By Michael Lynch
Hype over a big-ticket energy project is not the first economic development proposal in recent years that grabbed the attention of the Thunder Bay business community, but it is the second. The first was an $180-million dollar waterfront development that was cancelled by Thunder Bay city council earlier this year. The decision divided the council and still has business people up in arms.
In March of this year, a new proposal was put before the community – a massive three-phase alternative energy project that promised to create both seasonal construction jobs and long-term jobs.
Synfuel Technologies, a small U.S.-based company with 14 employees, is willing to spend approximately $140 million immediately, and 10 times that much over time, to pursue the energy projects.
The company is described as “a private corporation formed for the purpose of constructing, operating and integrating gasification plants utilizing low-value fuels and upgrading to value-added syngas and/or hydrogen streams for use in producing anhydrous ammonia or other industrial products, a well a electrical power generation.”
Robert Van Patten, Synfuel president, says Thunder Bay will know as early as sometime in June whether the project will be built in the city.
The first phase of the Synfuel project could be producing 120 megawatts “within two years,” Van Patten says, “and the plant could be expanded by 500 megawatts in four years.” Another 500 megawatts would bring the total to 1,120 megawatts. The cost of the three phases is estimated at $1.4 billion.
Van Patten says his company is wrapping up “some tests” before proceeding with the first phase. The “new technology” will use low-value feedstock (petroleum coke) to produce syngas (synthesis gas) that in turn can be burned directly to produce electricity.
Petroleum coke is a byproduct of oil refining and Alberta has been reported to have 20 million tonnes. Synfuel is testing petroleum coke from different sources in Alberta, Van Patten says.
James Sprangers, Synfuel’s chief operating officer, explains the new gasification technology as “the reduction, not the combustion, of waste hydrocarbons,” such as petroleum coke, ashphaltenes, heavy oil and high sulphur coal.
“A severe reducing environment is created with high temperature, high or negative pressure and pure oxygen,” Spranger adds. “The hydrocarbons are reduced to elemental form, which burn as syngas, that are as clean or cleaner than natural gas, depending on the technology employed.”
Synfuel is not concerned about emissions from the process.
“The contaminates in the hydrocarbon, such as sulphur, come out in a pure elemental form and are recycled, not emitted into the atmosphere,” Sprangers says
Energy Probe, a national consumer and environmental watchdog, is expressing doubts about the project.
Tom Adams, executive-director of Energy Probe, questions Sprangers’ explanation. “Theoretically gasification technology is very attractive.” he says, “But Ontario has 100 years of effort with nothing but failures to show for it, including a Polysar project in Sarnia.”
Adams says synthetic fuel is “extremely difficult to use on a practical basis.” He also questions the economic viability of the project. “Hauling represents a substantial cost. The natural place to build (the energy plant) would be in Alberta.”
“My suspicion is these guys are looking for government money.”
Sprangers says Synfuel has hired an environmental consultant with provincial and federal regulation expertise. He believes the energy project will not be subject to a full environmental assessment.
“What (the consultant) told us is we would be in for the lesser standard assessment.”
“The company may be right, because the provincial government has weakened environmental standards,” Adams says.
Synfuel’s project gained early credibility when Larry Hebert, general manager, Thunder Bay Hydro, announced it in March. He announced the project is the first phase of a three-phase $9-billion development by the Northwest Energy Association (NEA).
Hebert also serves as CEO of the NEA, a consortium of six municipal utilities in northwestern Ontario. NEA’s second phase is connecting the Ontario and Manitoba power grids, extending a grid eastward along Highways 11 and 17, plus three connections to the U.S. The third phase involves expanding a grid to northern First Nation communities.
Van Patten says Synfuel will “proceed with permitting (from government agencies) once the tests are finalized.”
After the permits have been obtained, Van Patten says, the company will start site engineering, to be followed by detailed engineering of the plant.
Van Patten says Thunder Bay Hydro will have no trouble selling the power in the Thunder Bay area once the first phase of the project (120 megawatts) is built.
A new grid will be required to handle the load for a second phase of the Synfuel project (500 megawatts). Hebert says it does not matter whether the provincial governments plan to privatize Hydro One (owner of transmission lines) proceeds or is stalled. He says the NEA will seek investors to build the grids.
Adams describes the NEA’s two grid proposals as “fanciful.” He says the business cases for building the grids are weak. “There is no chance of a positive return on such a massive investment.”
Hebert says, “There are a number of private companies that own a grid, including Great Lakes Power. He said in March that the NEA will consider taking a small equity position in the grids and the Synfuel project.
Synfuel has two projects, Sprangers says, including the project in Thunder Bay. The other is a $900 million US development for Farmland Industries in Enid, Okla. that is much further advanced. Farmland is “a large diversified farmer co-operative,” with headquarters in Kansas City, Mo.
Synfuel is working on engineering drawings to develop a coal gasification plant that will supply syngas to Farmlands’ adjoining ammonia fertilizer manufacturing facility.
