In 2010, when Riverview Energy first approached Vermillion County with a proposal to build a Coal To Diesel plant, the company name was Clean Coal Refining Corporation. It was exactly the same project they are proposing for Dale until Vermillion County officials tired of the company’s empty promises and did not renew their land options in 2016.
But during all that time, Riverview projected the plant would cost $2.5 billion and employ 2,200 construction workers. Now, eleven years after arriving in Indiana, their cost figures have remained the same or even decreased, although permit conditions require a variety of new things like massive structures to cover their coal piles and more sophisticated pollution controls than originally conceived.
In the meantime there has been general inflation and, of late, huge increases in the price of most building materials. Today (5/21/21), the New York Times (https://www.nytimes.com/2021/05/21/business/steel-prices-boom.html?action=click&module=TopStories&pgtype=Homepage) reports steel is at record high prices domestically. Trump imposed tariffs on imports that keep import prices high as well. And, have you seen the price of a 2×4 stud of late?
But, Greg Merle, whose previous job was tutoring high school kids to take the SAT test, insists that the plant can still be built for the original figure presented to Vermillion officials more than a decade ago. Of course, Merle, as president of Riverview is the same man that in recent testimony was unsure of who exactly served on his small board of directors.
It’s been more than forty years since I was a commercial loan banker but I cannot imagine any reasonable banker giving someone with no construction or operating experience $2.5 billion to construct an experimental technology that produces carbon-based fuels like diesel and naphtha in a period when those fuels are being shunned worldwide because of carbon’s impact on climate.
In 2010, the selling price of oil varied between $70 and $90 per barrel. Over the last year, oil prices, lately dictated by OPEC, have run between $45 and $65 per barrel. Last year, oil prices actually dropped to a negative level for a brief time due to a glut resulting from the pandemic.
In Merle’s recent brief chamber update on his proposal, he said he would begin construction in about six or seven months, but his testimony in a recent deposition indicated that almost nothing had been done to design the complex experiment or engage in front-end engineering and design for the project. Nor has anything been finalized on where his water will come from or who will pay for the pipeline to get it to the site or where the plant’s wastewater will go.
At one time, they seemed to have plans to dispose of their wastewater in Huntingburg’s drinking water lake.
In 2017, when I first heard about Riverview’s plans for Dale, I questioned their $2.5 billion construction costs, saying that costs had risen considerably since the first figures were put up in 2010. Now, five years later, Riverview claims they can build the plant for basically the same price they claimed in 2010. In 2017, I placed the actual cost of such a massive industrial facility at closer to $4.5 billion. Today, costs may have increased even more significantly. If construction is planned to begin this year, contracts for the specialized steel and other equipment should be in place NOW. But currently there is no general contractor signed on, no contracts in effect, and as far as anyone can tell, no financing arranged for the huge investment that will be required.
It is time for State and County officials who will be asked to pay a large price for infrastructure to serve the plant to begin due diligence to actually assess the truthfulness and ability of Merle to get his job done. His lack of experience alone should raise a red flag as to its veracity. But more than that, both public and private investors should closely investigate Riverview’s capacity to get this job done at all. The former banker in me says this would be an extreme financial risk for many reasons, any of which could doom the project.
Last, in his update Merle mentioned that he had not even been to Dale in more than a year. If I was about to assume debt of numerous billions of dollars, I would have moved to Dale and been walking the proposed site almost daily to get a real feel for the assets of the site and its pitfalls. But not this guy, whose failed tutoring business disqualifies him to construct one of the largest projects ever proposed in Indiana.
Snake oil, anyone?
John Blair, Evansville