A Chinese business consortium that includes several banks and oil company Sinopec is in talks to invest $1 billion in a carbon capture and sequestration plant in Texas. The group is looking to acquire an equity stake in the $2.5 billion project. Sinopec is pursuing this deal in part to build favor in the U.S. and expertise in Western markets.
The project marks a significant collaboration between Chinese and American advanced energy interests. Efforts to work together in advanced energy have been limited by several trade disputes.
The agreement between Sinopec and Summit Power Group LLC, the project development firm based in Seattle, WA, could be announced as soon as September. Sources close to the deal have cautioned that several of the details have yet to be set. The Wall Street Journal reports:
The Texas plant, located near Odessa, will convert coal into a combustible gas and use it to make electricity, much like a conventional gas-fired plant. In the process, it also will tease out chemicals for resale and carbon dioxide, which will be piped to the western Texas Permian Basin and used for enhanced oil recovery.
People involved in discussions said China's investment will be a "significant share" of the project's cost, consisting partly of debt and partly of equity. Summit's ownership likely will decline from majority to minority, as other investors join in. More investors are needed, and Summit is talking with potential participants in the U.S. and Europe, including some that might be eligible for export-bank financing from their own nations.