Company awarded $30M for 'green' energy project at AK Steel

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In this Oct. 21, 2008 file photo, flags fly outside steel maker AK Steel Holding Corp.'s corporate headquarters in West Chester, Ohio. Air Products has been awarded $30 million in federal funds to build ‘green’ power plant at AK's Works facility in Middletown.

File photo In this Oct. 21, 2008 file photo, flags fly outside steel maker AK Steel Holding Corp.'s corporate headquarters in West Chester, Ohio. Air Products has been awarded $30 million in federal funds to build ‘green’ power plant at AK's Works facility in Middletown.

Air Products awarded $30 million from feds to build ‘green’ power plant at Works.

By Jessica Heffner, Staff Writer Updated 6:57 AM Wednesday, November 4, 2009

MIDDLETOWN — A  $300 million project that will create about 220 temporary construction jobs and generate electricity for AK Steel’s Middletown Works operations is headed to Middletown.

Air Products and Chemicals Inc. of Middletown has been awarded $30 million from the U.S. Department of Energy to construct a combined cycle power generation plant at AK Steel’s Middletown Works, it was announced Tuesday, Nov. 3. The project is valued at $300 million and will take about two years to construct, said Alan McCoy, spokesman for AK Steel, which has its corporate headquarters in West Chester Twp.

The new generation plant will capture and process blast furnace gas its Middletown facility. The gas, which is generated in iron-making operations, is either flared — burned off — or used to make steam needed for industrial processes. About 50 percent of the blast furnace gas is flared, and is visible as a light blue flame around the blast furnace, McCoy said.

This project will use that waste gas to generate more than 100 megawatts of power and saving an estimated 2.7 trillion Btu annually, according to department of energy officials.

“This is a project that has environmental benefits and has energy cost benefits, and we are just pleased that the DOE has funded a portion of it,” McCoy said.

The project has been in the works by AK Steel and Air Products for several months. With only 10 percent of the funding in place through the DOE announcement, where the rest of the money will come from through the partnership is still being defined, and there are “still many hurdles we have to overcome,” McCoy said.

AK Steel, as the generator of the fuel, would receive all of the steam and electricity the plant produces to power its Middletown Works operations. McCoy said officials are still determining how best the energy will be used.

Lisa Patt-McDaniel, director of the Ohio Department of Development which oversees the state’s Office of Energy, said making manufacturing more green on Ohio is important to its future and described the newly announced AK/Air Products project “an awesome contact.”

“Green energy, that is where the future is for the state and we are always going to be a manufacturing state,” she said.

With budgetary issues of its own, Patt-McDaniel said her office will have to “think outside of the box” and wants to work with both companies to secure any available funding for the new plant.

The award comes from federal stimulus monies set aside for industrial energy efficiency projects in Ohio.

U.S. Sen. Sherrod Brown, D-Ohio, who supports the new AK/Air Products project along with U.S. Sen. George Voinovich, R-Ohio, and Ohio Gov. Ted Strickland, said the funding will help AK and Middletown’s competitiveness.

“This investment of $30 million in Department of Energy recovery funds will enable AK Steel to capture waste gas to provide an efficient source of power for the plant. It’s this kind of ingenuity that will cut costs, create jobs and make Ohio a clean energy leader,” he said.

It’s just one of a series of recent moves by AK Steel to find alternative sources of energy to power its operations. The company agreed to buy the approximately 50 megawatts of the electricity that could be co-generated from the heat-recovery ovens of a coke plant SunCoke Energy plans to build in Middletown. AK also announced in September that it had secured a financial interest in the electricity produced by another heat-recovery coke plant SunCoke has in Franklin Furnace, Ohio.

McCoy said this new project would in effect displace 100 megawatts of power the company is using in Middletown.

However, he said AK has concerns that pending climate legislation does not “look favorably on a project like this” because the process the plant will use has not been considered in legislation before Congress.

“It clearly is a project that is in AK Steel’s best interest and in the public’s best interest to use what is wasted gas and steam right now and make electricity. We’ve heard no one argue with that analysis,” he said.

Jim Wainscott, AK Steel’s chairman, president and chief executive, has been especially vocal about climate change legislation and the effect it could have on the U.S. steel industry.

Signing off the company’s third quarter earnings report last week that if the Congress does not get climate change legislation right, he said “its incredibly high stakes will harm the U.S. economy, will move our remaining manufacturing activities to China and elsewhere. And the global carbon emissions will actually grow, not decline, and that’s the exact opposite of the goals of climate legislation.”

The industrial sector uses more than 30 percent of U.S. energy and is responsible for nearly 30 percent of U.S. carbon emissions, according to the U.S. Department of Energy.

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