Lima Energy gets extension to September 2014 to build gasification plant

Lima Energy, a unit of USA Synthetic Fuel, has gotten an extra couple of years, until September 2014, to build its long-delayed Lima Energy gasification project at Allen County, Ohio.

The Ohio Power Siting Board on July 30 granted an extension of a deadline under a site permit for this project that it first approved in 2002. Under the 2002 approval, the company needed to untertake a “continuous course of construction” within five years, which extended until May 2007. Lima Energy did start construction in 2005, by the deadline, but halted it when the company ran out of money. Thus, the issue with its apparent lack of “continuous” construction.

On Jan. 25, the board gave Lima Energy until Feb. 7 to file an application requesting an extension of the certificate to construct or it would be recommended to the board that the certificate be found invalid. On Feb. 6, Lima Energy filed a motion requesting that the board extend its certificate to construct for 30 months, until Sept. 1, 2014.

Lima Energy said it continued with the design-build development and engineering efforts while continuing to pursue financing. “Lima Energy asserts that the delays on the project are the result of the withdrawal of financial support for gasification technology since the economic downturn of 2007,” the board noted. “Since that time, the parent company of Lima Energy transferred Lima Energy to a new public company, USA Synthetic Fuel Corporation, which the Company contends will increase financing opportunities for the project. The Company also offers that, in April of 2010, the project renewed its bond resolution for bonds it plans to place in the coming year. Lima Energy notes that other projects, which were necessary for the flow of traffic in the area of the project and to meet the water requirements of the project, have recently been completed by the city of Lima. For these reasons, Lima Energy requests an extension of the certificate.”

The company later filed an update with the board on the status of the electric grid interconnection for the project, stating that it will initiate a completely new interconnection application with PJM Interconnection LLC (PJM) when funding is available, which is anticipated in the second half of 2012.

With regard to the Ohio Environmental Protection Agency (OEPA) air permit to install for this project, the company estimated that it will need two months to draft a new permit application for submission to OEPA.

Lima Energy said it believes it is still within the five-year continuous course of construction window, due to the fact that the engineering and project finance efforts continued into 2010 and 2011. However, it acknowledged that this window is coming to an end. The company further agrees that, since it has developed an agreement with a customer to deliver synthetic natural gas once the plant is complete, it will need two months to prepare and file an application to amend its certificate in order to account for additional gasification capacity and processing.

Based on the company’s assertions, the board ruled that Lima Energy’s certificate to construct the proposed facility should be extended until Sept. 1, 2014. The board ordered the company to file information in these dockets by Aug. 1, 2013, to update the information filed on June 20.

Lima plans to burn regular natural gas in its power plant

With the recent decline in natural gas prices, Lima Energy said in the June 20 update that it is now looking at this project to ultimately produce ultra clean synthetic liquids, like diesel or jet fuels, instead of synthetic natural gas (SNG) for the gas pipeline market. Lima Energy Project Director Dwight Lockwood noted that the catalytic process for the liquid fuels is similar enough to the SNG process that no major issues are involved with the product switch. Like with the SNG version of the project, CO2 capture and sequestration is planned and would mean the plant has similar CO2 emissions characteristics as oil refining. Biomass could also be added to the plant feedstock to minimize greenhouse gas emissions. The main feedstock for the plant would still be petroleum coke, with high-sulfur coal also an viable option, Lockwood said.

The original Lima Energy project was going to be a 540-MW integrated gasification combined cycle power plant. Then there was a switch to SNG, with the gasification-based power plant still held out as a possibility down the road in a next phase of the project.

The company said in the June 20 update that with project financing still tight due to the 2008 recession, there will be three phases to this project over time.

  • Phase 1 will consist of one gasifier designed to produce about 6,000 barrels of synthetic liquids per day.
  • Phase 2 would be three more gasifiers (two operating and one spare) that would produce 15,000 barrels per day of synthetic liquids. Phase 2 could start construction after Phase 1 is built, or construction of the two phases could overlap. Phase 2 will let the Phase 1 gasifier run more continuously, bringing the combined product yield for both phases to 22,000 barrels of liquids per day.
  • Phase 3 is currently expected to be a natural gas-fueled 2X1 combined cycle unit with 515 MW (gross) of capacity. The fuel for Phase 3 would be regular pipeline natural gas, not SNG, so the company can take advantage of cheap natural gas prices.
About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.