COLUMBUS, Ohio, Oct. 16, 2007 – American Electric Power (NYSE: AEP) and SemGreen L.P., a subsidiary of SemGroup L.P., have signed a memorandum of understanding regarding the delivery and use of carbon dioxide captured by a planned commercial-scale carbon capture system on AEP subsidiary Public Service Company of Oklahoma’s Northeastern coal-fired power plant.
In March, AEP announced its intent to pursue the first commercial-scale use of technologies to significantly reduce carbon dioxide (CO2) emissions from existing coal-fired power plants. Greenhouse gases like CO2 are believed to contribute to global climate change.
In the memorandum of understanding (MOU), AEP and SemGreen have agreed that CO2 captured at Public Service Company of Oklahoma’s (PSO) Northeastern Station will be transported to SemGreen through pipeline and technology provided by SemGreen. The CO2 would then be used or sold by SemGreen for enhanced oil recovery. SemGreen is SemGroup’s business unit dedicated to emerging technology and opportunities that create sustainable energy alternatives, enhance energy resources and mitigate damage to the environment.
Under this MOU, AEP and SemGreen have begun the necessary engineering and design for the system
“This agreement with SemGreen represents an important step toward our goal of taking carbon capture technology to commercial scale,” said Michael G. Morris, AEP’s chairman, president and chief executive officer. “SemGreen and AEP will work together to develop and integrate an efficient system to compress and transport carbon dioxide captured at the plant.
“Technology for carbon capture will continue to develop, but perhaps a more significant challenge is what to do with the CO2 once it is captured,” Morris said. “Permanently storing it underground is one solution, but it would be best to find productive uses for the captured gas. Using the CO2 for enhanced oil recovery – where the gas is injected into older oil wells to improve production, then remains underground afterward – is a logical step for coal-fired plants near oil fields.”
In its March announcement, AEP said it would pursue the first commercial use of carbon capture technologies on existing coal-fired power plants, with installation of a commercial-scale system planned for one of the 450-megawatt coal-fired units at Northeastern Station in Oologah, Okla., after the completion of a large-scale product validation on an AEP plant in West Virginia. Plans are for the commercial-scale system to be operational at Northeastern early next decade. It is expected to capture about 1.5 million metric tons of CO2 a year, which will be used for enhanced oil recovery.
“PSO is excited about the installation of this new technology at our Northeastern Station here in Oklahoma,” said Stuart Solomon, president and chief operating officer at PSO. “It will benefit the environment by reducing carbon dioxide emissions and also provide jobs and tax revenues through the use of captured CO2 for enhanced oil recovery. SemGroup and its subsidiaries are highly respected Oklahoma companies and we are thrilled to be working with them on this promising project.”
The March announcement followed the signing of an MOU with Alstom, a worldwide leader in equipment and services for power generation and clean coal, for post-combustion carbon capture technology using Alstom’s Chilled Ammonia Process. Alstom’s system captures CO2 by isolating the gas from the power plant’s other flue gases and can significantly increase the efficiency of the CO2 capture process. The system chills the flue gas, recovering large quantities of water for recycle, and then utilizes a CO2 absorber in a similar way to absorbers used in systems that reduce sulfur dioxide emissions. The remaining low concentration of ammonia in the clean flue gas is captured by cold-water wash and returned to the absorber. The CO2 is compressed for enhanced oil recovery or storage.
The Alstom technology will be installed for product validation on AEP’s 1300-megawatt Mountaineer Plant in New Haven, W.Va., where it will capture CO2 from a slipstream – or portion – of flue gas from the plant. The slipstream will be equivalent to between 20 and 30 megawatts of generation, an increase from the 10 megawatts included in the March announcement. The Alstom chilled ammonia system is expected to capture between 100,000 and 200,000 metric tons of CO2 per year, which will be injected for geological storage in deep saline aquifers at the site.
Battelle Memorial Institute, a global science and technology enterprise and a leader in carbon storage research, is serving as the consultant for AEP on geological storage at Mountaineer. In 2002, Battelle, AEP, the U.S. Department of Energy and others sponsored the world’s first site-specific investigation of carbon storage capabilities at the Mountaineer plant. During the investigation, an approximately 9,000-foot exploratory well and seismic studies determined that the site was suitable for deep geological storage of CO2.
The validation project at Mountaineer will begin in late 2008, or after completion of a small-scale pilot demonstration of the technology by Alstom and the Electric Power Research Institute on a Wisconsin plant.
Once commercial viability of the technology is validated at Mountaineer, AEP plans to install Alstom’s chilled ammonia technology on Northeastern Station in Oklahoma.
American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning more than 38,000 megawatts of generating capacity in the U.S. AEP also owns the nation’s largest electricity transmission system, a nearly 39,000-mile network that includes more 765 kilovolt extra-high voltage transmission lines than all other U.S. transmission systems combined. AEP’s transmission system directly or indirectly serves about 10 percent of the electricity demand in the Eastern Interconnection, the interconnected transmission system that covers 38 eastern and central U.S. states and eastern Canada, and approximately 11 percent of the electricity demand in ERCOT, the transmission system that covers much of Texas. AEP’s utility units operate as AEP Ohio, AEP Texas, Appalachian Power (in Virginia and West Virginia), AEP Appalachian Power (in Tennessee), Indiana Michigan Power, Kentucky Power, Public Service Company of Oklahoma, and Southwestern Electric Power Company (in Arkansas, Louisiana and east Texas). AEP’s headquarters are in Columbus, Ohio.
This report made by AEP and its Registrant Subsidiaries contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934. Although AEP and each of its Registrant Subsidiaries believe that their expectations are based on reasonable assumptions, any such statements may be influenced by factors that could cause actual outcomes and results to be materially different from those projected. Among the factors that could cause actual results to differ materially from those in the forward-looking statements are: electric load and customer growth; weather conditions, including storms; available sources and costs of, and transportation for, fuels and the creditworthiness of fuel suppliers and transporters; availability of generating capacity and the performance of AEP’s generating plants; AEP’s ability to recover regulatory assets and stranded costs in connection with deregulation; AEP’s ability to recover increases in fuel and other energy costs through regulated or competitive electric rates; AEP’s ability to build or acquire generating capacity when needed at acceptable prices and terms and to recover those costs through applicable rate cases or competitive rates; new legislation, litigation and government regulation including requirements for reduced emissions of sulfur, nitrogen, mercury, carbon, soot or particulate matter and other substances; timing and resolution of pending and future rate cases, negotiations and other regulatory decisions (including rate or other recovery for new investments, transmission service and environmental compliance); resolution of litigation (including pending Clean Air Act enforcement actions and disputes arising from the bankruptcy of Enron Corp. and related matters); AEP’s ability to constrain operation and maintenance costs; the economic climate and growth in AEP’s service territory and changes in market demand and demographic patterns; inflationary and interest rate trends; AEP’s ability to develop and execute a strategy based on a view regarding prices of electricity, natural gas and other energy-related commodities; changes in the creditworthiness of the counterparties with whom AEP has contractual arrangements, including participants in the energy trading market; actions of rating agencies, including changes in the ratings of debt; volatility and changes in markets for electricity, natural gas and other energy-related commodities; changes in utility regulation, including the potential for new legislation in Ohio and membership in and integration into regional transmission organizations; accounting pronouncements periodically issued by accounting standard-setting bodies; the performance of AEP’s pension and other postretirement benefit plans; prices for power that AEP generates and sell at wholesale; changes in technology, particularly with respect to new, developing or alternative sources of generation; other risks and unforeseen events, including wars, the effects of terrorism (including increased security costs), embargoes and other catastrophic events.