Karen Frantz
GHG Monitor
1/31/2014
Southern Company is setting aside an additional $40 million dollars to increase the contingency for risks associated with start-up activities of its flagship Kemper County IGCC project—the cost of which has already risen to more than $5 billion dollars—the company’s Chairman, President and CEO Tom Fanning said on a call with investors this week. “Recognizing that there are risks associated with startup activities, we have recorded an additional charge for the project of $40 million pre-tax—$25 million after tax—in the fourth quarter of 2013 to increase the contingency for those risks,” Fanning said while presenting Southern Company’s figures for the fourth quarter of 2013. However, Fanning said the project is continuing to make progress and Southern Company still expects an in-service date of the end of this year.
“During 2013, the transmission infrastructure was completed, the pipelines were all completed, and the lignite mine was placed into service,” Fanning said. “At this stage, more than 75 percent of the piping has been installed and testing of the combined cycle is underway. In fact, we produced electricity using natural gas throughout most of January, generating approximately $1 million to offset project costs. We will move towards testing of the gasifier in the second quarter, which will mark the first heat up of a gasifier at the facility. The key milestone expected prior to commercial operations is a reliable supply of syngas to the combined cycle. … Overall, we continue to anticipate that … Kemper County will benefit customers with clean, safe, reliable and affordable energy for decades to come.”
Kemper is expected to become the nation’s first large-scale power generation plant to install and operate CCS technology, with the help of a $270 million Department of Energy grant. Southern plans on capturing 65 percent of CO2 emissions from the lignite-fired facility and transporting that 3.5 million tonnes of CO2 via Denbury Resource’s existing Green Pipeline to a depleted oil field owned by the oil and gas giant south of Houston for enhanced oil recovery operations.
