Lake Charles Clean Energy Announces Contracts With BP, Air Products And Denbury; Advances First-in-the-Nation Project With State-of-the-Art Gasification For Clean Fuels
The project represents a capital investment of more than $2.5 billion and is expected to provide up to 1,500 construction jobs during the 3-4 year construction period, beginning in 2013. Leucadia Energy will be managing construction of the project. Turner Industries Group, LLC of Baton Rouge, La., will construct the project, and Kellogg, Brown and Root, ("KBR"), will provide design, engineering and procurement services.
Located on property leased from the Port of Lake Charles ("the Port"), the project site will be adjacent to ship, barge and rail facilities, and the Port will provide logistical services such as storage and loading and unloading of cargoes. LCCE will acquire petcoke from Koch Carbon, LLC, under a long-term feedstock supply and logistics service agreement, which will amount to 7,000 metric tons of petcoke a day from Gulf Coast refiners. Through this process, LCCE would extract the beneficial energy in petcoke while avoiding harmful emissions and producing no waste product.
After completion, there will be approximately 165 full-time skilled employees (including contract employees) at the clean fuels plant, with competitive wages and benefits for the technical jobs needed to operate and maintain this first-of-its-kind U.S. clean energy plant. Operations and management at the plant will cost approximately $2 billion during its 30-year life. The majority of costs will go to pay local workforces and purchase locally procured materials and services. The project would have a tremendous economic multiplier effect in the surrounding area, through housing demand and services needed for the facility and its employees.
Former United States Senator Bennett Johnston (D-La.), whose Johnston Development Company is a joint venture partner of Lake Charles Clean Energy, said: "Commercial offtake agreements with BP and Air Products demonstrate the strength of the project and the viability of clean energy technologies and investment. Our project is a great demonstration of how government incentives and private enterprise can work together to implement clean energy technologies."Jeff Byrne, vice president and general manager, Tonnage Gases for Air Products, said: "We are pleased to be part of this project on both the supply side, as well as receiving product that we can use to serve to our customers. The hydrogen we receive from LCCE will again demonstrate the value of our Gulf Coast Connection Pipeline. We can take this hydrogen and supply the vast number of refinery and petrochemical customers on our Texas to Louisiana pipeline. On the Merchant side of our business, the argon will be a valuable source to our existing and new customers in North America." William Rase, Executive Director of the Port of Lake Charles, said: "We are very pleased that Lake Charles Clean Energy has reached this important commercial milestone. We fully support the Lake Charles Clean Energy project, which will be an important part of the future of the Port of Lake Charles. We look forward to working with Leucadia Energy to fully implement this clean energy project." LCCE was awarded $1.56 billion of Gulf Opportunity Zone ("GO Zone") and Hurricane Ike tax-exempt bonds by the Louisiana State Bond Commission. The issuance of these bonds demonstrates the state of Louisiana's strong financial support for the project. The low-cost GO Zone financing provided by the state was a large incentive to develop the project in Lake Charles. In addition to the state bond financing, the LCCE project is one of three large-scale industrial carbon capture projects that were awarded a Department of Energy ("DOE") grant as part of an effort to capture carbon dioxide from industrial sources for storage or beneficial use. The DOE grant is for approximately $261 million. As part of the clean fuels aspect of the project, all of the captured CO2, which is expected to equal approximately 4.5 million tons annually, will be sold to Denbury Onshore, LLC for use in its Gulf Coast EOR operations. Denbury currently produces over 35,000 barrels of oil per day from its Gulf Coast CO2 EOR operations and will use the captured CO2 to further increase this production. When used in EOR, CO2 is stored in underground oil producing formations.
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