Summary

Siemens Energy secured a licensing and equipment contract from Tenaska Energy Inc. , Omaha for a commercial-scale coal gasification plant with CCS features to be located in Taylorville , Illinois.  The plant output is synthetic natural gas ("SNG").  The project budget is $3.5 billion with a potential gross capacity of 730 MW.

Analysis

Of course, Illinois has coal and is off the path of shale gas.  Apparently Tenaska Energy is betting on high future natural gas prices and is investing in a coal to SNG project based on Siemens technology and equipment.  Well, the bet is not very difficult as long as DOE provides a $2.6 billion loan guarantee.  By itself the project would be uneconomical.

Its a repeat of Carter's Synfuels Corporation that lent $3billion for production of 240 MMSCFD of SNG from coal to the ANG Project, now the North Dakota Synfuels Corp.  Of course, when Carter's energy crisis subsided ANG went bankrupt and a private consortium picked up the project fro about $300 Million and now is very profitable.

Indeed if coal believes they can compete with high gas prices let coal develop the coal to SNG projects with their own funds without any government subsidies and make the U.S. companies like GE and ConocoPhillips partners with their proven gasification technologies.

However, GE or ConocoPhillips are not coming froward but let Siemens, a German energy company license their technology and import their major equipment without any substantial U.S. manufacturing labor content.  The latter is a hallmark of DOE renewable projects importing wind turbines and solar process modules from the EU,and Asia (China).

With our multi trillion dollar Obama debt load, we should just invest in:

  • Natural Gas
  • Nuclear Power
and will achieve energy security and independence.  As a matter of fact ExxonMobil regularly advertises in the Wall Street Journal that we have right now 100 years of proven natural gas energy reserves.  And if indeed by 2030 our electrical power demand has increased by 30% nuclear power will handedly fill in any additional power infrastructure.

Actually we are in a much brighter energy position than painted by the global warming crowd.  And coal may become an answer in the future when all natural gas sources have been exhausted and nuclear power can be depended on to provide inexpensive utility services to coal to syngas projects.  Right now at $4,800 per kilowatt the Tenaska coal to SNG project is uneconomical and investment should be directed toward combined cycle NG power plants of $600 per kilowatt of project costs.








 

Analyses are solely the work of the authors and have not been edited or endorsed by GLG.