Indiana Gasification

Learn more from the Center for Media and Democracy's research on climate change.

This article is part of the Coal Issues portal on SourceWatch, a project of Global Energy Monitor and the Center for Media and Democracy. See here for help on adding material to CoalSwarm.

Indiana Gasification LLC is a subsidiary of Leucadia National Corporation, a holding company that, through its subsidiaries, engages in mining & drilling services, telecommunications, healthcare services, manufacturing, banking and lending, real estate, and winery, among other businesses, including joint ventures with Berkshire Hathaway.

Proposed Indiana SNG plant

In 2008, Leucadia, through its subsidiary Indiana Gasification LLC, proposed Indiana SNG, a facility that would convert 3 million tons per year of Indiana coal into substitute natural gas (SNG). The project has two "development partners," E3 Gasification and Johnston & Associates.

In November 2009, the U.S. Department of Energy announced that it was considering the project for a federal loan guarantee. The project eventually got loan coverage of $1.6 billion from the U.S. Department of Energy's Energy Policy Act of 2005.

In February 2010, legislation to grant eminent domain for a carbon dioxide pipeline starting at the proposed plant and leading to oil fields in Texas cleared the state Senate, and was sent to the House Commerce, Energy, Technology and Utilities Committee. E3 Gasification LLC is working to develop the project, including a pipeline that would run underground from the Rockport plant down to Louisiana and Texas. Coal would be burned in Indiana to produce energy, while the carbon dioxide produced would be captured and then pumped through the pipeline, to be injected into oil fields and used to apply pressure to increase oil production in Texas and Lousiana.

On December 16, 2010, Indiana Governor Mitch Daniels made the announcement that the Indiana Finance Authority (IFA) Board had voted unanimously to approve the $2.65 billion project in Spencer County. According to the agreement, IFA will enter into a 30-year contract with Indiana Gasification, LLC, a subsidiary of Leucadia National Corporation, to purchase 38 million MMBtus (approximately 17 percent of the total used by non-industrial customers in the state) of substitute natural gas when SNG production begins in late 2015. Indiana coal will be used to produce the SNG, as well as other byproducts - sulfuric acid, argon, other rare gases, and vitreous slag for building roads. The IFA has completed its negotiations and will file a petition to the Indiana Utility Regulatory Commission (IURC) for approval of the agreements related to this project. Indiana Gasification is in the final stages of negotiating its loan guarantee with the U.S. Department of Energy. Depending on the completion of the IURC process and the environmental impact study, construction is set to commence in early 2012.

On February 8, 2011, Indiana Senators rejected an imminent domain measure for a pipeline to move carbon dioxide from the proposed Indiana SNG plant to buyers on the Gulf Coast. The vote was 28-21, with 16 of the chamber's 37 Republicans opposed. Without the legislation allowing eminent domain for pipelines, lead investor Leucadia doubts it could secure the federal guarantees on construction loans for the plant. A top Leucadia official in Indiana, Mark Lubbers, once a chief adviser to Gov. Daniels, is expected to confer with company and legislative leaders about bringing the eminent domain measure back to the General Assembly.

In May 2013 Indiana Gasification said the plant was "likely dead" after passage of a bill in the state Legislature that April. The state bill would allow the Indiana Utility Regulatory Commission to review the project's financing contract and set new standards, which Indiana Gasification said would add two years of delays and make financing impossible. The company said the only way the coal-to-gas plant would be revived is if the state Supreme Court took up the matter, which they believe is unlikely. The project's suspension also suspended a proposed CO2 pipeline from the plant by Denbury Resources.

Resources and articles

Related Sourcewatch articles

• United States and coal
• Global warming
• Federal coal subsidies
• Proposed Synfuels Plants in the United States
• Integrated Gasification Combined Cycle (IGCC)
• Syngas
• Existing U.S. Coal Plants
• Coal-to-Liquids Fuel Promotion Act of 2007
• Petroleum coke
• Coal-to-Liquids Coalition
• Coal-to-Liquids in Australia
• Coal-to-Liquids in China
• Greenhouse Gas Limits in 2007 Energy Act
• Rentech