A unit of Puget Energy Inc. (PSD) plans to use waste methane gas captured from a Seattle-area landfill to help fuel its power plants and prevent the heat-trapping gas from entering the atmosphere.

Puget Sound Energy, King County and landfill-gas developer Bio Energy-Washington said Monday the project is expected to provide enough methane gas to generate about 287,000 megawatt-hours of electricity a year, enough to power 24,000 homes.

The project will be the third-largest landfill-gas energy facility in the U.S., the companies said.

Bio Energy, owned by private equity firm First Reserve Corp., will build and operate a facility to process the gas, and a quarter-mile pipeline to ship the gas to Williams Cos.' (WMB) Northwest Pipeline system. The company will also install equipment at the landfill to generate electricity from some of the captured gas.

Bio Energy estimates that it will deliver to Puget from the landfill about 5.5 million cubic feet per day of processed methane over 20 years. King County estimates its sales of methane gas to Puget could be between $800,000 and $1 million a year, depending on natural gas prices and the amount of gas sold, said county spokesman Doug Williams.

Methane is 20 times more potent then carbon dioxide in trapping heat in earth's atmosphere, according to the U.S. Environmental Protection Agency.

In February, a group of investors led by units of Australian bank Macquarie Group Ltd. (MQG.AU) completed a $7.4 billion purchase of Puget Energy, taking the company private.

 
-By Cassandra Sweet, Dow Jones Newswires; 415-439-6468; cassandra.sweet@dowjones.com