NRG begins work on coal plant carbon capture project

NRG Energy is beginning construction on a $1 billion project designed to reduce the amount of carbon dioxide released from a Fort Bend County power plant and instead use it to help increase oil production.

The company is touting the effort as the largest project in the world to use a technique called “carbon capture, utilization and storage” that’s getting increased attention, in part due to proposed federal rules that would require drastic reductions in carbon emissions from electric power plants. The regulation would hit coal plants in particular because coal combustion emits more carbon dioxide than burning natural gas, the other main fossil power plant fuel.

“This will basically be extremely clean emissions from a coal plant — which we’ve never seen — at low coal prices,” said Arun Banskota, president and CEO of NRG Energy Petra Nova Holdings, the NRG subsidiary leading the project. “That’s the radical thing.”

The work is being done at NRG’s W.A. Parish power plant about 25 miles southwest of downtown Houston. On Tuesday the company will begin the initial construction phase of the project.

The company expects to complete the project in two years.

The new equipment will take flue gas — the exhaust produced by the power plant — and direct it to a tower where it will mix with an ammonia derivative. It then will be heated in a process that segregates the carbon dioxide.

The carbon dioxide will travel via pipeline to an oil field 80 miles southwest of the plant, where it will be pumped underground to improve oil production — a process called enhanced oil recovery.

Neither of the technologies is new, but their combination on a commercial scale is, Banskota said.

The idea is to take an abundance of carbon dioxide at power plants, where it’s not wanted, and shift it to the oil industry, where it’s in high demand. “What hasn’t been done before — until now — is the business model of putting it all together on a competitive basis,” Banskota said.

The effort is a joint venture of Petra Nova and a subsidiary of Japanese energy company JX Nippon Oil & Gas Exploration Corp. They each have a 25 percent stake in the oil field, with the rest owned by Houston-based Hilcorp Energy Co.

It is the only oil field in which NRG has an equity stake.

Today, the field produces about 500 barrels per day, but that could increase to more than 15,000 with the help of carbon dioxide injections, NRG officials said.  Essentially, the increased oil production will pay for the new infrastructure at the power plant.

NRG officials say in addition to being the largest suchproject in the world, it’s also the first commercial-scale project in the U.S. to remove carbon dioxide after the combustion process.

That distinction is key, since it means the infrastructure can be added to an existing power plant.

A different type of carbon-reducing technology requiring more advanced engineering typically can be installed only while a plant is under construction.

“It’s one of the precious few post-combustion, carbon-capture projects, and we need more of them,” said Charles McConnell, executive director of the Energy and Environment Initiative at Rice University.

The system will keep an estimated 1.6 million tons of carbon dioxide  out of the air each year.

Still, the project will affect only a fraction of the emissions from the Parish complex, the largest power plant in the U.S. outside of nuclear and hydroelectric facilities.

The Parish plant has four coal units and six gas units, and the carbon capture technology will be applied to about 40 percent of a single coal unit.

NRG officials say they hope to expand the use of the technology.

The U.S. Energy Department committed $167 million toward the NRG project as part of a grant program designed to accelerate the availability of the technology on a commercial scale. So far the project has received $7 million of the federal funds, most of it used for preliminary engineering work.

Banskota said the initial funding was key to developing the technology, which NRG said it’s poised to use at other facilities without the need for additional federal grants, since much of the early engineering work can be replicated.

The U.S. Energy Information Administration projects that through 2040, cumulative crude oil production from carbon dioxide-based enhanced oil recovery could total 5.2 billion barrels.

Still, the technology has its skeptics.

Jenna Garland, deputy press secretary with the Sierra Club, said coal-fired power plants are being phased out across the country. Rather than focus on retrofitting them with expensive technology, she said, it would be more economical to focus on development of wind and solar power.

“I would say there are several options that rank much more highly than looking at carbon capture and sequestration, especially when we’re talking about retrofitting,” Garland said.

Commodity prices also could prove a challenge to the future of the technology.

Because NRG’s business model funds the carbon capture infrastructure from the oil it helps produce, a decline in oil prices could be a setback to implementing it on a wider scale. “From a technology perspective, we’re very comfortable,” Banskota said. “What is not controllable is the commodity price.”

McConnell, who spent two years as assistant U.S. energy secretary in the Obama administration, acknowledged that some environmentalists don’t embrace the technology. But he said it’s more financially feasible than relying on federally subsidized alternative fuels, and it’s a practical way to improve the emissions of the power plants that exist today.

“I think we have to be realistic about our energy security and the costs for our society,” McConnell said.