AT THE MAJOR CCS PROJECTS: KEMPER, DECATUR

Tamar Hallerman
GHG Monitor
11/30/12

AT KEMPER: TWO REPORTS CONTEST STATE OF PROJECT’S PROGRESS

Two reports released in as many weeks have contested the level of progress Mississippi Power has reported in recent months on its Kemper County Integrated Gasification Combined Cycle project. Both analyses—one commissioned by project opponent the Sierra Club and the other by an independent monitor hired by a state agency overseeing Kemper—contradict recent claims made by Mississippi Power and its parent operation, Southern Company, that the 582 MW carbon capture and storage project is on schedule and on budget. During Southern Company’s most recent earnings call with investors earlier this month, the utility’s president and CEO said that construction on the pre-combustion CCS facility is roughly 70 percent complete and that the project is expected come online on time in May 2014 at or below Kemper’s $2.88 billion cost cap.

However last week the Mississippi chapter of Sierra Club released a study it commissioned on Kemper from the Institute for Energy Economics and Financial Analysis that concluded that construction on the IGCC facility is only about 40 to 45 percent complete. Relying mainly on progress reports from URS Corp., the project’s independent monitor appointed by the state’s Public Service Commission, the analysis rejects claims from the utility that efforts to rely on night shifts and other construction workarounds have been effective in saving time. The report highlights the “significant uncertainties” in construction and planned operations schedule, underscoring the fact that any delays in construction could translate to cost increases for the utility’s nearly 200,000 ratepayers. “The evidence shows that Mississippi Power’s plant is more expensive, and is taking substantially longer to complete, than originally planned for by the company and the Public Service Commission,” head author David Schlissel said in an accompanying statement. The report estimates that once construction delays and other side costs such as the project’s CO2 pipeline, adjacent lignite mine and financing costs are incorporated into the equation, Kemper will cost ratepayers somewhere in the neighborhood of $3.62 billion.

In a subsequent statement to the media, Mississippi Power called the $3.62 billion figure “simply wrong” and dismissed it as an attempt to “mislead” Mississippi citizens about the project. “This figure includes not only the cost of this state-of-the-art clean-coal generating facility, the Sierra Club has additionally added in the cost of the Mississippi coal mine that will supply fuel to the plant and the cost of facilities designed to actually reduce the operating costs of the plant and environmental emissions,” the utility said, defending its previous estimate that construction is more than 70 percent complete and on schedule. “We are going to complete this plant and operate it in a manner that keeps cost affordable for our customers.”

Independent Monitor Report Also Questions Kemper’s Progress

The Sierra Club this week also highlighted another project analysis from the firm Burns and Roe Engineering, another independent monitor for the project hired by the Mississippi Public Utilities Staff, a state agency separate from the Public Service Commission. That report, filed Nov. 26, estimates that the project will come online roughly six months behind schedule and that it will likely cost ratepayers at least $3 billion. The report also does not confirm Mississippi Power’s estimate that the plant is 70 percent complete. It estimates that there is a “low probability” that the May 2014 deadline can be achieved “unless all of the specific construction work-arounds are implemented, and future unforeseen delays or difficulties are effectively addressed.”

The Burns and Roe report also concludes that the project’s EPC contractor “is not utilizing some basic project management and project controls tools and techniques that are available and customarily used in the industry for a project of this magnitude.” In an accompanying statement, Director of the Mississippi Sierra Club Louie Miller questioned the construction management techniques used at the project. “By failing to use basic project management practices, Mississippi Power is ignoring the most important tools to track and control costs. Why?” Southern Company defended the Kemper project in a response provided to GHG Monitor. “Mississippi Power remains confident and recently confirmed its cost and schedule projections for the Kemper County energy facility. Burns and Roe, the Mississippi Public Utilities Staff’s monitoring firm, filed a report based on their beliefs and assumptions,” the utility said. “The project is creating jobs and will provide low-cost electricity to benefit Mississippi Power customers for decades.”

AT DECATUR: PROJECT HAS INJECTED 317,000 TONS CO2 TO DATE, DOE SAYS

More than a year after injection operations began at the Midwest Geological Sequestration Consortium’s carbon storage project in Decatur, Ill., researchers have piped roughly 317,000 metric tons of CO2 into the subsurface, according to the Department of Energy. With a daily injection rate of 1,000 metric tons, this means that the project, led by the Illinois State Geological Survey, has completed about one-third of its planned injection volume into the Mount Simon sandstone reservoir. The project is injecting the CO2, which is captured from an adjacent Archer Daniels Midland ethanol production facility and subsequently compressed into a supercritical state, into the deep saline aquifer. Operations will eventually coincide with a larger-scale injection project being sponsored by DOE’s Industrial Carbon Capture and Storage program that will capture CO2 from the same ethanol facility an pump it into the same formation.

DOE Assistant Secretary for Fossil Energy Chuck McConnell touted the project’s progress to date. “The work has been performed safely and with operational discipline to assure flawless performance; the volumes of CO2 injected have been measured, monitored, verified and accounted for; and we remain confident that the injected CO2 has been and will be safely and permanently stored,” he said in a statement last week.

DOE Looking to Test Illinois Basin’s Storage Potential

The project is aimed at ultimately testing the storage potential of the 60,000 square mile Illinois Basin, which stretches throughout much of Illinois, southwest Indiana and western Kentucky. Geologists have estimated that the formation could store tens of billions of tons of CO2. DOE estimated that the area emits more than 291 million metric tons of CO2 annually. “The results from various monitoring activities—including tracking the underground CO2 plume; sensing subsurface disturbances; and continuous scrutiny of groundwater, shallow subsurface, land surface and atmosphere around the injection site—show the Mount Simon Sandstone reservoir is performing as expected, with very good injectivity, excellent storage capacity and no significant adverse environmental issues,” DOE said.