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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Donald Trump's presidency has been "a bit of a reprieve" for coal mining, but restoring coal's fortunes requires more research, development and deployment of carbon capture and sequestration (CCS) technologies as well as moving forward with export terminals in the Pacific Northwest, according to speakers at a recent energy conference in Denver, Colorado.
Neither path will be easy. Washington State recently denied a permit to build the Millennium Bulk Terminals coal-export project. The developer vowed to appeal the decision. As for CCS, only two projects are operating commercially in North America, though the U.S. Department of Energy (DoE) (Washington, D.C.) recently announced a total of $62 million in funding for CCS technologies.
"CCS is a big part of the future of coal, but what we need are the first half dozen projects to be up and running," Jason Beggar, executive director of the Wyoming Infrastructure Authority (Cheyenne, Wyoming), told about 120 attendees on October 23 at the 4th Annual Western Power Summit, organized by Access Intelligence (New York, New York), publishers of POWER magazine. "We need off-the-shelf CCS systems."
"It was great to see those funding announcements for CCS," he continued.
Another speaker, Colin Marshall, chief executive at Cloud Peak Energy Incorporated (NYSE:CLD) (Gillette, Wyoming), cited studies from the Intergovernmental Panel on Climate Change (IPCC) saying the best way to combat global climate change was rapid expansion of CCS and nuclear power. "By funding renewable energy, we're just deferring the problem," he said. "Subsidizing renewables just mixes things up. Paying people to produce electricity that's not needed is one of the roots of our problem."
The problems to which he alluded were discussed by another speaker at the event, who recounted that energy in California was negatively priced - cost less than zero - for 9% of the hours in 2015, but as many as 26% of the hours this year. Widespread deployment of renewable energy, coupled with market rules giving those resources favorable treatment, pushed prices down across the state.
Repealing the federal production tax credits (PTCs) and investment tax credits (ITCs) for wind and solar, respectively, and redirecting those funds to CCS R&D would be "a great idea," Marshall said, but it would be hard to accomplish because the current system distributed benefits so widely. "It's hard to get anything done in Washington, and it's even harder to get anything undone. But if we don't get the PTC and the ITC undone, some pretty strange things will happen."
"The U.S. is the best place in the world to develop and deploy CCS," Cloud Peak's Marshall told the conference attendees. "Instead of picking winners and losers, let's invest in reducing emissions."
In an interview at the conference, Marshall said the owners of the W.A. Parish Power Station in Thompsons, Texas, the site of the first U.S. commercial CCS project, said they could build the next incremental CCS project for about 40% less than the first one. The Parish CCS project began operating earlier this year. For more on that, see January 11, 2017, article - NRG Completes World's Largest Carbon-Capture Project. But NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey) said it would exit the CCS business after the completion of the Parish project. For more on that, see October 7, 2015, article - NRG to Exit Carbon-Capture Business After Texas Project is Completed.
CCS was more in vogue a few years ago, when crude-oil prices were substantially higher. Back when crude oil was selling for $100 per barrel, CCS project developers planned to use the captured CO2 in enhanced oil recovery (EOR) projects, like the Parish project is doing. That extra revenue stream from the sale of the gas would help offset high capital costs to build the capture systems. But the collapse of crude-oil prices two years ago undermined the economics of several CCS projects.
North America's only other commercial-scale CCS project was installed at SaskPower's Boundary Dam Power Station. The construction and initial operational challenges at that unit have since been resolved, and that CCS project is capturing about 92% of CO2 emissions at the unit where it is installed, a conference attendee told Industrial Info.
"The coal industry has three years to do something better" than the Clean Power Plan, Beggar added. "Coal got a bit of a reprieve" when Trump instructed the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) to repeal the Clean Power Plan. That repeal was announced earlier this month. If the agency succeeds at repealing the CPP, it will then determine what it would be replaced with, an agency official said. For more on that, see October 11, 2017, article - EPA Releases Plan to Repeal Clean Power Plan and Save Up to $33 Billion in Compliance Costs.
Beggar commented, "This administration is really behind the eight-ball because so many second-tier positions [at the EPA] have not been filled."
Turning to exporting Western coal, long a goal of mining companies, Marshall said Asian demand for coal is "fantastic," citing strong demand from China and South Korea, among other nations. But the long distance that coal would have to travel - by rail from the Powder River Basin, and then on water to Asia - makes the economics difficult. He suggested, without going into detail, that the projects would become stronger economically if the customers helped finance the export terminals and other associated infrastructure. While asserting "the business model is there," he nonetheless acknowledged it was "a tough slog. It's tough to overcome the inherent cost that comes from distance."
Proposed coal-export terminals in the Pacific Northwest, once numerous, have shrunk in recent years. For more on that, see November 6, 2016, article - Proposed West Coast Coal Terminals Winnowed. The Millennium Bulk Terminals project, the last active proposed project, received a setback in late September when the Washington State Department of Ecology denied the project a permit. The developer is challenging that decision. For more on the Millennium project, see July 11, 2016, article - Is it Too Late for a Planned West Coast Coal-Export Terminal?
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Neither path will be easy. Washington State recently denied a permit to build the Millennium Bulk Terminals coal-export project. The developer vowed to appeal the decision. As for CCS, only two projects are operating commercially in North America, though the U.S. Department of Energy (DoE) (Washington, D.C.) recently announced a total of $62 million in funding for CCS technologies.
"CCS is a big part of the future of coal, but what we need are the first half dozen projects to be up and running," Jason Beggar, executive director of the Wyoming Infrastructure Authority (Cheyenne, Wyoming), told about 120 attendees on October 23 at the 4th Annual Western Power Summit, organized by Access Intelligence (New York, New York), publishers of POWER magazine. "We need off-the-shelf CCS systems."
"It was great to see those funding announcements for CCS," he continued.
Another speaker, Colin Marshall, chief executive at Cloud Peak Energy Incorporated (NYSE:CLD) (Gillette, Wyoming), cited studies from the Intergovernmental Panel on Climate Change (IPCC) saying the best way to combat global climate change was rapid expansion of CCS and nuclear power. "By funding renewable energy, we're just deferring the problem," he said. "Subsidizing renewables just mixes things up. Paying people to produce electricity that's not needed is one of the roots of our problem."
The problems to which he alluded were discussed by another speaker at the event, who recounted that energy in California was negatively priced - cost less than zero - for 9% of the hours in 2015, but as many as 26% of the hours this year. Widespread deployment of renewable energy, coupled with market rules giving those resources favorable treatment, pushed prices down across the state.
Repealing the federal production tax credits (PTCs) and investment tax credits (ITCs) for wind and solar, respectively, and redirecting those funds to CCS R&D would be "a great idea," Marshall said, but it would be hard to accomplish because the current system distributed benefits so widely. "It's hard to get anything done in Washington, and it's even harder to get anything undone. But if we don't get the PTC and the ITC undone, some pretty strange things will happen."
"The U.S. is the best place in the world to develop and deploy CCS," Cloud Peak's Marshall told the conference attendees. "Instead of picking winners and losers, let's invest in reducing emissions."
In an interview at the conference, Marshall said the owners of the W.A. Parish Power Station in Thompsons, Texas, the site of the first U.S. commercial CCS project, said they could build the next incremental CCS project for about 40% less than the first one. The Parish CCS project began operating earlier this year. For more on that, see January 11, 2017, article - NRG Completes World's Largest Carbon-Capture Project. But NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey) said it would exit the CCS business after the completion of the Parish project. For more on that, see October 7, 2015, article - NRG to Exit Carbon-Capture Business After Texas Project is Completed.
CCS was more in vogue a few years ago, when crude-oil prices were substantially higher. Back when crude oil was selling for $100 per barrel, CCS project developers planned to use the captured CO2 in enhanced oil recovery (EOR) projects, like the Parish project is doing. That extra revenue stream from the sale of the gas would help offset high capital costs to build the capture systems. But the collapse of crude-oil prices two years ago undermined the economics of several CCS projects.
North America's only other commercial-scale CCS project was installed at SaskPower's Boundary Dam Power Station. The construction and initial operational challenges at that unit have since been resolved, and that CCS project is capturing about 92% of CO2 emissions at the unit where it is installed, a conference attendee told Industrial Info.
"The coal industry has three years to do something better" than the Clean Power Plan, Beggar added. "Coal got a bit of a reprieve" when Trump instructed the U.S. Environmental Protection Agency (EPA) (Washington, D.C.) to repeal the Clean Power Plan. That repeal was announced earlier this month. If the agency succeeds at repealing the CPP, it will then determine what it would be replaced with, an agency official said. For more on that, see October 11, 2017, article - EPA Releases Plan to Repeal Clean Power Plan and Save Up to $33 Billion in Compliance Costs.
Beggar commented, "This administration is really behind the eight-ball because so many second-tier positions [at the EPA] have not been filled."
Turning to exporting Western coal, long a goal of mining companies, Marshall said Asian demand for coal is "fantastic," citing strong demand from China and South Korea, among other nations. But the long distance that coal would have to travel - by rail from the Powder River Basin, and then on water to Asia - makes the economics difficult. He suggested, without going into detail, that the projects would become stronger economically if the customers helped finance the export terminals and other associated infrastructure. While asserting "the business model is there," he nonetheless acknowledged it was "a tough slog. It's tough to overcome the inherent cost that comes from distance."
Proposed coal-export terminals in the Pacific Northwest, once numerous, have shrunk in recent years. For more on that, see November 6, 2016, article - Proposed West Coast Coal Terminals Winnowed. The Millennium Bulk Terminals project, the last active proposed project, received a setback in late September when the Washington State Department of Ecology denied the project a permit. The developer is challenging that decision. For more on the Millennium project, see July 11, 2016, article - Is it Too Late for a Planned West Coast Coal-Export Terminal?
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
