BP, Rio Tinto and GE Working on Hydrogen Energy’s Carbon Clean Power Projects

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Researched by Industrial Info Resources (Sugar Land, Texas). A new company, Hydrogen Energy, jointly owned by BP (NYSE:BP) (London, England) and resources major Rio Tinto (NYSE:RTP) (London, England) will identify, build and operate hydrogen power plants with carbon capture and storage. Once through regulatory approval, the new company will be the home for collaboration between BP and GE (NYSE:GE) (Fairfield, Connecticut) to jointly develop and deploy technology for at least five hydrogen power plants with CO2 sequestration.

BP and Rio Tinto have announced that they are beginning feasibility studies and work on plans for the development of a $1.5 billion coal-fired generation project at Kwinana in Western Australia that would be fully integrated with carbon capture and storage to reduce emissions of greenhouse gases.

Following detailed engineering and commercial studies and providing policy and support in the form of carbon trade-offs in place, the final investment decision on the project could be made in 2011, with the project coming into operation after a three year construction period. The feasibility study will cost about $50 million and employ 250 people.

The 500 MW power station would be located 45 kilometers south of Perth in Western Australia adjacent to BP’s refinery and Rio Tinto’s Hismelt facility which would benefit from the power output and provide synergies for the growing industrial base around Perth. The plant would burn low quality coal from Western Australia’s nearby Collie coalfield. About 4 million tons of CO2 per annum (90% of the gas produced) would be captured and stored securely in a saline geological formation beneath the seabed of the Perth Basin. This type of geological structure is more common globally than suitable oil and gas reservoirs.

Australia’s Prime Minister John Howard has given his support to the project. ”Carbon capture and storage projects such as this are crucial to the future of Australia’s important coal industry, and to the national and global challenge of reducing our greenhouse gas emissions,” he added. The government is developing carbon capture and storage legislation to provide investment certainty for the developers of the technologies, and is investing in geological mapping to identify sites where CO2 could be stored. Howard favors using technology to tackle climate change rather than Kyoto Protocol type emission caps.

Government support is needed for the plant for which the cost could be three times that of a conventional power station. Hydrogen Energy is seeking a government subsidy at least as high as those granted to wind and solar projects. Analysts estimate that the cost of power from Kwinana at more than $49 a megawatt hour, compared with the less than $32 per mWh for conventional coal fired plants and under $41 for open cycle gas turbines. At this price a carbon price of $20.5 to $24.5 a ton would be required to subsidize the Kwinana output cost.

Following an agreement in 2006, BP and GE have now formed a global alliance to combine power generation from fossil fuels with carbon capture and storage to deliver commercial scale power. Initially the companies expect to work together to apply GE’s proprietary gasification and turbine technology to the development of five 500 MW hydrogen power plants that would use petroleum coke or bituminous coal as feedstock. The projects will first gasify the fossil fuel to convert it into hydrogen and CO2. The hydrogen rich syngas is used to power the turbines and 90% of CO2 would be sequestered.

BP and GE have already been participating in two hydrogen power projects at Peterhead in Scotland and at Carson in Southern California where the respective partners are Scottish and Southern Energy and Edison Mission Energy. But concurrent with the GE alliance announcement BP said that it had pulled out of the $1 billion Peterhead project saying that it could not wait for a government sponsored competition to decide who to back to build this type of plant. After investing $60 million in the project, BP may seek new partners for a site south of the border in England. The withdrawal decision was followed by Scottish government dismay at losing a foothold and a lead into the hydrogen economy.

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