Southern expects initial Kemper syngas power production this summer

Despite the ongoing headaches involved with the project, Southern (NYSE:SO) Chairman and CEO Tom Fanning expects to start generating power from gasified coal this summer at an advanced Mississippi Power plant.

Fanning made the comments during a quarterly earnings call April 27 in connection with the 582-MW Kemper County Integrated Gasification Combined Cycle (IGCC) project.

“We expect to achieve full syngas production” this month and power production using syngas this summer, Fanning told financial analysts.

Southern earnings for the first quarter include after-tax charges of $33m, or 4 cents per share, related to an increased cost estimate for the construction of the Kemper IGCC.

The project will gasify local Mississippi lignite coal to generate electricity and also capture carbon dioxide (CO2) emissions. The combined-cycle natural gas portion of the plant is already operational.

In 2015 the plant already proved its ability to generate electricity with natural gas. So it provides a dual fuel capability, Fanning said.

The “refractory” repairs at Kemper have taken longer than anticipated. “We still believe that we will have syngas and ultimately electricity this summer,” Fanning said. The CEO explained that the repairs have been “time-intensive.”

The lignite is essentially 40% moisture. “One of the cool environmental aspects of this plant is that it actually produces water,” Fanning said.

Southern management also updated the financial community on progress on the company’s other major infrastructure project, the Vogtle 3 and 4 nuclear units being developed by Georgia Power and its partners.

The transition to Westinghouse Electric as the single lead contractor is complete, Fanning said. During the third quarter, workers place concrete in the shield building and installed component cooling water pumps at Unit 3. At Unit 4, concrete was placed for the roof slab of the turbine building and construction started on the annex building.

Southern reduces coal reliance; works on acquisitions

The Southern energy mix for the first quarter of 2016 was 50% natural gas; 25 coal, 17% nuclear and 8% hydro and “other.”

Compare that to the first quarter of 2015 when the Southern energy mix was 48% natural gas; 32% coal; 16% nuclear and 4% hydro and other.

Coal dipped 7% year-on-year, according to the Southern earnings materials.

On other issues:

  • The Georgia Public Service Commission could vote this summer on the Georgia Power integrated resource plan. Georgia Power is among the first utilities in the Southeast to offer green bonds.
  • CFO Art Beattie said the Southern regional economy continues to outpace the national economy. “All four of our states posted manufacturing job gains.”
  • AGL Resources (NYSE:AGL) stockholders and the Federal Trade Commission have approved the AGL merger. Southern continues to expect that deal to close in the second half of this year, Fanning said. Georgia has already approved the AGL transaction, as have California and Virginia. Final approval in Maryland could come within days.
  • Non-utility subsidiary Southern Power could be looking more at wind power projects in the near future as states consider their compliance options for the Clean Power Plan, Fanning said.
About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.