Ind. lawmaker: Coal-gas plant no longer feasible

Published on NewsOK Modified: March 27, 2013 at 5:17 pm •  Published: March 27, 2013
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INDIANAPOLIS (AP) — An Indiana lawmaker who opposes a 30-year contract with the developers of a proposed $2.8 billion coal-gasification plant told a House committee Wednesday that the surge in U.S. shale gas production has driven down natural gas prices, leaving synthetic gas projects unfeasible.

Sen. Doug Eckerty, R-Yorktown, also told members of the House Utility Committee that the 30-year contract contains a "financial imbalance" that would saddle Indiana ratepayers with any losses incurred by the plant proposed for the Ohio River city of Rockport.

The House panel heard testimony from Eckerty and several plant opponents, including environmentalists, Indiana Farm Bureau and representatives of Evansville's Vectren Corp.

Supporters of the plant also presented their case against a bill Eckerty is sponsoring that would direct the Indiana Utility Regulatory Commission to review the project and the 30-year contract between plant developers Indiana Gasification LLC and the Indiana Finance Authority.

Under that deal, the state agency would buy the company's synthetic natural gas and resell it on the open market. Indiana utility customers would receive discounts or increases on their bills, depending on whether those gas sales make a profit or a loss.

The 30-year deal would tie 17 percent of Hoosier gas users' bills to the Rockport plant's rate.

Eckerty said much has changed since the project was first proposed several years ago at a time of high natural gas prices.

He said the nation's booming shale gas market, where hydraulic fracturing, or "fracking," is used in drilling for gas has driven down natural gas prices for the foreseeable future. Eckerty said similar coal-gasification projects in Illinois, Mississippi and Louisiana have been canceled or revised to eliminate synthetic gas as one of their products.

"What does it say to you that nobody is willing to finance this project unless the utility ratepayers in Indiana are saddled with losses for potentially up to 30 years?" Eckerty asked the committee.

Mark Lubbers, the Indiana project manager for the coal-gasification plant's financier Leucadia National Corp., told the committee that natural gas rates are historically volatile and therefore difficult to predict and that the shale gas boom isn't sustainable.