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Investors shying away from planned $1 billion carbon capture project in North Dakota

October 15, 2021

S&P Global Market Intelligence ($):

The U.S. has seen lawmakers from both parties agree that carbon capture is one important way to rein in greenhouse gas emissions and rural communities are rallying around plans to retrofit large American coal power plants with the technology to save jobs.

But one of the most high-profile carbon capture projects in the U.S., the $1 billion Project Tundra in North Dakota, is facing months of delays after its engineering contractor apparently pulled out in March. The Minnkota Power Cooperative Inc., which is spearheading the project at its 692-MW Milton R. Young coal-fired power plant, has acknowledged it is also having difficulty securing private-sector funding

“It’s not clear why investors would sink a billion dollars into any risky and controversial coal carbon capture proposal, much less one facing such major outstanding questions,” said Joe Smyth, a research manager with the Energy and Policy Institute. The watchdog group obtained copies of reports the electric co-op filed with the U.S. Energy Department detailing Project Tundra’s struggles.

Minnkota’s former contractor Fluor Corp. could continue to work on Project Tundra in a more limited capacity and bring in additional partners, noted John Thompson, a technology and markets director for the Clean Air Task Force who monitors U.S. carbon capture projects. He said Fluor likely did not walk away from the contractor job over concerns with the technology but rather due to its corporatewide push away from fixed price to reimbursable contracts. “They’re shifting their portfolio and have been pretty candid about that,” Thompson said. “They’re restructuring all their stuff to be less reliable on fixed contracts.”

Private-sector support has been harder to secure, however. Stacey Dahl, a senior manager of external affairs for Minnkota, described the project’s finance challenges at an event Sen. Kevin Cramer, R-N.D., held with The Goldman Sachs Group Inc. CEO David Solomon in Bismarck on Sept. 9.

“We paired with a multi-national bank that had a real interest in this project,” Dahl told Solomon. “And it wasn’t long into that relationship that the parent company made the decision that [it would make] no more investment in coal. No more relationships with coal…even if it’s supposed to have a technological solution.”

[Karin Rives]

More ($): Financing, engineering setbacks plague North Dakota’s $1B carbon capture project

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