Andrews Kurth Represents NRG Energy in $1 Billion Carbon Capture Joint Venture with JX Nippon Oil & Gas

Texas plant to be world’s largest post-combustion carbon capture and sequestration facility.

(Houston, Texas)—A team of attorneys from Andrews Kurth LLP served as project development counsel to NRG Energy Inc. in the company’s joint venture with JX Nippon Oil & Gas Exploration Corp. to build the world’s largest post-combustion carbon capture and sequestration (CCS) facility on an existing coal plant in Fort Bend County, Texas.

The Petra Nova Carbon Capture Project at the W.A. Parish Power Plant Facility will capture 90 percent of the carbon dioxide (CO₂) from processed flue gas, or approximately 1.6 million tons of CO₂ annually. The CO₂ will be delivered through an 82-mile pipeline for enhanced oil recovery at the West Ranch Oil Field in Jackson County, Texas. The West Ranch Oil Field is estimated to contain more than 60 million barrels of oil, available through enhanced recovery operations.

“This project has enormous potential to make CCS economically viable and competitive in the global market,” says David G. Runnels, a Houston partner with Andrews Kurth and lead project development counsel to NRG. “The project is the first commercial-scale facility of its kind in the United States and will demonstrate the viability of retrofitting an existing coal-fired power plant with a commercial-scale carbon capture system. It was an honor to be selected to help NRG with this ground breaking project.”

While CCS projects around the world are hampered by large capital costs with insufficient revenue drivers, Giji M. John, an Andrews Kurth partner and one of the lead project development counsel on the deal, says the Petra Nova project proves that CCS can work economically through:

1. the sale of CO₂ for enhanced oil recovery in the previously depleted West Ranch Oil Field;
2. its modular design, which allows the addition of CCS at operating power plant facilities; and
3. its reduction of CO₂ otherwise emitted from coal-fired power plants.

The team from Andrews Kurth was heavily involved with many of the transaction's complex elements, including preparing operations and maintenance and shared facilities agreements for the CCS facility and a companion 78-megawatt combustion-turbine-peaking power plant; negotiating a fixed price, turnkey engineering, procurement and construction contract for the CCS facility with subsidiaries of Mitsubishi Heavy Industries and The Industrial Company (TIC); negotiating license agreements with respect to proprietary technology provided by Mitsubishi Heavy Industries to be incorporated in the CCS facility; negotiating a construction contract for the 82-mile CO₂ pipeline from the W.A. Parish Power Plant Facility to the West Ranch Field; and negotiating a grant for partial funding from the U.S. Department of Energy.

In addition to negotiating the up to $167 million DOE grant, Andrews Kurth attorneys assisted NRG in its multi-tranched project financing provided by the Japan Bank for International Cooperation (JBIC) and Mizuho Bank, Ltd., backed by Nippon Export and Investment Insurance (NEXI).

The Andrews Kurth attorneys who represented NRG in the deal included: David G. Runnels, Giji M. John, Lino Mendiola III, Jeff C. Dodd, Mark J. Thurber, Will S. Becker, Michael L. Dinnin, Mark B. Arnold, Lisa Montgomery Shelton, Kenneth L. Wiseman, Mark F. Sundback, Stephanie A. Kroger, Eleanor N. Verret, Gabrielle L. Stokes, Ali Farish, Jonathan Heins and Jason Reiner.

As released by the former Andrews Kurth Kenyon LLP