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Leucadia Petcoke(CVX's) Gasification SNG plant awaits word DOE loans

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    Charles Randall
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    Gasification plant awaits word on loans

    Monday, February 23, 2009
    By APRIL M. HAVENS

    The company that could bring a $2 billion energy project and up to 300 jobs to Moss Point is working to meet a March deadline for the plan’s linchpin, $800 million in federal loan guarantees, local leaders say.
    The project is a gasification plant at the old International Paper Co. site, which could produce 123 million cubic feet of substitute natural gas daily.
    “Everything is on pace,” said George Freeland, director of the Jackson County Economic Development Foundation.
    New York-based Leucadia Na tional Corp., Mississippi Gasification’s parent company, is focusing its efforts on a U.S. Department of Energy loan application, Freeland said. The project has already secured $300 million in Gulf Opportunity Zone bond financing from Gov. Haley Barbour, he said.
    In June, the DOE announced $30.5 billion in loan guarantees for projects that employ advanced energy technologies. Of that amount, $6 billion was set aside for coal-based power generation and industrial gasification.
    In December, Jackson County supervisors and Port Authority commissioners approved a lease option agreement that enabled Mississippi Gasification to apply for the loans, Freeland said. The company submitted the first portion of the application in January. The second and final phase is due March 23, with a decision expected in late spring, Freeland said.
    The company is initially paying $11,100 monthly to lease the 185-acre Moss Point Industrial and Technology Complex parcel. If funding is approved, Leucadia would lease it for $650,000 annually.
    When approving the lease in December, Supervisor John McKay said that the project would create 250-300 permanent jobs and about 2,000 construction jobs. It could generate $10 million a year in tax revenues for the county, $8 million-$10 million for the Moss Point School District, and as much as $6 million for the city of Moss Point, he said.
    Company sources have confirmed that the DOE loans are necessary for the project to come to fruition.
    Plants like these can use various feedstocks to create syngas, or a mixture of hydrogen and carbon monoxide, said Eric Smith, an energy market expert and professor at Tulane University’s Energy Institute.
    The syngas can be burned to produce electricity, used as a feedstock in making other chemicals, or made into methane. Leucadia wants to use petroleum coke as a feedstock to produce methane and make substitute, or synthetic, natural gas.
    SNG is composed mostly of methane and is chemically similar to natural gas. It can be transported through natural gas pipelines and is stable, Smith said.
    The feedstock petroleum coke, or pet coke, is made mostly of car bon and is a byproduct of oil refining. “It’s bottom of the barrel and looks like coal,” Smith said.
    Leucadia sources said that the plant would not be reliant on Chevron’s Pascagoula refinery for its pet coke supply. The company is in talks with a private supplier, which may or may not call on Chevron for pet coke, sources said.
    Leucadia is additionally seeking funding and permits for two other SNG gasification plants, one in Indiana and one in Louisiana.
    Last April, the company received $1 billion in Go-Zone funding for a similar SNG project at the Port of Lake Charles in Lake Charles, La., according to its 2007 annual report. Total construction cost for that plant is $1.6 billion, and Leucadia expects to break ground this year.

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