Port of Lake Charles

Lake Charles Harbor & Terminal District
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Port secures 25-year contract with $2.5-billion clean energy plant

Posted on: October 30th, 2012

The Port of Lake Charles has secured a $2.5-billion first-in-the-nation gasification plant project to be located on port property and adjacent to the port’s bulk cargo handling facility known as Bulk Terminal No. 1.

The Port of Lake Charles has partnered with Lake Charles Clean Energy LLC (LCCE), a subsidiary of Leucadia Corporation, through a 25-year operating agreement that will greatly enhance the economic position and stability of the port over the next 25 years and beyond. To be able to efficiently handle this large volume of new cargo, the port’s Bulk Terminal No. 1 facility will need to be completely reconfigured and improved at an estimated cost of $100 million dollars.

LCCE has concluded several major long-term commercial offtake contracts—up to 25 years each—with three major companies, including British Petroleum Products North America, Inc. (BP), one of the top five refiners in the U.S. These purchase contracts represent a major step on the path to groundbreaking for this first-of-its-kind processing facility. Construction on the new plant is expected to commence by mid- 2013.

LCCE will use new gasification technologies to cleanly produce industrial liquid and gas products from petroleum coke (petcoke). These products—methanol, sulfuric acid, argon, carbon dioxide, and hydrogen—will be sold by LCCE to BP, Air Products and Chemicals Inc. and Denbury Onshore LLC. The products can then be safely and cleanly reused in a variety of manufacturing processes. Additionally, substantially all of the carbon dioxide (CO2) that is generated in the high-temperature gasification process of the new plant will be captured and used for secondary oil recovery, enhancing existing supplies of oil for the nation’s energy needs. Methanol and CO2 are known as greenhouse gases, and LCCE will capture and sell these as usable products.

Through an operating agreement with LCCE, the Port of Lake Charles will provide cargo-handling services to unload and deliver petroleum coke and other materials needed for the plant operation. The port will also load trucks, railcars, barges and ships with LCCE’s liquid products for transportation to the plant’s customers. Port personnel will be used in these activities.

“The Port of Lake Charles was able to provide a unique combination of location, infrastructure and transportation capabilities to make this unique plant project work,” said La. House Speaker Chuck Kleckley, who worked closely with the company and the port to secure available financing mechanisms and necessary infrastructure needs as an incentive to attract the new plant to the Lake Charles area.

The impact of this project on port operations is significant: it will double the cargo tonnage handled at Bulk Terminal No. 1 to approximately 6 million tons annually, and will require cargo handling 24 hours a day, seven days a week.

The physical transformation of the bulk terminal will begin immediately with the relocation of current port customers so as not to negatively impact current customer cargoes. Next, the petcoke storage area will be reconfigured. An additional 1,000-foot concrete discharge dock with conveyors will be built to transport inbound coke to the storage area. A separate 1,000-foot liquid dock will be constructed to handle the loading of liquid products to a newly constructed tank farm, and later to vessels and barges.  This infrastructure will allow the port to handle the additional import tonnage of 2.6 million tons of petroleum coke and the export of 1.25 million tons of liquid products per year.

“Fortunately, the port is in a position to move quickly to take care of the infrastructure and operational needs that will make this project happen,” said William J. Rase III, executive director of the Port of Lake Charles.

The new project will bring a $2.5-billion capital investment and nearly 1,500 construction jobs for an estimated three years. When completed, the plant will create 165 permanent jobs, paying highly competitive wages and benefits for those trained in petroleum technology and other training programs currently offered at local educational institutions. In addition, the operation of the LCCE plant will require approximately 50 new full-time employees at the Port of Lake Charles for loading and unloading related cargos.

The Port of Lake Charles worked closely with the state and federal governments to ensure the project could take advantage of federal financial incentives. Rase credits U.S. Senators Mary Landrieu and David Vitter and U.S. Rep. Charles Boustany, along with former State Senator Willie Mount and all the Southwest Louisiana legislative delegation, with helping to clear the way for the plant to benefit from Gulf Opportunity Zone (“GO Zone”) tax-exempt bonds available from Hurricanes Rita and Ike which will be issued by the port for the project.

Additionally, the U. S. Department of Energy awarded LCCE a $261-million grant as part of an effort to encourage the capture of greenhouse gases from industrial sources. Methanol and CO2, both greenhouse gases, will be captured and sold as usable products by LCCE.

“This new state of the art plant is a total win-win-win,” said Harry Hank, president of the Board of Commissioners for the Port of Lake Charles. “Southwest Louisiana’s economy and the port will benefit for a very long time from this project that creates badly needed jobs for our area by using innovative green technology to economically produce useful products for numerous manufacturing and production facilities through-out the United States.” said Hank.