CEO Roger Williams announced Tuesday that Energy Security Partners has selected land in Jefferson County as its final and official site for a $3 billion-plus plant to convert natural gas into diesel and other liquid fuels, a project billed as the largest economic development endeavor in Arkansas history.
The site, 10 miles north of Pine Bluff near the Arkansas River and the National Center for Toxicological Research, has been mentioned since early this year as the most likely building site, but Williams held off on making a final declaration even as the Jefferson County Economic Development Corp. spent taxpayer money on land parcels and signed a lease agreement with ESP earlier this year.
Williams, who made the pronouncement in a noon speech to the Rotary Club of Little Rock at the Clinton Presidential Library, said the final piece of the puzzle was acquisition of an easement for a road to run from the gas-to-liquid facility to the river, where ESP plans to build docks for off-loading heavy equipment and eventually loading fuel barges for river transport.
"There have been articles written about, well, is ESP's GTL project really going to locate in Arkansas? Isn't Louisiana trying to coax this project to move south? Well, yes, they did, and no, we're not going. The reason is that we finally received an easement from the FDA, which owns NCTR, culminating a three-year process."
Williams said doubt about the easement amounted to final weak link in ESP's plan for a facility that is expected to turn 350 million cubic feet of natural gas into 33,000 barrels of diesel and naphtha every day.
"Until we got that easement, we didn't have the means to get to the Arkansas River," he said. "Now I'm glad to say that weak link has been taken away, the easement has been granted to Jefferson County."
River access is crucial for building the plant, which is expected to generate more than 2,400 jobs in the Pine Bluff metropolitan statistical area and $183 million in labor outlays over several years of construction. Across the state, the building project should bring more than 5,200 direct and related jobs and $333 million in wages, Williams said.
"River access is critical because of the size of the equipment we need for this project. The only way we can get it to the site is via barge transport on the Mississippi and Arkansas River systems," Williams said. "Two of the vessels we need, the FT reactors, require the world's largest crane, and we've been talking to the owner of this to make sure it will be available to us for construction. We're talking about a 300 metric ton lift by a single crane, so it's a massive operation."
Another advantage to the site is that it is within a few dozen miles of two major interstate natural gas pipelines, Williams said, adding that tying into those lines shouldn't require a large or costly effort.
"When people interested in this project have asked why Arkansas? We've answered why not? It's a good place to do business," he said.
Beyond confirming the site and offering an overview of economic benefits, Williams also gave Rotarians a rough timeline for the permit process and construction, along with a summary of the benefits he sees in the clean GTL-produced fuel and an idea about where ESP is going for financing. He even described the chemical process that converts the gas to liquid fuel.
"This is the part where you can doze off if you have to," he joked.
He said that front-end engineering design and permit-gathering could take years before construction can begin.
"It could be two to two-and-a half years before we can turn the first shovel of dirt. We have to engineer every piece of equipment, every pipe, so I don't want people to get frustrated and wonder if this is ever going to come. It is. Next comes the permitting process," Williams said, saying that the company will work with the Arkansas Department of Environmental Quality and the Army Corps of Engineers for water, air and wetlands permits.
"This is a commitment of millions of dollars. We expect to have financing of $100 million by the first of the year or early 2017 at the latest. It's my least favorite but a very necessary part of the job, because the engineering work costs a lot of money," he said.
For the bulk of the billions needed to complete the project, Williams said ESP had been on an encouraging worldwide search for "project financing, where the project itself is collateral." Williams said the partnership is seeking equity and debt financing in New York, Houston, London, Paris, Frankfurt and Copenhagen.
"We've had strong interest from funds" that specialize in equity financing, he said, and encouragement from major banks interested in financing the debt portion.
Answering questions, he differentiated the GTL endeavor from biodiesel projects that create environmentally friendly fuel but are viable only with government incentives like tax subsidies.
"Our project stands on its own," he said. "We have not modeled any subsidies, and as Donald Trump said last night, if the government offers you a subsidy, you're going to take it. That's just good business. But we're not planning on it, and we're not advocating for it."