A company planning to produce synthetic natural gas says it has resumed talks with so-far-reluctant Louisiana utilities about buying its product as a hedge against often-volatile natural gas prices. Lake Charles Cogeneration plans to create synthetic gas with petroleum coke, a plentiful byproduct of refining.
The project, backed by $1 billion in GO Zone bonds provided through the federal government as a hurricane recovery measure, was put together before natural gas prices plummeted last year. So far, major power and gas suppliers in Louisiana have not been willing to buy synthetic gas, citing the company’s desire for long-term contracts, questions about transportation and storage and whether consumers would benefit. The Public Service Commission is monitoring the progress—but has refused to intervene.
On Wednesday, LCC attorney Luke Piontek told the PSC the company had been talking again with Entergy—and was designing a revised business plan that it would present to the commission staff if LCC’s investors approve. The company’s principals include Hunter Johnston, a Washington, D.C.-based development partner and son of former U.S. Sen. J. Bennett Johnston, who has lobbied on behalf of the company.
Piontek says besides synthetic gas, LCC will be manufacturing industrial gases and is in negotiations with potential major buyers for that output. He says company-hired economic consultants were projecting that natural gas prices—currently trading around $4.25 per thousand cubic feet—would be in the $7 to $8 range by the time the plant opens in 2013.
