Winning POWER’s highest honor, the U.S.’s first and world’s largest commercial post-combustion carbon capture system at a power plant is distinctively both a globally significant environmental breakthrough and a trailblazing revenue-generating facility. Putting this $1 billion project online on time and on budget—despite a chaotic policy climate and other challenges that sank similar projects—was a top priority for its investor-owned owners and project partners.
About 25 miles southwest of NRG Energy’s glass-walled headquarters within a sleek skyscraper in downtown Houston, the freeway narrows into a backroad that meanders through the humid coastal plain in Fort Bend County, over the placid Brazos River, and past a series of verdant cotton and sorghum fields. NRG’s 3.7-GW W.A. Parish power plant stands out within this near-treeless landscape, its four coal units and six gas units scattered amid towering smokestacks, snaking coal conveyers, and dark coal mounds, a vast 2,000-acre site nestled at the shore of a wide cooling lake. The magnitude of this power plant—which is one of the largest in the U.S. and a prime power supplier for the Greater Houston area—overshadows Petra Nova, the world’s largest post-combustion carbon capture system, which began commercial operations at an 8-acre site near the edge of the Parish plant last December.
This landmark $1 billion project, which leverages operations of the existing W.A. Parish Unit 8 and a maturing oil field using proven carbon capture technology, could potentially play a pivotal role in the future of coal power in a world that has been increasingly gripped by climate change worries. But, the key reasons that this project won POWER’s 2017 Plant of the Year Award are that it was brought online on time, and on budget, and despite its unprecedented scale, it was completed in roughly 1.78 million man-hours without a single lost-time incident during construction.
Today, Petra Nova functions as a unique source of revenue for its owners NRG Energy, one of the largest independent power producers in the U.S., and JX Nippon Oil & Gas Exploration Corp., the upstream arm of the JXTG Group, a petroleum, mining, and metal conglomerate which includes the largest oil company in Japan. As laudable is that the project was a marvel of collaboration between some of the world’s biggest firms, including the consortium that built it, which comprised Mitsubishi Heavy Industries America (MHI America), the Houston-headquartered arm of global industrial firm Mitsubishi Heavy Industries (MHI), and The Industrial Group (TIC), a subsidiary of Omaha, Neb.–based contracting firm Kiewit.
A Chaotic Beginning
Intriguingly, Petra Nova was conceived in the midst of a period of unprecedented uncertainty on several fronts. In 2009, the U.S. was just emerging from a deep economic recession, and President Barack Obama had just been elected, recalled David Greeson, vice president of development at NRG Energy. “The whole country—the whole world—was talking about climate change, and coal seemed to be in the crosshairs for the whole movement,” he told POWER.
While NRG is today the largest independent power producer in the U.S., at the end of 2009, the Princeton, N.J.–based wholesale power generator owned just half its current 49-GW power plant fleet. That year, the company saw several upheavals. Though stunned by the credit crisis and ensuing market turbulence that crippled so many U.S. utilities and power generators, it managed to thwart a hostile takeover by Exelon Corp., and was in the process of revenue diversification with the acquisition of Reliant Energy’s retail business in Texas. The company was also actively decarbonizing its fleet—which was then 32% coal-fired—and was considering a 2.7-GW expansion at the South Texas Project nuclear plant, along with new wind farms in West Texas, solar in California and New Mexico, and multiple gas-fired power projects in California, Texas, and throughout the Northeast.
Investor documents from 2009 show that NRG wasn’t confident that federal climate change legislation being considered at the time would “stick.” As Greeson recalls, the company’s impetus to build a carbon capture system was simply to preserve its existing fleet in a low-carbon environment. “So, we formed a small team of folks and said, ‘Hey, we’re going to get run over by this issue if we don’t address it,’” he said.
But conceiving a solution was complicated by three factors, he said: First, how the carbon technology worked; second, how to sequester captured carbon; and third, how to pay for it all. “We’re not a government entity, and we’re not a rate-based company,” he said. “Everything we do is subject to competitive pressures, competitive markets. And so, we can’t just raise the price of electricity, because then customers won’t buy our products.”
The NRG team ultimately settled on the idea of building a carbon capture system at the W.A. Parish facility near Houston, mostly because the site offered access to a number of opportunities to sequester the CO2 in oil fields that were good candidates for enhanced oil recovery (EOR). “Using the plant in Houston, we kind of had an environment where there was an opportunity to be successful on all three fronts,” Greeson said. Also, he noted, the Texas Legislature had just passed “very strong” incentives to abate half of the EOR severance tax, and another substantial reduction if a project uses anthropogenic CO2. The facility also benefited from franchise tax credits. The capture system, too, offered exemptions from property taxes because it is considered a pollution control device, and a substantial amount of equipment used in the facility was exempt from sales tax.
Fleshing Out the Project
At that point, the project was still a skeleton of an idea that required “putting flesh on the bones, one by one,” Greeson said. That entailed selecting the technology, applying for a grant from the Department of Energy (DOE), and making preliminary arrangements with an oil field.
NRG, which had envisioned the project as a small-scale commercial carbon capture project, was bent on choosing a technology that was as mature as possible. “Only two passed the test,” Greeson said. One was Flour Corp.’s advanced Ecoamine FG Plus technology, equipment tested on a large scale at a plant in Bellingham, Mass., which promised to capture about 400 thousand tons of flue gas CO2 from a 60-MW unit.
The second technology under consideration was developed by MHI in conjunction with Japan’s Kansai Electric Power Co. (see sidebar, “A Highly Tested Carbon Capture Technology”). The lure of MHI’s technology, according to Greeson, was that it had been demonstrated at Southern Co.’s Plant Barry in Alabama. A memorandum of understanding and a confidentiality agreement with MHI allowed NRG to assess the technology in detail with the help of outside engineering firms. Greeson also credited Southern Co. and the Electric Power Research Institute for allowing NRG to tour the DOE-funded demonstration project at Plant Barry, which captured and injected 500 metric tons of CO2 per day (about 90%) from a 25-MW flue gas slipstream.
“In the end when we were doing our final capital raise with our lenders and our partners and NRG’s board, having Plant Barry successfully operate was critical to everyone having confidence that this technology would work at the scale we were proposing,” Greeson said.
The biggest factor was simply economics. To cover costs required to capture CO2 and deliver that gas to the oil field, NRG reasoned that the project needed to be sized to the oil field. NRG ultimately settled on injecting the gas into wells to optimize production at the West Ranch Field in Jackson County. However, the 11,500-acre field discovered in 1938 and now operated by exploration and production company Hilcorp is about 80 miles southwest of the W.A. Parish site, and transporting the gas would require a 12- to 16-inch-wide buried pipeline.
“So, as we settled on which oil field was going to be our target, we realized because of sub-surface simulations and production simulations, that the amount of CO2 [proposed by the 60-MW capture system] was not going to be enough to create an upfront loaded response of oil from the oil field,” Greeson explained. “We would still get all the 60 million barrels that we know are in there that can be produced with CO2, but it might have taken 30 or 40 years to get there. With the increased amount of CO2 [from Petra Nova], that can happen in 10 years.”
What it required, NRG determined, was a massive increase in scale and scope of the project. Both MHI and Fluor provided a FEED study on the larger system, and MHI, which proposed a 10-fold increase of its demonstration at Plant Barry, emerged as the winner.
Greeson described the decision as a confident one, noting that a typical scale-up process of any technology is only sound if limited to a factor of 10. “If you go more than that, it’s just really difficult to predict what’s going to happen,” he said. In the end, “What we expected actually turned out to be true,” said Greeson. “And that is as we quadrupled the size [of the original proposal], we only doubled the price.”
Going All Out to Reduce Risk
As an investor-owned company, NRG placed elaborate emphasis on reducing risk, and while it was sketching out the unique project, it was also seeking a partner of the same mindset and the same desire to help it achieve success. Greeson recalled learning about JX Nippon Oil & Gas Exploration Corp., the sole upstream arm of oil and gas giant JXTG Group, as a coincidence sometime in mid-2012. As JX Nippon’s Takeo Tanei, who now serves as vice president of Petra Nova Parish Holdings—the 50-50 joint venture formed between NRG and JX Nippon to build the carbon capture project—remembers it, at the time, JX was in the process of scoping out new opportunities for project development and production over the short term. It was open to several possibilities, Tanei said, as long as the project complied with JXTG’s core values of prioritizing community, health, safety, and environment, and high ethical standards.
JX’s decision to participate, however, was reached only after detailed deliberations about just how much to invest, a call it had to make while it was wrapping up financials at the end of a fiscal year. Both NRG and JX Nippon described the partnership as highly compatible, especially considering their corporate, industry, and cultural divide. For NRG, the partnership immediately opened a new avenue for funding with Japanese banks, which considered JX Nippon’s potential 25% interest in the proposed 60 million barrels of recovered oil from West Ranch. For JX Nippon, the novel project has also been meaningful for several reasons, including technology growth and its effect on the environment.
Meanwhile, once the determination was made to go with MHI’s technology, NRG and JX Nippon drew up a short list of construction partners, eventually settling on Kiewit-subsidiary TIC, a company that has brought online a number of complex projects across multiple markets, including for NRG. Spearheading the project for TIC was Robert Wolosyn, an industry veteran whose leadership during the Petra Nova and other construction projects earned him Kiewit’s largest and most prestigious Peter Kiewit award this year. As he recalls, sometime in November 2013, NRG and JX Nippon concluded that if MHI America, the Houston-based subsidiary of MHI, and TIC agreed to work together as a consortium, the two companies would secure the engineering, procurement, and construction contract.
It came with one catch, though: The project owners gave the two firms only three months to determine a project price. “We worked for a couple months on costing the project to see for sure if we were within the boundaries of the pricing that was already put forward—which we were,” said Wolosyn. MHI’s thorough FEED study provided nearly everything needed to come up with a 100% full estimate, he added. “And with some back and forth between MHI and Petra Nova we were able to come to a lump sum price [by December 2013] that worked for everybody.”
Meanwhile, MHI America, which had conducted a year-long FEED study, pressed on with engineering the project throughout the whole estimate phase, assured that the project would go to field. For NRG’s Greeson, this was pivotal to boosting project efficiency. In an effort to cut risk, NRG and JX Nippon paid the consortium to complete an estimated 20%—two to four times more than usual—of project engineering before issuing the notice to proceed, he noted.
“They had a very detailed 3-D model that was a part of that design work so we could see where there would be interferences or where things didn’t match up,” Greeson said. “And they handled those during that part of the process rather than when the pipe-fitters from both sides end up having a miss in the field. That didn’t happen. Everything matched up very well.”
That isn’t to say that the project was bereft of challenges (Figure 3). “I can’t tell you how many times I had to pull the team together and tell them, ‘I know this looks bad, but we know we have a good project here and the good news is we didn’t get halfway through construction and then discover that we had this problem,’” Greeson said. NRG, for example, encountered a major roadblock early during the project’s planning phase when a major oil field it was negotiating with abruptly stopped discussions, owing to crippling legal problems.
|3. When it rains, it pours. Midway through the construction period, the team was forced to contend with the Texas coastal plain’s propensity for flooding. On Memorial Day weekend in 2015, the Greater Houston area was drenched by a historic downpour. The project site recorded 11.5 inches of rainfall. “When we came back to work on Tuesday morning, the entire carbon capture site was underwater,” TIC’s Robert Wolosyn recalled. TIC’s consortium partner Mitsubishi Heavy Industries America credited TIC with having the foresight to lime-treat all its backfill material, which kept the water from permeating and allowed for quick drainage. “All we had to do was scrape off about an inch of the top layer that was very muddy and it was all hard and good, and we were able to go back to work,” said Wolosyn. Courtesy: TIC|
Construction Kicks Off
Between January and July 2014, when it received the final notice to proceed, the consortium negotiated contracts with key equipment suppliers, securing the heat recovery steam generator from Nooter/Eriksen, a cooling tower from SPX, a dehydrator from Tryer, and structural steel from Cives Steel Co. Then a ceremony to break ground on the project was held on September 2014, at the site where the team relocated a large warehouse at the site of the project only a month before.
According to Wolosyn, among the project’s most notable feats of construction were to build the 120-foot-tall quencher tower (Figure 4) and a 360-foot-tall absorber tower. “And those were totally fabricated onsite in our fabrication yard and brought to the area where they were erected at, in 40-foot-tall modules. So, there was basically, four modules were built for the quencher tower and [eight] modules ended up being built for the absorber tower,” he said.
|4. A modular move. The 120-foot-tall quencher tower and 360-foot-tall absorber tower were fabricated onsite and erected part by part, as 40-foot-tall modules. This image shows crews lifting a module of the absorber tower in December 2015. Courtesy: TIC|
MHI America, specifically, boosted project efficiency by getting all components to the project site on time, including the powerful, custom built compressor—a complicated “eight-stage machine with inner coolers,” as MHI America’s Yusuke Yoshida described it to POWER—and massive regenerator (Figure 5).
|5. Getting it to site on time. One specific challenge noted by Mitsubishi Heavy Industries (MHI) was transporting the massive 27-foot-diameter, 160-foot-tall regenerator to site from the Port of Houston, a feat that took several days—with crews maneuvering the move during the dead of the night—owing to the narrow roads leading into the site. As MHI America’s Yusuke Yoshida told POWER, the custom-built regenerator had to be “walked” across a bridge using multiple supports. Courtesy: TIC|
Pre-commissioning and commissioning, which was undertaken between September and December 2016 (Figure 6), required a “multitude of testing we had to do on all the components before we actually introduced the flue gas to create the CO2, and the process worked great,” said Wolosyn. The process was so smooth, he remarked, that performance testing exceeded standards for provisional performance acceptance, running at 100% capacity for a 72-hour period.
|6. Opening the carbon dioxide valve. In November 2016, after the Petra Nova construction team completed pre-commissioning and commissioning tests at the facility, they opened the valve to the pipeline, enabling transport of the captured carbon dioxide to the West Ranch oilfield 80 miles southwest of the W.A. Parish site. Courtesy: TIC|
Achieving First Operation
First operation of the carbon capture system in December 2016 was widely celebrated as a first-of-its-kind technical achievement. On the carbon sequestration front, however, the gains have been slower. As JX Nippon’s Tanei noted, first injection of CO2 for EOR was “not sensational.” As was expected, he explained, the initial fraction of oil in the extracted fluid was “very small” because production was mostly water when opening the valve over the well. However, gradually the fraction of oil has increased to more than 4,000 barrels per day.
JX Nippon’s evaluation of the process is continuing as the company accumulates more data to understand production trends as well as to finesse a production increase in the near future. Hilcorp, which operates the oilfield it owns along with NRG and JX Nippon, is also monitoring the movement of CO2 deep in the oil reservoir, with expertise from the University of Texas Bureau of Economic Geology. Hilcorp expects that the captured CO2 could increase oil production at West Ranch from about 300 barrels a day to a peak volume of up to 15,000 barrels a day. “For a company like Hilcorp, that primarily focuses on conventional assets, the positive impact of Petra Nova’s CO2-EOR on energy production is tremendous,” said Justin Furnace, director of External Affairs for Hilcorp. “The amount of oil and gas Hilcorp can now produce in this region has increased significantly.”
A Compelling Business Model
What sets Petra Nova apart from several other projects is its unique business model. “Oil revenues pay for the entire project,” NRG spokesperson David Knox told POWER. This is a pivotal winning attribute of the project, considering that several carbon capture and sequestration (CCS) projects have been scrapped or postponed because they are economically unfeasible or have become too expensive for rate recovery.
One glaring example is the stalled development of the only other power plant CCS project under construction in the U.S.: Southern Co.’s Kemper County Energy Facility in Mississippi. That integrated gasification combined cycle project had promised to capture 3 million tons of CO2 per year, but it has been wrought by exorbitant cost increases—now estimated at $7.5 billion—owing to a three-year-long delay in completion. Just weeks before it was expected to begin commercial operation this June, the company suspended start-up and operations activities involving the lignite gasification portion of the facility, pending the Mississippi Public Service Commission’s decision on future operations.
Still, Petra Nova’s model isn’t entirely free of risks. Knox noted revenues are highly dependent on crude oil prices, which have fluctuated wildly since 2014 owing to an assortment of global factors. To break even, he said, oil prices will need to hover at $50 per barrel. In June, they plunged close to $42 per barrel, but the Energy Information Administration forecasts stronger Brent spot prices of between $53 and $56 over the short term.
Yet another interesting facet of the project is how it tackles parasitic load. As Greeson explained, technologies that capture CO2 are energy-intensive. “If you had a 1,000-MW coal plant, in order to capture all the CO2 off of that plant, you would need 300 MW of steam and power. So, it effectively becomes a 700-MW net output plant.” But because power consumed by the capture system would be unsold power—negatively impacting the pro forma—NRG determined that the project would benefit from a purpose-built 70-MW gas-fired cogeneration system. That installation (Figure 7) features a GE 7EA gas turbine that is “converting fossil fuels at an efficiency of 55%, instead of the host coal unit, which is converting fossil fuels at an efficiency of 33.34%,” Greeson said.
|7. Tackling parasitic load as well as generating revenue. To handle the carbon capture system’s parasitic load, NRG built a 70-MW natural gas–fired cogeneration plant as part of the Petra Nova project. Excess power from the plant is sold on the Texas grid. Courtesy: TIC|
“We’ve effectively cut the parasitic load from 30% down to about 22%, which is a big deal and we believe we will be optimized to under 20% over the next few years with debottlenecking.” At the same time, while the cogeneration facility helps slash the project’s carbon footprint, NRG uses only half its power for the capture system—and sells the remainder, about 35 MW to 39 MW, on the grid.
NRG developed its unique business model based on several considerations. When the project was first conceived in 2009, the company mulled hinging its efforts to pay for the project on serious discussions underway about a federal carbon tax, hoping that there would be value placed on sequestered carbon. But Greeson rejected the idea. “Earlier in my career, I had done a waste-to-energy project whose economics relied 100% on a government subsidy. And as we were completing that project, the political winds shifted, the subsidy was terminated,” he said. “I still wear the scars of developing a project that went nowhere.” That’s why it was important that the philosophy from the beginning was to find a way to make this work without depending wholly on the government, he said.
Still, a grant from the DOE boosted investor and project participation in the project, Greeson noted. The agency in June 2010 signed a cooperative agreement with NRG for up to $190 million in total cost share. About $167 million was to be disbursed from financial assistance through the original Clean Coal Power Initiative Round 3, but the project also received $23 million in February 2016 under Section 313 of the 2016 Consolidated Appropriations Act.
Significantly, when NRG first submitted the DOE grant application, it was for a project a quarter of the size it ended up being. “At the time, we were not as bold as we ended up being,” Greeson remarked.
However, the process was relatively painless, he said, even though it required a thorough environmental impact statement, which took between 18 and 24 months to complete. Yet, this assessment was lucrative in securing $250 million in a loan from the Japan Bank for International Cooperation (JBIC), which is Japan’s public financial institution and export credit agency. Project finance loans also include $75 million from Mizuho Bank, which is insured by Nippon Export and Investment Insurance. Project partners NRG and JX Nippon each contributed up to $300 million in equity for the remainder of the $1 billion project cost.
Building this unique project on time and on budget, while meeting the stringent expectations of investors as well as rigorous quality standards outlined by the construction and engineering firms, required collaboration on every level. NRG’s Greeson remarked, “We all had a sense that we were working on a project that was going to be under a microscope at some point, and so everybody just rolled up their sleeves and said, ‘We’re going to make this thing successful.’ ”
TIC’s Wolosyn pointed to a similar relationship with MHI America, a company his group had never worked with before. “We did everything as a team. We were constantly looking to see how we could better the entire project, and sometimes TIC had to spend a little money to get that done, sometimes MHI America had to spend a little money to get that done. But both sides were always looking at the final outcome of the project, and how we could make sure it was successful.”
One significant nugget of advice imparted by NRG’s Greeson to project owners contemplating similar projects is to “put the responsibility for keeping the construction on time on the people who can manage that, and give them the tools to make it happen.” For TIC’s Wolosyn, the consortium’s determination to keep the project within time and budgetary parameters was reinforced by rigorous planning. TIC, for example, held a “draft” akin to a professional sports draft, intent on assembling a team from “the best of the best.” Each of the more than 1,000 workers who contributed to the project was also required to attend a 10-hour orientation session. TIC senior management additionally challenged the team “to get on the early curve of the schedule and stay on the early curve of the schedule for the entire project” to give it time to react to potential difficulties. Throughout the entire project the consortium was on or within three weeks of the “early curve,” Wolosyn said.
Today, the project continues to garner interest far and wide. NRG has so far hosted eight foreign delegations on tours of the facility and expects interest to ramp up as operations continue, said Greeson. One reason for this is that the project shows that advanced post-combustion capture technology is both available and scalable, said Michael Burger, a CCS expert who heads the Sabin Center for Climate Change Law at Columbia Law School.
“This could allow for the retrofit of existing coal-burning power plants, many of which will be in operation for years,” he told POWER. ■
—Sonal Patel is a POWER associate editor.