SAN FRANCISCO, July 15 (Reuters) - NRG Energy and Japan's JX Nippon on Tuesday announced plans to capture carbon emissions from a Texas coal plant and use the pollution to boost oil production at an aging field, the latest attempt to bring to life a troubled technology seen as a key to combating climate change.
When completed in 2016, the Petra Nova Carbon Capture Project will trap 1.6 million tons of carbon annually from one unit of NRG's WA Parish power plant and pipe it 82 miles (132 km) to the West Ranch Oil Field.
There it will be injected underground to help stimulate oil production, and revenue, for NRG and JX Nippon, which each hold a 25 percent interest in the field.
Oil production at the field is expected to rise from 500 barrels per day to more than 15,000 barrels per day as a result. Money from the sale of the oil will eventually pay off the $1 billion price tag for installing the carbon capture equipment, the companies said.
"While the electrical generation business is working to control our carbon emissions, carbon is incredibly important to the oil industry for continuing production at mature oil fields," said Arun Banskota, president of Petra Nova project.
"We are building a model that is a win-win for both industries, providing the CO2 that the oil industries needs and the revenue the generating companies need to make projects like this economic," he said.
The widespread deployment of carbon capture and sequestration (CCS) technology is viewed as essential to stopping runaway climate change, but the high price of CCS projects coupled with the lack of a national carbon price have made it difficult for power companies to justify the investment.
U.S. federal funds for CCS projects, which were instrumental in getting Petra Nova off the ground, are drying up. Meanwhile the U.S. Department of Energy's troubled FutureGen CCS project is on its second iteration but has yet to capture a single ton of carbon.
But with natural underground sources of carbon dwindling, the oil industry in Texas is willing to pay $30 to $40 per ton of carbon dioxide, a price that could spur CCS projects in the future, said John Thompson of the Clean Air Task Force.
Thompson said projects like Petra Nova transform CCS from a technology that simply mitigates climate change to one that also generates energy, a much more lucrative enterprise.
"Every joule that is used at the power plant to capture and compress that CO2 creates 3 to 4 joules of new energy from oil that would be otherwise unrecoverable," he said.
He said projects like Petra Nova are also critical because they bring together engineering expertise and financing from Asia and the United States.
The technology at the project was developed by Japan's Mitsubishi Heavy Industries and Kansai Electric Power Co.
An even more ambitious CCS project proposed by Summit Power for a new Texas power plant recently received a pledge for financing from China.
The project had stalled due to cost overruns but was brought back to life after the China Huanqiu Contracting & Engineering Corporation (HQC), an affiliate of China National Petroleum Corporation, agreed to provide money for it.
Like Petra Nova, Summit's Texas Clean Energy Project will use the carbon it captures to pump oil when it is completed.
Thompson said multinational collaboration is critical to the evolution of CCS.
"The beauty is it creates the possibility for CCS projects on both sides of the Pacific, which really speeds the effort to address global warming globally." (Editing by Eric Walsh)