Developer wins over environmental group with groundbreaking green provisions 

 

BY ROSE RAGSDALE FOR GREENING OF OIL

Power plant developer Tenaska Inc. is riding honcho on what is likely to be the world’s first commercial power plant to successfully produce clean energy from low-cost coal.

Scheduled to begin commercial operation in 2016, the proposed 600-megawatt (net) Tenaska Trailblazer Energy Center near Sweetwater, Texas, will produce electricity using low-sulfur, sub-bituminous coal. It is designed to capture 85 to 90 percent of its carbon dioxide emissions and dehydrate, compressing and shipping the CO2 via pipeline to Permian Basin oil fields for use in extracting additional oil from wells nearing depletion, a technology used in Texas for more than 30 years.

“Trailblazer will be among the first commercial-scale applications of post-combustion CO2 capture technology,” said Greg Kunkel, vice president of environmental affairs for Tenaska.

“This is the only technology that can directly address the largest source of greenhouse gas emissions in the United States and around the world,” Kunkel told members of two Texas House of Representatives committees in late April. “This technology also may be applied to the existing conventional coal-fueled plants that now generate about half this nation’s electricity.” 

Wins green group approval

The plant, projected to require $3.5 billion in capital costs, will help Texas with a looming shortage of generating capacity and with its reliance on natural gas as a power plant fuel. A recent Electric Reliability Council of Texas report projects a need for at least another 55 gigawatts of new and replacement generating capacity in Texas over the next 20 years to meet growing demand. 

Tenaska’s efforts to develop Trailblazer recently won an influential, albeit unusual, supporter.

The company applied for air quality permits for Trailblazer in February 2008 and received draft permits a year later. The Environmental Defense Fund, joining others, challenged the permits in a case that is still pending before the Texas Commission on Environmental Quality.

After hammering out a separate agreement with Tenaska, the Environmental Defense Fund reversed its stance April 19, saying it no longer opposed the air permits.

Under the agreement, Tenaska pledged to use best available technology to capture at least 85 percent, or 17,000 tons per day, of the CO2 produced by the plant. At this level, the plant would emit 70 percent less carbon dioxide than the cleanest natural gas-based power plants, Tenaska said.
The company also agreed to contract for delivery and sequestration of the captured CO2 to third parties authorized by Texas and federal law for enhanced oil recovery.  

Less water with dry cooling technology

Tenaska further committed to use dry cooling technology to reduce by 90 percent the plant’s water usage from outside sources. That means Trailblazer will use water at a rate of no more than 1 million gallons per day (2,000 acre-feet per year). That’s a fraction of the 10 million gallons a day of water required by a similar-size plant using traditional “wet” cooling technology.

The dry cooling decision and Tenaska’s willingness to back its pledge to capture at least 85 percent of the CO2 with a legally binding contract convinced EDF to support the project.

“The era of building traditional coal plants without carbon capture and storage is over,” said Jim Marston, EDF national energy program director. “This is a first of its kind agreement where the company is getting ahead of regulations and doing it in a way that makes the project economic. We’re hoping it will be a model for others.”

If Tenaska reneges on its promises, EDF can sue for damages, which it will use to fund greenhouse gas reduction projects or to reduce water consumption elsewhere in Texas, Marston said.

“Our No.1 priority as a group is to do something about the urgent and pressing problem of climate change. Frankly, the regulators in Texas are less stringent than (those) in other states. We think the timing and amount of CO2 sequestration make this a good deal for the environment,” he said. “We believe in trusting but verifying. If our verification finds that they have not kept their word, we will sue them, and take the money that we recover and make the reductions ourselves in other locations in the state. Failure to comply will cost them a lot of money. The only issue will be whether they made the promised reductions or not. The penalties are spelled out in our agreement.”

The Sierra Club and several smaller groups have continued to contest the air permits. An administrative hearing on the permits is scheduled for June 2. 

Solid track record

Omaha, Neb.-based Tenaska, meanwhile, says it can meet its goals with the Trailblazer project even though it is still reviewing which of several CO2 CCS technologies it will choose.

An industry veteran, Tenaska has developed 9,000 megawatts of electric generating capacity in various non-utility plants across the United States. It also markets natural gas, bio-fuels and electric power, provides risk management services and offers other electricity related services.

The company is listed by the Natural Resources Defense Council in 2008 as having one of the best records in the United States for fleet-wide average emissions of carbon dioxide, nitrogen oxides and sulfur dioxide.

Tenaska is also actively pursuing development of a power plant in Taylorville, Ill. that will use integrated gasification combined-cycle technology to capture CO2 emissions for geologic storage. The Taylorville IGCC plant already has an air permit, but Tenaska still has to identify customers for the plant’s output. Illinois law does not allow utilities to buy power for residential and small industrial customers under long-term contracts. 

Technology awaits policy

Kunkel told a congressional panel in June 2008 that technologies exist to limit carbon dioxide emissions from coal, but if the United States does not take advantage of them, then the nation faces sharply rising electricity prices and declining reliability, with base-load generating capacity shrinking as older plants are retired.

“Construction of the next generation of clean power plants can begin as soon as firm public policies on climate change are established,” said Kunkel, who testified on behalf of Tenaska before the U.S. House Committee on Natural Resources’ Subcommittee on Energy and Mineral Resources.

“Technologies to produce electricity virtually emission- and greenhouse gas-free are here today, and, as demonstrated by our proposal to build the Trailblazer plant, Tenaska is willing to be at the forefront of development,” he said. 

Development update

Recently, Tenaska reported new progress in Trailblazer’s development, including completion of a transmission interconnection study, the hiring of Fluor Corp. as the project’s engineering, procurement and construction contractor, and the sale of a 35 percent equity interest in the facility to Arch Coal Inc.

As one of the largest suppliers of low-sulfur coal in the West, Arch is expected bring strategic benefits to the Trailblazer project with an unspecified investment that will be staged over time as the project hits key development milestones. As part of its agreement, Arch will supply the plant’s fuel needs for the first 20 years of operation from its Powder River Basin operations in Wyoming.

Trailblazer also is set to benefit from clean energy incentives approved by the Texas Legislature in 2009. The plant is eligible for a state grant to help fund front-end engineering and design studies and related costs.  
New legislation also established a framework for regulation of CO2 sequestration and storage between the Railroad Commission and the state’s environmental quality agency. The Texas Legislature also approved a bill that will provide tax incentives for each of up to three carbon-fueled power generating projects that capture and sequester at least 70 percent of their CO2 emissions. Recipients of the tax credits must be able to supply CO2 for enhanced oil recovery, as Trailblazer would.  

Boon to oil industry

The CO2 that Trailblazer would provide to Permian Basin oil fields would increase annual production by more than 10 million barrels, enhancing the West Texas economy and helping reduce dependence on foreign oil, Tenaska points out.  

The new legislation also requires eligible projects to meet stringent air emission standards for nitrogen oxides, sulfur dioxide, particulate matter and mercury, all of which Trailblazer would meet with highly advanced emissions controls, the company said. Tenaska also notes that the new laws set the environmental standards bar higher for clean energy incentives than any other state or national incentive program.

Tenaska and the Environmental Defense Fund agree on at least one other point—no 100 percent clean-coal process exists.

“No existing or near-term technology will capture 100 percent of the CO2 from a power plant, but we believe it is important to advance existing technology that will capture the vast majority of the CO2 produced,” says Tenaska.

Links of interest

Tenaska Trailblazer Energy Center

How Trailblazer will work

Environmental Defense Fund

Air cooling vs. water-cooling technologies

Contact Rose Ragsdale at editor@miningnewsnorth.com