SUMMIT PREPARES ROLLOUT OF TWO MORE TX CCS PROJECTS FOLLOWING TCEP MODEL

Tamar Hallerman
GHG Monitor
12/14/12

Seattle-based development company Summit Power Group is planning to announce two new carbon capture, utilization and storage projects in west Texas that will use a business model similar to its Texas Clean Energy Project (TCEP). In a recent interview with GHG Monitor, Summit Chief Commercial Officer Ann Banks confirmed that her company plans on introducing what are internally being called XCEP and YCEP soon after the $2.9 billion TCEP financially closes in the second quarter of 2013.

TCEP is a 340 MW integrated gasification combined cycle plant with pre-combustion capture that is currently slated for a greenfield site west of Odessa, Texas, in the Permian Basin. The project was one of the first to utilize a poly-generation business model, which allows the plant to produce and sell electricity, captured CO2 for enhanced oil recovery operations and urea fertilizer for three separate revenue streams. The model is seen in part as a way to help avoid some of the cost issues that have plagued other IGCC projects in recent years, and other developers have taken note, such as the Massachusetts-based SCS Energy, which is moving forward with a similarly-styled project in southern California.

Summit Continues to Probe Permian Basin for Opportunities

Banks confirmed that Summit will continue pursuing poly-generation IGCC projects in Texas’ Permian Basin due to the region’s plentiful oilfields that demand a substantial amount of CO2 for EOR operations. “If you want to get the maximum price for your CO2 with these kinds of projects, make the logistics simple,” she said. “That’s why we’re also looking at the Permian Basin for XCEP and YCEP, because there’s a pent-up demand for CO2.” Banks said west Texas is a particularly desirable locale for Summit because of the existing infrastructure and the fact that plants could be built in close proximity to depleted oilfields, eliminating the need for long pipelines that can often run as much as $2 million per mile. Banks said Summit would also be able to take advantage of economies of scale from having multiple poly-gen plants located in the same area. “With XCEP and YCEP, we’re trying to leverage the lessons we learned from TCEP to develop more projects,” she added.

Siemens will likely provide the gasifiers for XCEP and YCEP, according to Banks, and Summit hopes to leverage some of the other partnerships forged for TCEP for the two new projects. Banks said that while both new projects will produce electricity and CO2 for EOR, Summit has not yet decided on the additional products XCEP and YCEP will produce with the syngas generated from the plants. The development company is currently in talks with strategic investors, she said, and the results of those discussions will likely determine which additional products are produced at XCEP and YCEP. In addition to producing urea or ammonia for fertilizer, syngas could produce other products such as methanol and plastics. Summit has already looked at several sites in the region and has a short list ready, although final location will also depend on the needs of strategic investors, Banks said. “What we learned is that because it’s a new industry, we need to make sure we have those strategics up front and therefore we’re doing that first on these projects,” she said.

Summit Also Pursuing IGCC Project in Scotland

While Summit moves forward on its Texas ventures, the company is continuing to develop an IGCC project in Scotland known as the Captain Clean Energy Project. Summit announced that project in March when it applied for a slice of the U.K. Department of Energy and Climate Change (DECC)’s £1 billion ($1.6 billion) CCS demonstration funding. Captain, which recently made DECC’s short list of finalist projects last month, aims to build a new 570 MW IGCC plant in central Scotland. Utilizing an existing natural gas pipeline owned by project partner National Grid, Summit said it hopes to transport 3.8 million tons of CO2 annually to a deep saline reservoir in the North Sea, where developers hope to store the emissions temporarily until an offshore EOR industry is developed (previous estimates have indicated that the North Sea has the potential to produce roughly 3 billion additional barrels of oil).

Banks said Summit is not incorporating a poly-gen component into the Captain project, but that much of that loss of potential revenue would be balanced by the fact that the company is looking to harness long-term operational support from the government for the project. Earlier this month, the ruling coalition in Parliament introduced a reform package aimed at overhauling the country’s electricity market. A key component of that legislation is a provision that greenlights feed-in tariffs with contracts for difference for projects that utilize clean energy technologies such as CCS. If that measure passes, as it is expected to early next year, the developers of CCS projects will be able to receive sustained operational support during the lifetime of the project, a perk Banks said could make the economic case for Captain.