Phibro buys, saves Wabash River gasification unit in Indiana

Phibro LLC on May 17 announced that its affiliate, Philipp Brothers Fertilizer, together with a group of investors, have acquired SG Solutions‘ Wabash River facility, which is a coal gasification plant located outside of West Terre Haute, Indiana, that until recently produced synthetic gas and steam to fuel an adjacent power unit owned by the Wabash Valley Power Association.

Phibro said will repurpose the plant to produce ammonia fertilizer for use in the region. Following the conversion, the plant will use petroleum coke sourced from Midwest refineries as a feedstock to produce ammonia, Phibro added.

In the 1990s, the Wabash River power plant’s Unit 1 was repowered, with U.S. Department of Energy funding help, as an integrated gasification combined cycle unit. That unit initially used coal as a feedstock, per the DOE agreement, but has mostly operated since then on cheaper petcoke.

Notable is that Duke Energy Indiana owns the other, conventional coal units at Wabash River, and in April retired Units 2-5 there, while putting Unit 6 on idle while it decides whether to retire it or convert it to burning natural gas. The units were shut due to air emissions limits under the federal Mercury and Air Toxics Standards.

Petcoke is more economical than the natural gas many other ammonia plants use as a feedstock and will enable the plant to offer local farmers more affordable fertilizer, Phibro said. The gasification plant’s clean coal technology allows for repurposing it to a world-scale ammonia production plant. There are very few plants in the U.S. with similar technology, Phibro noted. The acquisition and conversion of the unit, which had been scheduled to be decommissioned, will not only save existing jobs, but also create roughly 100 permanent local manufacturing jobs.

Simon Greenshields, President and Chief Executive Officer of Phibro, said: “We are thrilled to be able to put this plant’s technology, which has outlived its viability in an era of reduced coal fired power generation, to a more productive economic use, manufacturing much needed ammonia fertilizer for the region. This transaction benefits numerous stakeholder groups as it will create and save manufacturing jobs, provide the most affordable fertilizer for farmers in the area and reduce our nation’s reliance on imported ammonia fertilizer. We would like to take this opportunity to thank Mr. Jay Bartlett, C.E.O. of SG Solutions and Wabash Valley Power Association and his entire team for their support and assistance throughout this process. We look forward to commencing work on this project with our partner Quasar Energy Partners.”

The Phibro Group plans to invest approximately $450 million into the plant to convert it to produce ammonia and is targeting a mid-2018 completion date. 

Phibro is an independent new commodity merchant company focused on asset acquisition, project development, and trading. Its principals have deep expertise across commodities including oil and oil products, natural gas, natural gas liquids (NGL), electricity, renewable fuels, fertilizer, and coal.

Duke recently reported the status of Wabash River Units 2-6

The coal-fired Wabash River Units 2-5 in Indiana were retired on April 15 of this year and Unit 6 is currently shut pending a decision whether to retire it or convert it to firing natural gas, said John D. Swez, employed by Duke Energy Carolinas as Director, Generation Dispatch and Operations. Swez routinely supplies fuel cost testimony to the Indiana Utility Regulatory Commission on behalf of Duke Energy Indiana, another Duke Energy (NYSE: DUK) subsidiary. His latest fuel testimony was filed with the commission on April 28.

“As we have previously indicated, Wabash River units 2-5 were retired on April 15, 2016,” Swez wrote. “These units were granted a one-year extension of the April 2015 MATS rule compliance date due to the need for at least two of the four units to operate at any given time for transmission system reliability (in addition to Wabash River Unit 6, which also has a one-year MATS rule extension of time).

“In consideration of the minimization of MATS-related emissions during the extension period and the operational complexities of units at this point in the lifecycle, Duke Energy Indiana employed a MISO offer strategy that prioritized availability and operation of the units to solve transmission reliability constraints. As a result, Duke Energy Indiana generally held two of the four of Wabash River units 2-5 in reserve shutdown available for emergency operation only. The number of units in reserve versus operation varied depending on unit availability, the needs of the  transmission system, and energy prices in the MISO market. Additionally, offer prices on these units were adjusted to reflect these considerations.

“The Company’s goal was to maintain the availability of the generating units primarily for transmission reliability support, and specifically to maintain availability during peak demand times such as summer and winter periods when transmission related events and/or energy prices had the highest customer impact.

“Because these units were not available for the full MISO capacity planning year, Duke Energy Indiana sought and was granted a FERC waiver so that it was not required to offer the units into the MISO resource adequacy capacity market for planning year 2015/2016.

“As discussed, Wabash River Unit 6 had a one-year MATS rule extension until April 15, 2016. Operation on the unit has been suspended at the present time. A decision regarding the future operation of the unit has not been made at this time.”

Lee R. Wilmes, employed by the Wabash Valley Power Association as its Vice President of Power Supply, said in Jan. 21 testimony filed at the Indiana Utility Regulatory Commission about Wabash River #8: “This facility is an approximately 168 MW peaking plant located in Vigo County, Indiana. It is the remaining generation after the retirement of sgSolutions‘ gasification facility and the Wabash River Unit #1 steam turbine. After the retirements, expected in the spring of 2016, the gas turbine Unit #8 will be fueled by natural gas.”

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.