A North Dakota power plant may capture a coal gas used to enhance oil recovery and be the first in the Midwest to do it.

Basin Electric Power Cooperative told a Senate Energy Appropriations subcommittee Monday it's making plans to capture carbon dioxide from its Antelope Valley Station and sell it for enhanced oil recovery, likely in the Williston Basin.

The capture technology has not yet been applied to a power plant that uses lignite, or even subbitumious coal, like is mined in Montana, and the Mercer County project would be closely watched by the industry.

Sen. Byron Dorgan, D-N.D., chaired a hearing in Bismarck to get testimony on how requiring coal plants to remove carbon dioxide from the flue stack can benefit the oil industry and what it will take to put the two together.

North Dakota is a logical place to look at such a marriage because coal-fired power plants are built close to the the oil fields.

Dorgan said coal plants will likely have to capture the greenhouse gas anyway and injecting it into oil fields squeezes out oil that would be left behind. Capturing those elusive barrels will help reduce the country's dependence on foreign oil, Dorgan said.

The Williston Basin has an estimated 13 billion barrels of oil, but 9 billion would be left behind without enhanced recovery, Dorgan said.

Basin's manager Ron Harper said the co-op estimates it will spend $150 million on carbon capture equipment to pull the gas from its waste stream that normally goes up the power plant flue stack.

He said one unit of the twin-giant Antelope Valley Station will produce about 60 million cubic feet of the gas a day. The carbon gas would be compressed at the adjacent Dakota Gasification Co. and put in a CO2 pipeline that terminates in Canada.

DGC is already sending CO2 to Saskatchewan oil producers and extra taps were built into the pipeline so it could be distributed and sold to Williston Basin oil field operators along the way. DGC extracts the CO2 from a lignite process, but it liquifies the coal into a synthetic natural gas. Coal-fired power plants crush and burn it.

Harper said the co-op expects to get five solid proposals on the AVS carbon capture project by its Sept. 1 deadline and then spend the remainder of the year evaluating them.

Carl Bauer, who directs the National Energy Technology Laboratory, told Dorgan there is some research into how the carbon capture will work on coal-fired plants, enough to know it will drain off some of the plant's electrical output just to run the equipment.

Bauer said it will cost coal-fired plants up to $300 million to install the gas separation equipment, plus lost energy sales and then there's the cost of moving the carbon gas from the plant to the oil field.

"Who pays for it?" he said.

Rod Nelson, representing the National Petroleum Council, said the use of carbon gas to bubble reluctant oil out of the strata is not a new concept. This is not a "light bulb" going off in the industry, he said.

He said an obstacle to getting it into widespread use is the fact that many oil field operators are independents, not the major companies with vast financial resources.

"They don't' have the research dollars," Nelson said.

Jeff Phillips, who manages the coal program at the Electric Power Research Institute, said the institute hopes, with government assistance, to have a demonstration carbon capture plant on line by 2012.

Phillips said the industry would realize knowledge and cost savings if even a small number of new plants with capture technology are built near where oil fields need carbon gas.

"The history of other power generation technologies tells us that the 18th facility will cost a lost less than the first," Phillips said.

Dorgan was told the government should not put policies ahead of the industry's ability to remove carbon gas, and also begin providing time lines when it will be required.

"(Research) funding is one thing, but we don't have targets to shoot at," Harper said..

(Reach reporter Lauren Donovan at 1-888-303-5511, or lauren@westriv.com.)