Kelley Williams | Chair, Bigger Pie Forum | www.biggerpieforum.org | October 7, 2014
There are good reasons to be concerned that the Kemper County Lignite Plant under construction by Mississippi Power could explode if started up. So, will it ever start up? Probably not. Here’s why.
Construction of the experimental plant continues out of control. It has been plagued with repeated cost overruns and construction delays due to engineering revisions and numerous project and corporate management mistakes. Latest example is a $88 million cost increase in July and August recently disclosed in a 10-Q filing by the Southern Company parent of Mississippi Power. Total estimated cost is now over $5.8 billion – more than three times the original estimate in 2006.
But the most revealing disclosure is the new completion date: sometime after mid 2015 vs early next year earlier this year. In other words, sometime between now and infinity but not before mid 2015. The explanation: “construction, start-up and operational readiness activities and additional contingency.” In other words, trying to build and start up the plant. The problem is the company doesn’t have enough information or knowhow to build the plant and operate it safely. It apparently has figured this out and is giving itself plenty of time to decide what to do.
Project risk warnings. The project’s Independent Monitor has known and repeatedly warned about the information and competence gap and resulting project risk. These warnings were most recently summarized in its 99 page report of July 21 in rebuttal to 999 pages of excuses by the company’s Washington DC consultants. The Independent Monitor is the engineering consulting firm of Burns and Roe. It advises the Public Service Commission Staff which advises the PSC.
The Independent Monitor recently got a big budget increase. This is telling. It probably means more thorough reviews and more damaging and disturbing revelations. It may mean the PSC is getting nervous about its role in Kemper. Others too. There are good reasons.
So far, the consequences of the runaway project have just been huge cost overruns and construction delays. The jury (PSC) is still out on who pays for the experimental plant. The company says not to worry, it will pay for the “excess” cost, not customers. But it is trying to define excess so as to stick customers with billions more than the cost of the same size natural gas plant and charge them over twice as much for the lignite plant’s electricity.
Safety risk. But something much more disturbing than cost risk is buried in the Independent Monitor’s report. There is also safety risk. It is measured in injuries and deaths, not dollars. It has the same root cause as the cost overruns and construction delays: inadequate information. The Independent Monitor emphasizes that Kemper’s gasifier is a First of a Kind plant. It is supposed to partially burn lignite in a very large high pressure high temperature reactor to make a synthetic natural gas to drive turbines to generate electricity. It is a potential bomb (the kind that explodes).
The Independent Monitor says the company skipped a critical step for a First of a Kind plant. It went from a pilot plant reactor to a full scale commercial plant. The commercial plant is much more complicated and over fifty times larger. The customary and prudent thing would be to build a semi-works plant first based on pilot plant data to test the First of a Kind concept and to generate useable information to scale up and design and operate the commercial plant. The company didn’t do this. It was in a hurry.
The lack of reliable cost, engineering, and operating data is the root cause of the cost overruns and construction delays. This was aggravated by the decision (driven by tax credit deadlines) to start construction before the plant was designed based on the incomplete data that was available. So, the Independent Monitor says, the First of a Kind Plant may not operate. The only way to know is to try to start it up and see if it works. It could be a total loss. Worse, the plant may not be safe. Likewise, the only way to know is to try to operate it. But is it safe to try?
The China Syndrome. The process to partially burn or oxidize lignite operates at 1800 degrees Fahrenheit. There are hundreds of tons of burning lignite circulating in a twenty story high reactor operating at high pressure. The company found a safety issue in reviewing its design of this system. Here’s how the company described it as quoted in the Independent Monitor’s report:
“Some failures can be sudden and catastrophic. Of most concern are the syngas scrubbers which are directly coupled to the gasifier and syngas system at over 600 psig. Major loss of containment on the syngas scrubbers would likely result in explosion due to large release of toxic syngas and could cause rapid depressurization of the gasifier, causing ash to inflate/expand and violently push its way through the syngas coolers, PCD and syngas scrubbers, creating steam explosion and uncontrolled ejection of 1,800 deg. F ash into the gasifier structure and onto the plant site.”
Unknown hazards? Fortunately, the company caught this safety issue in design review. It reported it in an effort to get customers to pay to fix the mistake. (The Independent Monitor said no.) How many safety issues has it missed or not reported? Are there others that might have been found and avoided by building and operating a semi-works plant first? Let’s hope there are none. But there’s no way to know except to start the gasifier up.
Think making excuses for repeated cost overruns and construction delays gets old? And is embarrassing? The company is pretty good at spinning. But try spinning a catastrophic explosion spewing toxic gas and red hot ash over the plant site and countryside.
Would you like to be on the plant startup team? Would you like to be held responsible for the plant? Even partly responsible – say as a politician who promoted it? Or as a legislator who helped finance it? Or a regulator who approved it? Or as a director who went along with company management unwilling to admit a mistake?
Probably not. So, the plant may never start up.