- Region: North America
- Energy and Natural Resources
- Overseas Investment Loans
- Project Finance
July 15, 2014
The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Watanabe) signed on July 14 a loan agreement, in project financing*1, totaling up to USD175 million (JBIC portion) with Petra Nova Parish Holding LLC (PNPH) in the United States of America, which is owned equally by JX Nippon Oil & Gas Exploration Corporation (JX NOEX) and NRG Energy Inc. (NRG), an American company. The loan is cofinanced with Mizuho Bank, Ltd. (MHBK), bringing the total cofinanced amount to USD250 million, and MHBK's portion will be insured by Nippon Export and Investment Insurance (NEXI).
The project is a post-combustion carbon capture-enhanced oil recovery project, in which PNPH builds a carbon capture system*2 in the W.A. Parish coal-fired power plant owned by NRG's subsidiary in Texas and increases oil recovery at West Ranch oil field in Texas, by pressure injecting the carbon dioxide (CO2) removed from the flue gas of the power plant. JX NOEX is participating indirectly in the project by investing equity for 50% in PNPH, which makes 25% of the interests in West Ranch oil field and enables to acquire a disposal right of crude oil production commensurate with the existing interests. The loan will partially fund the capital required for the acquisition of the interests and procurement of plant facilities.
In this project, it plans to pressure inject CO2 into the oil field from the 4th quarter of 2016, increasing daily production to an average of 12,000 barrels from 500 barrels of its current crude oil production. Although EOR utilizing CO2 have been popular globally, this EOR utilizing CO2 from the flue gas of a coal-fired power plant will be the world's first large-scale commercial project and enables to produce additional crude oil from the existing oil field, as well as reducing CO2 emission by 1.6 million tons annually into the atmosphere from the W.A. Parish coal-fired power plant, and thus this project is expected to contribute to both the increased production of energy resources and mitigate the impact on the global environment.
As Japan's policy-based financial institution, JBIC will continue to actively support the development and interest acquisition of important resources by Japanese companies, by drawing on its various financial facilities and schemes for structuring projects, and performing its risk-assuming function.
- *1 Project finance is a financing scheme in which repayments are made solely from cash flows generated by the project and secured only on the project assets.
- *2 The carbon capture system will be built by a consortium of Mitsubishi Heavy Industries America, Inc., a US subsidiary of Mitsubishi Heavy Industries, Ltd., and The Industrial Company, a major US construction company, and will be the world's largest CO2 capture plant with a production capacity of 4,776 tons a day.