Hallador Energy is advancing its proposed 460-megawatt Turtle Creek natural gas project in Indiana toward a final investment decision before the end of 2026, following the acquisition of turbine equipment and the closing of a $600 million construction financing facility.
The company plans to develop the gas-fired generating facility at its existing Merom site in Sullivan County, diversifying a generation business that currently relies heavily on coal. Hallador is targeting commercial operation in the second half of 2028, although several major development, financing and regulatory steps remain outstanding.
In its November 9, 2026, third-quarter results, Hallador confirmed that it had taken title to the turbine and generator equipment acquired under a $350 million asset purchase agreement with Energy World Corporation. The equipment, which has never operated, was located in the Philippines before being exported to the United States.
Siemens will inspect the equipment and bring it up to current specifications before installation. Hallador has placed the remaining $265 million purchase consideration in escrow, with payments released according to milestones under the agreement.
Turbine acquisition advances development
The equipment package includes approximately 460 MW of Siemens gas turbines, generators, a steam turbine and ancillary equipment. Securing the package gives Hallador an important component of the proposed generating facility, but the purchase does not represent the full installed cost of Turtle Creek.
The equipment must complete its transportation to the United States, undergo inspection and refurbishment, and be integrated into the new facility. Hallador has identified transportation, equipment condition, refurbishment, tariffs and delivery delays among the risks that could affect the project’s cost and schedule.
The company is also finalizing its engineering and construction agreement and purchase orders for the remaining equipment. Those contracts will help determine the final construction scope and the additional capital required to complete the project.
Turtle Creek would occupy Hallador’s existing Merom Generating Station, an established power-generation site with approximately 1 GW of coal-fired capacity. The location provides an existing industrial and electricity infrastructure setting, but the proposed gas facility still needs its own fuel arrangements, equipment installation and completed grid connection.
Hallador has not disclosed a final construction cost or announced a full engineering, procurement and construction contract.
$600 million loan is only part of the financing plan
Hallador’s $600 million senior secured construction bridge loan facility represents the largest component of its current financing plan. The facility provided $550 million at closing, with a further $50 million delayed-draw tranche available for 12 months subject to an agreed draw schedule and funding conditions.
The company is also working to finalize a $75 million super-priority revolving credit facility and evaluating additional sources of capital to meet the project’s remaining requirements. Hallador says it wants to limit or avoid equity dilution, but it has acknowledged that it has not secured commitments for all the additional capital it will need.
The loan also carries significant financial obligations. Hallador’s credit agreement includes a minimum return of 1.35 times the funded amount upon repayment, including refinancing, as well as paid-in-kind interest, security over substantially all company assets and restrictions on cash transfers.
These conditions are important when assessing the project’s financing position. The $600 million facility is a major commitment, but it should not be mistaken for a fully funded construction budget. The additional revolving facility has not yet been executed, and Hallador still needs to secure capital for the remaining development and construction costs.
Grid connection and air permitting remain outstanding
The Midcontinent Independent System Operator (MISO) has completed the project’s interconnection study through its Expedited Resource Addition Study process. However, Hallador confirmed that the generator interconnection agreement has not yet been executed.
Completion of the study is a significant development milestone, but it does not establish that all grid-connection terms, costs or network upgrades have been finalized. The agreement will be important to determining the project’s remaining interconnection obligations and its ability to deliver electricity into the regional market.
Environmental permitting is another outstanding requirement. Hallador submitted air permit applications to the Indiana Department of Environmental Management on September 25, 2026. The applications include a Title V significant-source modification subject to major Prevention of Significant Deterioration review.
As of November 2, the applications were listed in initial processing, with no draft permit or public notice identified in the available state permit records. The review will establish the applicable air-emissions requirements before the proposed generating facility can proceed through the permitting process.
The project’s potential emissions have also drawn scrutiny. Environmental group Oil and Gas Watch estimates that the proposed expansion could emit more than 2.6 million tons of greenhouse gases annually, alongside approximately 2,400 tons of other air pollutants. These are estimates associated with the proposed facility, not measured emissions from an operating plant. The final permit and its conditions will provide a more definitive basis for assessing the project’s permitted emissions.
Hallador has also identified natural gas supply and pipeline capacity among the risks that could affect completion. The company has not yet disclosed a finalized gas transportation arrangement for Turtle Creek.
Long-term power contracts are still ahead
Hallador is targeting long-term offtake agreements with investment-grade counterparties in early 2027. These contracts would provide buyers for the project’s electricity and could improve the terms available for additional financing.
Management says its current financing plan does not require the offtake agreements to be signed before the final investment decision. However, the company believes long-term contracts could strengthen the project’s commercial position and support future capital raising.
Hallador’s reported forward sales book of approximately $3 billion should not be interpreted as contracted revenue from Turtle Creek. The figure includes existing contracts for delivered electricity, accredited capacity and third-party coal sales, as well as intercompany coal sales. The company separately reported approximately $2.5 billion in contracted revenue from delivered energy, capacity and third-party coal sales.
Hallador has not announced a long-term power purchase agreement specifically for Turtle Creek.
Indiana project reflects wider investment in dispatchable generation
Turtle Creek is part of a broader wave of investment in dispatchable electricity generation as power producers respond to growing demand and the need for dependable capacity.
In Oklahoma, Public Service Company of Oklahoma has started construction on its 450 MW Northeastern Units 5 and 6 natural gas project at an estimated capital cost of approximately $539.8 million. Unlike Hallador’s proposed independent power project, PSO’s development forms part of a regulated utility generation portfolio.
The two projects illustrate how different power-sector companies are pursuing new gas-fired capacity, while facing their own financing, fuel supply, grid and construction requirements.
A further comparison is the proposed Long Mott Generating Station in Texas, where Dow and X-energy have secured an NRC construction permit for four advanced nuclear reactors intended to supply electricity and industrial steam. That project highlights a different route to adding dependable generation and industrial energy supply.
Hallador targets commercial operation in 2028
Hallador is targeting a final investment decision for Turtle Creek before the end of 2026, subject to board approval, definitive agreements and financing. Commercial operation remains targeted for the second half of 2028.
Reaching that schedule will require the company to complete its interconnection agreement, finalize engineering and construction arrangements, secure the remaining capital, obtain the necessary permits and complete the turbine transportation and refurbishment process.
The project would give Hallador a natural gas generation asset alongside its existing coal operations at Merom. But the year-end investment decision will be a critical test of whether the company can convert its equipment acquisition and financing commitments into a fully financed, construction-ready development.
Turtle Creek Gas: Project factsheet
- Developer: Hallador Energy Company
- Location: Merom Generating Station, Sullivan County, Indiana
- Technology: Natural gas-fired generation
- Planned capacity: Approximately 460 MW
- Equipment package: Siemens gas turbines, generators, steam turbine and ancillary equipment
- Equipment purchase agreement: $350 million
- Construction financing: $600 million senior secured facility
- Additional financing under development: Up to $75 million revolving credit facility
- Grid operator: Midcontinent Independent System Operator
- Air permit applications submitted: September 25, 2026
- Target final investment decision: Before the end of 2026
- Target commercial operation: Second half of 2028
Leave a Reply