AE Details

Add To DockDollars and Cents of Sequestration

Dow Chemical in Plaquemine, La. typically makes fertilizer and ethanol. However, efforts toward cleaner skies have given the company a new product to market – the carbon emitting from its smokestacks.

Ann Davis wrote about a joint project between Dow and Texas oil and natural gas company Denbury Resources a couple weeks ago in the Wall Street Journal. Denbury has started buying up the smokestack emissions from the chemical factory.

Using modern technology, Denbury will scrub the carbon from the smoke and ship it via pipeline into its marginal oil fields back in Texas. That carbon, once pumped back into the ground, acts like a solvent for the oil, helping loosen more of it from the rocks.

This is not a new idea. For decades, companies have pumped naturally occurring CO2 from geological basins into existing oil wells. Really, it's just a new way of getting the carbon dioxide. And, what makes this project special is that it is being done without the help of government aid.

One reason why Denbury is able to afford such a project is due to the nature of the emission stream it's using in the first place. Factories like this Dow plant emit an almost pure form carbon dioxide. That means Denbury has less scrubbing to do before sending the carbon dioxide back underground.

In her article, Davis writes:
The costs of treating and transporting the carbon dioxide emitted by the Dow plant is slightly higher than the $10 to $20 a ton oil producers pay to harvest naturally occurring, pure carbon dioxide.

If a company were trying to treat the emissions coming from a refinery or coal-plant, it might cost upwards of $50 to $80 per ton. Right now, Dow isn't charging Denbury for its carbon stream. But, with a price difference of $40 to $60 dollars between Dow's CO2 and what it would cost Denbury to go somewhere else, chemical companies may begin to see they have a highly sought after commodity that was once just thought as waste, and close the price gap. Time can only tell.

Denbury's president and COO says he's willing to pay Dow as much as a few hundred thousand dollars a year for its carbon stream, depending upon oil prices. I get the impression he feels the return on investment is worth it.

The reporter quotes Denbury's president and COO Tracy Evans:

"Our message is that this has two benefits. One is the benefit of more domestic energy," says Evans. The other, he says, is "Sticking as least some greenhouse gases in ground permanently in the process."

Capturing the entirety of the Dow plant's carbon dioxide emissions every year, which is what Denbury plans to do, is equal to the yearly emissions of 27,000 cars.

Related Stories »