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DOE Stops Payments for HECA Carbon Storage Project
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On July 10, the Department of Energy (DOE) stopped stimulus funding payments for a California carbon capture and sequestration (CCS) project, saying the project being developed by SCS Energy LLC has “failed to meet certain milestones” required as part of a $408 million grant.  The $4 billion Hydrogen Energy California (HECA) project in Kern County, Calif., has received about $153 million of the funding.  “If and when HECA is able to meet those obligations—including firm agreements to utilize the Elk Hills field or one or more alternative storage sites for the project—the Department will work with the project developers to determine the best path forward,” according to a DOE statement.  However, as required by the American Recovery and Reinvestment Act, funds must be spent by September 30, making it unlikely the company would be able to utilize the funding.


As envisioned by the privately held company, the demonstration project would convert coal and petroleum coke into hydrogen, which would be used to fuel a 300-megawatt power plant and produce 1 million tons of fertilizer annually.  The carbon dioxide from the project would be transported via pipeline to the nearby Elk Hill Oil Field, where it would be used to increase oil production by an estimated 5 million barrels per year.  The California Energy Commission announced July 7 it suspended the project's application for certification for six months and noted the project's backers were seeking buyers for its sequestered carbon dioxide after a deal with Occidental Petroleum Corp. fell through.


HECA marks the second carbon capture and sequestration project in which the Energy Department has suspended stimulus funding after it announced in February it was halting $1 billion in funding for the FutureGen 2.0 project, the department's premiere CCS demonstration project backed by a coalition of coal companies that included Alpha Natural Resources Inc. and Peabody Energy Corp.  That leaves one remaining CCS project being backed by the DOE through stimulus funding: Summit Power Group LLCs Texas Clean Energy Project.  The $1.7 billion project, which was awarded $450 million in Recovery Act funds, is planned for Penwell County, Texas, and would generate 400 megawatts of electricity and capture about 2.6 million metric tons of carbon dioxide per year.  That project is behind schedule as well but was considered the furthest along of the three.

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