AT THE MAJOR CCS PROJECTS: FUTUREGEN 2.0, HECA

Tamar Hallerman
GHG Monitor
06/08/12

AT FUTUREGEN 2.0: DOE BEGINS CONSIDERATION OF ALLIANCE’S PHASE II APPLICATION

The Department of Energy’s Office of Fossil Energy began vetting the FutureGen Alliance’s application for Phase II carbon capture work on FutureGen 2.0 this week, the Department confirmed. DOE said it began examining the Alliance’s application for oxy-combustion capture work on a 200 MW oil-fired unit at Ameren Energy Resources’ now-shuttered Meredosia plant in central Illinois this week. DOE’s review of the project, which is expected to take several weeks to several months to complete, will determine whether the Alliance will be able to move forward on Phase II Front-End Engineering and Design (FEED) work for the project. The Alliance previously submitted an application for the transport and storage portions of the project earlier this spring, a consortium spokesman said. 

Meanwhile, the lawyers for the Alliance and Ameren are continuing to finalize an option for the consortium to purchase the oil-fired unit at Meredosia from Ameren in order to move forward with the project. “The Alliance and Ameren are still working on the Meredosia Energy Center option and we expect to make an announcement this summer,” FutureGen Alliance spokesman Lawrence Pacheco told GHG Monitor this week. “Until the option is finalized, it would be premature for the Alliance to discuss details of the capture side for Phase II.” If Phase II work begins in July, as the Alliance said it expects, the FEED study is expected to take approximately 18 months to complete, which could mean financial close on the project at the end of 2013 at the earliest.

Cost, Timing Issues Remain

The Alliance and project partners Babcock and Wilcox and Air Liquide were forced to reevaluate the future of the project last year after Ameren announced that it was pulling back from its role as capture lead. The utility dealt another blow to FutureGen when it announced that it was shuttering the project’s host site, the decades-old Meredosia plant, late last year in anticipation of an upcoming Environmental Protection Agency rule regulating SO2 and NOx emissions. In the aftermath, the Alliance sought a single cooperative agreement with DOE under its name for both the capture and storage ends of the project.

But even if DOE gives FutureGen approval to move forward on Phase II, the project still faces several uncertainties, including larger-than-expected cost overruns and a looming fight with the state of Illinois over the status of a long-term power purchase agreement for electricity produced at the plant. Phase I pre-FEED work last year revealed that the project is more than $360 million over budget. DOE has previously said that it will not give any more federal funding to the project beyond the $1 billion initially allocated under the American Recovery and Reinvestment Act.

Also at issue is the timeline for the project moving forward. For now, FutureGen remains six to seven months behind schedule, project officials said earlier this spring. But depending on the length of DOE’s Phase II review, the project partners could fall further behind. That time lost could be critical, especially since the $1 billion in Recovery Act funding expires at the end of Fiscal Year 2015. Given that many of the major expenditures for a large-scale project such as FutureGen come towards the back end of the project timeline, officials could face problems in terms of being able to spend that money in the available time they have to move forward.

AT HECA: MITSUBISHI HEAVY INDUSTRIES TO COMPLETE PROJECT FEED WORK

Mitsubishi Heavy Industries, Ltd. will administer Front-End Engineering and Design (FEED) work for the Hydrogen Energy California (HECA) project, officials announced this week. The Tokyo-based equipment manufacturer said it will work through its subsidiary, which is a subcontractor to Fluor Corp., to perform the FEED study for the gasification and power island portion of the new-build 400 MW Integrated Gasification Combined Cycle (IGCC) plant. MHI said that work is currently underway and will be completed by March 2013. “The company will spare no effort to bring the FEED process to a successful conclusion and will work toward winning the [engineering, procurement and construction] contract for the HECA IGCC and fertilizer project as well,” an MHI release said. MHI is also providing its oxygen-blown gasification technology for the capture end of the project.

The FEED announcement is the most recent in a string of news surrounding the revamp of the $3.9 billion HECA project, slated for a site 25 miles west of Bakersfield, Calif. The project’s original owners, BP and Rio Tinto, received $408 million in federal funding from the third round of the Department of Energy’s Clean Coal Power Initiative program in 2009, but the project has experienced significant structural changes since that point. Following a period of stagnation, the independent power producer SCS Energy took over the project last summer, spearheading a new poly-generation formula in order to make the project more economically viable. The project will now use coal and petroleum coke to produce hydrogen from gasified syngas to generate up to 400 MW of electricity. Part of the syngas will be reserved for use in urea fertilizer production, the company said, yielding up to 2,500 tons of the commodity per day. HECA will also capture roughly 3 million tons of CO2 emissions from the plant per year for enhanced oil recovery operations in the area.

SCS said it is expecting to finalize its contract for engineering, procurement and construction by the middle of next year. The company submitted an amended permit application for the project to California and federal regulators last month, officially restarting the regulatory review process for HECA. The plant is expected to come online by the end of 2017.