Summit Power Group plans to scrap the power generating portion of the Texas Clean Energy Project in a bid to keep the troubled coal project alive after the federal government pulled funding for the project earlier this year.
Instead, the company will reconfigure the project to produce more fertilizer by adding another urea line for the carbon capture coal plant, Summit CEO Jason Crew told the Odessa Development Corporation on Thursday. The other major product the long-delayed plant would produce is CO2 to be sold to oil companies.
“Once the DOE pulled out I was fully willing to accept an outcome where we are just done,” Crew said. But he said Summit officials sought ways to salvage the project “and we feel like this is the opportunity. We want to see it through.”
Crew said the more than $3 billion total projected cost of the plant would remain about the same without a need for a costly or lengthy redesign. And the plant would still provide 150 or more high-skilled jobs.
City officials want the plant, which would take up more than a third of a 600-acre site near Penwell for the jobs it would create and the billions of dollars it would invest in the community.
To that end, ODC officials extended a deal for the land set to expire this month for another year. The ODC will also continue to reserve a $5 million incentive for Summit if the company succeeds in building the plant.
ODC Chair Richard "Buz" Browning described a feeling of “fatigue” about the project among city officials after years of delay. But he and other board members reasoned Summit should get an extension if there is a chance they will succeed.
“We do want the project to go forward — it’s a huge great benefit to the City of Odessa,” Browning said. “But it needs to go forward. We need to quit talking about it. We need to get it done.”
The board added the condition that Summit present a detailed progress report six months into 2017. That way, ODC can begin planning to use the land for other projects if Summit seems unlikely to build the plant, board member Tim Edgmon said.
If the ODC had rejected Summit’s request, the company would have had to pay the city $480,000 to keep the property or give back the land that city officials consider as a site for other projects.
“The community has probably eight years invested in the project we call Summit, and we really don’t have any results,” said ODC board member Jimmy Breaux, who said he considered pushing the company to buy the land or return it to the city instead of the extension.
The U.S. Department of Energy in April warned of “serious doubts about the continuing viability” of the Texas Clean Energy Project, the second major blow to the company this year after the department suspended funding in February for the project citing missed benchmarks.
The project was over-budget and delayed by years as Summit officials continued to seek financing. And independent clean energy experts described the DOE’s decision as a crippling blow for the project.
In all the DOE committed about $450 million to the TCEP, a project meant to demonstrate a carbon capture and sequestration plant as a technology of capturing emissions from burning coal in a commercial viable way. The department spent about $116 million on the project before freezing funding.
Plans had called for the plant to generate about 400 megawatts of electricity while capturing more than 90 percent of the carbon dioxide it produced.
Crew said Thursday that generating electricity was a condition of the DOE funding. But he argued that repurposing the project to produce more fertilizer will make raising money for the project easier.
He also said producing more urea while scrapping the power generation would prove more profitable and that “because we are producing more fertilizer, the universe of investors grows.”
“We are in search of that equity partner that really has an interest in a urea plant of this size,” Crew said. “There are a number of companies that want to be exposed to fertilizer in that way, particularly as a hedge against the cost of natural gas rising potentially rising.”
Crew said raising money for a pioneering power plant was more difficult and that the DOE recognized that challenge.
“That was the reason they had the program in place in the first place,” Crew said.
Contact Corey Paul on Twitter @OAcrude on Facebook at OA Corey Paul or call 432-333-7768.