Where is Global?
By Bart Mills, The Lima News, Ohio
Jul. 27–LIMA — The picture is almost 9 years old. It shows a younger Dwight Lockwood, vice president of Global Energy, flanked by Lima Mayor David Berger and Allen Economic Development Group President Marcel Wagner, all smiling from the concrete slab they hoped one day would be home to a massive gasification plant and the key to a bright future for the city.
Today, almost a decade later, not much has changed. The three men in the picture still hold the same jobs and continue to push for a project they believe can mean great things for Lima. But the slab of concrete that stands there now — a different slab, poured three years ago in a moment of optimistic progress — now strikes many as a reminder of promises made that have yet to be fulfilled.
“I get that, but it’s still a useful piece of concrete. Concrete lasts a long time, and we’re still going to be building on it,” Lockwood said last week. “I still believe in this project.”
Moving goals After years of expectations, of reset deadlines, altered plans and rising costs, there are plenty of people in Lima absolutely convinced Global has a project that will never come to pass.
But, for supporters of the project, including Lockwood and others pushing to see it through, the real answer is that the project is slightly ahead of where it was last year, and the year before that, and the year before that.
“I’m hoping it all comes together pretty soon. There are some things that encourage me, but I can’t get into it beyond that, but it’s moving ahead,” Lockwood said.
If that answer sounds familiar, that’s probably because you’ve heard it before.
Archives of The Lima News show six separate deadlines and about as many different cost estimates. When the project was first announced in 1999, the company was touting a $500 million plant it expected to have up and running in 2002. Today, the cost is closer to $1.01 billion, and Lockwood said he hopes to have financing in place by the end of the year. Given that and a 30-month estimate for construction time, the new launch goal is June 2011.
The company has success finding customers for its end product. As early as 2001, Global signed its first customer, American Municipal Power-Ohio. That company and others have pulled their promise of business in ensuing years. The company now has a 10-year contract to supply energy to Procter & Gamble. The details of that arrangement have yet to be released.
That doesn’t mean there hasn’t been progress. Last June, the company filed a $350 million initial public offering in anticipation of its Lima plant. The filing with the Securities and Exchange Commission was the first step in seeing the company sold on the NASDAQ market and raising needed funds for the project.
Lockwood said the company is still working to meet requirements for the public offering, so stocks are not currently available to the public. Current shareholders in the company include Fifth Third Bank and the Belcaro Group. Chief Executive Officer Harry Graves owns about 69 percent of the company.
“There are some things we’re still working on, particularly on the debt side of that, which is a prerequisite of going forward. The product is financed with equity from the IPO and lending package, so those two have to come together,” Lockwood said.
Financing always has been the stated stumbling block for the project. Lockwood points out that a lot has happened since 1999 to lead to those problems.
“Early on, Enron happened. 9/11 happened. The credit markets happened. We’re trying to be innovative in the way we manage capital costs, and that whole thing is challenging,” Lockwood said. “For sure, I didn’t expect it would take this long. There have been … a lot of changes, but I still believe in this project.”
Permits remain One thing that’s not standing in the way is approval from the Ohio Environmental Protection Agency. The agency came close to pulling Global’s permits in 2004, after years of inactivity at the proposed plant site. The Ohio EPA eventually renewed the permit when the company showed proof it had a contract for construction. It was a few months later that workers poured the slab of concrete that stands at the site today.
The current lull in construction hasn’t endangered those permits, according to environmental specialist Jan Treadway.
“We are considering their permit valid. It’s our understanding that the completion of it is being held up by financial issues, but we are of the understanding they will shortly be resolved,” Treadway said.
Information released in the company’s 2007 initial public offering to the Security and Exchange Commission provided enough good news to convince the EPA, Treadway said.
“From that, I guess, we conclude that at this point in time things are moving forward. We are anticipating at some point in time additional activity will take place,” Treadway said.
Other projects The Lima Energy project may be top-of-mind for most folks locally, but for Lockwood and his partners at Global, it’s just one piece of the pie.
When they first came to Lima, officials talked about a similar project they were advancing on in Kentucky. That project never materialized.
Years before coming to Lima, the company made its first purchase, a Scottish plant called the Westfield Development Centre. That plant is currently not in operation.
According to Global’s Web site, it plans to restart operations at Westfield in two phases. In the first phase, officials have begun the work necessary to recommission an existing gasifier and add new equipment. The second phase would add seven new gasifiers, each using renewable feedstock. They would also build a new, 400-megawatt gasification facility at the site.
In contrast to the Lima project, the Westfield gasifiers will use fixed-bed gasification technologies.
The company also owns Wabash River Energy, one of two operating gasification units in the United States. Global purchased that plant in 1999 and kept it running off and on over the years. In recent years, it has been in operation, employing about 50 people.
Wabash Valley Power owns 50 percent of SG Solutions, which transforms petroleum coke into synthetic natural gas, which is then burned to generate electricity. The company last year bought one unit of the Wabash River Power Station from Duke Energy. The unit includes a 192-megawatt gas turbine and 100-megawatt steam turbine, along with the unit’s associated equipment and property.
To Lockwood, the fact that the Wabash facility is running and successful is proof the Lima project is a viable one.
“That’s the same gasifier technology, just more of them in Lima. It shows what we’re doing,’ Lockwood said.
Additionally, Global Energy holds mineral rights to approximately 783 million inplace tons of coal deposits in Wyoming and Indiana.
Reason for hope As much as any single issue that’s taken place in Lima during his 19 years in office, Berger’s reign is tied to the success or failure of Lima Energy.
During his 2005 re-election campaign, opponent Ned Bushong pummeled Berger with accusations that the project was an “Enron wannabe” and would never materialize. In the end, Berger won the election soundly, but the public doubts persist.
“Those who are skeptical will remain skeptical. That is their privilege,” Berger said. “But I am absolutely confident that it will happen.”
That confidence comes in part from regular contact with Lockwood and other Global managers. It also stems from a growing sense that the gasification process planned for Lima is an increasing viable part of the nation’s future energy plan.
Berger points to a recent Wall Street Journal article listing Global Energy among its picks for investors looking at new technology. And, just last week, former Vice President Al Gore included gasification in his proposed plan for a cleaner, independent energy future.
“There is no question that this technology will in fact produce for our nation the kind of clean energy that everyone is demanding. It is a timely project, truly cutting edge,” Berger said.
“It does in fact help,” Lockwood added. “There are folks that are eager to see this move forward because of that alternative energy aspect. It helps a certain part of that investment community to stay interested. They still want to see this happen.”
Berger acknowledged he and the whole community have a great deal invested in the success of Global, if not financially, at least in terms of the community’s growth.
In recent years, the city has been making room for a planned research and design center that would work cooperatively with the Lima Energy plant. The 14-acre site near Fourth Street will be used for the Lima Synthesis Gas Product Commercialization Center, adjacent to the plant.
Earlier this year, City Council approved a $165,000 contract for project engineering, including removing existing streets and houses, constructing drainage and making landscaping improvements. The project and money for purchasing the homes and lots are funded with Ohio Department of Development Job Ready Site grant money.
The city also is nearing completion of the creation of a nonprofit organization to steer the megacenter through funding searches and opening. But Berger bristles at the idea that the city may have too many eggs in the Global basket.
“I think we are pursuing an ambitious set of projects, and that is exactly what we need to be doing. We should not be looking backward. We have to reach for a global niche in the economy,” Berger said. “We have many eggs in many baskets. Global is, of course, just one of those.”
Berger is not alone in his optimism. All three Allen County commissioners said they remain hopeful the project will eventually come to fruition, although cautiously so.
“I think we’re encouraged that it’s in the process. It’s encouraging, but at the same time there’s a caution that ought to have been there in the first place,” Commissioner Sam Bassitt said.
All the players involved in making the Lima Energy project are aware of the general pessimism surrounding the project. Still, they remain convinced they will one day be vindicated in their optimism. The fact the project is still moving ahead while dozens of others have been dropped is a small success in itself, Lockwood said.
“I understand that people have this jaundiced view, but we’re the only ones still standing. A lot of others have been just exercised, so we’re pretty pleased that we’re still standing,” Lockwood said.
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Copyright (c) 2008, The Lima News, Ohio
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