With key contracts signed, Summit Power’s Texas CCUS project on track for July groundbreaking | Global CCS Institute

The Texas Clean Energy Project, a 400-megawatt, coal-fired plant designed to perform carbon capture, use and storage recently cleared two key milestones and is moving towards a July groundbreaking.

In February, TCEP inked a deal securing supplies of water and, on Valentine’s Day, the project announced agreements for engineering, construction and maintenance services for the new plant outside Odessa, Texas.

I’ve been keeping an eye on TCEP since last autumn when, on behalf of the Global CCS Institute I spoke with Laura Miller, the charismatic ex-mayor of Dallas who, after leaving public office moved to the Summit Power Group to help advance CCS solutions by becoming TCEP’s project manager.

TCEP is on track to be the world’s first integrated gasification combined cycle (IGCC) poly-generation facility, as well as one of the world’s cleanest coal-fueled power plants.

Summit Power’s Texas facility is designed to snare 90 per cent of the COit generates, as well as 99 per cent of sulfur dioxide, 90 per cent of nitrogen oxide, and 99 per cent of mercury. Of the roughly 2.5 million standard tons of COthe plant will capture annually, about four-fifths will flow via pipeline to West Texas, where it will be shot into the ground to enhance oil recovery. TCEP’s remaining CO2 will be fed to a chemicals production facility to make urea, a feedstock for fertilizer.

Miller explained via email that of its 400-mw gross electric output, TCEP will sell 200 mw to a local utility (more on that below), about 85 mw will power commercial operations to make urea and compress CO2, and another 100 mw will be used internally to run project components.

Sited in Penwell, Texas, about 15 miles west of Odessa, TCEP is scheduled to come on line in 2015. If it can hit that deadline, the project will likely be the second US commercial CCUS facility to be sending COto the oil patch: Southern Co’s 582-mw Plant Ratcliffe Project is currently under construction in Mississippi and is scheduled to fire up in 2014.

With a price tag of US$2.4 billion, TCEP is being financed mostly by private sources and has also been granted US$450 million from the Department of Energy’s Clean Coal Power Initiative.

The recent news: On 14 February, TCEP announced that it had signed engineering, procurement, and construction (EPC) contracts, as well as a 15-year operations and maintenance (O&M) contract for the new complex. According to a company press release:

The two, firm-price, turnkey EPC contracts that guarantee price, schedule and performance for the integrated coal gasification combined cycle (IGCC) project were finalized in December by the project’s three EPC contractors: Siemens Energy Inc.; Selas Fluid Processing Corp., a subsidiary of The Linde Group; and SK Engineering & Construction, a major Korean contractor. The total value of the EPC contracts is approximately $2 billion.

Selas Fluid Processing and SK E&C will supply a complete chemical block capable of producing syngas by gasifying Powder River Basin coal. A portion of the syngas fuels a Siemens power block, and the balance is used for the production of granulated urea. The chemical block captures 90% of the CO2 from the syngas and compresses the CO2 for sale to the mature, enhanced oil recovery (EOR) market in West Texas. The chemical block EPC contract also includes coal handling, coal gasification based on two Siemens SFG-500 gasifiers, gas cleanup, mercury removal, ammonia and urea production facilities, sulfuric acid plant, water treatment, CO2 compression, site preparation, plant buildings and other goods and services.

In the second EPC contract, Siemens Energy will supply a nominally rated 400MW combined cycle power plant capable of operating on syngas and natural gas. The power block is comprised of an SGT6-5000F gas turbine capable of operating on high-hydrogen syngas or natural gas. The power block includes an air-cooled condenser for plant cooling, which greatly reduces the water needed for the project, and a high-voltage switchyard.

A separate, 15-year O&M contract was also signed for the complete, turnkey operation and maintenance of the entire 600-acre facility, including day-to-day operation, and short term and long term maintenance. The contract, signed by Linde’s Gases Division, includes guarantees of performance and availability by Linde’s Gases Division and Siemens for the full 15-year contract period.

TCEP has cleared most of the other major milestones necessary to begin construction. It has signed a 25-year power purchase agreement to supply 200 megawatts of electric power to the municipal utility of San Antonio, CPS Energy. Whiting Petroleum Corp has agreed to a 15-year deal to buy the plant’s CO2 stream. And Summit has also signed a long-term deal with an un-named company to purchase the plant’s urea output.

Until recently, water supplies were an open question. Texas has been hammered by a millennial drought over the past few years. While the facility is designed to operate using minimal net amounts of water, securing water rights was a lingering challenge. TCEP tied up that loose end in February as well, Miller wrote, with a contract to buy “brackish underground Capitan Reef water” from a landowner west of the project. TCEP will pipe in the water and desalinate it on site.

So what next? Miller wrote to me that TCEP is hoping to close financial terms in June, and to break ground in July.

Before then, only one substantial hurdle remains. TCEP faces a frustrating glitch in the federal tax code, requiring the partnership to pay about US$150 million on its US$450 million federal grant. Summit Power is working with lawmakers to get an exception passed for the quirk. The effort is being led by US Sen. John Cornyn (R., Tex.) and US Congressman Mike Conaway (R., Odessa, Tex.).

Recently, the stakes got higher for TCEP’s success. Delays have slowed a similar project, Hydrogen Energy California (HECA), being planned for a sitebetween San Francisco and Los AngelesAs originally conceived, partners BP and Rio Tinto were working with the DOE to develop an IGCC facility, fuelled by a 3:1 mix of coal and petroleum coke, with full CO2 capture for enhanced oil recovery.

Last May, SCS Energy took over the project, and subsequently tweaked the design to also produce urea, similar to TCEP’s approach. According to an Energy Dept. source involved in the project, the revisions improve HECA’s economic viability and the project is currently progressing through front-end engineering design.

Writing for the Institute, NRDC’s George Peridas recently summarized the obstacles HECA has navigated:

After years of development, the project as we knew it came to an end. The price of power that was required to make the project viable (reported to be in the region of $300/MWh) was, unsurprisingly, not one that tickles the interest of local utilities.

Subsequently, the project changed ownership and management (from Rio Tinto/BP to SCS Energy) and is now undergoing design changes before proceeding with the permitting process afresh. Reportedly, these entail the co-production of fertilizer at the plant, and the use of out-of-state coal for the majority of its fuel needs.

It is not yet clear if and how fast the new version of the project will proceed, but we will likely know more in the coming months.