CO2 capture could boost Kemper County power costs

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Published: May 21,2010

Tags: CO2, Kemper

One of the main features of the proposed Kemper County clean coal facility are plans to capture and store as much as 67 percent of the carbon dioxide emissions, making it most likely the first integrated gasification combined cycle electric generating plants in the country with that capability.

The captured CO2 would then be sold for use in enhanced oil recovery, according to MPC officials.

Although the capturing of CO2 emissions may be a first for a power-generating facility, its use in oil production is far from unusual.

“The source of CO2 being an industrial plant is new, but in the United States CO2-enhanced oil recovery has been a commonplace thing for well over 30 years,” said Mark Northam, director of the School of Energy Resources at the University of Wyoming. “In West Texas, for example, a lot of oil fields would have been abandoned 20 or 30 years ago had we not used CO2 to keep them alive.”

Should the proposed 582 MW facility be constructed, about 3.5 million tons of CO2 would be captured each year, according to Mississippi Power Co. spokeswoman Cindy Duvall. At 70 degrees Fahrenheit, that equates to about 61 billion cubic feet of CO2.

“About 3.5 billion cubic feet of CO2 is already used each day for enhanced oil recovery,” said Tracy Evans, president and CEO of Plano, Texas-based Denbury Resources Inc. “The market would be able to absorb whatever Kemper would produce.”

Denbury is the largest oil and natural gas operator in Mississippi and owns some of the largest reserves of CO2 used in enhanced oil recovery. Although the company has been in discussions with MPC to purchase the captured CO2, no agreements have been signed, Evans said.

A $2.7-billion coal-to-gasoline facility under construction in Medicine Bow, Wyo., plans to make use of similar CO2 capture technology.  Houston-based DKRW Energy, which is building the facility, plans to capture about 50 percent of the CO2 emitted and pipe it to Wyoming oil fields for use in enhanced oil recovery.

“We have a shortage of CO2 here, so it is quite easy for them to get long-term take-or-pay contracts,” Northam said. “It should actually be a fairly significant profit stream for the plant.”

 

Making it pay

But while plans to capture CO2 emissions may be good for the environment, doubts remain as to whether it’s good business.

A 2006 report by the Environmental Protection Agency pegged the costs of capturing CO2 at $24 per ton. Include transportation and storage, and the cost rises another $10 per ton, according to a study by the Massachusetts Institute of Technology. 

“Using carbon capture increases the cost of generating electricity by as much as 40 percent,” said Jeff Schweitzer, former chief environmental officer at the State Department’s Agency for International Development during the George H.W. Bush administration and assistant director for international affairs in the Office of Science and Technology Policy during the Clinton administration.

“The process of capturing CO2 decreases plant output by about 25 percent and increases water consumption by about 23 percent,” Schweitzer said.

Those costs could ultimately be passed along to ratepayers, although they may be offset by the sale of the captured emissions. Using captured CO2 for enhanced oil recovery could pay big dividends down the road.

In this method of enhanced oil recovery, porous rock holds the oil underground, similar to the manner in which a sponge holds water. Once the oil field has been depleted by conventional drilling technology, CO2 is pumped into the well. The CO2 displaces oil trapped in the rock pores and forces it to the surface, along with some of the CO2. The CO2 is then returned to the well where it remains trapped underground in a process known as sequestration.

“You can recover about 50 percent more oil from a mature field that has been depleted using conventional technology,” Schweitzer said. 

“Right now, though the market is very small,” he said. “Oil production with CO2 is only about 300,000 barrels per year, which is a tiny amount compared to the eight million barrels that we produce every day. So the potential is huge, but the number of companies actively using the process is limited, which limits how much a company is going to buy for that purpose.”

But because the well infrastructure would already be place, the ability to extract additional oil is a bonus. Estimates on the amount of oil that could be extracted using CO2 run as high as 500 billion barrels, Northam said.

“Enhanced oil recovery will add a few dollars to the cost of the incremental barrels of oil recovered,” he said. “Depending on how much you had to pay for the CO2 the initial costs may be high, But given that you weren’t going to get that oil anyway, it’s actually pretty cheap.”

 

Liability issues remain

Recent actions by the Environmental Protection Agency have clouded the future of CO2 capture and its use in enhanced oil recovery. The EPA has proposed requiring companies engaged in enhanced oil recovery to monitor wells and collect data regarding potential CO2 leaks.

Monitoring costs for a well with sequestered CO2 are projected to average approximately $300,000 per year. The agency is accepting public comments on the proposed rules until the end of May.

And even greater uncertainty surrounds the long-term liability regarding such wells.

“Wyoming and several other states have passed legislation that regulates and describes how to cover liability during the operations phase of a project, but the big unknown is who’s going to cover the post-closure liability,” Northam said. 

“There are still concerns over the next century or two at the CO2 could migrate and contaminate groundwater,” he said. “The government is still debating on how to handle that.”

 

By Richard Slawsky I Contributing Writer

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