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Friday, March 13, 2009

Environment - State legislation re the financing of a coal-to-gas plant near Rockport close to passage

Updating the second half of this ILB entry from March 8th, Mark Wilson reports today in the Evansville Courier & Press under the heading "Proposed coal-to-gas vote near." Some quotes:

State legislation that would move forward the financing of a coal-to-gas plant near Rockport, Ind., in Spencer County could receive a final vote in the Indiana House as early as Monday.

The $2 billion facility would turn coal into a "pipeline quality" synthetic gas that Indiana customers could use for home heating.

Developer William Rosenberg said the plant will be able to provide the gas at a cost less than the market price of natural gas over the long run.

However, special legislation is required to do so, because negotiations with several utilities to lock in a 30-year contract to purchase the gas fell through last year. Such long-term purchase agreements are necessary to qualify for federal loan guarantees that would make funding of the plant possible, Rosenberg said.

Although natural gas prices currently are low, Rosenberg said Thursday that prices are expected to rise over the next 30 years while the supply from within the United States is expected to decrease. The price of coal is expected to stay relatively stable, with much less of an increase over time.

A recent forecast by the federal Energy Information Administration predicts the price of natural gas to reach $9.25 per million Btu by 2030. The report also is expecting demand for natural gas to increase sharply during that time, supplying most of the additional electric generating capacity added by 2030.

"No one believes they (natural gas prices) are going to stay where they are today," Rosenberg said.

He suggested if the plant was operating now, it would be able to produce 16 percent to 20 percent of Indiana's natural gas needs.

But with utilities unwilling to commit to a long-term purchasing agreement, legislators drafted a bill that will allow the Indiana Finance Authority to act as a go-between for the plant and utilities.

Senate Bill 423 passed the Senate last week. It passed out of a House committee Tuesday by a vote of 10-1 and could face a final vote in the House as early as Monday, said John Schorg, a House spokesman. * * *

Rosenberg said the plant will capture 99 percent of most pollutants and 90 percent of its carbon dioxide — a pollutant linked to global climate change.

That puts it in line with a growing movement toward capturing carbon dioxide emissions from power plants and other facilities and using it in other ways, Rosenberg said.

He said Thursday that while carbon dioxide has many uses in industry and energy production that the carbon dioxide captured at the Rockport plant would be piped for used in oil production. In a process called enhanced oil recovery, the carbon dioxide would be injected into wells traditionally thought of as spent, forcing additional oil to the surface.

"Essentially, we will be using coal to produce not one but two kinds of energy — gas and oil," Rosenberg said.

Posted by Marcia Oddi on March 13, 2009 09:55 AM
Posted to Environment