The North Dakota Industrial Commission on Tuesday approved $205 million in state loans for Project Tundra, the carbon capture retrofit targeting roughly 5 million tons of CO2 per year at Minnkota Power Cooperative's Milton R. Young Station near Center in Oliver County.

The Bank of North Dakota will disburse the funds: $45 million to Grand Forks-based Minnkota and $160 million to Reliant Carbon Capture & Storage, the new operating partner Minnkota brought in to run the capture and CO2 delivery system. The Clean Sustainable Energy Authority, which the Industrial Commission oversees, had set aside $250 million for Project Tundra and recommended approval last week.

The loans carry a 2% interest rate and expire if not drawn within a year. The companies requested a 12-year payback period; specific terms remain under negotiation with the Bank of North Dakota.

What changed in the revived project?

Two things separate this iteration from earlier Project Tundra designs, which Minnkota has pursued since 2015: Reliant's technical role and a smaller capital cost.

Reliant brings direct experience with coal plants and uses cooling to convert captured CO2 from gas to a more liquid form, according to Kelvin Hullet, chief public affairs officer at the Bank of North Dakota.

The cost estimate has fallen from about $3 billion to about $1.7 billion, Hullet said.

Gov. Kelly Armstrong, who chairs the three-member commission, said: "The science has gotten better, the technology has gotten better" since early versions of the project.

Why enhanced oil recovery now carries more weight

The revised plan puts greater emphasis on delivering CO2 to North Dakota oil fields for enhanced oil recovery — injecting the gas underground to boost well productivity.

Federal tax policy drove that shift. The 45Q credit previously paid less for CO2 used in enhanced oil recovery than for permanent geologic storage. Both pathways now earn $85 per ton. At Project Tundra's target of 5 million tons annually, that equates to $425 million in tax credits per year.

The loan application letter states the companies are in partnership discussions with oil producers that would use the CO2. Any pipeline needed to move CO2 to an oil field site would be funded separately, according to the application. State officials have said enhanced oil recovery could extend well life and generate additional oil and gas tax revenue.

Minnkota has already secured permits for underground storage. The Young Station sits atop geology suited to permanent sequestration, which keeps the storage pathway open alongside oilfield delivery.

What are the state's exposure and the project's claims?

State Sen. Dale Patten, R-Watford City, co-chairs the Clean Sustainable Energy Authority and is a retired banker. He said the state's risk of loss on the loans is "extremely low," citing the size of the assets controlled by Minnkota and Reliant and the project's potential revenue.

Company officials told the authority last week that the project would:

• Cut carbon emissions at the power plant by 95%
• Create about 350 jobs
• Result in no increase in utility bills

Those are company projections presented to the authority, not independently verified performance figures.

What happens next

Minnkota said in its announcement of the Reliant partnership that it will decide in 2027 whether to proceed with the $1.7 billion build. The 2% loan offer lapses after one year, putting pressure on the partnership to close financing, finalize terms with the Bank of North Dakota, and firm up CO2 offtake agreements with oil producers before the credit window narrows.

The 2027 go/no-go decision — and whether binding CO2 purchase agreements back the enhanced-oil-recovery case — is the milestone that determines whether Project Tundra breaks ground or returns to the shelf for a third time.