Hydrogen-Fueled Integrated Gasification Combined-Cycle Power Project Proceeds in California

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--The world's first commercial-scale, hydrogen-fueled integrated gasification combined cycle (IGCC) power plant with carbon capture and sequestration (CCS) took another step forward last month, after a supportive preliminary staff assessment from the California Energy Commission (CEC).

The power plant will have a design capacity of 400 megawatts (MW), but after the paracitic load from all the gasifiers, and CCS equipment it will generate 250MW net to the grid. Hydrogen Energy California (HECA), is owned by Hydrogen Energy International LLC (Long Beach, California), a 50:50 joint venture between mining giant Rio Tinto plc (NYSE:RTP) (London, England) and energy conglomerate BP plc (NYSE:BP) (London). Located in Tupman, California, seven miles west of Bakersfield, HECA will cost an estimated $2.5 billion to build. Proposed in 2009, HECA also received a grant of up to $308 million last year by the U.S. Department of Energy's Clean Coal Power Initiative, lowering the owners' cost to about $2 billion.

This project has a number of unusual aspects. Located near the Elk Hills oil field in Kern County, California, HECA will gasify petroleum coke and coal, turning it into hydrogen while removing the carbon dioxide. The CO2 will be compressed and transported by pipeline about four miles to the Kern County enhanced oil recovery (EOR) projects operated by Occidental Petroleum Corporation (NYSE:OXY) (Los Angeles, California). The hydrogen will be burned to generate electricity. HECA officials estimated that the pre-combustion CCS technology will capture 90% of CO2 emissions.

HECA spokesman Jordan Feilders said this project would be the world's first commercial-scale, hydrogen-fueled IGCC with CCS: "There are several demonstration projects that use hydrogen, but nothing that is commercial-scale."

By locating the project near the oilfields of Kern County, HECA will have ready access to petroleum coke, a residual product from nearby oil refineries. Today, that pet-coke is trucked from refineries to ports to be loaded onto ships for export to other nations. A nearby rail line also can bring in Western low-sulfur coal for the plant. HECA plans to build the plant on 473 acres of agricultural land. The project is expected to preserve limited local fresh water resources by using non-potable, brackish ground water supplied by a local agricultural water district. "Currently the water's poor quality and shallow location negatively impact local agricultural activity," the project's website said. "Process wastewater will be treated on site and recycled within the gasification and power plant systems."

General Electric Company (NYSE:GE) (Fairfield, Connecticut) is providing the project's gasification and turbine equipment. Fluor Corporation (NYSE:FLR) (Irving, Texas) is performing front-end engineering and design (FEED), which should be complete late next year. An EPC Firm will most likely be selected by late next year. Assuming all permits are received, a three-year construction period could begin in early 2012, and the project could begin commercial operations in early 2016. Building HECA would create up to 1,500 construction jobs, and once operational, 100 permanent staff would be created.

HECA estimates that its project could sequester up to 2 million tons of CO2 per year in EOR projects, which would also spur an increase in domestic oil production. HECA's Feilders told Industrial Info Resources that Kern County has "the best geology for sequestering CO2 in the country." He noted that there is a dome-shaped sandstone formation about 6,000 feet underground, with layers of cap rock atop it.

Feilders said that HECA is currently negotiating purchase-power contracts with California's investor-owned utilities: Southern California Edison Company, a unit of Edison International (NYSE:EIX) (Rosemead, California); Pacific Gas & Electric Company, a unit of PG&E Corporation (NYSE:PCG) (San Francisco, California); and San Diego Gas & Electric Company, a division of Sempra Energy (NYSE:SRE) (San Diego, California). He said he expects negotiations to conclude by mid-2011.

HECA officials were encouraged by a positive preliminary assessment last month by the staff of the California Energy Commission. That preliminary assessment found that, with certain mitigation measures, the project would have no direct, indirect, or cumulative adverse environmental impacts on air-quality, geology and paleontology or public health. In a separate assessment, due to be released in October, the CEC staff will weigh HECA's impact on local biological resources, cultural resources, soil and water resources, visual resources, land use and waste management.

Several California officials, including Governor Arnold Schwarzenegger and Michael Peavey, the president of the California Public Utilities Commission, have supported establishing at least one large-scale CCS project in California by 2020 to help the state attain its aggressive clean-energy and environmental-protection goals.

The HECA plant will produce nitrogen oxide (NOx), a precursor of ozone, in an area that is already not meeting federal ozone requirements. The plant's NOx emissions would be about double the allowable NOx emissions from a natural gas generator. However, HECA officials told "The Fresno Bee" that they are willing to offset the excess pollution by paying $681,262 to help farmers in the area replace old tractors and polluting water pump motors. The money also could be used for such projects as replacing old school buses in nearby towns, such as Tupman or Buttonwillow.

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