Iron Range project off fed's priority list

The U.S. Department of Energy's list of priority projects no longer includes the $1.4 billion coal gasification plant in the Iron Range, which critics of the plant say means it has fallen out of favor in Washington.

The project led by Excelsior Energy of Minnetonka has received about $22 million in financial support from the federal government, $10 million in state funding and a $9.5 million loan from Iron Range Resources.

DOE spokeswoman Tiffany Edwards told the Duluth News Tribune that the project was taken off the list because an environmental impact statement was completed in November. However, the newspaper reported that other projects that have completed the statements remain on the list.

For about five years, the Mesaba Energy Project near Bovey in northeastern Minnesota could reliably be found on a DOE chart tracking the progress of key projects in which it has invested. But the Excelsior Energy project isn't on the department's latest chart.

Excelsior Energy general counsel Thomas Osteraas said he believes the project will be completed.

"We remain committed to moving the project forward, and we continue to do that," he said.

Osteraas said the project is no longer on the DOE priority list, because the final Environmental Impact Statement had been completed.

Excelsior intends to build two 600-megawatt generators. They would be fueled by coal that has been converted into a synthetic gas that will burn more cleanly than conventional pulverized coal. Excelsior estimates the project would employ more than 1,500 people during construction. Another 107 people could be hired to run the plant.

Charlotte Neigh, a high-profile critic of the project and member of Citizens Against the Mesaba Project -- commonly known by its acronym CAMP -- takes its omission from the list as an indication the project may be running out of gas.

She said the other coal projects still on the DOE chart include some sort of plan to capture and store greenhouse gases on-site, a feature lacking in Mesaba's design.

The project has been moving toward groundbreaking, but has faced setbacks.

In March, Excelsior announced that the Minnesota Public Utilities Commission had approved a plant site permit for the project. But the same commission also rejected an agreement that would have obliged Xcel Energy to buy electricity from the plant. Consequently, Excelsior lacks a guaranteed customer for the power it generates.

Iron Range Resources Commissioner Sandy Layman told the newspaper last week that her staff was monitoring the progress of the Mesaba Energy project.

"The agency is aware of the uphill battle, but we continue to stand behind them, recognizing the challenge that they face, absent a power purchase agreement," she said.

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Information from: Duluth News Tribune

(Copyright 2010 by The Associated Press. All Rights Reserved.)

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