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The Texas Tribune: Carbon Dioxide, the Bane of Environmentalists, Is in Demand in the Oil Industry
2011-01-07 04:04:53.44 GMT
The Texas Tribune: Carbon Dioxide, the Bane of Environmentalists,
Is in Demand in the Oil Industry
By KATE GALBRAITH
(New York Times) -- The Obama administration views carbon
dioxide as a pollutant that warms the earth, and it imposed new
regulations at the beginning of the year to begin to control CO2
emissions. But to Texas oilmen, carbon dioxide is a useful — and
scarce — commodity that is vital to extracting hard-to-reach oil
In Texas, the nation's largest oil-producing state, the
demand for CO2 is soaring — because carbon dioxide can help
squeeze oil out of formations deep underground — and new carbon
dioxide-producing plants are in the works.
Last month, Texas air-quality regulators approved crucial
permits for two coal-fired power plants that will capture their
carbon dioxide emissions and sell them for use in nearby oil
fields. Also in December, a major new pipeline operated by
Denbury Resources of Plano began ferrying carbon dioxide from
Mississippi to oil fields near Houston.
"The demand for carbon dioxide is very, very large," said
Steve Melzer, president of the Texas Carbon Capture and Storage
Some oil-extraction projects have been delayed, Mr. Melzer
said, because they cannot buy enough carbon dioxide.
The idea of capturing carbon dioxide and pumping it
underground is gaining traction in the power sector. It sounds
like an exercise in environmental idealism: Take the
heat-trapping gas — belched profusely from coal plants, which
generate 45 percent of the nation's electricity — and bury it,
benefiting the atmosphere and combating global climate change. Of
course, it is something of an environmental paradox that stowing
the greenhouse gas can also help to produce more fossil fuels.
Carbon dioxide is a "fantastic solvent," said Susan Hovorka,
a scientist with the Gulf Coast Carbon Center at the Jackson
School of Geosciences at the University of Texas. In a nearly
liquid form, it can mix with the underground oil, making the oil
more fluid and easier to extract. Water is pumped in before the
carbon dioxide; when carbon dioxide is unavailable, water
suffices, but it is not as effective.
Some of the carbon dioxide comes back out with the oil, but
that gets separated and reused in the wells. When the project has
finished producing oil, the vast majority of the carbon dioxide
stays underground and will not leak out of the tiny pores it is
wedged into, said Ms. Hovorka, whose team has monitored two oil
fields in the state and verified that the gas did not escape.
Capturing carbon dioxide can increase a coal plant's capital
cost by about 30 percent — a key reason no major power plant with
that capability has been built in the United States. One pilot
project, slated to expand, has been operating in West Virginia
since 2009, and another plant that may capture and store carbon
dioxide is under construction in Indiana. In addition to the two
proposed Texas plants, projects are in the planning phases in
California, Illinois, Kentucky and Mississippi, said Julio
Friedmann, director of the carbon management program at Lawrence
Livermore National Laboratory.
Texas, however, has a major advantage over most other
states: it can put the carbon dioxide to use. The West Virginia
plant pumps carbon dioxide underground just to keep it out of the
air, but Texas plants can sell it to oil companies.
Texas has been using carbon dioxide to help extract oil
since the early 1970s. Much of the state's supply is piped in
from New Mexico and Colorado, where dome formations yield
abundant CO2. In recent years — due to high, though fluctuating,
oil prices that motivate oil producers to expand operations —
demand for carbon dioxide has far outstripped supply in the
Permian Basin. Prices there for carbon dioxide for new projects
have more than doubled in the past five years and are now close
to half the wellhead price of natural gas, measured by volume,
Mr. Melzer said.
It seems odd that Texas, which because of its heavy industry
discharges more carbon dioxide into the air than any other state,
would need to import it. But this could begin to change, in a
modest way, with the construction of the two coal plants that
received air permits last month. One is a $3.5 billion to $4
billion plant called the Tenaska Trailblazer Energy Center near
Sweetwater; the other is a $2.2 billion plant near Odessa built
by Summit Power.
Neither power plant is being built yet, but they plan to
capture 85 percent or more of their carbon dioxide emissions and
sell them to oil companies. Laura Miller, Summit Power's director
of projects in Texas, said the Odessa plant would get one-third
of its revenue from selling power, one-third from selling
fertilizer — a byproduct of a coal-gasification process to be
used by the plant — and one-third from selling carbon dioxide.
Some environmentalists — in effect acknowledging that the
country cannot quickly wean itself off coal, the dirtiest fossil
fuel — have tepidly endorsed the concept of capturing carbon
dioxide from coal plants and storing it underground. James D.
Marston, the Texas head of the Environmental Defense Fund, which
received a written commitment from Tenaska to using
carbon-capture technologies, noted that the state's planned
plants would help show that the technology works..
Whether Texas' plants actually get built remains to be seen.
Around the country, some similar projects have folded or stalled
due to cost. The failure last year of federal legislation that
would have in effect put a price on emissions of heat-trapping
gases hurt the economics of the plants, which will sell power at
market prices in Texas.
But federal and state help have pushed the Texas projects
along. Both Texas and the federal Environmental Protection Agency
have recently issued new rules governing carbon-capture projects
designed to provide clarity for the industry — and have also
provided financial help.
The Summit Power plant received $450 million in federal
incentives, and is eligible for state incentives, including a tax
credit, approved in the last legislative session, worth up to
Some Texans are already looking far ahead, to when carbon
dioxide, because of its heat-trapping properties, gets buried for
its own sake — not just in oil fields.
The Gulf Coast Carbon Center recently received $10 million
from the federal stimulus package and Texas' General Land Office
to study the possibility of storing carbon dioxide emissions
below the Gulf of Mexico — "not that anyone is going to want to
do it tomorrow," Ms. Hovorka said.
Copyright 2011 The New York Times Company
-0- Jan/07/2011 04:04 GMT