When news came yesterday that a Chinese company would be hired to build Summit Power Group’s coal-gasification project near Odessa that Laura Miller’s been managing, the first question that came to mind was, “Couldn’t they find an American outfit to do that?” Not really, the former Dallas mayor says, basically because putting up the innovative “clean-coal” plant is just too complicated. But Miller’s tale of how China–a country the Pentagon says has launched cyber-attacks against the U.S military and our economic system–wound up taking a lead role in the state-of-the-art, $2.5 billion-plus plant is fascinating.
As Miller explained during a visit to D last year, the plant is cutting-edge because it will use “carbon-capture” technology, slashing emissions of greenhouse gases and capturing 90 percent of the CO2 it produces. Besides producing electricity–San Antonio’s giant municipal electric utility has already agreed to buy 200 megawatts annually–the plant will sell most of the carbon dioxide for pumping into the Permian Basin, enhancing oil recovery, and market the rest to produce urea, which is used by industry.
For financing, the project first snagged $450 million in funding from the Department of Energy–$211 million of it from the American Recovery and Reinvestment Act. One condition for getting those funds, Miller said at D, was sharing the plant’s innovative technology with the Chinese.
How come? Because China has lots of coal and lots of pollution, Miller elaborated yesterday, and the Obama administration wants the U.S. and China to cooperate because “both countries are facing serious issues with greenhouse gases.”
With the promise of the federal money in hand, Summit arranged for a couple of German companies to provide equipment and to oversee construction of the plant.
Then, though, along came another player: the Export-Import Bank of China. The state-owned Chinese bank agreed to lend Summit more than $1 billion, the only loan the project will need to get up and running.
Suddenly, a Chinese company called Sinopec also popped onto the scene, and it was announced that Sinopec’s engineering unit would oversee engineering, procurement and construction for a major portion of the plant. According to the Wall Street Journal, that means Sinopec “will perform key duties previously expected to be furnished” by one of the German companies.
Says Miller: “It was pretty clear that if Sinopec was not included” in the project, the China Ex-Im bank “was not interested in lending the money.”
Meantime, Summit is continuing to look for U.S., European and Asian equity partners for the project, which it hopes will break ground early next year and be operating around 2017.
Miller stresses that Sinopec will look to hire U.S. contractors, including some big ones from Texas. And she adds that the plant’s 2,000 construction workers will “all be American workers,” as will the plant’s 200 permanent full-time employees, who will earn from $65,000 to $130,000 annually.
So, is everyone in West Texas–in the news lately for hard-right-wing views–okay so far with China taking a direct, lead role in the coal-gasification project? Yup, Miller replies. This will be the cleanest coal-fueled power plant in the world, she says, and West Texans know that jump-starting the plant will provide jobs and fill up their hotels, restaurants, and car-rental agencies.
At an event in San Antonio announcing the Chinese deal this week, she recounted, Odessa Mayor Larry Melton said, “I always wanted Odessa to be a household name internationally. And this will make it happen.”