Developer bins half-built Teesside energy plants taking $1bn hit

Aaron Morby 8 years ago

The US developer behind the construction of two energy-from-waste plants on Teesside has announced it is abandoning the unfinished projects in the face of spiralling costs.

Air Products forced to axe twin Billingham waste gasification plants as technical problems blow budgets
Air Products forced to axe twin Billingham waste gasification plants as technical problems blow budgets

The decision hits around 20 contractors on the job and around 125 of the firm’s staff.

Air Products revealed yesterday that the move to shut-down the unfinished plants at North Tees Chemical Complex at Billingham will cost it up to $1bn.

“We pushed very hard to make this new EfW technology work and I would like to thank the team who worked so diligently.

“We appreciate the hard work of our employees and contractors at the site, and certainly understand their disappointment in this decision. We are also disappointed with the outcome,” said Seifi Ghasemi, chairman, president and CEO of Air Products.

The decision brings a long and painful saga to a close on Teesside. Air Products had bought in the gasification technology that had been trialled in Japan but was yet to be proven on the scale of use planned at Billingham.

Foster Wheeler Energy started work on the first plasma gasification plant, Tees Valley 1, three years ago. Before this plant was finished Air Products decided to press ahead with construction of its planned second waste gasification plant.

But work was suddenly halted 18 months into this second plant’s construction programme last November causing around 500 workers to be laid off.

At the time Air Products said it needed to concentrate on commissioning the first plant, which had run into serious technical challenges but pledged to restart TV2 once the first plant reached full operation.

The firm unveiled on Tuesday that it was pulling out of energy from waste after running into a series of technical problems during attempts to commission TV1.

Its statement said: “In previous public comments, Air Products’ management has communicated the challenges with the Tees Valley, UK projects.

“Testing and analysis completed during the company’s fiscal second quarter indicated that additional design and operational challenges would require significant time and cost to rectify.

“Consequently, the board has decided that it is no longer in the best interest of the company and its shareholders to continue the Tees Valley projects.

“Air Products will work to optimise the cash value of its investments. Exiting the EfW business will allow the company to direct its resources to its core business of industrial gases.

“Air Products expects to record a pre-tax charge in the range of $900m to $1bn in discontinued operations, primarily to write down assets associated with the EfW business to their realisable value.”

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