North Dakota approves loans for carbon capture at coal plant

The North Dakota Industrial Commission on Tuesday approved $205 million in loans for a project that aims to capture carbon emissions from a coal-fired power plant. 

Minnkota Power Cooperative recently partnered with Reliant Carbon Capture & Storage to operate the carbon capture and CO2 delivery system. 

The companies will split the loans, $45 million for Minnkota and $160 million for Reliant, which will be issued through the state-owned Bank of North Dakota. 

Electric co-op adds partner to renew pursuit of carbon capture at North Dakota coal plant

The money will be used at Minnkota’s Milton R. Young Station near Center in Oliver County, which sits on top of an area geologically suited for permanent underground storage. Minnkota has already secured permits for the underground storage.

Grand Forks-based Minnkota has been working on a carbon capture plan known as Project Tundra since 2015.

Some differences from the earlier version of Project Tundra include Reliant providing its experience and technical expertise on carbon capture and a smaller project cost.

Kelvin Hullet, chief public affairs officer at the Bank of North Dakota, said Reliant has experience working with coal plants. Reliant uses cooling to turn carbon dioxide from a gas into a more liquid form. 

“The science has gotten better, the technology has gotten better,” since early versions of the project, said Gov. Kelly Armstrong, who chairs the three-member Industrial Commission.

Hullet noted the cost estimate for Project Tundra has shrunk from about $3 billion. The project is now estimated to cost about $1.7 billion.

The project also puts more emphasis on the potential for using CO2 in North Dakota’s oil fields, pumping the gas underground to make oil wells more productive.

Federal policy previously offered a smaller tax credit for CO2 used in enhanced oil recovery than for permanent storage. That credit is now the same — $85 per ton of CO2. 

Project Tundra aims to capture about 5 million tons of carbon per year, worth $425 million in tax credits annually.  

The loan application letter from the companies says they are engaged with partnership discussions with oil companies that would use the CO2. 

The application says any pipeline needed to get CO2 to an oil field site would be funded separately. 

State officials have said enhanced oil recovery could extend the life of oil wells and generate more oil and gas tax revenue. 

The Industrial Commission oversees North Dakota’s Clean Sustainable Energy Authority, which last week recommended approving the loans. The authority had previously set aside $250 million in loans for Project Tundra but had not recommended that the Industrial Commission approve grant the loans. 

Minnkota said in a recent news release announcing its partnership with Reliant that it would make a decision on whether to proceed with Project Tundra in 2027.  The 2% loan offer expires after a year. 

The requested payback period is 12 years, but the specific loan terms will be negotiated with the Bank of North Dakota. 

State Sen. Dale Patten, R-Watford City, co-chairs the Clean Sustainable Energy Authority and is a retired banker. 

“I think the risk to the state for loss on these is extremely low,” Patten said, pointing to the size of the assets controlled by Minnkota and Reliant and the potential revenue from the project.

In a presentation last week to the Clean Sustainable Energy Authority, company officials said the project would cut carbon emissions at the power plant by 95%, would create about 350 jobs and would mean no increase in utility bills. 

Reach North Dakota Monitor deputy editor Jeff Beach at [email protected]