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Hogan Lovells Advises JX Nippon Oil & Gas Exploration Corporation in Joint Venture with NRG Energy to Build World’s Largest Post-Combustion Carbon Capture-Enhanced Oil Recovery Project

28 July 2014

HOUSTON, TX and TOKYO, JAPAN, 28 July 2014 – A Hogan Lovells cross-border, cross-practice team made up of lawyers from Denver, Houston, Washington, D.C., and Tokyo, advised JX Nippon Oil & Gas Exploration Corporation (“JX Nippon”) in its formation of a 50/50 joint venture company (“ the Company”) through its wholly owned subsidiary JX Nippon Oil Exploration (EOR) Limited1; and Petra Nova Holdings LLC, a wholly owned subsidiary of NRG Energy, Inc. (“NRG”).

The Company constructs the world’s largest post-combustion CO2 capture plant at W.A. Parish power plant in Texas (the largest fossil-fueled plant in the U.S., which is located in the south-west area of Houston and is owned by a subsidiary of NRG Energy, Inc.) and plans to increase oil production by injecting the captured CO2 into the West Ranch Oil Field, approximately 130 kilometers away from W.A. Parish power plant. This Project reduces CO2 emission by approximately 1.6 million tons per annum.

The Project is epoch-making in that it not only reduces the CO2 emitted from W.A. Parish power plant into the air, but also boosts the oil production.

Among CO2 EOR projects, this project is exclusively advanced in that the project is a commercial CO2 EOR project which utilizes CO2 emitted from coal-fired power plant on a large scale.

The Project is slated to start injection of the CO2 into the West Ranch Oil Field and commercial operation of CO2 capture plant in the fourth quarter of 2016.

The Project has been selected by the United States Department of Energy to receive up to US$167 million as part of the Clean Coal Power Initiative Program2. In addition to that, it has been agreed with the Japan Bank for International Cooperation and Mizuho Bank, Ltd. that they provide this Project with a project-finance type loan. Finance from Mizuho is backed by Nippon Export and Investment Insurance. The overall cost of this Project will be approximately US$10 billion.

Denver Environmental partner Jennifer Biever, Houston Energy partner David Locascio, Washington, D.C. Energy partner Mary Anne Sullivan, and Tokyo Energy senior associate Luke Edney led the Hogan Lovells team. The Hogan Lovells team assisted JX Nippon on all aspects of the transaction, including negotiating all key transactional, construction and project finance documents, conducting all contractual, environmental and regulatory due diligence and analysis, interacting with the DOE, and complying with CFIUS.

For more information on the project please visit the JX Holdings, Inc. website, found here.

1 a wholly owned subsidiary of JX Nippon Oil Exploration (U.S.A.) Limited, a wholly owned subsidiary of JX Nippon
2 a program to enable and accelerate the deployment of advanced technologies to promote clean, reliable, and affordable electricity for the U.S.

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