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APEC members learn about the innovative technology of the Kemper County energy facility
APEC members learn about the innovative technology of the Kemper County energy facility

The promise of dramatically reducing carbon emissions and using the world’s most abundant type of coal for more energy production brought another group of international visitors to Kemper County.

Members of the Asia Pacific Economic Cooperation spent two days in east Mississippi to tour Mississippi Power’s Kemper County energy facility and hold a series of workshops primarily focused on Southern Company and Mississippi Power’s innovative carbon capture technology which is poised to be applied commercially next year when the Kemper County energy facility begins commercial operation.

“This technology can be very important for improving the environment in China,” said Pang Guanglian, secretary general and senior economist for the China Petroleum and Chemical Industry Federation.

Pang said China faces significant air quality challenges, particularly in Beijing. Guanglian was one of about 40 participants in the tour at Kemper. Along with China, the tour included representatives from the United States, Mexico, Japan and a host of Pacific Rim nations interested in not only Southern Company’s innovative carbon capture technology, but also its patented gasification process. The process – transport integrated gasification or TRIG – is the first in the world capable of turning low-grade, high-moisture coal into power, and use captured carbon for enhanced oil recovery.

“Many of these economies are seeing a decline in their oil production and some of these economies depend heavily on revenue from oil production, and the purpose of these meetings is both carbon management and energy security,” said Craig Hart, associate professor at Renmin University in China.

“China is both a producer and consumer of technology,” Hart continued. “So the ability to use, buy or partner with regard to technology would, for them, be a boon but also be beneficial for U.S. companies to be profitable and helpful to the broader societal goals in the long term.”

Despite the diversity of language and background, APEC Kemper workshop participants were linked by the common belief that technology can address the environmental challenges facing the globe, and ensure that readily available fuel sources, like lignite coal, can be used cleanly, responsibly and affordably.

Pamela Tomski, of the Global Carbon Capture and Storage Institute based in Australia said even on her third trip to Kemper, the facility continues to impress.

“It’s amazing,” Tomski declared. “It’s an engineering beauty. Everyone is looking at the Kemper plant. Mississippi has an opportunity to be showcased on the global stage. The whole world sees it as a first of its kind facility that’s going to set an example for the rest of the world on how to burn coal more cleanly and without CO2 emissions.”

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Kemper-July-14

Mississippi Power’s monthly Kemper County energy facility status report with the state Public Service Commission includes an additional $418 million pre-tax estimated probable loss for the third quarter of 2014 and an extension of the plant’s expected in-service date to the first half of 2016.

As previously announced, the company has been reviewing the schedule for the remainder of the project, including the gasifier and gas clean up facilities. Additional time is required for start-up activities and operational readiness, including enhancing the scope of specialized operator training.

“While it will take longer to complete the project, and the capital costs are higher than expected, Mississippi Power still believes in the team that is responsible for constructing and starting up the plant, along with the operations team currently running the combined cycle and training personnel for full operation of the gasification facility,” CEO Ed Holland said.

“These teams are working hard to bring this plant safely online for the benefit of Mississippi Power customers for decades to come,” he added.

Major construction on the project is “essentially complete” and the combined cycle portion of the plant has been in service since early August. The plant has been running at a capacity factor of 80 percent and has a reliability rate four times better than the industry average for combined cycles, Holland said.

The company continues to be committed to the long-term success of the project and the implications it has for coal use around the world. Last month, the top climate technology official for the United Nations toured the plant and said the project “gives hope” to developing countries.

Certain information contained herein is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the cost and schedule for completion of the Kemper County energy facility.
Mississippi Power cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Mississippi Power; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Mississippi Power’s Form 10-K for the fiscal year ended December 31, 2013, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries; available sources and costs of fuels; state and federal rate regulations and the impact of pending and future rate cases and negotiations; ability to control costs and avoid cost overruns during the development and construction of facilities; ability to construct facilities in accordance with the requirements of permits and licenses to satisfy any
operational and environmental performance standards and to integrate facilities into the Southern Company system upon completion of construction; advances in technology; actions related to cost recovery for the Kemper County energy facility and satisfaction of requirements to utilize investment tax credits and grants; Mississippi PSC review of the prudence of the Kemper County energy facility costs; the outcome of any legal or regulatory proceedings regarding any settlement agreement between Mississippi Power and the Mississippi PSC, the March 2013 rate order, or the State of Mississippi legislation designed to enhance the Mississippi PSC’s authority to facilitate development and construction of baseload generation in the State of Mississippi; and the ability of counterparties of Mississippi Power to make payments as and when due and to perform as required. Mississippi Power expressly disclaims any obligation to update any forward-looking information.

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kemper aerial
An aerial photo of the Kemper Co. energy facility.

Mississippi Power today filed its monthly Kemper County energy facility project status report with the Mississippi Public Service Commission outlining construction milestones and costs.

The filing identified additional estimated costs subject to the cost cap in the aggregate amount of approximately $88 million including $29 million previously reported in the July PSC report and $59 million reported in the August report.

The estimated cost increases reported in August are due primarily to construction, start-up and operational readiness activities, as well as additional property taxes and insurance. The report also noted the company expects the Kemper IGCC will be placed in service later during 2015 than the previously scheduled in-service date of the second quarter 2015.

“Mississippi Power and Southern Company remain committed to this project. Our investment in integrated coal gasification and the Kemper project – and our belief that this technology represents the future of coal in energy production – has not changed,” said Mississippi Power CEO Ed Holland.
Mississippi Power customers will not pay a penny of cost above the limit agreed to by regulators and legislators.

This latest report also outlined significant milestones achieved at the Kemper facility, including placing the combined cycle into service this summer to help serve customers’ energy needs during peak summer season.

Additional information about the Kemper County energy facility is available at mississippipower.com.

Certain information contained herein is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the projected cost and schedule for the completion of construction and start-up of the Kemper IGCC. Mississippi Power cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Mississippi Power; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Mississippi Power’s Form 10-K for the fiscal year ended December 31, 2013, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries; available sources and costs of fuels; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; ability to control costs and avoid cost overruns during the development and construction of facilities, which include the development and construction of generating facilities with designs that have not been finalized or previously constructed, including changes in labor costs and productivity factors, adverse weather conditions, shortages and inconsistent quality of equipment, materials, and labor, contractor or supplier delay, non-performance under construction or other agreements, operational performance, operational readiness, including specialized operator training, unforeseen engineering or design problems, delays associated with start-up activities (including major equipment failure and system integration), and/or operations; ability to construct facilities in accordance with the requirements of permits and licenses to satisfy any operational and environmental performance standards, including any Mississippi Public Service Commission (PSC) requirements and the requirements of tax credits and other incentives, and to integrate facilities into the Southern Company system upon completion of construction; advances in technology; actions related to cost recovery for the Kemper IGCC, including actions relating to proposed securitization, Mississippi PSC approval of Mississippi Power’s proposed rate recovery plan, as ultimately amended, which currently includes the ability to complete the proposed sale of an interest in the Kemper IGCC to South Mississippi Electric Power Association, the ability to utilize bonus depreciation, which currently requires that assets be placed in service in 2014, and satisfaction of requirements to utilize investment tax credits and grants; Mississippi PSC review of the prudence of Kemper IGCC costs; the outcome of any legal or regulatory proceedings regarding the Mississippi PSC’s issuance of the Certificate of Public Convenience and Necessity for the Kemper IGCC, the settlement agreement between Mississippi Power and the Mississippi PSC, the March 2013 rate order, or the State of Mississippi legislation designed to enhance the Mississippi PSC’s authority to facilitate development and construction of baseload generation in the State of Mississippi; and the ability of counterparties of Mississippi Power to make payments as and when due and to perform as required. Mississippi Power expressly disclaims any obligation to update any forward-looking information.

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Tripp Ward (left) and Emmanual Gatling (right), from the Kemper Co. energy facility, drop off a donation to Brian Terry.
Tripp Ward (left) and Emmanual Gatling (right), from the Kemper Co. energy facility, drop off a donation to Brian Terry.

After a tornado swept across central Mississippi in late April, carving out a path of destruction and killing 14 people, employees at the Kemper County energy facility immediately asked how they could help in the recovery process.

At the plant’s May safety meeting a few days later, a hat was passed around and $1,600 was donated.

On May 20, Tripp Ward, chemical products analyst at Kemper and fundraiser organizer, delivered the donation to a pair of employees at the Red Hills plant who lost their homes in Louisville.

“The support from our employees has been unbelievable,” Ward said. “This is just another example of how supportive this team is of their community in a time of need.”

At the entrance gates to the plant, several security guards that live in Louisville, which took a direct hit from the tornado, organized another collection.

“Captain Robert Smith had the idea that his security force could show their appreciation and compassion for the tornado victims by donating some needed items,” Drew Hunt, Mississippi Power security coordinator, said.

Employees from Total Protection Services and the plant’s security officers raised more than $400 and used the money to purchase water, food, paper towels and other personal items.

The supplies were delivered to the Louisville relief effort in mid-May.

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By Natalie Campen

The Kemper County energy facility impressed a dozen energy leaders from Norway, the Netherlands and Germany as the group toured the site of Mississippi Power’s innovative, 21st century project last week.

Like Mississippi Power, the Norwegian government, public researchers and private companies are exploring new technologies to use fossil fuel more efficiently and with less impact on the environment. The tour followed a successful visit by Tord Lien, Norway’s Minister of Petroleum and Energy, who accompanied U.S. Secretary of Energy, Dr. Ernest Moniz to the Kemper facility last year.

Mississippi Power Vice President of Generation Development John Huggins provided an overview of the project, its benefits and the need for fuel diversity. Huggins reminded the visitors they were in “serious football country, so we like to use a lot of football references around here.” Describing Mississippi Power’s commitment to success of the Kemper project, Huggins said, “Our goal is to be national champions.”

The group of engineers, scientists and policy makers listened intently to the technical briefing on technology by Kerry Bowers, Southern Company technology licensing director. Bowers’ presentation included animation illustrating the basic operation of the lignite gasification process. The visitors took notes and asked detailed questions about design, costs, efficiency and marketing of the technology.

An hour-long bus tour of the Kemper facility, highlighted construction design and safety features.

David Hardin, startup manager, pointed out various components of the facility, like the lignite dome and the operation of the dragline at the Liberty Mine.

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psc_article[1]Mississippi Power’s monthly status report filed with the state Public Service Commission includes an additional $380 million pre-tax estimated probable loss for the first quarter of 2014, and a possible extension of the plant’s expected in-service date for the gasification system to the first half of 2015.

As reported earlier this month, the company is experiencing decreases in construction labor productivity due to adverse weather, unexpected excessive craft labor turnover and unanticipated installation inefficiencies.

The company will not seek to recover the increase from customers. Customers will not pay a penny of cost above the limit agreed to by regulators and legislators.

Mississippi Power currently expects to place the combined cycle and the associated common facilities portion of the project in service in the summer of 2014 and continues to focus on completing the remainder of the Kemper plant, including the gasification system.

As a result of construction issues identified, as well as the risk of additional factors that have the potential to further extend construction and start-up, the in-service date for the gasification system is expected to occur in the first half of 2015.

Extending the expected in-service date into 2015 could impede the company’s ability to secure some tax benefits under current law. The company will work with the Mississippi Public Utilities Staff to determine if it can mitigate the impact to customers.

“Mississippi Power is committed to the success of this 21st-century coal project and to providing stable energy prices for customers,” CEO Ed Holland said. “Our investment in integrated coal gasification and the Kemper project is further evidence of the company’s belief that this technology represents one method to achieve coal’s future in energy production and our commitment to a diverse fuel mix.”

 


 

Cautionary Note Regarding Forward-Looking Statement

Certain information contained in this release is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the projected cost and schedule for the completion of construction and start-up of the Kemper IGCC, recovery of costs associated with the Kemper IGCC, and bonus depreciation tax benefits. Mississippi Power Company cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Mississippi Power Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Mississippi Power Company’s Annual Report on Form 10-K for the year ended December 31, 2013, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries; available sources and costs of fuels; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; ability to control costs and avoid cost overruns during the development and construction of facilities, which includes the development and construction of generating facilities with designs that have not been finalized or previously constructed, including those risks identified above that have caused and may continue to cause cost increases and/or extensions of the in-service date; ability to construct facilities in accordance with the requirements of permits and licenses and to satisfy any operational and environmental performance standards, including any Mississippi Public Service Commission (“PSC”) requirements and the requirements of tax credits and other incentives; advances in technology; actions related to cost recovery for the Kemper County integrated coal gasification combined cycle facility (“Kemper IGCC”), including actions relating to proposed securitization, Mississippi PSC approval of Mississippi Power Company’s proposed rate recovery plan, as ultimately amended, which currently includes the ability to complete the proposed sale of an interest in the Kemper IGCC to South Mississippi Electric Power Association, the ability to utilize bonus depreciation, which currently requires that the related assets be placed in service in 2014, and satisfaction of requirements to utilize investment tax credits and grants; Mississippi PSC review of the prudence of Kemper IGCC costs; the outcome of any legal or regulatory proceedings regarding the Mississippi PSC’s issuance of the Certificate of Public Convenience and Necessity for the Kemper IGCC, the settlement agreement between Mississippi Power Company and the Mississippi PSC, the March 2013 rate order, or the State of Mississippi legislation designed to enhance the Mississippi PSC’s authority to facilitate development and construction of baseload generation in the State of Mississippi; and the ability of counterparties of Mississippi Power Company to make payments as and when due and to perform as required. Mississippi Power Company expressly disclaims any obligation to update any forward-looking information.

 

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05_01_Norway3The Kemper County energy facility impressed a dozen energy leaders from Norway, the Netherlands and Germany as the group toured the site of Mississippi Power’s innovative, 21st century project April 24.

Like Mississippi Power, the Norwegian government, public researchers and private companies are exploring new technologies to utilized fossil fuel more efficiently and with less impact on the environment. The tour followed a successful visit by Tord Lien, Norway’s Minister of Petroleum and Energy who accompanied U.S. Secretary of Energy, Ernest Moniz to the Kemper facility in November.

Championship Goal

Mississippi Power Vice President of Generation Development, John Huggins provided an overview of the project, its benefits and the need for fuel diversity. Huggins reminded the visitors they were in “serious football country, so we like to use a lot of football references around here.”  Describing Mississippi Power’s commitment to success of the Kemper project, Huggins said, “Our goal is to be national champions.”

The group of engineers, scientists and policy makers listened intently to the technical briefing on TRIG technology by Kerry Bowers, Southern Company Technology Licensing Director.  Bowers’ presentation included animation illustrating the basic operation of the lignite gasification process. The visitors took notes and asked detailed questions about design, costs, efficiency and marketing of the technology.

An hour-long bus tour of the Kemper facility, highlighted construction design and safety features. David Hardin, IGCC Project Start-Up Admin Manager pointed out various components of the facility, like the Lignite Dome and the impressive operation of the drag-line at the Liberty Mine.

After the tour, the visitors enjoyed a southern bar-b-que lunch.

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Kemper County energy facilityMississippi Power today filed its monthly Kemper project status report with the state Public Service Commission.

In the filing, Mississippi Power management identifies a minimum of approximately $177 million in likely cost increases associated with the project, including $152 million in construction costs and $25 million in start-up costs. Any future changes will be fully evaluated in connection with the company’s quarterly reporting. The next quarterly reporting period for earnings is in late April 2014.

Adverse weather, unexpected high craft labor turnover and unanticipated problems with material installation are reasons for the projected cost increases.

“We’ve always said that unanticipated schedule extensions associated with start-up activities for this ‘first of a kind’ technology could impact the overall cost and schedule of the project,” said CEO Ed Holland. “We’re continuing to review the impact these issues will have on the construction schedule.” The facility is scheduled to be fully operational in the fourth quarter of 2014.

Mississippi Power customers will not pay a penny of cost above the limit agreed to by regulators and legislators.

“As always, Mississippi Power is committed to the success of this 21st-century coal project and providing stable energy prices for customers,” Holland said. “Our investment in integrated coal gasification and the Kemper project is further evidence of the company’s belief that this technology represents one method to achieve coal’s future in energy production and our commitment to a diverse fuel mix.”

 

Cautionary Note Regarding Forward-Looking Statements

Certain information contained in this article is forward-looking information based on current expectations and plans that involve risks and uncertainties. Forward-looking information includes, among other things, statements concerning the projected cost and schedule for the completion of construction of the integrated coal gasification combined cycle facility in Kemper County, Mississippi (“Kemper IGCC”).  Mississippi Power Company cautions that there are certain factors that could cause actual results to differ materially from the forward-looking information that has been provided. The reader is cautioned not to put undue reliance on this forward-looking information, which is not a guarantee of future performance and is subject to a number of uncertainties and other factors, many of which are outside the control of Mississippi Power Company; accordingly, there can be no assurance that such suggested results will be realized. The following factors, in addition to those discussed in Mississippi Power Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, and subsequent securities filings, could cause actual results to differ materially from management expectations as suggested by such forward-looking information: the impact of recent and future federal and state regulatory changes, as well as changes in application of existing laws and regulations; current and future litigation, regulatory investigations, proceedings, or inquiries; available sources and costs of fuels; state and federal rate regulations and the impact of pending and future rate cases and negotiations, including rate actions relating to fuel and other cost recovery mechanisms; ability to control costs and avoid cost overruns during the development and construction of facilities, which includes the development and construction of facilities with designs that have not been finalized or previously constructed, including those risks identified above that have caused and may continue to cause cost increases and/or schedule extensions; ability to construct facilities in accordance with the requirements of permits and licenses and to satisfy any operational and environmental performance standards, including the requirements of tax credits and other incentives; advances in technology; actions related to cost recovery for the Kemper IGCC, including actions relating to proposed securitization, Mississippi Public Service Commission (“PSC”) approval of Mississippi Power Company’s proposed rate recovery plan, as ultimately amended, which includes the ability to complete the proposed sale of an interest in the Kemper IGCC to South Mississippi Electric Power Association, the ability to utilize bonus depreciation, which currently requires that the Kemper IGCC be placed in service in 2014, and satisfaction of requirements to utilize investment tax credits and grants; Mississippi PSC review of the prudence of Kemper IGCC costs; the outcome of any legal or regulatory proceedings regarding the Mississippi PSC’s issuance of the Certificate of Public Convenience and Necessity for the Kemper IGCC, the settlement agreement between Mississippi Power and the Mississippi PSC, or the State of Mississippi legislation designed to enhance the Mississippi PSC’s authority to facilitate development and construction of baseload generation in the State of Mississippi; and the ability of counterparties of Mississippi Power Company to make payments as and when due and to perform as required. Mississippi Power Company expressly disclaim any obligation to update any forward-looking information.

 

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