Southern Company: Coal Gasification Project to Produce First Syngas in Fourth-Quarter 2015

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Southern Company (NYSE:SO) (Atlanta, Georgia) expects the Kemper County integrated gasification combined cycle (IGCC) generator project in Mississippi to produce its first synthetic gas from lignite coal in the fourth quarter this year, company executives said Wednesday. The plant is expected to begin operating full time in the first half of 2016. Industrial Info is tracking $25 billion in active Southern Company projects. Fifty-five of these projects, including the Kemper County IGCC, are in the construction phases.

Chief Executive Officer Thomas Fanning gave an overview of Southern Company's major capital projects during the company's earnings conference call with investment analysts. Southern Company said in a June presentation that the IGCC was expected to produce its first syngas in the third quarter, but Fanning said Wednesday that plans to conduct simulation tests have pushed production back to the fourth quarter.

The project is estimated to cost at least $6.1 billion, nearly $2 billion more than originally estimated. Company earnings results for the first and second quarter include after-tax charges totaling $24 million related to the Kemper County project, compared with $235 million in similar charges from the same period of 2014.

The project has incurred numerous delays and cost overruns. The 582-megawatt (MW) generator originally was scheduled to begin operations in May 2014.

For related information, see January 16, 2015, article - Costs for Kemper County IGCC Plant Soar to $6.1 Billion.

Fanning also gave an update on construction of units 3 and 4 at the Vogtle Nuclear Station in Waynesboro, Georgia. The project has a total investment value of more than $15 billion. Completion of Unit 3 is expected in second-quarter 2019, and Unit 4 a year later. The units will add about 2,234 MW of new generation capacity. Like the Kemper County project, the Vogtle units have experienced significant delays. The original in-service dates for the units were set for 2016 and 2017.

Southern Company is ratcheting down its capital expenditures (capex), Fanning said, from $6.8 billion this year to $5.5 billion in 2016 and $4.3 billion in 2017.

Fanning gave an overview of the company's renewable energy portfolio, which comprises more than 3,200 MW from current and planned resources. This includes 1,896 MW from power purchase agreements and 1,394 MW from Southern Company-owned resources. Solar power accounts for 1,735 MW, wind for 1,131 MW, and biomass for 424 MW.

Southern Company reported second-quarter earnings of $629 million, compared with $611 million in the same quarter of 2014. Operating revenues were $4.34 billion, compared with $4.47 billion a year earlier.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.