Today, the Department’s Loan Programs Office (LPO) expanded its portfolio of loans, loan guarantees, and commitments to support innovative technologies. I’m proud to say that LPO announced the first ever offer for a conditional commitment to guarantee a loan for an Advanced Fossil Energy project.
The Department offered Lake Charles Methanol, LLC up to $2 billion in loan guarantees to finance a first-of-a-kind petroleum coke (petcoke) to methanol facility, which will be located in Lake Charles, Louisiana. This project represents a first on many levels. It would not only be LPO’s first deal under the Advanced Fossil Energy Projects Solicitation, but also the first petcoke to methanol project in the United States. Additionally, it would be the world’s first methanol facility utilizing carbon capture technology and would become the world’s largest industrial manufacturing carbon capture facility. The carbon captured by the project will be transported via pipeline to southeast Texas for use in enhanced oil recovery (EOR).
The Lake Charles project will provide numerous economic and environmental benefits – from new jobs to reducing the amount of greenhouse gases that would otherwise be emitted into the air. This major infrastructure project is expected to generate substantial benefits for Louisiana by creating an estimated 1,000 full-time construction jobs and 200 permanent jobs. Roughly another 300 jobs will be created from the related EOR activities in Texas.
An important goal of the Title XVII loan guarantee program is to help deploy projects that avoid, reduce, or sequester man-made greenhouse gases. The Lake Charles Methanol facility is designed to emit 36 percent fewer greenhouse gases on a life-cycle basis than typical methanol facilities. It is also designed to capture 77 percent of its carbon emissions, which is expected to result in sequestration of 4.2 million metric tons of carbon each year.
First-of-their-kind projects in the United States, like the Lake Charles Methanol project, can have difficulty accessing private capital due to their innovative nature. The Department leverages its unique technical expertise and rigorous underwriting process when offering loan guarantees to help these types of projects overcome early-stage financial challenges. Carbon capture, utilization, and storage (CCUS) technology is on the cusp of commercial-scale deployment. DOE’s offer to finance the Lake Charles Methanol project could play a role in helping to bridge the funding gap for CCUS so this technology is financed by private lenders in the future.
A number of steps remain and certain conditions must be met before the Department issues a loan guarantee, but the conditional commitment offer demonstrates the Department’s intent to support construction, completion, and operation of the project. In the meantime, LPO is continuing to work with the Lake Charles Methanol team on this important and innovative fossil energy project that is expected to create good-paying jobs in Louisiana and Texas.