Dominion Virginia Power (DVP), a subsidiary of Dominion Resources (D), seeks federal assistance for a carbon-capture and storage demonstration project proposed at its Virginia City Hybrid Energy Center (VCHEC) electric generation facility. Recently, DVP along with its project partners, which include Virginia Center for Coal and Energy Research (VCCER), the Southern States Energy Board, Marshall Miller and Associates have applied to the National Energy Technology Laboratory of the U.S. Department of Energy (DOE) for funding up to half of the project cost ($580 million) under the Clean Coal Power Initiative of the American Recovery and Reinvestment Act of 2009.
VCHEC is a 585 megawatt (MW) carbon-capture compatible, clean-coal fired power station, to be built and operated by DVP near St. Paul, Wise County. The plant is scheduled to be completed by 2012. The carbon-capture demonstration equipment to be installed at the plant site will remove up to 1,500 tons of carbon dioxide from the station’s emissions every day. The removed carbon dioxide would be moved by pipeline to unmineable coal seams and underground saline formations in the region for permanent storage.
Construction work for the carbon-capture and storage demonstration project is expected to be completed by April 2015, subject to requisite funding, company and regulatory approvals. However, the injection and monitoring phases of the project will run through April 2021. VCCER conducted a preliminary sample test for carbon storage in unmineable coal seams, which showed encouraging results.
Shares of Dominion Resources closed at $34.31 on Tuesday, trading at 10.4X trailing 12-month EPS. We presently have Neutral recommendation for the company.
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