OREANDA-NEWS. The developer of an integrated-gasification combined cycle facility in Texas is betting on public policy support for carbon capture and sequestration projects while the company's own project and similar facilities in the US face uncertain economics.

Seattle-based developer Summit Power wants to build a 400MW project near Odessa, Texas, that will capture 90pc of its carbon for use in enhanced oil recovery by Permian basin producers. The company last year estimated the Texas Clean Energy Project could cost \$3.5bn. The plant's economics depends on its ability to produce urea and sulphuric acid and on a 200MW power sales agreement with San Antonio utility CPS Energy.

The US Department of Energy is expected to provide up to \$450mn for the project. Summit still is negotiating funding and other key arrangements, vice president for carbon capture Sasha Mackler told Argus.

The Electric Reliability Council of Texas lists October 2018 as the projected in-service date for the plant. But the company expects the project to go on line in 2019, Mackler said yesterday during a discussion hosted by the US Energy Association in Washington, DC.

Enhanced oil recovery has been the main driver for US carbon capture, sequestration and utilization projects, Mackler said. CO2 capture is not valued in power markets so developers have to reuse the substrance, he said.

The decline in crude oil prices so far has not affected the prospects for NRG Energy's Petro Nova project, which involves using CO2 captured from a unit at the Parish coal plant in Texas to boost oil production at a mature oil field. The \$1bn project is on budget and on schedule for late 2016, NRG's Dave Knox said.

Summit hopes for regulatory measures to boost the prospects of CO2 capture projects, including the Environmental Protection Agency's (EPA) proposed CO2 emission cuts for new and existing power plants.

The federal agency in the Clean Power Plan proposal noted that "the costs of integrating a retrofit [carbon capture and sequestration] system into an existing facility would be substantial" while claiming that partial carbon capture has been adequately demonstrated for new coal plants, for which the costs "are not unreasonable."

The only new power generation facility under construction that uses the technology, Southern Co's Kemper integrated-gasification combined cycle facility in Mississippi, will cost \$6.2bn, or three times the earlier projected cost. Southern is hoping to pass the costs of the project to ratepayers but has lost a co-investor in Kemper.

EPA's recent clarification that it will continue permitting CO2 geologic storage under the Class II underground injection control program for enhanced oil recovery, rather than the more restrictive Class VI program, is removing legal uncertainty for project developers, Mackler said.

But uncertain costs of carbon capture projects undercut the case for an EPA mandate for the technology.