McDermott International (NYSE: MDR) announced today that its subsidiary, The Babcock & Wilcox Company (“B&W”) is working with one of the largest power utilities in the U.S. to commercialize a clean coal product.

B&W and American Electric Power (“AEP”) are exploring bringing to market a new combustion technology to reduce carbon dioxide (CO2) and other emissions from coal-fired power plants.

The companies are assessing the application of oxy-coal combustion as a retrofit to an existing AEP plant, and are to work toward the development of the first oxy-coal commercial validation project in the United States.

Oxy-coal combustion uses pure oxygen for the combustion of coal in electricity generating plants. In this system, nitrogen that comes in with the air for the combustion process is eliminated. As a result, the exhaust gas is a relatively pure stream of CO2 that is ready for capture and sequestration or alternative uses such as enhanced oil recovery.

The technology is expected to result in near-zero emissions from coal-fired electric-generating facilities.

B&W has established a collaboration agreement with American Air Liquide for the continued development of the technology.

During the summer of 2007, B&W will complete a pilot demonstration of the oxy-coal combustion technology at its Clean Environment Development Facility in Alliance, Ohio.

AEP will be among the utility participants in B&W’s Oxy-Coal Combustion Advisory Group in an effort to help bring the potential users of the technology into the development process.

B&W and AEP will evaluate and select the most suitable existing AEP plant location for the commercial application of the oxy-coal combustion technology.

In addition, B&W is working with a Canadian utility to develop a supercritical pressure, pulverized coal-fired boiler and to assess the feasibility of a new, near-zero-emissions, 300MW power station utilizing the oxy-coal combustion technology. In that unit, recovered CO2 would be sold for oil recovery operations and eventually sequestrated underground in stable geologic formations.

AEP has also signed agreements with Alstom, another clean coal company, for post-combustion carbon capture technology using Alstom's Chilled Ammonia Process. AEP plans to install the system on its 1300-megawatt Mountaineer Plant in New Haven, West Virginia in mid-2008 for 30 megawatts of product validation in mid-2008, followed by a 450-megawatt coal-fired unit at its Northeastern Station in Oologah, Oklahoma.

American Electric Power is one of the largest electric utilities in the United States, delivering electricity to more than 5 million customers in 11 states.

The Babcock & Wilcox Company has specialty manufacturing and service capabilities, focused on energy infrastructure.