Ohio Attracts Another NatGas-Fired Power Project, Potentially More Industry

Jamison Cocklin – NGI’s Shale Daily

http://www.naturalgasintel.com/articles/110118-ohio-attracts-another-natgas-fired-power-project-potentially-more-industry

Yet another developer is at work to build a natural gas-fired power plant in Appalachia, this time in Ohio’s Monroe County on a rust belt site that was purchased out of bankruptcy with a vision to revitalize it for Utica Shale-related growth.

A subsidiary of Fortress Transportation and Infrastructure Investors LLC (FTAI) plans to file for a key air quality permit with state regulators this month to build a 485 MW combined-cycle facility at the Center Port Terminal in Hannibal. It’s the latest downstream development in a sleepy area that’s been lifted by Utica production.

At a site miles up the Ohio River in Belmont County, PTT Global Chemical pcl is considering building a multi-billion dollar ethane cracker. “The idea of a cracker right up the river — that completely changes the game in the region,” said Mark Barry, a project development executive with FTAI subsidiary Ohio River Partners Shareholders LLC.

Existing rail lines, a port and transmission lines were a few of the things that attracted FTAI to the site, he said. Barry said FTAI is “methodical.” An affiliate of Fortress Investment Group LLC, it was established as a cash vehicle to generate long-term returns through transportation and infrastructure assets. FTAI went public in 2015 and has a number of port and intermodal projects across the United States.

The company and the power plant it intends to build are exactly what Eric Spirtas had hoped for. He’s the president of Hannibal Development Partners LLC, which purchased the site for $25 million in 2014 from bankrupt Ormet Corp. Ormet operated an aluminum smelting plant for years at the site but was forced to close it in 2013 after facing low aluminum prices and climbing electricity rates — putting more than 1,000 people out of work at the time.

Center Port Terminal is now home to about 10 tenants, Spirtas said. They handle multiple clients working throughout the Utica and Marcellus shales. Transloading, equipment staging and personnel management operations take place daily at the site. Hannibal Development initially marketed the property as a central oilfield service terminal, but later looked at the bigger picture to try and attract a power plant or large manufacturer. Even after FTAI’s decision, there’s room for more at the 1,700-acre site.

“We’re also looking at the long-term. We’re talking to natural gas liquids (NGL), and gas-to-liquids (GTL) companies, refineries, crackers; and now we have the power plant developer,” Spirtas told NGI’s Shale Daily. “This site is perfect for long-term operators. Once you have the power plant, you have a position where satellite companies here, down the road, in the area can jump in and enjoy that megawattage.”

Barry added that FTAI plans to sell power into the PJM Interconnection marketplace, noting that selling directly to an adjacent business is complicated by regulatory, contractual and physical considerations. The company is, however, studying the option, which depends on how the project and site develop.

In the late 1950s, Ormet built two-coal fired plants to power its facility that were supplied by a nearby coal mine, demonstrating how different the region’s economy once was. American Electric Power Co. later bought the plant, built a third unit and was eventually forced to close it without a dedicated facility to supply.

Development at the Center Port Terminal is exactly what local officials had hoped for. Private and public sector economic development organizations across the Appalachian Basin have stepped up to market old brownfields that once served as coal-fired plants or booming steel operations. Ohio, Pennsylvania and West Virginia have even signed a cooperative agreementto create policies that promote the region’s prolific shale plays.

“We’re actively working on fuel supply. Being on top of two basins is really a good thing,” Barry said of the Marcellus and Utica. “There are pipelines in the area. There’s a range of options that we’re doing the economic evaluation on now and receiving proposals from folks at different places on the value chain…We’re bullish on industrial development in the area and in terms of what seems to already be happening.”

The site is near the Clarington hub and both Columbia Gas Transmission and Dominion Transmission are nearby. FTAI has already hired Black & Veatch as the project engineer, and it has enlisted Tetra Tech Inc. as the project’s regulatory consultant. Third parties would be contracted to operate and manage the facility.

Barry said the company estimates that the plant would cost between $500 million and $600 million. The target in-service date is 2020.

FTAI joins a growing list of developers that have flocked to the region to take advantage of low-cost natural gas and build power plants. In Ohio, there are 10 other projects that have either been proposed or that are under construction. Roughly double that have been proposed or are being built in Pennsylvania, while developers currently hope to advance three gas-fired facilities in West Virginia.

While questions remain about how many of those facilities ultimately will be built or how viable they’ll remain in the future in the face of stiff competition from other power sources, the development is good for the region, Spirtas said.

“Power begets industry,” he said. “And any one of those NGL, GTL, refineries or crackers would need power, would need energy, would need steam. All of those things are being created.”

Ohio Gas Association