March 2006

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CARSON, CA - If all goes according to plan, a novel 500 MW power plant fueled by refinery byproducts converted to mostly hydrogen will start churning out electricity five years from now for Southern California.

The $1 billion low carbon emission project, to be located here, some 20 miles south of Long Angeles, is a joint effort by energy company BP and Edison Mission Group (EMG), a subsidiary of Edison International, of Rosemead, CA. EMG operates about 9,000 MW of fossil- and renewable-fueled power plants in nine states.

The basic idea is to locate the new power plant next to BP's Carson refinery. It would use the refinery's 3,000-4,000 tons/day of byproduct petroleum coke - and maybe petroleum coke from other California refineries - to power the plant after it has been converted to hydrogen and carbon dioxide.

About 90% of the CO2 - an estimated four million tons per year - would be sequestered underground by injecting it into existing California oil fields that would again produce oil that previously was unrecoverable. The announcement said BP is already discussing carbon dioxide injection into Occidental Petroleum's California oil fields.

The cleaned-up hydrogen stream would be burned in a gas turbine to generate electricity, enough for around 325,000 homes.

Final investment decisions, i.e., whether to go ahead with the project, won't come for another two years. An EMG spokesman told H&FCL under current plans BP would own 51% of the new facility and EMG the rest. Both companies expect to win federal loan guarantees and tax credits in financing the project. One issue: the cost of hydrogen-generated electricity. It will be higher than that of conventionally powered plant because of the cost of gasification of the petroleum coke, plus the cost of sequestration.

According to the spokesman, these front-end engineering studies, a review of permitting issues and the impact of the new Federal energy law will take up the next year to 18 months. Both the California Energy Commission and the South Coast Air Quality Management District will have to review the plan, plus possibly other state and federal government agencies.

The project has a big backer in Gov. Arnold Schwarzenegger. "This will be the first plant of its kind in the whole country, and I think it is a perfect fit for our state," he said at the project's announcement Feb. 10 here.

Still, some doubts seem to persist. For example, EERE Network News, an online news summary service produced on behalf of the Energy Efficiency and Renewable Energy Office of the U.S. Energy Department, said in its Feb. 15 online report, "the project remains largely speculative because of the many agencies, companies, and other stakeholders that would be involved."

BP last November launched its new low-carbon power generation business, and this is the second hydrogen power plant the company intends to build: the first one is scheduled for Peterhead, Scotland (H&FCL Aug., Dec. 05).

Contacts: BP: Cindy Wymore, 714/228-6719; EMG, Doug McFarlan, 312/343-2561.