September 2, 2009

California Studies $1 Billion Carbon-Capture Plant (Update1)

By Mark Chediak

Aug. 26 (Bloomberg) -- California's Energy Commission said it will consider approving a carbon-capture plant proposed by a joint venture of units of Rio Tinto Plc and BP Plc .

The venture, called Hydrogen Energy International LLC, has provided enough information to start a formal, yearlong certification process for the plant, the commission said today at its regular meeting.

Last year, units of BP and Rio Tinto proposed to build the 350-megawatt carbon-capture plant about 7 miles (11.3 kilometers) west of Bakersfield, California.

The project will require more than $1 billion in investment, Tiffany Rau, spokeswoman for Hydrogen Energy, said in an e-mail. Hydrogen Energy also plans to build a $2 billion carbon-capture plant in Abu Dhabi, which is expected to start in 2013.

The California plant will convert blends of petroleum coke and coal into hydrogen that will be used to fuel a power station. It will also capture 90 percent of the carbon dioxide produced, the companies said. Occidental Petroleum said in July it may use the carbon dioxide for oil recovery and storage in its nearby Elk Hills oil field.

The project got $308 million in July from the Energy Department as part of its $1.4 billion Clean Coal Power Initiative. If approved, Hydrogen Energy's plant will begin construction in 2011 and come online by 2014, the commission said.

California law requires greenhouse gas emissions to be cut to 1990 levels by 2020.

To contact the reporter on this story: Mark
Chediak in San Francisco mchediak@bloomberg.net.

Last Updated: August 26, 2009 16:49 EDT