Great Plains to sell CO 2 for EOR

U.S. Energy Sec. Bill Richardson has announced an agreement that will help keep the Great Plains coal gasification plant near Beulah, N.D., in operation by selling its carbon dioxide by-product to producers for enhanced oil recovery projects.

"This agreement secures the long-term future of a facility that is vital to North Dakota's economy and to the 700 North Dakota citizens employed there and hundreds more in adjacent coal mines and regional businesses," Richardson said.

The Great Plains plant is the only U.S. plant that converts coal into pipeline-quality gas. Built under a federal loan guarantee in the early 1980s, it supplies synthetic gas to nearly 300,000 homes and businesses in the Midwest and eastern U.S. In order to increase revenues, Dakota Gasification Co. (DGC), the Basin Electric Power Cooperative subsidiary that owns the plant, has sought markets for the plant's CO₂ output, which currently is released to the atmosphere.

DOE said PanCanadian Petroleum Ltd. wants to buy the CO₂ for an EOR project at its Weyburn oil field in southern Saskatchewan, if DGC finances a 205-mile pipeline to the field. PanCanadian said injecting CO₂ at Weyburn would mean incremental recovery of 122 million bbl of oil. DOE will provide financial arrangements to allow the plant's owners to convert federal tax credits into the necessary capital to build the pipeline and to complete improvements enabling the plant to meet the state's environmental standards.

Under the deal, the government will allow DGC to use alternate fuel tax credits to attract partners and create a corporate structure that could finance the capital projects.

When DGC bought the plant in 1988, it agreed to forego the use of alternative tax credits and in the past decade has foregone about 85% of the nearly $600 million in credits. Congress has extended the tax credits through 2002, and DGC wants to take advantage of their remaining life.

The credits could be used to pay for 90%, or $110 million, of the proposed pipeline and up to $40 million for improved control devices to reduce air emissions. DOE assistance hinges on an Internal Revenue Service determination that DGC is entitled to the tax credits. The plant would repay DOE for the tax credits.