Ind. coal-gas bill stalls C02 pipeline project

INDIANAPOLIS (AP) — Legislation state lawmakers passed last week that the developers of a proposed Indiana coal-gasification plant say effectively kills their project also has dealt a blow to a Texas company's plans for a pipeline that would carry carbon dioxide to the Deep South for extracting oil from depleted Gulf Coast oil fields.

Denbury Resources spokesman Ernesto Alegria said Friday that Indiana Gasification LLC's proposed $2.8 billion plant near the Ohio River city of Rockport was the last hope for making the 440-mile Indiana-to-Mississippi pipeline a reality. Coal-gasification plants turn coal into synthetic natural gas.

Alegria said two other proposed coal-gasification plants — one in Illinois, the other in Kentucky — that would have fed compressed carbon dioxide into the pipeline had previously fallen through or been altered to remove their carbon dioxide production.

"Really the last one that we had as a potential source of the gas was the Indiana Gasification plant in Rockport. Now with that plant in question it just doesn't look like it's a project that's going to get done," Alegria said of the pipeline.

The proposed pipeline would have run from Rockport, Ind., to Tinsley, Miss., where it would have linked up with other pipelines that would have carried the liquefied gas to depleted oil fields along the Gulf Coast, where it's used to push remaining oil deposits to the surface.

The Illinois and Kentucky plants and potentially others would have also fed carbon dioxide into that pipeline.

The coal-gas plant proposed for a southern Indiana a site about 30 miles east of Evansville, would turn coal into pipeline-quality synthetic natural gas and also extracted carbon dioxide during the gas-making process, compressing it into a liquid that would then be fed into Denbury's planned pipeline.

But last Saturday, before gaveling out their session, Indiana lawmakers approved legislation that requires state regulators to give a new review to a 30-year deal mandating the state to buy the plant's synthetic natural gas, should the state Supreme Court uphold a lower court ruling that found the contract invalid.

Opponents of the plant, including natural gas utility Vectren Corp., have said the project could saddle Indiana ratepayers for $1.1 billion in rate hikes, but the bill approved by lawmakers directs the Indiana Utility Regulatory Commission to consider new ratepayer protections.

Three days after lawmakers approved that bill, the Rockport plant's developers suspended planning for the project other than working on the case pending before the state Supreme Court.

Indiana Gasification LLC project manager Mark Lubbers said Friday that even if parent company Leucadia prevails in that court case he believes the proposed plant is almost certainly dead.

"I think the chances of this plant happening are less than 5 percent," he said.

Lubbers said the loss of the plant, and by extension the pipeline, will harm economic development in manufacturing-heavy Indiana. He said the pipeline would have given the state a "gigantic advantage."

"There are many businesses that produce CO2 as a byproduct of their manufacturing processes and we believe that having a place to put it was going to create a strategic advantage for Indiana going forward," he said.

Lubbers said the Rockport plant would have fed 5.5 million tons of carbon dioxide each year into the pipeline, removing about 90 percent of plant emissions of the gas largely blamed for global warming. He said Leucadia is still moving ahead with plans for other gasification plants in Moss Point, Miss., and Lake Charles, La., that will convert an oil refinery byproduct called petroleum coke into methanol, hydrogen and carbon dioxide.

Final engineering site work is underway at the Lake Charles plant, which will cost about $2.6 billion, and Lubbers said construction there could begin this fall and take three years

He said that plant's carbon dioxide would feed into existing Denbury Resources pipelines for use in oil extraction.

Copyright 2014 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

 

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