As published in Toledo Business Journal - March 1, 2013


Rendering of the Oregon power plant

Rendering of the Oregon power plant

$850M+ to be invested in Oregon power plant

Groundbreaking expected for August

A major investment is being planned for a site in northwest Ohio. Construction of a new power plant is expected to begin by August, which is estimated to cost between $800 million and $900 million. An additional $50 million will be invested in a gas pipeline to the plant.

The facility will be constructed on approximately 30 acres on North Lallendorf Road near the intersection of York Road in Oregon.

The new plant is expected to have approximately 25 employees. The jobs will be high-paying positions with some having compensation of $60,000 and above. Total salary and benefits for all employees will be approximately $3 million per year.

The power generated by this facility will be placed on the electricity grid. Its customers will be major utilities that will resell the output of this plant to their customers. The plant will have a capacity of 800 megawatts (MW) or for every hour that it operates, it will be able to produce 800MW of power. The new facility will use natural gas to generate the outputted power.

“The technology for the plant is what is known as two-on-one combined cycle cogeneration,” stated Jeff Ruggiero, project manager for the Oregon power plant. “There will be two gas turbines that will each spin generator sets. Exhaust gases will go through a heat recovery steam generator (HRSG) which takes heat from the exhaust gasses and then turns it to steam in order to spin a steam turbine that will also generate electricity.”

Ruggiero further explained that the technology being incorporated in the new plant is highly efficient and its ability to capture energy from the exhaust gases enhances the facility’s capabilities. The use of natural gas and the recapture of energy from the exhaust gases make this technology very environmentally friendly, Ruggiero advised.

While coal-generated power is still among the lowest cost alternatives for electricity generation, the declining cost of natural gas and the efficiency of this technology has made it more competitive in the marketplace.

The developer of this project is North America Project Development LLC (NAPD). It has set up an entity for this project called Oregon Clean Energy Center, LLC (OCEC). This entity is a joint venture being driven by two experienced energy project development professionals, Bill Martin and Bill Siderewicz.

Toledo Business Journal met with the two developers in early February to discuss the progress of this large project. Martin and Siderewicz advised that they were the joint owners of this venture and that both had many years of experience in doing such major energy projects.

Martin also heads a company called CME Energy LLC in Boston and Siderewicz is also a principal in Pure Energy Resources LLC, located in Burlington, Massachusetts.

CME Energy is involved in the development and financing of privately-owned electrical power, cogeneration, and other forms of energy projects. CME is interested in all forms of technology which have a low negative environmental impact, including solar, geothermal, wind, and gas-fired projects.

Pure Energy Resources LLC (PER) that is actively engaged in the acquisition of development and operating projects and greenfield development of power and energy-related projects in select North American markets.

Martin and Siderewicz expect that ground will be broken for the Oregon project in August and will take close to three years to build. They expect it to be fully operational by May 2016.

“We used very strict criteria to select this project location,” Martin stated. “One of the critical factors in the decision process was to find a community that is supportive of industrial development. We certainly found this in Oregon,” Martin explained.

The two partners explained that to date they have already invested close to $2 million of their money into this project. They expect their personal investment will be close to $7 million by August and this money will be lost if the project does not move forward.

Martin and Siderewicz discussed the financing for this large project. $300 million of equity will be placed into the project and $500 million of borrowed funds, provided by a consortium of banks, will be utilized.

An equity partner who will own the project is providing the $300 million of equity capital being invested. The equity partner is Energy Investors Funds (EIF), located in Boston with offices in New York and San Francisco. Siderewicz explained that EIF is focused on energy investing and has significant experience in this area. EIF has invested in over 100 energy-related projects since 1987 that have an underlying asset value of over $15 billion. It owns approximately 4,000 MW of capacity in facilities that are currently operating or under construction and an additional 6,000 MW in facilities that are in various stages of development.

Siderewicz advised that EIF will hire a third party operator for the facility and that it plans to own and operate the Oregon plant for its investors. He advised that an equity firm will typically own such a facility for eight to 10 years and then may consider selling the operation to a utility company.

The two partners discussed the construction aspects of this project. Power Plant Management Services, LLC (PPMS) located in North Richland Hills, Texas is being retained as the construction manager on this project. They expect the construction costs for the facility will be close to $400 million.

“We plan to have local contractors and subcontractors working on this project. Most of the labor for the construction will come from this area,” Martin explained.

The partners expect to have 450 on-site jobs over the three-year construction period. They project that there will be 1.3 million hours of construction labor to build the facility.

(From L to R) Bill Martin, OCEC principal; Jeff Ruggiero, OCEC project manager; Lindsay Meyers, executive director of Oregon Economic Development Foundation; Michael Saferian, Mayor of Oregon; Bill Siderewicz, OCEC principal

(From L to R) Bill Martin, OCEC principal; Jeff Ruggiero, OCEC project manager;
Lindsay Meyers, executive director of Oregon Economic Development Foundation;
Michael Saferian, Mayor of Oregon; Bill Siderewicz, OCEC principal.

Martin and Siderewicz discussed the impact of the project in depth. The partners funded a study of the economic impact of the project and retained Calypso Communications, LLC to perform this analysis.

The project is expected to have a $900 million economic benefit. $412 million of this benefit will occur during the construction period. An estimated benefit of $480 million will occur during the first 20 years of the facility’s operation. This includes the benefit of 25 new jobs and the associated payroll and taxes. It also includes the impact of spin-off jobs at supplier companies to support the operations.

The project will also provide $4 billion in purchases of natural gas. This will be especially important to the new shale gas development in eastern Ohio.

There are a number of key issues that still must be addressed. Siderewicz advised that there were four important “hurdles” that the project still needed to clear.

At the top of his list is a critical element of the project involving the electricity output of the facility. The capacity of this plant will be placed for auction through PJM Interconnection LLC, which operates a regional electricity grid and conducts an auction for its members. More than 650 utility companies are members of PJM, which serves 60 million customers and has 167 gigawatts (GW) of generating capacity. Both Martin and Siderewicz described the auction that will be held in mid-May as critical to the project.

The two partners discussed the other “obstacles” that the project still faces and advised that each of these elements were simply issues that needed to be satisfied in order for the project to be able to place the facility’s capacity for auction at the PJM event in May.

A second “obstacle” involves the issuance of an environmental air permit. Martin explained that a great deal of work had taken place over the past year for this permit. The partners expect to have this completed by May.

A third “obstacle” that Siderewicz discussed involved the approximately 20-mile pipeline that will bring natural gas to the facility, which will run from Maumee to the site in Oregon. It will be approximately 20 miles long. Siderewicz estimates the cost will be $50 million. The pipeline will be funded separately and will have a third party entity for its management.

A fourth “obstacle” involves a permit from the Ohio Power Siting Board (OPSB).

“The Ohio Power Siting Board has been great to work with. They have created an accelerated process for our project,” Martin stated.

Both partners stressed the importance of the cooperation that they are receiving in the area as they move this large project forward. They advised that while it has taken a full year to move the key permits and approvals along, this same project on the east or west coast would take at least four to five years.

The Mayor of Oregon, Michael Saferian, discussed this project in an interview with Toledo Business Journal. He discussed the support and encouragement that has been given to the two developers. He also talked about the importance of this project to the area and the approach being taken with it.

“We welcome industrial development. We have a community that recognizes the value of such new investment and the high paying jobs that it will create for our citizens,” Saferian concluded.