OREANDA-NEWS. A $2bn loan guarantee from the US Department of Energy (DOE) has revived plans to build a petroleum coke gasification plant in Lake Charles, Louisiana, that will use CO2 emissions for enhanced oil recovery in Texas.

Lake Charles Methanol wants to build a $3.8bn facility that would use gasification technology to manufacture industrial products like methanol and hydrogen and argon from petroleum coke, consuming about 2mn t/yr of coke. The project developer shelved the plans in September 2014, citing unfavorable economics. The DOE back then expected to provide $261mn for the project. But the agency now upped its commitment to $2bn, allowing the project to proceed.

The federal agency is backing the project to promote carbon capture utilization and sequestration technologies. The project aims to capture 77pc of CO2 produced at the facility, reducing greenhouse gas emissions by 36pc compared with other facilities producing methanol, US energy secretary Ernest Moniz said today.

"This is the first DOE loan extended to a fossil fuel facility," Moniz said. "This conditional commitment represents a major milestone in the department's efforts to scale up carbon capture utilization and sequestration."

US independent producer Denbury will use 4mn-5mn tons of captured CO2 for enhanced oil recovery operations in Texas.

NRG Energy's Petra Nova facility near Houston, Texas, will be the only operational carbon capture and enhanced oil recovery project in the US upon completion. NRG said Petra Nova - an existing coal-fired plant augmented with a post-combustion carbon capture technology - will enter service soon. But NRG earlier this year took a $140mn impairment on the project, noting the unfavorable economics as oil prices tanked since 2014 when the project was launched.