HECA’S REGULATORY APPROVAL SCHEDULE SLIPS SLIGHTLY

Tamar Hallerman
GHG Monitor
5/10/13

Permitting activity surrounding the planned Hydrogen Energy California (HECA) gasification project will heat up this month as public hearings continue and state and federal regulators prepare to issue draft assessments of the $3.9 billion poly-generation plant. State regulators on the California Energy Commission are expected to release their preliminary staff assessment of the project later this month, as is the U.S. Department of Energy with its draft environmental impact statement (EIS), according to HECA spokeswoman Tiffany Rau. Those dates are a bit delayed from a previously-issued project timeline, which had planned for the staff assessment and draft EIS to be released in March, with evidentiary hearings and a final CEC decision and EIS later this summer. Rau said the slight delay appears to be driven by efforts to coordinate a review from multiple state, federal and local agencies. “We are focusing all of our resources on continuing to move the project forward and we look forward to the next milestones,” Rau said.

The CEC is in the process of determining whether the 390 MW new-build IGCC project should earn a permission to construct permit from the state. DOE’s eventual determination in its final EIS will help inform the Department’s decision about whether to give the project access to its $408 million federal grant from the stimulus bill. Project developer SCS Energy received a ‘preliminary determination of compliance’ from the San Joaquin Valley Air Pollution Control District for HECA in February and has since held two air district hearings. SCS said it is holding an additional public hearing next week in Buttonwillow, Calif.

In addition to permitting, SCS also continues to move forward simultaneously on other fronts for the project, Rau said. Project officials must still secure financing for the venture—no small task given the sizable price tag and the troubles similar projects have faced in the recent past—as well as negotiate a power purchase agreement with the California Public Utilities Commission. The project’s CO2 offtaker, Occidental Petroleum Corp., is also gearing up to apply for CO2 injection permits with the state. Front-end engineering and design work is expected to wrap up in the coming months. “The challenge of this important and complex project is in bringing all of the various elements together to a timely close,” Rau said. 

SCS Reapplied for HECA Permit

SCS Energy has been moving forward with that permitting process for the better part of a year. The Massachusetts-based developer resubmitted HECA’s permit application with the state last year after major design changes to the project’s design were enacted following an ownership change. After taking over the project from BP and Rio Tinto, SCS added a poly-generation component to the previous IGCC design, incorporating urea fertilizer production in addition to plans to capture and sell 3 million tonnes of CO2 annually for EOR. SCS also decided to pursue a ‘dispatchability’ component for HECA, which allows a portion of the electricity produced at the plant to be ramped up or down as needed in order to meet seasonal electricity demand.

SCS officials told GHG Monitor in February that they hoped to achieve financial close on the Kern County, Calif. project by the end of the calendar year and commence construction in early 2014. Rau said she does not expect the slight slip in schedule to cause a project delay in the long run. In an interview earlier this year, SCS Energy CEO Jim Croyle said he was confident that the project could stay on schedule moving forward. “These projects are large and complex and must navigate regulatory frameworks that at are times unpredictable,” he said in February. “I think the current schedule we have for the project is realistic. Could it be delayed? Of course. But over the last year our schedule has only slipped by about six weeks, so we’ve been relatively pleased in terms of timing and schedule.”