Ammonia from “Clean Coal” power plants

There are three “clean coal” power plants in development with plans to produce ammonia as a byproduct.

If they get built, these projects will bring to market roughly 1.25 million metric tons of urea and 460,000 metric tons of UAN per year.

Unfortunately, the “clean coal” power industry appears to be in a bit of a pickle.

Mississippi Power’s Kemper County Energy Facility (now called Plant Ratcliffe) was supposed to begin operations earlier this year – now, it won’t be up and running until June 2016, at least. This project won’t have a significant impact on the nitrogen industry, with an expected capacity of only 20,000 short tons of ammonia per year.

Kemper is the “first mover” however, and I have to imagine that other “clean coal” developers are looking at its shifting schedule and ballooning budget, and sweating.

Kemper will now be 2 years late and ~$4 billion over budget and, in the last few months, has been forced to return almost a billion dollars: to the equity partner that walked away ($301 million), electricity customers that sued for refunds of rate increases ($350 million), and government funding agencies whose deadlines it missed ($234 million, on top of a previous $133 million). Solvent only due to equity infusions from its parent, Mississippi Power’s credit ratings have been downgraded, and the word “bankruptcy” gets thrown around in legal hearings and news stories.

But Kemper is already built – it’s been producing power from natural gas for a year – it just needs however-many-months of testing before it can start actually gasifying the lignite coal.

The other “clean coal” projects haven’t begun construction yet and, now, there’s another reason why they might never do so: the low price of oil.

In lieu of any better use for captured carbon dioxide emissions, the idea driving “clean coal” is to sell the CO2 to an oil field, who pumps it underground to extract more oil in a process called enhanced oil recovery (EOR).

Unfortunately for “clean coal,” the fall in the price of oil wreaks havoc on the economics behind EOR. As a recent article in the Houston Chronicle makes clear, while selling CO2 for EOR “made both strategic and economic sense at $75 to $100 a barrel … Obviously, it does not currently make economic sense.”

Hydrogen Energy California (HECA) is the most embattled project. Having withstood fierce community and environmental opposition, HECA recently lost its CO2 offtake agreements, which the California Energy Commission (CEC) required to justify the project. The developers are now in the process of proving that they can simply pump the CO2 underground, without any offtake sales or EOR, but they only have until January 2016 before they hit the CEC’s deadline. HECA has not started construction and, at this point, I’m not sure it ever will. [Update 03/08/2016: HECA has withdrawn its application to CEC and the project is on hold, indefinitely.]

The Texas Clean Energy Project (TCEP) appears to be faring slightly better. I’ve not heard of any offtake agreements falling away – in fact, they announced last month a new 750,000 stpy urea offtake agreement with United Suppliers (originally, they had a 700,000 stpy agreement with CHS). Moreover, TCEP may not be as sensitive to CO2 sales as the other projects, as it expects urea sales to contribute more than half its revenues. TCEP has not broken ground, yet.

Leave a Reply

Your email address will not be published. Required fields are marked *