Concord, MA-based independent power producer SCS Energy plans to take over a carbon capture and storage (CCS) project tied to a proposed integrated gasification combined cycle (IGCC) power generation plant in the heart of the oil-rich southern San Joaquin Valley near Elk Hills. Earlier this year BP plc and Rio Tinto pulled out of the joint venture project centered on Hydrogen Energy California (HECA).
SCS said last Tuesday it has a conditional agreement to take over HECA and move the modified project forward through state permitting, construction and operation. BP and Rio Tinto have invested $55 million in HECA since filing for the project's approval with the California Energy Commission three years ago and subsequently moving the proposed site for the project in Kern County west of Bakersfield, CA (see Daily GPI, Aug.28, 2009).
SCS will continue to develop the project with the prospect of some additional U.S. Department of Energy (DOE) loan guarantees being involved. BP and Rio Tinto began discussions with DOE ahead of pulling out of the project earlier this year as a means of seeking ways to sustain the effort. DOE already has invested $54 million in the project through the federal stimulus funds program, and SCS is hoping to tap another $354 million as part of the DOE clean coal initiative.
As a newly designed approach, SCS said it intends to integrate electricity generation with urea production in a way that will allow the facility to use the hydrogen produced from solid fuel IGCC to generate electricity, urea or both depending on market demand. Urea is widely used in fertilizers for agriculture, and it would mark a return of sorts to the agriculture and fossil fuel-dominated central valley in California that once was the home for several larger fertilizer manufacturers.
Noting that he is a strong supporter of carbon capture efforts, California's chief regulator, Michael Peevey, said Thursday that the project is a "major potential DOE program with $400 million at stake."
Both Peevey and SCS representatives said the plant would capture 90% of the carbon dioxide (CO) produced and transport it to the adjacent Elk Hills oil field owned by Occidental Petroleum for use in enhanced oil recovery and sequestration in deep underground geological formations.
"The approach of producing both electricity and urea helps address the economic challenge of creating a viable business model to cover the high capital costs of the plant and its carbon capture capabilities," said an SCS spokesperson.
HECA's Jonathan Briggs said the project's major obstacle of late had been attracting new investors that could "provide a wider platform of interest and capital for the development of this pioneering project." Briggs added that the project has had strong support from local communities in Kern County, which has a long history of major oil/gas and agricultural production.
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