HECA backs out indefinitely

Mar 4 - McClatchy-Tribune Content Agency, LLC - John Cox The Bakersfield Californian

Hydrogen Energy California, the $4 billion clean coal project heavily subsidized by the Obama administration but opposed by its neighbors in western Kern County, was placed on indefinite hold Thursday by its Massachusetts-based developer.

SCS Energy LLC, which bought the project in 2011 from oil giant BP and mineral company Rio Tinto, abruptly withdrew its project application just days before a do-or-die hearing before a committee of the California Energy Commission, whose staff had recommended terminating the proposal for lack of progress.

Company President Jim Croyle said by email SCS hopes to reapply once it receives clarity on the project's driving concept: the burial of greenhouse gas emissions in a process known as carbon capture and sequestration.

"Not only are we still interested in the project, we believe this project is critical to developing the technologies essential to curbing the devastating effects of climate change," he wrote.

The withdrawal was cheered by locals who objected to HECA's proposed emissions, storage of anhydrous ammonia and use of local roads and groundwater.

"David has defeated Goliath! Many people in Kern County have cause to celebrate tonight," environmental activist Tom Frantz said by email.

As most recently envisioned by SCS, HECA was to be a 200-employee hybrid power plant manufacturing fertilizer when it wasn't producing electricity for sale to the state grid.

That iteration of the proposal represented a significant departure from the original plan under BP and Rio Tinto. They wanted to build a power plant whose byproduct carbon dioxide would be put to use in oil production and left underground indefinitely.

Originally the idea was to build the project in Wilmington, next to the Port of Long Beach. But when residents there turned against the proposal, BP and Rio Tinto moved it to a relatively remote site measuring more than 400 acres near Tupman.

The Obama administration, hoping to demonstrate a commercially viable method of burying emissions associated with the use of coal and petroleum coke, offered HECA $308 million in economic stimulus and other grants.

Low prices for natural gas made the project less competitive, however, and when SCS took over, it introduced a revised plan: manufacture chemicals in addition to electricity as a way of making HECA more economical. The U.S. Department of Energy responded by increasing the federal subsidy to $408 million.

County government was highly critical of the project, from its proposed heavy use of landfills to the manufacture of not only fertilizer but transportation chemicals Kern planners said would violate HECA's agricultural zoning.

The biggest setback came when the oil company that had tentatively agreed to accept the project's CO2, Occidental Petroleum Corp., spun off its California operations and moved to Houston.

The spinoff, California Resources Corp., walked away from the proposed gas off-take agreement, leaving HECA with nowhere to send its CO2.

When HECA opponents asked the Energy Commission to declare the project hopeless last year, SCS petitioned the agency to instead give it six months to demonstrate the project was still on track. The commission agreed to the company's request.

By the time the regulatory timeout expired in December, HECA had a new plan: inject its CO2 beneath its own property. That proposal, too, was opposed by the county. Commission staff soon came out against the new plan, saying SCS had failed to show progress toward a viable plan.

The drama took a surprise twist this week when Massachusetts technology company Ztek Corp. proposed stepping in with its own idea for energy storage at the site. Saying it had been monitoring the project for years, Ztek said it could help the project meet California policy goals by turning solar and wind energy into hydrogen for use in transportation.

SCS's Croyle rejected the idea, saying it had not had meetings with Ztek and viewed its proposal as "unsolicited and unwelcome."

The project had been scheduled for a Monday hearing in Sacramento, after which time a committee of the Energy Commission was expected to decide whether to give HECA more time or end it altogether. That hearing was canceled Thursday following SCS's notice that it was withdrawing its certification application.

HECA neighbor Chris Romanini, a fourth-generation farmer who had actively lobbied against the project, said she was relieved at the outcome.

"I'm so pleased," she said. "It's just been hanging over us for eight years, the abuse to our water and the abuse to our air."