Indiana Gasification LLC (IG) said June 28 that a new air permit, issued June 27 by the Indiana Department of Environmental Management (IDEM), is a major step toward construction of its state-of-the-art coal gasification plant at Rockport, Ind.
“The IDEM air permit is critical to an IG plant that promises huge energy and economic benefits. Our plant will produce both substitute natural gas for Hoosier consumers and CO2 that will be piped to the Gulf States, enabling America’s oil production to increase by tens of millions of barrels a year,” said Bill Rosenberg, an IG partner and a former Assistant Administrator for Air at the U.S. Environmental Protection Agency.
“The cleanest coal plant ever permitted in the United States, the IG facility will directly create about 1,500 high-paying jobs,” Rosenberg added. “Construction of the plant will require 1,000 workers and take three years. The plant will employ 200 people, with its annual demand for 3.5 million tons of coal expected to create another 300 jobs. This doesn’t count the multiplier effect in the Southwest Indiana economy. This home-grown energy means that about $250 million a year will be spent in Indiana instead of leaving for some state or country that drills for natural gas.”
The $2.8bn IG facility will provide approximately 17% of Indiana’s residential and commercial natural gas requirements. Under a contract negotiated with the Indiana Finance Authority, consumers are guaranteed savings of at least $100m over 30 years and are protected against the full effect of notoriously volatile natural gas prices, Rosenberg said.
The Indiana Utility Regulatory Commission approved the deal between IG and the Indiana Finance Authority last November. But several parties, including gas distribution affiliates of Vectren Corp. (NYSE: VVC), have appealed that decision, saying there is too much price risk with this gas supply over time. The appeal at the commission was still pending as of June 28.
Indiana Gasification racks up needed approvals
The IDEM permit is the most recent regulatory endorsement of the project. The U.S. Department of Energy (DOE) in June filed an amended notice of intent to include the CO2 pipeline in the project’s loan guarantee financing and environmental impact statement. Also in June, IDEM issued a draft Clean Water Act permit for the plant. If all goes as planned, construction will begin in late 2013.
The gasification process will convert about 10,000 tons of coal per day into substitute natural gas (SNG) and liquefied CO2. About 80% of the plant’s SNG output will be sold to the Indiana Finance Authority under an agreement that protects Indiana ratepayers, IG said. Because the facility will gasify coal, it will achieve extremely low air emissions, much lower than those produced by traditional coal-fired plants.
The byproduct CO2 will be compressed, sold and shipped from Indiana to the Gulf Coast and injected into depleted oil wells for enhanced oil production. This enhanced oil recovery (EOR) effort will produce 10 million to 20 million barrels of oil annually that could lead to substantial reductions in imports of oil, IG noted.
The use of CO2 produced from plants like the IG facility and shipped by pipeline to oil-producing states for use in EOR is one of the most promising and innovative energy technologies. In a June 22 study for DOE, the National Coal Council called for the increased capture of CO2 from coal plants and transportation through a national network of pipelines that could boost oil production through EOR by 3.5 millions of barrels a day.
At design, the annual usage would be about 3.85 million tons of Illinois Basin coal, with the possibility of substituting a portion of this with petroleum coke. SNG production would be about 47 million mmBtu (about 38 million mmBtu will be sold to the Indiana Finance Authority). Sulfur in the feedstock will be processed into sulfuric acid, which Indiana Gasification will sell into the industrial market. Heat generated during the gasification process will be used to produce steam for steam turbines that can produce approximately 300 MW to meet essentially all on-site power needs, with utility interconnection for minor power balancing.