The Texas Clean Energy Project, Odessa, Texas

Issue 9 and Volume 116.

By Laura Miller, Director of Projects, Texas, Summit Power Group

While the science behind low emissions and carbon capture technologies continues to mature – the success of the first phase of American Electric Power’s Montaineer project in West Virgina is a case in point – the number of projects under development and construction continues to decline (Mountaineer Phase II being a case in point). Low natural gas prices, the desultory economy, ratepayer fatigue, election-year uncertainty, and changing emissions regulations all contribute to the lack of progress.

In late 2009, Summit Power’s Texas Clean Energy Project (TCEP) was selected to receive a $450 million award from the U.S. Department of Energy’s Clean Coal Power Initiative (CCPI) Round 3; it subsequently received $313 million in investment tax credits (ITC) from the IRS. As a fully developed, 400 MW power/polygen project with 90 percent carbon capture – with all off-take agreements, environmental permits and construction contracts fully executed – the TCEP is working towards a financial closing and groundbreaking by year’s end. Summit’s six-year odyssey from concept to construction readiness is due to Summit’s ardent belief that carbon capture projects are critical to national energy security and environmental sustainability; critical support from the US Department of Energy, industry, elected officials and environmental groups; and great good luck.

The luck came early on when Summit and Siemens – partners on many of Summit’s more than 7,000 MW of currently operational gas and wind projects in nine states – conceptualized a coal gasification project at the urging of Summit’s Chairman Donald Hodel, former Secretary of Energy under President Reagan, and Summit’s CEO Earl Gjelde, Hodel’s former Under Secretary.

When the two companies decided on a high-efficiency, 2×1 combined-cycle natural gas plant that would be run on gasified coal, Siemens’ “twin pack” of SFG-500 gasifiers provided more clean, H2-rich, low-CO2 syngas than was needed to generate 400 MW (gross) from an SGT6-5000F combustion turbine. What to do with the excess gas? After reviewing market forecasts for various products – synethesized gasoline and diesel fuel, ammonia, methanol, synthetic natural gas – urea fertilizer was chosen for its low commodity risk and low barriers to entry (the U.S currently imports 70 percent of its urea consumption). The TCEP will produce 710,000 tons per year of urea, all of which has been committed in a long-term contract to a large fertilizer company.

Siemens provided a gasifier for the Texas Clean Energy Project. Courtesy: Summit Power Group
Siemens provided a gasifier for the Texas Clean Energy Project. Courtesy: Summit Power Group

Although the TCEP initially aimed to capture 65 percent of its CO2, Summit — working with Selas Fluid Processing Corp., a Linde Group subsidiary engaged for the project’s FEED Study — increased the capture rate to 90 percent (or 2.5 million tons per year of CO2) all of which will be used by off-takers to bring up 7 million barrels a year of Texas crude through enhanced oil recovery (EOR). Through Blue Strategies, LLC, which is managing EOR sales, pipeline transmission and certification of verifiable emissions reduction (VER) credits for carbon storage, the TCEP has pre-sold all of its CO2 to Whiting Petroleum Corp. and two other purchasers in long-term contracts.

The result: a power plant became a polygen plant, and one revenue stream, electricity, became three major ones: today, projected urea revenues expected to account for about half of total revenues; electricity and CO2 sales revenues comprise most of the remainder; and minor products like argon gas, sulfuric acid, and non-leachable slag comprise 7 percent.

U.S. DOE chose TCEP for a CCPI award based, in part, on the polygen configuration: achieving a 90 percent capture rate on a power-only facility would be harder to privately finance if there was no federal carbon legislation. The business model was so compelling that when Hydrogen Energy California (HECA), the other 90 percent carbon capture project in DOE’s CCPI portfolio, was sold to Massachusetts-based SCS Energy in 2011, DOE and SCS modified the project’s design based on the same polygen model: power, urea and CO2 for EOR.

Unlike capture projects in numerous other regulated states (West Virginia, Illinois, Indiana, Mississippi) that have decided that the cost of low-emissions projects should not be borne by ratepayers, TCEP’s future is determined purely by whether or not it can sell its electricity on the open market. And it has done that, thanks to the $450 million federal award (which comprises less than 20 percent of the project’s construction costs) that has allowed TCEP to sell all of its products at market prices.

Thanks to the visionary leadership of the City of San Antonio, the TCEP has entered into a 25-year take-or-pay power purchase agreement with CPS Energy, the largest city-owned gas and electric utility in the country. San Antonio Mayor Julian Castro and CPS Energy CEO Doyle Beneby are determined to make San Antonio a hub for energy-related economic development and a recognized leader in clean energy technology. The TCEP was a good fit for that goal as it will capture 90 percent of the carbon dioxide, 99 percent of the sulfur, more than 95 percent of the mercury, and it will eliminate more than 90 percent of the nitrogen oxides produced by the process – making it overall the cleanest coal-fueled power project ever permitted in Texas.

The TCEP’s air permit was issued in December 2010, after a relatively short eight months and with no opposition. The TCEP has been extremely fortunate to have the support of leading environmental organizations, including the National Resources Defense Council (NRDC), the Clean Air Task Force (CATF), and Environmental Defense Fund (EDF). Summit is fortunate to have a long history of working with these groups. In fact, Summit was invited to Texas in 2005 by environmental groups hoping to see low-emissions gasification projects with carbon capture built in the state.

The project site in Pennwell, Texas. Courtesy: Summit Power Group
The project site in Pennwell, Texas. Courtesy: Summit Power Group

In December 2011, the TCEP signed engineering, procurement and construction (EPC) contracts and a 15-year operations and maintenance (O&M) contract. The two, firm-price, turnkey EPC contracts guarantee price, schedule and performance by the project’s three EPC contractors: Siemens Energy Inc.; Selas Fluid Processing Corp., a subsidiary of The Linde Group; and SK Engineering & Construction, a major Korean contractor. The total value of the EPC contracts is approximately $2 billion.

Selas Fluid Processing and SK E&C will supply a complete chemical block capable of producing syngas by gasifying 1.8 million tons per year of low-sulfur, sub-bituminous Powder River Basin coal. Sixty to 75 percent of the syngas produced by the gasifiers fuels a Siemens power block, and the balance is used for the production of granulated urea. The chemical block captures 90 percent of the CO2 from the syngas and compresses the CO2 for sale to the mature, enhanced oil recovery (EOR) market in West Texas. The chemical block EPC contract also includes coal handling, coal gasification with the two Siemens gasifiers, gas cleanup, mercury removal, ammonia and urea production facilities, sulfuric acid plant, water treatment, CO2 compression, site preparation, plant buildings and other goods and services.

In the second EPC contract, Siemens Energy will supply a nominally rated 400 MW combined-cycle power plant capable of operating on syngas and natural gas. The power block is comprised of an SGT6-5000F gas turbine capable of operating on high-hydrogen syngas or natural gas. The power block includes an air-cooled condenser for plant cooling, which greatly reduces the water needed for the project, and a high-voltage switchyard.

A separate, 15-year O&M contract was also signed for the complete, turnkey operation and maintenance of the entire 600-acre facility, including day-to-day operation, and short term and long term maintenance. The contract, signed by Linde’s Gases Division, includes guarantees of performance and availability by Linde’s Gases Division and Siemens for the full 15-year contract period.

Upon financial closing and groundbreaking, the TCEP plans to employ up to 2,000 workers at the peak of construction. When the project becomes operational in 2016, there will be 200 full-time, high-wage employees at the facility; 200 additional workers will be hired every two years during periods of major maintenance.


Laura Miller joined Summit Power’s TCEP team in January 2008 as Director of Projects, Texas. She served as the Mayor of Dallas from 2002 to 2007 and is most proud of her environmental accomplishments during that time, including the formation of the Texas Clean Air Cities Coalition, made up of 36 cities, counties and school districts in Texas that opposed the construction of 18 old-technology coal plants. She won a 2008 Climate Protection Award from the EPA for this effort, which has been memorialized in a documentary film produced and narrated by Robert Redford: “Fighting Goliath: The Texas Coal Wars.”