Yesterday we heard the start of Laura’s story, and the progression of the Texas Clean Energy Project. This is the second and final part of the Q&A with Laura.
You have a competitor that’s following a similar technology path?
Yes, that’s Hydrogen Energy California (HECA). They’ve gone through a complete transformation. One of the original backers, BP, dropped out after the Gulf spill.
Like us, HECA also got Department of Energy (DOE) money as part of the Clean Coal Power Initiative. They got $408 million, we got $450 million. They’re also at 90 per cent capture. Their original design, I think, was using petcoke, rather than Wyoming coal.
When the project nearly died, in an effort to keep it alive, DOE went out and solicited other companies to come in and take it over. SCS Energy, in Concord, Massachusetts took over HECA in September.
I joked when I called the head of HECA because they have the same tax problem that we have right now in congress. I called the man who was negotiating to buy the project, the chairman of the company, and I said, “Hey, I hear that the project now is modelled after our project, that we have the same configuration,” and he said, “Yep. We like to tell everyone we meet that we taught you guys everything that we know.”
Is there sufficient demand for urea and CO2 to repeat this model in other facilities?
Right now, the United States imports about five million tons a year of urea and the US domestic production is 3.5 million. When we go online, we’ll be boosting urea domestic production by 20 per cent.
There’s obviously a finite amount of urea that can be produced worldwide, but the beauty of the syngas is that it makes lots of other products. You can make methane out of it, you can make ammonia out of it, you can make gasoline out of it. The Germans used coal gasification to fuel their entire war effort during World War II.
We picked urea because we did a very thorough look at the different markets for various products that could be made from a syngas and decided that urea was a profitable strong market because of this imbalance between domestic output and international production.
The plant has taken longer than you anticipated. What have been the delays?
We’ve had some shifts in the ownership of the project. Summit always builds for owners – so far, gas, solar and wind projects, never coal. We contract to do a turnkey power project, we build it, we hand over the keys, they give us a success fee, we move on to the next power project.
In this case, we developed the project and then Babcock & Brown became the owner of the project in 2008. But they had to give the project back to us because in the economic downturn, they went bankrupt and couldn’t afford to build it.
That was, obviously, a big setback and we kept the project going even though if we’d have been a gas plant, we just would have stopped working on it and moved onto the next project until we found a new owner and the economy improved.
But we have a strong philosophical belief that if coal’s going to be used in this country for power production in the future, it’s going to have to be done this way – in an incredibly clean way – and the time is now while the world is trying to find ways to reduce carbon emissions We decided it was worth holding onto the project because we thought we had a good business model and that if any of these projects was going to succeed, ours had a good chance to succeed.
Are you bearing the full development cost of the project now?
We added one key investor in the project, and it’s Clayton Williams out of West Texas. Had he not entered the project, we probably would not have been able to continue. He came in at a really critical time just before we got the DOE award, putting in money along with Summit.
Williams is a very colourful oil man in West Texas—a real character and a sweet man. He just turned 80, and he ran for governor against Ann Richards some years back.
Knowing oil, he immediately saw the value of the CO2. He understood how we put this together and how it could work and how it could be attractive to investors and so he became a minority owner.
Since then, we’ve talked to other investors, who will need to put up about $1 billion for financial closing. We have a checklist of things that these investors need to see in order to make their final decision and we’ve been, one by one by one, checking off all those milestones. Now we’re down to just a handful of things that need to be completed.
What’s done, and what remains to be completed?
Here are the milestones we’ve already passed.
We kicked off the front-end engineering and designing in June of 2010 and we finished it in July 2011. We got our air permit in December of 2010 with no opposition. That was a very big milestone for us.
We got our record of decision from the Department of Energy, which puts us in compliance with the National Environmental Policy Act. We have pre-sold all of the urea, CO2 and sulfuric acid. And we are about to sign our interconnection agreement that will connect our project to the state’s electricity grid.
What about the electricity?
Ah yes. Last but not least, we have sold all of the electricity to the city of San Antonio.
CPS Energy in San Antonio is the largest municipally-owned utility in the country, led by a CEO named Doyle Beneby. He’s been incredibly visionary in terms of where he wants the utility to go. He is shutting down one of his old coal plants early and buying all of our power, and building solar farms and wind projects.
Working with the mayor of San Antonio — who notably is the youngest mayor of a big city in the country, by the name of Julian Castro – they have joined up, so that every single power deal that they’re making is for green power, and includes an economic development component requiring companies they do business with to create jobs in San Antonio.
We, as an example, are opening an office in San Antonio for customer relations, and for media. And we’re forming a carbon management advisory board with environmentalists, industry experts and scientists on it, to be on the inside of our construction process so that they learn how the gasification process and carbon capture work. Then they can go out and tell people that clean coal with carbon capture does exist.
You’ve gone from fighting coal to selling a very complex coal project, and have been successful at both. How have you been able to sell others on the vision of this plant?
It can be difficult. It’s so funny. I was at a dinner party and someone asked me what I’m doing since I left being mayor, and I said, “Oh. I’m building a carbon capture power project that uses the carbon for enhanced oil recovery in the Permian Basin.”
The guy literally closed his eyes. And he said, “Oh. Wow. Huh.” and then he turned to a person on the other side of him to find more interesting conversation.
Whenever that happens, I always say, “But, I want you to know, I’m going to save the polar bears and make the planet safe for your grandchildren.” Sometimes that gets their attention.
The irony is that I’ve always been a communicator who used my communication skills to win journalism awards and get elected mayor of Dallas, but you start talking about gasification and compressed CO2 and everyone just goes to sleep on you.
It can be too abstract for the public to connect with. How do you get around that?
When I was fighting TXU’s big coal plant proposal, I kept losing in all these debates with them because they’d bring their engineers in to talk about how coal gasification didn’t work, and carbon capture didn’t work.
The most important thing I did at that time was to go to Tampa, Florida, where I had been told there was an advanced IGCC – gasification — plant operating. I had to fly there to go touch the plant, to be able to come back to Dallas, and stand up to them in the debates and say, “You are not being truthful. Gasification works, and it’s working in Tampa, Florida, and I saw it.”
They said, “Well, but that plant has a history of problems. And they use a very specific high-quality Appalachian coal. It’s the only kind of coal that can be used in gasification, and otherwise it just doesn’t work.”
So I said to them, “Really? Well, look at this,” and I opened my hand in the debate to show what looked like a shiny, black rock. I said, “Since you keep telling me this, the first question I asked the plant manager in Tampa is what kind of high-quality Appalachian coal do you use? He said, ‘We use pet coke from Houston”.
Then, I turned to the audience, and I said, “That’s basically sludge off refineries in our own backyard.”
So then the debates turned because then people said, “Oh my God, they haven’t been telling us the truth about what’s technologically available.”
My point is that offering real-world examples – when people can go and see and touch the cleanest coal plant in the world, which ours will be – it will really move the debate. Until then, it’s just conversation.”
Check out the original post here:
http://www.globalccsinstitute.com/community/blogs/authors/adamaston/2011/11/04/fighting-coal-plants-fighting-carbon-capture-and-re-use