The staff of the Ohio Power Siting Board on Feb. 23 filed with the board a report and a series of recommendations related to a 2014 amendment application on a long-delayed and much-altered petroleum coke/coal gasification project of Lima Energy to be built in the city of Lima in Allen County.
The current project applicant is American Future Fuels Corp. (f/k/a Lima Energy), which filed this second amendment application in June 2014.
Said the staff report: :As originally proposed by the Applicant (00-0513-EL-BGN), the project was designed as an integrated gasification combined cycle electric generating facility. The facility was to be located in Lima, Ohio, on a roughly triangular 63.7 acre industrial brownfield property that was formerly the location of Lima Locomotive Works. The site was located within a 200-acre region designated by the City of Lima as Liberty Commons Industrial Park.
“The certificated project was to consist of a gasification facility and a gas-fired combined cycle electric generation facility. The gasification facility would produce a synthetic gas from a feedstock of briquettes that would consist of a mixture of coal and municipal waste product. The synthetic gas would be used as fuel for the gas-fired combined cycle electric generation facility, which would have consisted of two General Electric 7FA combustion turbine generators and one steam turbine generator. The electrical generation capability of the combined cycle electric generation facility was to be 580 megawatts (MW), with up to 520 MW net being available for export to the electric grid.
“In the first amendment application (04-1011-EL-BGA), the Applicant proposed to revise the technology to be used to manufacture synthetic gas from a fixed bed slagging gasifier technology to a slurry-fed, entrained flow, slagging gasification technology. The feedstock for the gasifier would be changed to a carbonaceous slurry produced from either coal or petroleum coke. This change in technology was expected to increase the production of synthetic gas and the production of steam. The additional steam would be used to power a larger steam turbine generator. As a result, gross electrical output was expected to increase to 657 MW, with up to 541 MW net being available for export to the grid.
“Construction of the proposed facility did not get underway until late 2005. At that time, the Applicant constructed the foundation for the feedstock storage facility and began demolition of existing buildings and concrete infrastructure. These activities continued through 2006. In late 2012, the Applicant continued with removal and crushing of existing concrete and brick infrastructure and material. These activities continued through 2013, and were observed by Staff at a June 2013 site visit. At the time of Staff’s June 2015 site visit, concrete removal and crushing activities had ceased, but additional concrete materials remained that would need to be removed prior to continuing with construction of the facility.
“On June 25, 2015, Lima Energy Company and American Future Fuels Corporation filed a joint application to transfer the existing certificate and amendments to American Future Fuels Corporation. On August 27, 2015, the Board issued an entry approving the joint application. Application Description
“With this amendment application, the Applicant is proposing significant modifications to the facility that was previously certificated by the Board. The Applicant no longer intends to produce synthetic gas for use as fuel in a combined cycle electric generation facility. The project as currently proposed by the Applicant involves the addition of a Fischer-Tropsch technology that would be used by the revised facility to convert its synthetic gas to an ultra clean synthetic crude product. Rather than use this product as fuel, the product would be sold.
“The process of converting the synthetic gas to a liquid product is highly exothermic. The waste heat from this process, and waste heat from the gasification process, would be used as the sole energy sources for electricity production in the initial stages of the newly proposed facility. The waste heat would be used to generate steam, and the steam would be used in a steam turbine generator to generate electricity.
“As proposed by the Applicant, the revised facility would be developed in three phases. The Applicant proposed to begin procurement and construction activities for the initial phase of the revised facility as early as the 4th quarter 2015.
“This initial phase would include an ultra clean synthetic crude production process consisting of two slurry-fed entrained flow gasifiers, two air separation units, a synthetic gas purification train, gas to liquids conversion units, a waste heat recovery system, and other associated equipment. Waste heat recovered from the ultra clean synthetic crude production process would be used to generate steam that would power a steam turbine generator. The Applicant estimates that electrical production capability associated with the first phase would be approximately 120 MW. However, the steam turbine generator would be sized for steam output from both the first and second phases of the revised facility, at approximately 250 MW. The Applicant believes that the electrical production capability of the facility during this phase of project development could be entirely consumed on site, largely through the operation of the air separation units. However, optimization of facility operations by the Applicant could result in excess electricity production capability, and the Applicant intends to export any such excess electricity onto the electric grid.
“The second phase of the revised facility would be a duplicate of the first phase, essentially doubling the product capacity and the electrical generation output of the facility at that time. Procurement and construction activities for this phase are projected by the Applicant to start in the first quarter of 2019. The Applicant anticipates that electricity production would be in excess of the needs of the revised facility when this phase becomes operational, and the excess electricity would be exported onto the electric grid.
“The third phase of the revised facility would consist of a stand alone 525 MW natural gas-fired combined cycle electric generating facility, consisting of two natural gas-fired electric generating turbines and a steam turbine electric generator. Procurement and construction activities for this phase are projected by the Applicant to begin in the 4th quarter of 2021. This phase of the project would essentially be the same style of electric generating facility (i.e., gas-fired combined cycle) as approved in the original certificate issued in case number 00-513-EL-BGN, with the exception that it would be fueled by natural gas rather than synthetic gas.”
Staff says second project needs to go through its own proceeding
“With this amendment, the Applicant proposes significant revisions to its originally certificated facility,” said the report. “In Staff’s view, the proposed amendment actually consists of two distinct proposed projects. The first proposed project, to be developed in two phases, is the Applicant’s intended production of ultra clean synthetic crude and the concomitant utilization of waste heat associated with the production process to generate electricity. Although not identical, this first project has significant similarities with the originally proposed facility, with the exception that it would not make use of gas-fired combustion turbine generators.
“In the second proposed project, the Applicant proposes to construct a standard combined cycle combustion turbine generating facility. The Applicant expects procurement and construction of this project to commence in the 4th quarter of 2021, although this date is subject to future adjustment.
“This project, although similar in function to the originally certificated facility, would not be reliant upon the waste heat produced from the ultra clean synthetic crude projection process, nor the product resulting from that process, for the generation of electricity. For these reasons, Staff views this amendment application to be more than just an amendment to a certificated facility. The first proposed project (in two phases) does actually propose to amend the facility that was originally certificated by the Board, by using the synthetic gas to produce a sellable product (synthetic crude) rather than using it as fuel in combustion turbine generators.
“However, the second proposed project is actually an independent project. As such, it should be presented to the Board as a separate filing, not as part of this amendment. Further, the sole purpose of the second proposed project is to generate electricity for export to the electric grid, but the Applicant has not yet initiated the necessary studies with PJM Interconnection in order to accomplish this.
“Additionally, the second project was presented to the Board in this amendment application more than five years in advance of the anticipated construction start date, which is not in compliance with §4906.06(A)(6), of the Ohio Revised Code. Therefore, Staff recommends that, in its order on this proposed amendment, the Board not certify the independent combined cycle combustion turbine generator portion of the amendment. Rather, the Board should indicate that, if the Applicant desires to pursue the construction of that segment of the proposed amendment, it should timely file an appropriate application with the Board.”
Report outlines issues with grid, gas pipeline connections
Staff said that previously, the developer obtained an interconnection agreement with American Electric Power (NYSE: AEP). “However, this agreement is no longer applicable, and the Applicant has not yet commenced an ongoing process to obtain a new agreement with PJM, the regional transmission organization that currently is charged with managing the regional transmission system and wholesale electricity market. As proposed by the Applicant, the facility would have the potential to generate excess electricity that the Applicant would intend to export to the electric grid. However, because the Applicant’s grid export plans have not been reviewed by PJM, any potential impacts associated with such exports are unknown at this time.
“Staff, therefore, recommends that, in its order on this proposed amendment, the Board prohibit the export of any power from the facility to the electric grid. Further, if the Applicant desires to export power to the electric grid, the Applicant first should initiate all necessary PJM procedures for review of such export plans, and after obtaining appropriate PJM approvals, file an amendment request for the Board to review the Applicant’s grid interconnection proposals at that time.
“The facility would require approximately 4 million cubic foot per day (MMCFD) for operation of the first proposed project. Gas consumption would be significantly greater than this for the second project, at approximately 84 MMCFD. As of the date of filing this staff report, the Applicant had not solicited service/capacity requests from the local area natural gas suppliers. Staff inquired with local natural gas suppliers about the capacity of their existing pipelines to serve the proposed facility. Suppliers indicated that it would be feasible to supply natural gas to phases 1 and 2 through mainline extensions to the facility and other incremental pipeline upgrades. Service to phase 3 would require an additional pipeline extension, a pipeline pressure adjustment, and further study.
“A specific route for a natural gas interconnection pipeline has not yet been determined. Staff would review the environmental impacts of the gas pipeline under a separate filing to the Board, if such pipeline would be of a jurisdictional size and pressure. Staff believes that the original conditions of the certificate, specifically conditions 13 and 24 adequately address gas pipeline interconnection and upgrades to the local natural gas system.”
Staff recommended these conditions:
- The company needs to construct and operate the first proposed project in conformance with the application, as modified and/or clarified by the applicant’s supplemental filings and by the recommendations in this Staff Report of Investigation, and in such a manner as to assure that it will not export power to the electric grid.
- The applicant shall not construct any structures or facilities that would solely be necessary as part of the second proposed project, the natural gas-fired combined cycle electric generating facility.
- The applicant shall submit requests for review by the Federal Aviation Administration and the Ohio Department of Transportation Office of Aviation and submit a copy of any determination letters to staff prior to commencement of construction.
- The conditions required by the board in the initial application (00-513-EL-BGN), as modified by the board’s requirements in the first amendment application (04-1011-EL-BGA), continue to apply to the project, except as modified by the additional conditions resulting from this second amendment application (14-1142-EL-BGA).