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Blue Source CEO Bill Townsend says that developing the 16 carbon-storage projects the company is now pursuing would require more than $1 billion. Some projects, such as a fertilizer plant in Coffeyville, KS, that Blue Source will link to oil fields in Kansas or Oklahoma, provide concentrated and thus cheap carbon dioxide. But Townsend says that several are coal-fueled power projects and synthetic-fuel plants equipped with sophisticated carbon-capture equipment that is likely to double the cost of preparing the carbon dioxide for pipeline transport.

Such projects will face competition. Independent oil and gas firm Denbury Resources has signed two deals in the past six months to buy all the carbon dioxide produced by three planned gasification plants in Louisiana and Mississippi that will convert coal and petroleum coke (a low-grade product of oil refineries) into synthetic fuels and chemicals. And power producer NRG Energy, based in Princeton, NJ, announced plans earlier this month to capture and sell one million tons of carbon dioxide per year from a Texas coal plant using a novel carbon-capture system developed by pollution-controls firm Powerspan. (For comparison, Blue Source is sequestering 400,000 tons of carbon dioxide per year from the Colorado gas plant.)

Klein says that there is room for all of these projects because the oil industry is eager to do more carbon-dioxide-enhanced oil recovery and is short on carbon dioxide. “Over the last 20 years, most of the CO2 used in [enhanced oil recovery] has come from natural sources, [and] those are pretty much tapped out,” he says. “If the industry is to grow and expand and meet their growth objectives, anthropogenic CO2 will have to play a role.”

That could be very good news for the coal-dependent utilities that dominate the U.S. power industry–and for their customers. As Klein puts it, “The future for coal doesn’t look bright unless they can address this carbon issue.”

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Credit: Peter Fairley

Tagged: Business, emissions, gas prices

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