Another coal gasification plant canceled

November 26th, 2008

Yes, the only good coal gasification plant is a dead coal gasification plant. Coal gasification just doesn’t make any sense, and even project proposers are figuring that out!

Here it is in the Chicago Tribune:

Plans dropped for Indiana coal gasification plant

Congrats to John Blair and Valley Watch for exposing the realities of this project.

Coal-gas project shelved

But potential Rockport, Ind., facility still may have life

By Bryan Corbin
Wednesday, November 26, 2008

INDIANAPOLIS — The developer of a $2 billion coal-to-gas plant proposed for Spencer County, Ind., has shelved the project — at least for now.

It was canceled after the developer failed to reach an agreement with utility companies for purchasing the substitute natural gas it would have produced.
Vectren Corp., which along with NIPSCO (Northern Indiana Public Service Co.), was negotiating to buy the substitute gas, said there is too much uncertainty over possible federal carbon regulations to commit to a 30-year purchase agreement now.

The proposed plant near Rockport, Ind., would have converted local coal into substitute natural gas and sold the “pipeline quality” gas to utility companies.

If built, the project could have brought 125 full-time jobs to Spencer County, not counting mining jobs to supply the coal and temporary construction jobs to build it, officials have said.

In light of the possibility of those jobs, Rockport Mayor Nedra Groves said she was disappointed by the news.

“It would have been beneficial work for the people here, and we need industry and infrastructure,” Groves said.

But the mayor hasn’t abandoned hope. The notice she received held out the possibility the project could be resumed once the economy improves.

Negotiations between the developer, Indiana Gasification LLC, and the two utilities continued for months, prompting several postponements of hearings before the Indiana Utility Regulatory Commission.

On Tuesday, Larry J. Wallace, attorney for the developer, read aloud a statement asking the commission to discontinue consideration of the proposal, at least for now. The developer hopes the project can be revived in a different form and resubmitted later, he said.

“If any viable means can be found for developing the project, Indiana Gasification will certainly pursue them,” the statement said.

Two environmental groups, Citizens Action Coalition of Indiana and Valley Watch Inc., had intervened to oppose the developer’s plans. The groups contended the gasification project was a bad deal for ratepayers because it would have locked in 30-year contracts for substitute natural gas, even when the market price for natural gas might drop below that amount.

“We’ve never asked that the commission prevent them from coming back,” said Jerome Polk, attorney for Citizens Action Coalition and Valley Watch. “If (the developer) can come back with a workable proposal that makes sense, even my clients would be willing to sit down and talk if it makes sense and doesn’t hang ratepayers out to dry.”

The end of contract negotiations comes amid uncertainty over what the new Congress or the incoming administration of President-elect Barack Obama might require of coal plants, in terms of limiting their greenhouse gas emissions, such as carbon dioxide. The likelihood that coal plants might have to capture the carbon dioxide and inject it underground, at unknown costs, adds to the uncertainty.

“That could have an impact on the price of gas this (plant) could yield, especially if the plant would have to capture carbon. That could impact the capital costs,” said Chase Kelley, Vectren Corp. communications director.

Vectren never was going to be a “significant purchaser” of the substitute gas, she said. But the uncertainty of federal carbon legislation was too much of an obstacle to reaching agreement on a 30-year purchasing contract.

A spokesman for NIPSCO would not be as specific on what derailed negotiations with the developer. “We actively negotiated . . . however, a business decision has been made to discontinue those negotiations,” NIPSCO spokesman Nick Meier said, adding the utility had made no financial commitment to the project.

The developer intended to apply for a federal loan guarantee to help finance the project along with private equity.

Two years ago, Gov. Mitch Daniels attended the Indiana Gasification announcement at Vectren headquarters in Evansville, and on Sept. 3 he specifically cited the plant as an example of clean-coal technology’s potential during an energy summit in Indianapolis.

“We understand that the developer is looking at other ways to continue the project,” the governor’s communications director, Jane Jankowski, said Tuesday.

Two legislative sessions in a row, state Rep. Russ Stilwell got bills passed to clear regulatory obstacles to the coal-to-gas plant.

“Obviously, I’m disappointed. We worked hard to get to this point,” said Stilwell, D-Boonville, whose House district includes the Rockport area. “I would call it a lost opportunity. A project of this opportunity only come around once every few decades.”

But Stilwell noted that the project is not dead unless the developer completely withdraws it. “Whatever we need to do to bring partners in, I’m committed to doing that,” Stilwell, D-Boonville, said.

For environmentalist John Blair, president of Valley Watch Inc., the developer’s announcement comes as no surprise, given the uncertainty about the project’s costs.

“In a word, ‘thrilled,'” Blair said of his reaction to the decision.

Indiana Gasification requested Tuesday that the Utility Regulatory Commission end its proceedings on the proposal, while leaving open the door to resubmitting the project later. Utility commission regulators have not ruled yet.

Posted by Carol A. Overland
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2 Responses to “Another coal gasification plant canceled”

  1. DaveChgo Says:
    November 26th, 2008 at 11:32 am

    I know you’re opposed to all of these types of projects, but just so we’re clear, this was not an IGCC project. IGCC is a specific kind of plant that converts coal into a syngas and then uses it to generate power. This was a project to convert coal to Substitute Natural Gas (SNG). It is not the same thing. Coal to SNG projects have been built and operated successfully many places. Because they use a full methanation process, they are built to be able to capture the overwhelming majority of the CO2. Just thought you should know.

  2. Carol A. Overland Says:
    November 26th, 2008 at 3:11 pm

    Yes, I SHOULD know, and tossed in “IGCC” and it’s fixed now. THANKS for keeping me on my toes.

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