The Final Four

Issue 9 and Volume 110.

With a shortlist of sites in hand, FutureGen’s CEO discusses how the project to build the world’s first zero-emission coal plant emerged, where it stands today and where it’s headed.

By: Steve Blankinship, Associate Editor

The Final Four may represent the near-pinnacle of achievement for college basketball, but its significance pales by comparison to the FutureGen Final Four, the hotly-contested process to be chosen to build the world’s first near-zero emission coal-fired power plant within the next decade.

Mike Mudd
Click here to enlarge image

This past July, a field of 12 potential FutureGen sites was narrowed to four candidate sites, setting the stage for final selection by next September. The $1 billion project could make it economically possible to generate electricity using the most abundant energy resource in the U.S. without producing any significant emissions.

In scope, FutureGen will be a 275 MW integrated gasification combined cycle (IGCC) coal-fired power plant that would produce near-zero emissions, make hydrogen, capture carbon dioxide (CO2) and sequester the gas in underground geological formations called saline aquifers.

FutureGen will gasify coal, converting it to a synthetic gas composed mainly of hydrogen and carbon monoxide. The syngas will then react with steam to produce still more hydrogen and a concentrated CO2 stream. The hydrogen will be used as a clean fuel to generate electricity in turbines or fuel cells. The captured CO2 will be separated from the hydrogen and stored in the aquifers. Potential commercial uses for the sequestered CO2 include enhanced oil recovery (EOR), whereby the CO2 would be pumped into partially depleted oil deposits to force out remaining petroleum.

By mid-May 2006, a dozen candidate sites across seven states had filed proposals to the FutureGen Alliance. As the driving force behind the public/private partnership, the FutureGen Alliance is made up of several of the world’s largest coal and electric utilities in cooperation with leading research institutions. FutureGen Alliance members will contribute up to $250 million toward the project’s costs and lend technical expertise and industrial project management experience to the project.

In July, the alliance selected four finalist sites. Two are in central Illinois near Mattoon and Tuscola. Two are in Texas, near Odessa in far West Texas and Jewett in the south central part of the state.

Immediately after the Final Four announcement, Power Engineering spoke with FutureGen Alliance Chief Executive Officer Mike Mudd.

PE: How did FutureGen start and evolve?

Mudd: About 10 years ago when the debate about CO2 emission reductions escalated, some people in the power industry recognized that we needed to advance the science of economically capturing and sequestering carbon. This was about the time that the Kyoto debate was going on. People were saying that the technology is not available and that the economics are very high for capturing carbon. We simply did not know the science behind permanent storage. So just after the Bush Administration came in, we got the people on Capitol Hill and the Department of Energy to agree that this should be a major national initiative.

PE: Who instigated the effort?

Mudd: It evolved as a consensus among energy leaders talking among themselves. AEP (American Electric Power) and Battelle were involved in the original activity. Then when the President and DOE (Department of Energy) said it made sense, President Bush announced the FutureGen initiative. That’s when work started on getting the companies together to form the alliance. There were originally seven companies that banded together and began to pursue it.

PE: What did they do?

Mudd: We started by establishing certain goals required for us to proceed. One of the major ones was the recognition that to build this billion-dollar near-zero emissions power plant we needed the support of Congress and that congressional support had to come in such a way that it would not divert funds away from other R&D programs. We said if you’re going to be serious about this, it should be incremental funding. It took several years for Congress to come to that realization and start budgeting money that was above and beyond what was in the base budget for DOE’s R&D. When that finally happened in early 2005, it was clear to us that the Administration was serious. The alliance was officially formed in July of last year. For the three to four years prior to that, it had been an ad hoc informal group. With input from the DOE, independent technical experts, Battelle and other stakeholders, the site selection team developed nearly 100 peer-reviewed, publicly-vetted criteria against which each potential site was evaluated.

PE: How did you become CEO?

Mudd: I had been involved in the ad hoc meetings from the start and when it came time to select a chief executive officer, I was given the honor.

PE: Tell us a little about yourself?

Mudd: I have been with AEP my entire professional career dating back to 1974. I graduated from Stevens Institute of Technology in Hoboken N.J. My first assignment was the startup of the 1,300 MW Gavin coal plant. My early career focused on boilers in the steam generation sector – doing designs, construction and operation of large coal-fired plants. I saw the fantastic technology involved in coal combustion. When AEP got involved with developing its own clean coal technology projects, I started working with research engineers that really got it – that understood how engineers can use science to solve problems associated with burning coal cleanly.

During the period of deregulation, I helped develop independent cogeneration projects in Mexico with our deregulated business. That really gave me a sense of the business side of utility power plants. When the company returned to its core business, I went into the R&D group. That led to being assigned to what became the FutureGen project.

PE: Discus the process to narrow the field to four candidate sites.

Mudd: When we signed a contract with DOE, we had already started to develop the request for proposals (RFPs) and knew several states would be vying for the FutureGen project. So first of all, we engaged expertise from throughout industry. AEP had just gone through a very thorough site evaluation process for IGCC plants so we used much of that information. We pulled in some consultants from Sargent & Lundy and other alliance companies and developed criteria for the surface side of the equation.

The sub-surface side was more exciting because that had never been done before. And because Battelle has been engaged in geological studies and analysis for many years, they had access to some of the greatest minds in the world. People like Dr. Sally Benson of Lawrence Berkeley National Lab; Dr. Lee Spangler, who heads carbon sequestration studies at Montana State University; and Dr. Peter Cook of the Cooperative Research Centre for Greenhouse Gas Technologies in Australia, one of the world’s recognized leaders in sequestration geology. We had a Who’s Who of carbon sequestration. And these people worked together to assemble the criteria for the sub-surface elements of the RFP.

By May we had received 12 bids from seven states .Those proposals were subjected to the evaluation criteria. The evaluation was not done by the alliance itself, but by the independent experts who put together the RFP. The ranking for each proposal was assigned through a very thorough evaluation conducted by the independent experts and the alliance, and then ultimately approved by the alliance board of directors. At the end, we had four finalists – two from Texas and two from Illinois.

PE: How did you insulate the process from political pressures?

Mudd: There was a lot of politics out there, but we kept politics out of the process and didn’t allow political forces to influence the outcome at all. We had independent experts widely acknowledged as being the best in their fields. They don’t pay attention to politics. We let the scores be what they were. The chips just fell where they did, and we didn’t let the political consequences of whatever our decision would be impact the final choices.

PE: What about the disappointment expressed by the states not chosen?

Mudd: Certainly there has been disappointment from every state that didn’t make the short list. And these are important coal states. All the proposals had merit, and we had to pick the ones that met the very demanding and exacting criteria. But regardless of where FutureGen is built, it is important for the future of coal and it will benefit our country.

PE: Had it been predetermined there would be four finalists?

Mudd: No. We just looked for clear-cut finalists with our criteria dictating who they would be.

PE: Was the geological subsurface element a dominant issue?

Mudd: One thing we wanted to make sure didn’t happen was ending up with a site that had wonderful geological properties but terrible surface properties. We were hoping for proposals with a good balance. It turned out that the sites that were good from a geological perspective were good from a surface perspective too. And those that did not score well on geology didn’t score well on surface.

PE: How much weight was given to having coal nearby?

Mudd: That was one of the scoring criteria, but there were about 100 criteria and none were really primary. It’s important that FutureGen demonstrates technology on all different coals. We are assuming you would have to bring in some other coals one way or another.

PE: What is the possibility of someone blocking the project based on NIMBYism or some other issue?

Mudd: That’s always a concern when building a power plant. The pushback from those states that did not make the short list is that maybe our criteria were too stringent. Well, yes, our criteria were very stringent, and intentionally so to minimize the likelihood of intervention. We wanted to eliminate a lot of the objections that might arise. There was a lot of anticipation for potential opposition that went into the qualification criteria. Also, it is encouraging that the states stepped up, with strong community support to champion the effort to draw FutureGen into their communities, recognizing the positive impact that this project can have on the state and local economies.

PE: Can you give an example?

Mudd: One good example is that one of the sites in Ohio was disqualified because it is near a dam on the Ohio River. It is not a bad thing to locate a power plant near a dam, but FutureGen will be a major experiment of carbon sequestration. Our concern was that if we were to inject CO2 near a dam, it would be difficult to provide the data for a first-of-a-kind plant that would guarantee the safety of that dam. That’s why we decided upfront that you have to be a certain distance away from a sensitive feature like a dam so that question won’t come up.

PE: How close does the FutureGen project have to be to its sequester site?

Mudd: No specific distance was stated in the criteria. With some of the proposals, sequestration would occur on-site and with some of the sites in Texas it was several miles away.

PE: Could it be, say, 50 miles?

Mudd: Yes. Or more. Some peoples’ vision is to have a pipeline network of CO2 going here and there so you can move it throughout the country as necessary, to use for enhanced oil recovery or whatever. One of the attractive things about Texas is that there is enough open land there to create experimental carbon storage fields. You can put in surface wells and have easy access for monitoring, measuring and verification systems above it.

PE: Enhanced oil recovery is a big issue for Texas and the nation in general in terms of extracting more petroleum. Was that an element of the decision?

Mudd: No. Understand that EOR is not a primary part of the sequestration element of FutureGen. The primary purpose it to do the experiments with the deep saline aquifers and get that information we need in terms of how to best do that and make sure it stays put. There is also potential for EOR near the Illinois sites. While EOR may be part of the picture in the long run, geological sequestration will be the focus.

PE: What happens now?

Mudd: Now begins a 12-month process involving filing of environmental impact statements for the four sites. It’s a mutual commitment of the FutureGen Alliance and DOE to complete this process in one year, which is a major accomplishment because this process would normally take quite a bit longer.

That does not mean we’ll be taking any shortcuts. The NEPA (National Environmental Policy Act) process requires an environmental impact statement for these kinds of projects that is very rigorous and ensures it will be done right. It will be done thoroughly, giving full recognition to public input and entailing a very careful study. A final site selection will be announced in September of 2007.

PE: When the final site is chosen, how will the bidding process be conducted?

Mudd: We do not expect to conduct another formal solicitation. Final site selection among the acceptable sites will be a matter of negotiation. These negotiations will focus heavily on best-value criteria as well as meaningful financial incentives.

PE: There’s a good chance that we’ll see ground broken on several commercial IGCC plants within the next several years. How will FutureGen differ from those plants?

Mudd: The commercial IGCC plants will be designed and operated to run – and run reliably. They will use proven technology and many will have commercial warranties and guarantees, even availability guarantees. Therefore, they will be designed conservatively and without many features that could improve the emissions and efficiency of the IGCC plant, but could cost too much or impose additional risk to the project.

The FutureGen plant is not designed around a business deal – in fact the alliance is a not-for-profit organization. Therefore, the FutureGen designers can take the additional risks that would prove new systems that could enhance the efficiency and environmental advantages of IGCC. Further, the FutureGen facility will capture and sequester the CO2. The other commercial plants will be designed with the potential to retrofit such systems in the future, but not capture CO2 from the initial start up.

PE: FutureGen is purported to be a10- year project. What will be happening during that period? Will power from FutureGen go to the grid?

Mudd: During the test phase, the plant is expected to be an R&D facility to test different coals and systems, incorporate an R&D platform to provide syngas to research scientists who wish to test new systems and components and inject meaningful quantities of CO2 into the test formation. The power will go to the same grid that other power plants serve. However, because FutureGen is an experimental plant, it cannot sign up for the typical business deals with guaranteed delivery and liquidated damages for failure to deliver power when the plant is out of service. Further, the production cost of the first-of-a-kind FutureGen facility will likely be more expensive than other plants on the grid. Therefore, it will be necessary to make special and innovative arrangements for the delivery of the power from the plant.

PE: What is the target date for construction to start, when will it be completed and go into service?

Mudd: Construction is scheduled to begin in 2009, leading to a start up in 2012.

This is a meaningful event in the power generation industry and we need to mention some of the people that made it a reality. They include Ken Humphreys who was involved in FutureGen from Day 1 and has passionately kept driving to make FutureGen happen. And there’s Charles Goodman of Southern Company, who is our Chairman of the Board, who has been one of the guiding lights from the formation of our activities to make sure the alliance was put together correctly. Two other visionaries are Dale Heydlauff, vice president of new generation at AEP, and George Rudins, assistant secretary, fossil energy at DOE.