Monday, December 15, 2008

Eyes of Texas on IGCC Debate - Again

Once again the opportunity for building a low-emissions IGCC plant on Gulf Coast
is in danger of being missed.

Can polygeneration come to the rescue?

It was only about two years ago when all eyes were on Texas as plans for upwards of 18 new coal plants had environmental groups up in arms.

The pressure was on the utilities to use cleaner IGCC technology, and on the regulators to accept IGCC as "Best Available Control Technology" for all new coal-fired plants - regardless of its higher costs.

That debate over IGCC vs PC technologies went into the history books when TU was bought out by a group of private investors who killed the idea of investing in new generation and made deals instead with IPPs for their surplus, mostly gas-fired, generating capacity.

But now the debate is once again heating up over whether or not IGCC technology should be imposed on a project despite its higher costs.

This time the spotlight is on the 1200 MW Las Brisas Energy Center fueled by high-sulfur petroleum coke slated for construction on the Gulf Coast near Corpus Christi. As currently planned, conventional boiler technology will be used, with stack-gas scrubbers to reduce sulfur and other emissions of the new plant as required by EPA standards.

No provisions are being made for CO2 capture - nor is the plant being required to be "capture ready" in anticipation of pending regulations to curb greenhouse gas emissions.

Once again concerned citizens and others are calling for an IGCC design that would produce much lower emission levels than required by law. As reported by Denise Malan, a journalist for the Caller-Times, gasification is better for the environment than direct burning but adds to the cost of electricity. She points out this is not just a local issue, but one that is shaping the national energy debate.

The question at the heart of the controversy is an old one. It boils down to whether the added cost for IGCC is too much to pay for a cleaner and greener power plant - particularly when the dirtier plant can meet current emissions standards.

The real questions
Taken to the next level, aren't the real questions: a) Is the cost of IGCC really higher when considering all of the long term social, environmental and health costs of the higher emissions generated by directly burning pet coke in a boiler? And, b) Why won't the EPA and state regulators recognize that IGCC is - in fact - the best available control technology for emissions reduction?

Not that the idea of a cleaner pet coke-fueled IGCC plant at Las Brisas has not already been suggested. Tondu Energy had proposed a 600 MW plant at the same site (Tondu IGCC). It was the only one of the 19 proposed coal or pet coke fired plants in Texas that wasn't targeted by environmental protests back in 2006.

As Joe Tondu, president of Tondu Energy, told the Caller-Times “Corpus Christi is a natural location for the application of IGCC, but we were unable to identify a market (for the power) that was willing to pay for an additional costs due to IGCC.” As a result, he says, we are going to build a gas-fired combined cycle plant instead.

It boils down to two issues: 1) should emission standards be stricter? and 2) are consumers willing to pay for the higher cost that comes with cleaner and greener energy?

"If you want gasification", he advises, "go to the state regulators and (get them to) set the emission standards that require IGCC, and boom it will happen."

Clearly, Joe Tondu couldn't hold out for his IGCC project to make it. He threw in the towel in mid-2007 when he announced that he'll take the path of least resistance and go with a natural gas fired plant.

Industrial Polygeneration alive and well
Since gasification per se does make sense for the Gulf Coast, and it could be that the Las Brisas project should revise its business model, and the plant should be redesigned for a different product mix.

At today's $7-$8 per MMBtu price for natural gas, gasification of pet coke to produce synthetic natural gas - with power production as a by-product - seems to have found solid footing at Dow Chemical's massive Freeport (TX) chemicals and cogeneration plant.

The $2.8 billion Hunton Energy Freeport plant, scheduled for completion in 2012 about 180 miles up the coast from Corpus Christi, is touted as a gasification success story.

Hunton plans to gasify petroleum coke to produce methane for sale to the nearby Dow plant, and will also generate a net 400 MW as well as other "process byproducts" including sulfur for fertilizer and carbon dioxide for injection into old oil wells.

The key for IGCC, or more properly, gasification-based polygeneration, is locating the market for the primary product, says Kay Johnson, Hunton Energy Vice President for Project Management.

Johnson told the Caller-Times that gasification plants such as the one in Freeport can only work in certain markets. Such projects are very capital intensive, she explains, which means that project viability depends on the profit you’re trying to make as well as the market conditions.

But it’s not impossible, at least in Freeport. The key was putting together the right combination of technologies in the "perfect location", Johnson says. Hunton is "very proud of the fact that we’re making 400 MW of power with no emissions,” she said. “It proves that you can be green and profitable.”

Which brings us back to Las Brisas. Perhaps they should be compelled to develop a different business model, more like what Hunton Energy adopted at Freeport. If they cannot be moved by tighter environmental standards to use IGCC technology, perhaps the key is to change its primary product, and make electric power a "byproduct" of a more profitable operation.

There should be compelling incentives for project developers to adopt polygeneration in their plant concept - the same way that cogenerators used to be favored under past energy legislation.

If Hunton Energy can profitably produce 400 MW without emissions by making its profit from selling pipeline quality gas to local industry, why can't the developers of the Las Brisas plant do the same?

No doubt the local refineries that are supplying them with pet coke would be good customers for hydrogen, steam and other plant products that could make the overall operation more profitable - and a lot greener.

And, by going with gasification to convert the pet coke into a clean fuel gas, they can more readily incorporate CO2 capture into their plant design. Then, like Hunton, they can then add compressed CO2 to their products for sale -- and and tack on another profit stream.

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