The company hopes to profit from the project by earning credits for the carbon reductions in voluntary carbon markets and by selling carbon dioxide to energy companies.

"For a project this size we really need both income sources to make it a go," Blue Source CEO Bill Townsend said in an interview.

The deal will cut CO2 from the plant by about 650,000 tonnes per year by permanently storing the emissions in the oil fields, he said. The US Department of Energy says that capturing CO2 from power plants for enhanced oil recovery could greatly boost US oil reserves while permanently keeping CO2 from reaching the atmosphere.

Blue Source has about 13 more deals like the Coffeyville agreement lined up that it will begin to announce later this year, Townsend said.

Energy companies have pumped CO2 from naturally occurring sources since the 1970s into oil fields to push out hard-to-reach pockets of crude. Carbon dioxide in West Texas sells for about $17 a tonne, but the price depends on demand from individual oil fields and deals for the Kansas CO2 have yet to be negotiated, Townsend said.

In voluntary US carbon markets, where companies or individuals pay others to make emissions reductions, a credit representing a tonne of CO2 reduction can cost anywhere from about $4 to about $14.

The price of emitting carbon could rise quickly if the United States were to begin regulating greenhouse output. Several bills in the US Congress seek to create a market by regulating heat-trapping gases and candidates from both major political parties for next year's presidential election also favor doing that.

Equipment to capture and compress the CO2 from the Kansas plant, as well as the pipelines, could cost $50 million to $80 million, Townsend said.

Blue Source has built and operated five such projects and has aggregated and secured under long-term sourcing agreements more than 300 million tonnes of greenhouse gas emission reduction offsets through the year 2022.