Copyright © 2019 Albuquerque Journal
Journal Staff Writer
A plan to install carbon capture technology on the coal-fired San Juan Generating Station near Farmington got a boost from a Los Alamos National Laboratory study that says the project is technically feasible.
LANL conducted the study under contract with the U.S. Department of Energy, independent from the City of Farmington and private company Enchant Energy Corp., which are pursuing carbon capture at the plant.
Enchant Energy praised LANL for providing independent validation of the project’s technical viability, but environmentalists say the study ignored project economics, undermining its conclusions.
The LANL study, released last week, focused solely on “technical aspects” of the carbon capture technology selected for San Juan, prospects for selling captured CO2 for oil operations in the Permian Basin, and additional options for CO2 use and sequestration in the Four Corners Area.
The study concluded that the technology, to be supplied by Mitsubishi Heavy Industries Engineering Ltd., is well proven and can capture up to 90% of carbon emissions at San Juan, which is Enchant Energy’s goal. The technology is already deployed at Petra Nova in Texas, which is the only commercial carbon capture plant currently operating in the U.S.
LANL said that technology can be adapted to San Juan, and that developers can save money by re-purposing equipment from two non-operating San Juan generating units, including an existing cooling tower, auxiliary power systems and a circulating water pump.
The study said there is a ready market in the Permian for CO2, accessible by an existing, 500-mile Kinder Morgan pipeline in Colorado that’s just 20 miles from San Juan, although Enchant must still build a 20-mile connecting line and negotiate use of Kinder Morgan’s pipeline. It said potential CO2 markets also exist in the San Juan Basin, along with geological sequestration opportunities, although that would require new pipeline infrastructure.
“We’re proud that a nationally recognized laboratory with a completely independent study has validated our plan to build carbon capture at San Juan,” Enchant Chief Operating Officer Peter Mandelstam told the Journal. “Some stakeholders have questioned the technical feasibility, and LANL has now answered those questions.”
But Karl Cates of the Institute for Energy Economics and Financial Analysis, said LANL completely ignored project economics.
“This is not a science question, it’s an economics question,” Cates told the Journal.
IEEFA and others believe the project will likely cost much more than the $1.3 billion estimated by Enchant Energy, which must still raise that money upfront from investors. And despite Enchant’s recent signing of memorandums of understanding with Mitsubishi and Keiwit Power Constructors Co. to negotiate a final project development deal by next summer, Enchant’s plans remain economically unfeasible, Cates said.
“They can sign all the MOUs they want, but until they actually come to town and start building something, this project is just a paper tiger,” Cates said. “It’s a stack of papers, and we believe that’s all it’s ever going to be.”
IEEFA also questions some of LANL’s technical conclusions, such as whether Enchant could actually capture 90% of carbon emissions at San Juan, which would require the plant to run at 85% capacity or higher. Public Service Co. of New Mexico, which operates the plant as one of the facility’s five co-owners, says San Juan, at best, has run at about 75% capacity in recent years and frequently operates at only 60% or lower given the plant’s age and its consistent need for maintenance and repairs that force shutdowns.
If the facility doesn’t run at higher capacity, it could disrupt the economics of Enchant’s project, which is based on capturing and sequestering about 6 million metric tons of carbon per year. The company expects to earn $2.6 billion in federal tax credits paid for each ton of CO2 successfully captured and sequestered over 12 years, which is key to attract the $1.3 billion investment needed upfront to convert San Juan.
“Key to getting carbon capture and sequestration at San Juan would be to run the thing at full capacity all the time, and it’s nowhere near doing that even now,” Cates said.
Still, Mandelstam says PNM and its co-owners, who plan to abandon the plant in 2022, haven’t fully invested in needed maintenance to run San Juan at maximum levels. Once acquiring the facility, developers would invest what’s necessary.
“As exiting owners, it’s appropriate that they would not maintain the plant at its highest level capacity because they’re on a glide path to shutdown,” Mandelstam said. “Enchant and our partners are highly confidant that after we perform the deferred maintenance and install the carbon capture technology, we will be able to run the plant at above 85%.”