An ambitious multi-dimensional, $4 billion project that involves what would be California’s first commercial carbon capture and storage (CCS) has been revived in the state’s oil patch in the southern end of the central valley west of Bakersfield. State energy officials have scheduled a workshop Feb. 20 for the Hydrogen Energy California (HECA) project.
A proverbial sleeping giant of a project that dates back to the middle of the last decade, HECA proposes to use a 453-acre agricultural site to gasify coal and petroleum coke to produce hydrogen-rich synthetic gas fuel for use in producing electricity and fertilizer, along with capturing 90% of the carbon dioxide (CO2) produced and putting it to use as part of enhanced oil recovery (EOR) in the nearby Elk Hills oilfield.
Originally proposed as a collaboration among units of BP plc, Rio Tinto and Southern California Edison Co., HECA was sold two years ago to a Concord, MA-based small privately held independent power producer, SCS Energy LLC (see Daily GPI, May 31, 2011).
A preliminary staff assessment by the California Energy Commission (CEC) is scheduled for March 15, but the project, which has an estimated four-year construction timeline, has not moved forward until now. The project currently has a proposed start up date in September 2017, but that would require a CEC approval by late summer.
Integrated gasification combined cycle power plant technology has been held out as a possible means of reining in the U.S. carbon footprint while still using the nation’s vast coal resources. Economics and the shale gas boom have helped curb its attraction.
The CEC and other California energy regulators in the past have viewed the project as a research effort involving CCS and the production of power, fertilizer and oil in a nearby Occidental Petroleum Corp. Elk Hills production area (see Daily GPI, Aug. 28, 2009). At one time the project had a commitment for more than $300 million in U.S. Department of Energy funds.
In acquiring the project, SCS said the production of fertilizer and sulfur, along with the EOR application for the captured CO2, would make the multi-billion-dollar project more economic.
A CEC spokesperson told NGI that the commission staff is still in the analytical phase of the project application and it is not commenting on the degree to which the project is realistic at this time. “That may be a question better directed to the applicant,” she said.
A West Coast-based spokesperson for the HECA project said SCS’s current project schedule calls for breaking ground by the end of this year. The principals in the privately held firm have remained the same, and they are in the process of lining up a combination of private equity investors and debt financing to fund the massive project.
“The project changed with the addition of a fertilizer production component, so SCS submitted an amended application to the CEC in May last year,” the spokesperson said. “There have been hearings, workshops and data requests since May last year. Our schedule has changed a couple of times, but our expectations are the same.”
Noting that it specializes in “challenging projects with high barriers to development,” SCS’s website lists a number of Northeastern-based projects that the company has developed through initial operations before selling to long-term owner/operators. An example is a 1,000 MW combined-cycle natural gas-fired plant in New York City for which SCS sold its interest in 2008 after two years of operation.
In the Queens, NY, Astoria project, SCS worked with Credit Suisse First Boston to bring in “$285 million in private equity participation and approximately $800 million in debt financing.” SCS also negotiated a power purchase agreement with Consolidated Edison Company of New York, Inc.
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