Southern agrees to coal research with Chinese firm

JACKSON, Miss. (AP) -- Southern Co. says it has signed a deal with a state-owned Chinese coal and energy company to work together to develop coal technologies, based in part on the coal gasification and carbon capture technology that Southern subsidiary Mississippi Power Co. is deploying at the $5 billion Kemper County power plant.

The deal signed April 8 calls for Atlanta-based Southern to work with Shenhua as well as government agencies and universities.

Southern spokesman Tim Leljedal said the technology Southern is using at Kemper is "central" to the partnership.

"We believe there are applications around the world for this technology," Leljedal said Tuesday.

Shenhua is a huge company that mines coal, generates electricity and makes chemicals from coal. It posted 2013 revenue of $45.6 billion and profit of $7.2 billion at current exchange rates. Southern, one of the largest U.S. electric utilities, had revenue of $17 billion and profit of $1.7 billion last year.

Southern already has a deal with Houston-based engineering firm KBR to market the technology. In a 2013 settlement with the Mississippi Public Service Commission of lawsuits over the Kemper plant, Southern agreed to give Mississippi Power ratepayers 10 percent of after-tax licensing revenue of the gasification technology to power plants, in recognition that ratepayer dollars would help prove its commercial feasibility.

Industry observers say the research deal could be a big step toward commercializing the technology.

Jeff Phillips, senior program manager for advanced coal research with the Electric Power Research Institute, said China is gasifying coal to make plastics and liquid fuels, but is mainly using hard coals. But the transport integrated gasification (TRIG) technology — which is what Mississippi Power is using at what it calls Plant Ratcliffe in Kemper County — can gasify soft coals such as lignite. Phillips said that would fit in with Chinese aims of developing more of their soft coal reserves.

"It seems it fits a niche that there's really not a good alternative to right now," Phillip said of TRIG.

He said that beyond developing lignite, China may be interested in using carbon dioxide to force more oil out of old oil fields, as companies plan to do with carbon dioxide they have contracted to buy from Kemper.

The huge cost overruns at Kemper and at a plant that Duke Energy built in Indiana have depressed the market for additional plants in the United States, Phillips said, especially because a glut of natural gas has made it financially attractive to use that as fuel for power plants.

Gasifying coal and stripping out global warming-inducing carbon dioxide could still have appeal overseas, though. President Barack Obama's administration has been promoting TRIG to other countries, with Energy Secretary Ernest Moniz bringing ministers from other countries for a tour of Kemper in November 2013.

"We have a special place in our hearts for the Kemper plant in part because it's really demonstrating a novel gasification technology, that TRIG gasifier at commercial scale," Deputy Assistant Energy Secretary Julio Friedmann told a congressional committee in February.

So far the TRIG technology has been licensed to only one plant in China, where construction has not been finished. Phillips said outside China, it could also have appeal in other areas with lots of lignite, including Poland and Australia.

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