DOE slowing paperwork for Range project

From Mesabi Daily News: By Bill Hanna

WASHINGTON – A year ago the first energy bill in many years out of Congress contained federal loan guarantees for the Mesaba Energy Project and its clean-coal gasification plant.

But the Department of Energy has yet to release those fund guarantees so critical to attracting investors and lowering the cost of the $2 billion project for the Iron Range. An official of Excelsior Energy, which has herded the project from conception to the early stages of development, and the Minnesota U.S. senator who played a pivotal role in securing the guarantees both last week voiced concern over the DOE on the issue.

“We need to conclude the agreement and get going. We’re frustrated by the pace of the DOE,” Tom Micheletti, co-president and CEO of Excelsior Energy, said in a telephone interview last week.

Republican Minnesota U.S. Sen. Norm Coleman, in a teleconference interview along with Senate Majority Leader Bill Frist of Tennessee on the nation’s overall energy policy, fielded a question on the Mesaba Energy Project and the DOE. He, too, was frustrated by the DOE’s inaction so far on the loan guarantees.

“We’re aware of those concerns. We’re running into the same problem as is Excelsior. Commitments have been made and they must follow through. We’re in constant communication with DOE and we’re confident we will resolve the concerns,” Coleman said.

Coleman, during the teleconference, went on to inform Frist about the Excelsior Energy coal gasification project.

“Senator (Frist) this is a clean-coal project important to our country’s energy future in an area called the Iron Range of Minnesota that needs jobs and opportunities,” Coleman said.

Under the federal energy bill, loan guarantees should be in place for up to 80 percent of the $2 billion projected cost of the power plant.

Last week, Excelsior Energy filed all the required preconstruction permits for the first of three plants, which is slated for Itasca County near Bovey. The documents were about 2,000 pages in volume and took two years to compile at a cost of millions of dollars. Micheletti called it a “big step” in moving ahead with the project.

The timetable calls for permitting to be completed by the end of 2007 and construction, which would take 42-46 months, of the first plant to begin the first quarter of 2008. Construction jobs would peak at 1,200 to 1,400, Micheletti said, with more than 100 permanent jobs created once the plant is up and running. Two other plants, one in the central Iron Range and one on the east side, are also planned. They would produce the same construction and permanent job numbers.

Micheletti said last week that investors will not be a problem. “We’ve been getting calls all summer from those interested in the project. I’ve always said when we’re ready to go, the financing for all the equity and debt will be in place ... and maybe sooner. And that’s why we need the DOE to get moving on the loan guarantees,” he said.