A Houston company is proposing to build what it calls the world's first "green refinery" on the Texas Gulf Coast using an established technology it says could revolutionize the way transportation fuels are made.
The proposal, by Hunton Energy, envisions a refinery with the capacity to convert 340,000 barrels per day of Canadian bitumen crude oil into clean-burning jet and diesel fuel. Its defining feature is the integration of a gasification facility, which would capture most of the plant's carbon emissions before they reach the atmosphere.
Hunton previously announced plans to build a $2.8 billion gasification facility at Dow Chemical Co.'s manufacturing complex in Freeport. The new refinery could land at the same Dow site or at a stand-alone site in Texas City, Hunton officials said.
But key aspects of the refinery proposal, including how it will be financed, have yet to be determined.
Hunton officials also will not disclose names of companies that have committed to the project, citing sensitivity of negotiations. Those companies include a major oil firm that will supply crude oil and another major company that has agreed to buy the plant's chemical products.
With such big blanks to fill in, the project could face challenges as it moves forward. Other companies have seen proposals bog down amid local opposition, escalating costs or other factors.
But Hunton officials insist backing is solid for the project, partly because potential partners have been impressed by a management team that has decades of experience in gasification technology at General Electric, Chevron and the former Texaco.
Hunton Energy is a subsidiary of the Hunton Group, a provider of commercial and residential heating and air-conditioning systems.
Though not new, gasification technology has been touted recently as a "clean" way to produce electricity from coal. Yet high project costs have stalled wide adoption.
Hunton's Freeport gasification facility will convert coal or petroleum coke into synthetic natural gas and steam, most of which will be sold to Dow. All of the carbon dioxide will be captured and sold to the oil and gas industry for enhanced oil field production.
Announced in December, the gasification plant was originally slated to break ground by the end of the year. But it was pushed back to early 2009 pending a review of an air permit application by the Texas Commission on Environmental Quality, Hunton Energy President Rocky Sembritzky said.
A spokesman for the state commission confirmed the application is still under review and did not know when the agency will rule on the permit.
Environmental groups have championed the gasification plant as an example of how Texas can meet its growing energy needs while reducing pollution.
"We think the Hunton power plant is the game changer in the utility industry that we have all been waiting for," said Tom "Smitty" Smith, director of consumer group Public Citizen's Texas office.
But Hunton aims to take the project a step further.
By integrating a gasification plant into a refinery, Hunton said it can slash fuel-making emissions by eliminating several units found at conventional oil refineries and create cleaner fuels.
"Our company is using proven technologies to build a better mousetrap," Sembritzky said. "It is a shame that we as a country have not done it sooner."
In conjunction with the refinery, Hunton is planning a plant in Canada that will make agents used to dilute bitumen so it can travel through pipelines. Found in abundance in Canada, bitumen is a claylike rock that contains crude oil.
To get the bitumen to the Gulf Coast, Hunton may contract with a pipeline operator already planning to build a pipeline transporting heavy Canadian crude to the Gulf Coast, Sembritzky said. Or it may build its own pipeline.
Such a move could push the price tag of the project still higher. The whole plan -- including the Freeport gasification facility, green refinery, Canadian facility and pipeline -- could reach nearly $30 billion, he said.
But Hunton officials said the project could be paid back in as little as three years, partly because of higher-than-average fuel yields from the Canadian bitumen that would be processed in its refinery.
Later this month, Sembritzky will travel to the United Arab Emirates to meet with possible financiers.
Copyright (c) 2008, Houston Chronicle. Distributed by McClatchy-Tribune Information Services.