City council to consider Nacero agreement

The Odessa City Council will review an economic development agreement that will allow Nacero, Inc. to proceed with construction of a proposed $6.5-$7 billion natural gas processing and production facility.

Construction could begin by the end of the year on the project that will create at least 3,500 construction jobs and then 350 permanent jobs in Ector County.

The agreement will allow the Odessa Development Corporation to provide a $20 million grant incentive to help Nacero, a Houston-based gas manufacturing company construct the new Penwell facility, according to the proposed agreement.

Those funds will be paid out over 10 years if the company maintains compliance with all terms and conditions included in the negotiated contract, Wesley Burnett, director of economic development for the Odessa Chamber of Commerce, previously told council. In order to receive the grant, Nacero must meet several benchmarks, which include having in place no less than 310 Full-Time Equivalent Jobs in year 6, increasing to 330 in year 7 and maintained at 330 through year 10.

Other agreement terms include:

>> Nacero shall exercise its commercially reasonable efforts to advertise for bids with notice to local contractors.

>> Company shall exercise its commercially reasonable efforts to employ Odessa residents and to advertise the availability of job openings, taking into consideration cost and the requirements for the job.

>> For purposes of determining new jobs created or existing jobs retained, individual owners of 20 percent or more ownership of the company shall not be counted.

>> A Full-Time Equivalent Job (“FTE”) is defined as a job requiring a minimum of 1,820 hours of work per year, including allowance for vacation and sick leave. The FTE calculation may be used to calculate the number of jobs.

>> For purposes of determining new jobs created, a non-Odessa employee of Company or a wholly owned subsidiary of Company that transfers to the project site shall be counted as a new job.

>> Job retention is defined as a job which would have been eliminated without financial assistance. In addition, such payments must be for economic development and not simply as a subsidy to support a failing business.

The company plans to use a more environmentally-friendly process to convert natural gas to methanol, and methanol to gasoline, Nacero officials explained to city council in April.

This is a unique large-scale energy project that produces zero-sulfur gasoline from natural gas using an environmentally superior process with a smaller carbon footprint compared to traditional gasoline production processes, they said during the presentation.

Nacero’s new manufacturing plant will be built in two phases, the news release detailed. Phase one will produce 70,000 barrels per day of gasoline component, which will be ready for blending.

Phase two will increase that capacity to 100,000 barrels per day.

All of the plant’s electricity will come from renewable sources, much of which will be produced on-site from solar panels co-located with the manufacturing facilities on Nacero’s 2,600-acre site, which will sit on the Penwell land originally slated for the failed FutureGen and then Summit endeavors, officials have said.

The plant will be the first in the U.S. to make gasoline from natural gas and the first in the world to do so with carbon capture and sequestration. Sequestered CO2 will be transported via an existing on-site pipeline.

Council on Tuesday will also discuss reallocating $90,000 of CDBG Coronavirus funds and put in into the city’s mortgage/rent/utility assistance program.