Abby L. Harvey
GHG Monitor
5/2/2014
Contrary to prior reports that the Kemper County Energy Facility was on schedule to begin full operations later this year, the company announced earlier this week that they will be pushing that date back to the first half of 2015. In the monthly Kemper County energy facility project status report Mississippi Power filed with the Mississippi Public Service Commission earlier this week, the reason for the delay is stated to be related to “labor costs and productivity, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, non-performance under construction or other agreements, and/or start-up activities for this “first-of-a-kind” technology, including major equipment failure, system integration, and operations, and/or unforeseen engineering problems.”
In addition to facing $61 million related to construction issues, the company will also face approximately $135 million in costs related to the extension of the expected in-service date. The company will also record a charge to income for this estimated probable loss in the first quarter of 2014 of an additional $380 million pre-tax, but was sure to state they would not attempt to recover this loss from customers. This additional incurred cost brings the total cost of the project to $5.5 billion, a price tag Karl Moore, Senior Vice President at Southern Company, said this week suggests demonstrates the company’s dedication to clean coal technology. “The hallmark of the southeast electric supply system has been low cost, so when a company like Southern Company takes on a project like Kemper and encounters high cost, you can imagine that this gets our attention and we think long and hard about what it is we’re doing and how we’re doing it,” Moore said at the annual CCUS Conference in Pittsburgh earlier this week, just one day before the announcement of the delay.
The plant will begin operation of the combined cycle and associate common facilities portion of the project later this summer, but the gasification system seems to be the major hindrance to the start of full-scale operation. The gasifiers were recently undergoing testing, expected to be complete the weekend of May 10. Extensive testing to ensure that the unit will operate correctly has been an important focus of the company. “When it comes to large scale projects, you have to take your time. You have to know what you’re doing. You have to be patient with large scale technologies, and power plants are complicated things. Power plants that are also chemical plants are incredibly complex and costly,” Moore said.
Regardless of the construction issues noted, until recently Kemper staff appeared optimistic about their ability to bring the plant on-line in the original timeline. At a recent tour of the facility attended by a delegation from Norway, John Huggins, Vice President of Generation Development stated that work at the plant was nearing completion “High level we’ve basically completed the project, except the gasifier and the gas clean up. Combined cycle is done, the waste water treatment plant is finished, I mentioned the mine earlier, lignite delivery facility is done, all of the electrical infrastructure is completed, most of all the site work is done. We’re well underway and our completion plan is to bring both these gasifiers on-line, have reliable syngas in late summer, working toward a commercial operation date fourth quarter this year.”
Moore stated that he doesn’t believe a “Kemper 2” will be built in the U.S. in the next decade, stating that, while America is the ideal location for such development to take place, there are large hurdles to be overcome. “If we can get ahead of the curve and develop the technology and the applications and learn how to utilize this equipment we’ll be happy to share it. We’ll be happy to share it and we’ll be happy to apply it both from an IP standpoint and from an engineering and construction standpoint and share that technology with the world. We’ve made that very, very clear that letting us take the lead in developing the technology is fine, the question is, will we get an opportunity to do that? … America’s chance to lead on this issue is great. The economic benefit associate with being now newly enriched with oil and gas resources is remarkable and the question is, will we use the moment that we have to develop a set of technologies that are good, not only for us, but also for the world. The world is waiting to see if we are capable of doing that. We recognize the challenges. The simple truth is, outside of a few unique circumstances around the United States, it isn’t likely that there will be a Kemper 2 built in North America in the next decade.”
