Abby L. Harvey
GHG Daily
2/4/2016
The Kemper County Energy Facility carbon capture and storage project is now slated for full operation in the third quarter of this year, not the first half as project owner Mississippi Power previously had stated. The delay announced in a Feb. 3 filing with the Securities and Exchange Commission is little surprise as a previous filing stated that a review of the timeline was underway.
According to the filing, the delay is “the result of challenges in ongoing start-up and commissioning activities, including repairs and modifications to the refractory lining inside the gasifiers, as well as operational readiness.” At its inception, the plant was scheduled to reach full operation in 2013.
The project, a new-build post-combustion CCS project located near Meridian, Miss., has been producing energy with natural gas since August 2014. Once fully operational, the plant will use Mississippi lignite, a low-rank brown coal, to produce electricity. It will employ a custom integrated gasification combined cycle (IGCC) system and CCS technology to produce electricity from the coal with carbon emissions roughly equal to that of natural gas. As of yet the CCS and IGCC portions of the plant are not online.
Not only is the project years behind schedule, but it is also billions of dollars over budget. The latest filing puts the project’s price tag at $6.64 billion, far above its initially proposed $2.4 billion. The price continues to inch up as well. The filing cites an additional $110 million, including $40 million related to the same issues cited for the delay in full operation and “approximately $70 million related to the extension of the expected in-service date.”
Extending the project’s timeline beyond the first half of the year is costly for the company, to the tune of $25 million to $30 million a month, the document says. This total “includes maintaining necessary levels of start-up labor, materials, and fuel, as well as operational resources required to execute start-up and commissioning activities,” according to the document, which also notes that “additional costs may be required for remediation of any further equipment and/or design issues identified.”
The document also warns that further delays and cost increases are possible, saying the company will continue to analyze the time and funding needed to complete startup.
The list of issues that could arise causing further delay or cost increases includes, but is not limited to, “labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, non-performance under construction or other agreements, operational readiness, including specialized operator training and required site safety programs, unforeseen engineering or design problems, start-up activities for this first-of-a-kind technology (including major equipment failure and system integration), and/or operational performance (including additional costs to satisfy any operational parameters ultimately adopted by the Mississippi [Public Service Commission]),” the document says.
