Carbon capture and storage

Powerfuel: still intending to be 1st

1 September 2008

Powerfuel remains committed to its plan to develop an IGCC (integrated gasification combined cycle) plant with CCS at Hatfield but its strategy is now to develop the project in two phases, initially as a 900 MW (gross) combined cycle plant – synfuel ready but running on natural gas – and subsequently converting to IGCC. The IGCC is designed to become a ‘coal minemouth’ operation with around 90% carbon capture.

Although presumably disappointed by the terms of reference of the UK government’s CCS competition (which specifically excludes IGCC) and non-prequalification of its IGSC (integrated gasification single cycle) proposal (see Modern Power Systems, May 2008, p 30 and August 2008, pp 12-13), the competition was never seen as a sine qua non of the project’s business model. In fact it is planned that the Hatfield IGCC/CCS project would be operational ahead of the schedule envisaged for the winning project in the competition.

Powerfuel plc, which now has two major shareholders, R J Budge (47.75%) and Russian owned Tecalson Investments Ltd (52.25%), operates through its subsidiary, Powerfuel Mining Ltd, the Hatfield Colliery in South Yorkshire.

Powerfuel has access to about 95 million tonnes of British coal. It also owns and is developing adjacent land, which is consented for a business park development of up to 90 acres, the first 50 acres of which will soon be available for occupation. The company plans to finance and operate Europe’s first commercial large scale coal fuelled IGCC power station with CCS and is currently developing the funding structure to support it.

While production of coal from the Hatfield Colliery dates back to 1920, Powerfuel has undertaken major investment in re-opening the mine, which recently returned to coal production following the development of a new working face in the “Barnsley” coal seam. Coal from the site is produced solely for electricity generation and all current coal production is being purchased by local power stations.

In 2003 planning permission was granted for a major redevelopment of the Hatfield Colliery site – the Hatfield Power Park. The permission provides for significant new employment and spoil disposal – and the development of a clean coal technology power station.

It is proposed that Powerfuel plc will supply the power project based on the availability of the long-term coal feedstock from the re-opened and re-developed Hatfield Colliery. It is also proposed that a proportion of the up to 95 million tonnes of good quality coal reserves accessible from Hatfield will be ring-fenced to ensure security of raw material supply to the power project.

Through mine to power operations Powerfuel is able to provide a favourable pricing and indexation regime for the power station fuel supply, which will allow the conversion of coal to syngas for the IGCC at a very competitive cost. This, in turn, will mean that electricity generated from the project could be sold at a very competitive price.

There will, however, be a short period (minimum two years) where the power station will be operated solely on natural gas ahead of the conversion for syngas. It is expected that this will enhance the commissioning programme of the complete IGCC. In operating early on natural gas, all of the site infrastructure, along with the power island, can be commissioned and brought up to full load. Subsequently, the twin stream gasification plant can be commissioned one stream at a time, thus retaining a minimum 50% power output and allowing focussed attention on each gasification stream through its commissioning programme.

The current government consent (Electricity Act 1989, section 36) provides for the construction and operation of a 430 MW coal fuelled IGCC generating station to be situated on land adjacent to the Hatfield Colliery. It is anticipated that following an application already made a revised permission will be granted shortly, allowing a resizing to a 900 MW (gross) coal IGCC power generation plant, which can also run on 100% natural gas during the commissioning period and through gasification island maintenance periods.

The proposed power project has been designed to meet the UK’s need for new electricity power generation capacity and the government’s desire for power generation from fossil fuels to become significantly cleaner and more efficient. The proposed project has been designed to facilitate a move to clean coal technology (syngas fuelled) power generation, including carbon capture.

The site is conveniently located to provide access to the North Sea for storage of carbon dioxide following capture. Indeed, such is the density of existing and planned CO2 emissions in the Yorkshire and Humberside region that the region will certainly enable the development of a cluster of CCS projects.

Powerfuel now intends to develop the power project in two phases:

• First, the development of the syngas ready power island (Phase I);

• Second (after two or more years), move production over to coal IGCC running on syngas with an associated carbon capture facility (Phase II).

Powerfuel believes that gasification and precombustion carbon capture is the most proven and lowest cost route to CCS

The project has succeeded in contracting for an electrical grid connection for 2011, and has signed a gasifier licence agreement with Shell. A letter of intent has been signed with Air Products to build, own and operate the air separation unit. Jacobs Consulting has been engaged to carry out a full FEED study which began in the summer of 2007. Powerfuel has a letter of intent with GE for the power train engineering equipment package. In addition, the EPC tender process for Phase 1 of the build is underway and discussions are taking place concerning gas supplies, power purchases, O&M, etc.

This project is clearly the most advanced major CCS project in Europe. The CCGT is expected to be commissioned in 2011, followed by the IGCC/CCS in 2013/2014.

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