Equity Participation in JX Nippon Oil Exploration (EOR) Limited in U.S.
Supporting Acquisition of Interest and Development of Oil Field by Japanese Company Utilizing Its Large-Scale Carbon Capture Technology
- Area: North America
- Energy and Natural Resources
- Equity Participations
The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on November 26 a shareholders'agreement with JX Nippon Oil & Gas Exploration Corporation (JX NOEX), JX Nippon Oil Exploration (U.S.A.) Limited (JX USA), a U.S. subsidiary of JX NOEX, and JX Nippon Oil Exploration (EOR) Limited (JX EOR), a local subsidiary of JX USA, for acquiring a maximum of USD90,566 thousand preferred shares of JX EOR by JBIC.
In this CO2-EOR (Enhanced Oil Recovery) project,*1
a carbon capture system*2
would be constructed at the W.A. Parish coal-fired power plant in Texas owned by a subsidiary of a U.S. company, NRG Energy Inc. (NRG). The carbon dioxide (CO2) removed from the flue gas generated from this power plant will be pressure injected in the West Ranch oil field on the coast of the Gulf of Mexico to increase its crude oil recovery. JX EOR is participating in this project by acquiring a 50 percent equity stake in a U.S. company, Petra Nova Parish Holdings (PNPH), and holds a 25% interest in the West Ranch oil field, which enables it to acquire the disposal right of produced crude oil commensurate with the interest it owns. This equity participation will partially fund the capital required for the acquisition of the interest and procurement of plant facilities.
In this project, it is planned to pressure inject CO2 into the oil field from the 4th quarter of 2016 to increase daily production to an average of 12,000 barrels (average production volume during the project period) from the 500 barrels of its current level of crude oil production. In addition, CO2 emissions into the atmosphere from the W.A. Parish coal-fired power plant will be reduced by 1.6 million tons annually, and at the same time, the project will enable additional crude oil production from the existing oil field. Thus, this project is expected to contribute to both mitigating the impact on the global environment and increasing the production of energy resources.
As Japan's policy-based financial institution, JBIC will continue to support the development and interest acquisition of important resources by Japanese companies, by drawing on its various financial facilities and schemes, including equity participation, for structuring projects, and performing its risk-assuming function.
- *1 JBIC signed on July 14, 2014, a project finance loan totaling up to USD 175 million (JBIC portion) with PNPH. See Press Release dated July 15 this year for details.
- *2 The carbon capture system will be built by a consortium of Mitsubishi Heavy Industries America, Inc., a U.S. subsidiary of Mitsubishi Heavy Industries, Ltd., and The Industrial Company, a major U.S. construction company. It will be the world's largest CO2 capture plant from flue gas with a CO2 recovery capacity of 4,776 tons a day.