Summit faces challenges

Laura Miller sees three obstacles between Penwell and a $1.6 billion plant that supporters say would be a major move for a clean coal revolution.

Summit Power Group, a Bainbridge Island, Wash., company, needs a bill currently before the Texas Legislature to pass, said Miller, the company's Texas projects manager. The bill would give up to $100 million in franchise tax credits to the first three companies to qualify by sequestering more than 70 percent of carbon dioxide it produces.

If Summit builds the coal gasification plant, Miller said it would actually sequester between 80 and 85 percent of the CO2 it produces.

The bill introduced in the Texas Senate by Sen. Kel Seliger, R-Amarillo, and in the House by Rep. Phil King, R-Weatherford, would also give 30-year tax rate reductions to oil companies using CO2 generated by clean coal plants for enhanced oil recovery.

It would also require the Bureau of Economic Geology at the University of Texas at Austin to perform monitoring and verification duties for CO2 sequestration at the state's first three clean coal sites.

That bill recently passed the House Energy Resources Committee but still needs approval of the full House and Senate.

Another important decision comes from the Public Utility Commission of Texas. Miller said Summit needs for clean coal to be given priority with wind power in transmitting energy from competitive renewable energy zones in West Texas to the state's metropolitan areas.

"This project is $1.6 billion, the first of its kind in the world," Miller said. "And, then, when the wind blows, you can't shut the plant down."

But the third requirement is one Miller said the company didn't initially anticipate. It is requesting up to 80 percent of the project's cost from the Federal Loan Guarantee Program, which was part of the stimulus act.

The souring of credit markets led to the request - which Miller stresses is for a loan, not a grant.

"The banks just are not lending right now, especially for projects this large that some might consider experimental," she said. "I know a lot of investors are waiting to see if the Obama administration will support clean coal projects."

So the company has bombarded federal officials with information telling of the need for the project. Miller, who led opposition to TXU Energy's construction of 18 traditional coal power plants while mayor of Dallas, sent testimony to the U.S. Senate Committee on Energy and Natural Resources. She tells committee members the 345-megawatt gasification plant would capture more carbon than any coal-fired plant presently built anywhere in the world.

Energy Secretary Steven Chu received letters of support for the Summit project from dignitaries including Texas Lt. Gov. David Dewhurst, House Speaker Joe Straus, Railroad Commissioner Michael Williams and 29 of 32 members of the state's Congressional delegation.

Gary Vest, economic development director for the Odessa Chamber of Commerce, said an answer on the stimulus request is expected by July.

"I think they're very good," he said of the chances for receiving funding. "The kind of support we have for the project, not just in West Texas and Odessa but in the United States and the whole world, is very significant."

Miller said the Summit project compares favorably to FutureGen, the government-backed near-zero emissions coal-fired power plant that has been in various states of limbo since Mattoon, Ill., was chosen to host it over Penwell and two other sites in 2007.

Miller said 74 percent of FutureGen is taxpayer funded. And FutureGen's 275 megawatts are less that that of Summit's.

But perhaps more importantly, Miller said Summit wouldn't take five years to sell valuable CO2 to recover oil from depleted wells, as FutureGen would have.

"We're going to do it immediately," she said. "Because we have to do it in order to make money."

While there was some relief in the Permian Basin when it was learned the area might have an opportunity to work with private industry instead of the federal government on a clean coal project, Vest said getting stimulus money isn't the same process.

"If you get a loan from them, it's a little different," he said. "With FutureGen, (federal officials) were actually going to be running the project."

Vest said Summit wouldn't operate the plant. After it's completed, it would be sold to an electric provider such as TXU or Duke Energy.

If everything comes together for the company, Miller said the plant could be operational by late 2013 or early 2014. It would employ an estimated 2,000 people during construction and 120 permanent workers - with salaries between $65,000 and $120,000 a year.

Miller said none of the three hurdles the project has to jump is any higher than the others.

"All three things are critical," she said. "It's like a three-legged stool."

Summit looked at building its project in New Mexico, but Miller said Texas was a natural choice.

"Texas is just so perfectly suited for carbon capture and sequestration," she said. "It's just a natural fit."