Summit Power Group LLC, which hadn’t said much lately about its coal gasification power project in Texas, announced July 11 that there has been major progress on the Texas Clean Energy Project (TCEP).
During the 6th round of the U.S.-China Strategic and Economic Dialogue in Beijing, Summit said it signed two significant agreements that introduced a major new project participant for the project and created a second, historic alliance between TCEP and China’s cleanest fossil fuel power plant: China Huaneng’s GreenGen.
The milestones were announced over three days in conjunction with the meeting’s U.S.-China Climate Change Working Group CCUS initiative.
On July 8, Summit Power Group’s TCEP and Huaneng’s Clean Energy Research Institute (CERI) were identified at a press conference as the first of several “counter-facing project arrangements” endorsed by the two countries and tasked with cutting greenhouse gases. The signing ceremony for all the projects was overseen by key U.S. and Chinese government officials.
TCEP, a large scale commercial coal gasification power/polygen project that Summit is developing near Odessa, Texas, will capture 90% of its CO2 for use in enhanced oil recovery (EOR) by producers in the Permian Basin of West Texas. This will boost U.S. oil production by about 6 million barrels per year. TCEP will also produce more than 900,000 tons/year of urea as fertilizer for U.S. farmers and a long-term, 200-MW supply of ultra-clean and low-carbon power.
China Huaneng Group, which is the largest power generation company in China with 143 GW of total installed capacity, built China’s 250-MW IGCC plant, called GreenGen, just outside of Beijing, with the intention of adding a carbon capture component in the project’s Phase 2. GreenGen uses a combustion turbine manufactured by Siemens, which has been a longtime lead contractor on Summit’s TCEP project and the provider of TCEP’s gasifiers and combustion turbine.
“TCEP is a key part of the U.S. CCUS [carbon capture, utilization and storage] portfolio, and DOE has invested $450 million into the project,” stated DOE Principal Deputy Assistant Secretary of the Office of Fossil Energy Christopher Smith, in a July 3 letter to China’s National Energy Administration Deputy Administrator Zhang Yuqing.
Under the counter-facing project arrangement, Summit Power and Huaneng will help each other in the planning and operation of TCEP and Phase 2 of GreenGen by sharing non-proprietary information and results from these projects. Huaneng will also assist Summit Power in the commissioning of the TCEP plant.
Summit lines up Chinese firm for Texas work
In a second signing ceremony on July 10, Summit entered into a Memorandum of Understanding (MOU) with China Huanqui Contracting & Engineering Corp. (HQC) as a follow up to a contract signed between the parties two weeks before for HQC to provide engineering services to the TCEP project. HQC was brought into the project several months ago to review project costs, which had risen sharply in 2013 as a result of high construction costs in Texas due to the current oil and gas boom.
Under the new formal arrangement, HQC, Siemens, Summit and its owner’s engineer, CH2MHill, began an update of the project’s design to include recent gasifier and combustion turbine improvements from Siemens. Based on those improvements, HQC will revisit the front-end engineering and design (FEED) work previously undertaken by TCEP’s partners and will further optimize the project’s configuration based on the technology improvements.
HQC and Siemens will also perform value engineering on the project to find additional areas of savings. When the FEED update is completed in a few months, it is expected that HQC and Siemens will serve as the major engineering, procurement and construction (EPC) contractors for the project during its construction phase.
HQC, which is headquartered in Beijing and is a subsidiary of China National Petroleum Corp. (CNPC), has performed consultation, engineering, construction and EPC contracting for over 2,000 cross-industry, large- and medium-scale domestic and overseas projects for more than 50 years. For the TCEP project, HQC has retained Technip, a publicly traded French company that provides project management, engineering and construction services for the oil and gas industry in 48 countries.
The Export-Import Bank of China (Chexim) remains a key supporter of the project and, as it committed to do in September 2012, will be the financial lender to TCEP, subject to completion of an EPC contract between TCEP’s partners and Chexim’s customary due diligence.
The partnership arrangement between Summit and Huaneng will include an emphasis on EOR since Huaneng also intends to use all of GreenGen’s captured carbon dioxide for EOR, which is an emerging technology for China.
The total cost of TCEP will be approximately $2.5bn. Of this amount, $450m will be provided by a cost-sharing award announced in 2010 under DOE’s Clean Coal Power Initiative (CCPI).
“TCEP is an American project that will create products and jobs for the U.S. market using U.S. construction workers,” said Summit Power Group President and CEO Eric Redman. “But it is a project of global importance and its design and financing are truly international, drawing upon U.S., German, French, and other entities, including key engineering and financing participants from China, where similar projects have already been built. This week in Beijing has provided an opportunity for both the U.S. and Chinese governments to reaffirm their determination to work with one another and TCEP’s international team to assure that TCEP gets financed and built.”