field.
NRG and JX Nippon pay for the costs of the carbon-capture project with proceeds from the sale of oil. While oil is at roughly $50, the project breaks even; at higher prices, it can make money.
West Texas Intermediate crude futures, the benchmark for U.S. oil, sold at $52.47 a barrel at midday Friday.
What the technology needs for widespread success is a mechanism such as a carbon tax that would put a price on carbon and provide a greater incentive to find commercial uses of the gas.
Outside California and the Northeast, where state and regional regulations effectively price carbon, there is little interest in the USA in taking that approach. The preference for generating electricity is low-cost natural gas, solar and wind energy, not some cleaner version of coal. That said, Gutierrez doesn’t rule out broader adoption some day of technologies to capture carbon from power plants and find commercial uses for the gas or bury it deep underground. When that happens, projects such as Petra Nova will help guide the way.
If nothing else, he said, commitments by U.S. industry to re- duce carbon emissions in the face of climate change, regardless of any changes in U.S. environmental policy under the Trump administration, suggest such measures will ultimately be necessary to curb emissions from gas power plants as well as coal units.
NRG Energy, for example, continues to move in that direction. The company’s goal is to reduce its carbon emissions by 50% by 2030 and 90% by 2050, compared with 2014 levels.
“Whether it’s coal today or natural gas tomorrow, we need to figure a way to take carbon out of fossil fuels in power generation,” Gutierrez said.