High Hopes, Rocky Realities, An Unknown Future

High Hopes

The Leucadia coal gassification plant, also known as the Chicago Clean Energy project, received another dose of legislative support in the final days of the Illinois legislative session.

Project director, Hoyt Hudson, says the three billion dollar plant will bring clean energy, 1,100 temporary jobs and over 200 permanent jobs to a struggling area.

The synthetic natural gas plant would use steam to break down coal and petroleum coke. This process takes place underground allowing the gas to be filtered.

This process would allow for Illinois coal, notably high in sulfur and restricted in most states, to grow creating 165 mining jobs.

Leucadia is required to capture 85 percent of CO2 emissions. To meet this, Leucadia plans on redirecting it through an underground pipe (construction also pending) extending to Texas to further oil extraction.

Consumer's bills will also be reduced by $100 million over the next 30 years, says Hudson. A Consumer Protection Reserve Account of $1.5 billion is planned to bring the price of substitute natural gas down to the price of natural gas if needed.

But the project's high hopes have not moved forward smoothly.  

Rocky Realities

The initial bill supporting Leucadia was vetoed by Quinn in March of 2011.

In July Quinn signed a revised bill, aimed at enticing utility companies to enter the 30-year contracts with Leucadia, based in NY, by establishing biennial rate reviews of utility companies who do not. Under this law, no utility company could purchase more than 42 percent of the plant's output.

Estimating that the project would inflate its customers' bills by $126 million a year, in November 2011, Nicor sued in state court to block the deal.

People's Gas and North Shore Gas completely rejected the contracts, citing their own calculations which show a one billion dollar increase in the cost of gas for their customers over the next decade, causing bills to climb roughly six percent.

The loss of funding by People's and North Shore, contestation over whether the 42 percent-per-company applied to the plant's construction costs on top of output and a 16 percent cost gap to fill spurred the drafting of the bill passed at the end of May.

This bill forces Ameren Illinois and Nicor Gas Co. to shoulder 95 percent of the construction costs, a burden company representatives say will be felt by their costumers. 

 

Leigh Morris, Ameren media representative, says the company has also filed an opposition. “Its not in our customer's best interest,” says Morris. 

 

An Unknown Future

Just six years ago natural gas prices were breaking double-digits. Today, at $2.42 per MMBtu, according to U.S. Energy Information Administration, natural gas is three times cheaper than the synthetic natural gas to be produced by Leucadia.

Yet Ted Stalnos, executive director of the Calumet Area Industrial Commission and life-long resident of South Chicago calls the plant a “tremendous opportunity.”

“No one can predict what the price of natural gas could be in the future,” says Stalnos. “We are only guessing.”

What is certain is that the project remains controversial among southeast residents. While most labor unions and organizations support the project, over 6,000 letters in opposition were delivered to the Illinois Consumer Commission in mid-May. 

Many of the letters expressed concern for loved ones living near the proposed plant's site.  The area ranks first in Chicago for a majority of pollutants.  Other letters link the familiarity of cancer and asthma in the area to it's industrial past.  

Some letters, like Rachel C. Kuhn's, highlight already existent alternatives.  Wind and solar clean energy alternatives, she writes, have already created over 10,000 jobs in Illinois. 

Also true is that Illinois is now the fourth largest wind-producing state in the country and has enough generation capacity to power nearly 1,000,000 homes. The Twin Falls Wind Farm, just outside of Bloomington, is the largest wind farm in Illinois and cost $700 million