Pacificorp may have buyer for its Dave Johnston plant
A prospective buyer has emerged for PacifiCorp's Dave Johnston coal-fired power plant if the utility chooses to sell it.
Glenrock Petroleum has said it would be interested in purchasing the 762MW plant and equipping unit 4 with carbon capture and sequestration (CCS) technology to use for enhanced oil recovery at a nearby field. Company chief executive Terry Manning declined to give specifics on the potential acquisition, citing a non-disclosure agreement it has with PacifiCorp.
The company is set to retire the facility at the end of 2027, but produced a report in December suggesting that closing at least part of the Johnston plant before then could make economic sense. PacifiCorp is scheduled to submit an updated integrated resource plan in August and said it was premature to discuss the possibility of selling the plant.
But, a new bill signed by governor Mark Gordon (R) this month means PacifiCorp might have to find a buyer for the Johnston plant. The law requires all generators after 2022 to attempt to sell their coal plants before retiring them. Otherwise, power producers will not be able to pass on the costs of building new generation assets to their customers.
Glenrock wants to be the buyer. Manning, who founded the company in 2016, first approached former Wyoming governor Matt Mead (R) in summer 2017, around the time PacifiCorp released its plan to possibly retire the Johnston plant, about the possibility of using CO2 from coal plants for enhanced oil recovery. He has met with other legislators since then.
"There was a confluence of events and circumstances in Wyoming: cheap Powder River basin coal, low-cost power, power plants that were coming to the end of their economically convenient life, and the fact that there were sequestration sights in proximity to these power plant," Manning said in an interview with Argus.
Glenrock would use carbon captured from Johnston's 330MW unit 4 to extract oil from reserves it holds in Converse County, where the power plant is located. The majority of the 44,000 acres of conventional producing mineral leases Glenrock holds have tertiary reserves that require enhanced oil recovery to be mined.
Manning estimates that Glenrock could extract 14,000 b/d using CO2 from the Johnston plant on the company's reserves. He sees potential in PacifiCorp's Wyodak and Jim Bridger coal-fired plants as well.
Glenrock would used the same technology to retrofit Johnston unit 4 as was used at NRG Energy's Petra Nova station near Houston, Texas, and estimates it would cost $430mn-$470mn. The entire project would cost $850mn, Manning said. And, the break-even price of oil production is estimated at $55-$60/b.
PacifiCorp also has expressed some interest in retrofitting the Johnston plant. The company issued a request for proposals in 2018 for "parties that can demonstrate viable technical and commercial and financial proposals to explore the feasibility of carbon capture for the coal-fired power plants with the potential of enhanced recovery in northeast Wyoming," PacifiCorp said.
Glenrock was among the three proposals selected by PacifiCorp and the only upstream oil producer. The two other companies selected would operate a different part of the value chain.
Manning says there have been favorable preliminary talks with potential financiers for Glenrock's proposed purchase, but first PacifiCorp needs to unveil its integrated resource plan before any sort of financing can be committed.
The extension of the 45Q tax credit signed into law by President Donald Trump last year should help projects like Glenrock's secure funding. It allows certain projects using CO2 for enhanced oil recovery to recoup $35/metric tonne. With a capture rate of 55pc, the Dave Johnston CCUS facility would capture 1.26mn t of CO2 every year.
"If you have a tax credit, Bank of America, JP Morgan Chase, several others have indicated over the history of the tax credit business that they have an appetite to get involved," Manning said.
Glenrock has looked at contracting Mitsubishi, which was responsible for the Petra Nova plant in Houston, to design and build the facility.
"That way we have no engagement risk, we have no design risk, we have no engineering risk and we have no implementation risks because they have figured it out," Manning said.
Related news posts
SEC set to vote on climate disclosure rule
SEC set to vote on climate disclosure rule
Washington, 4 March (Argus) — The US Securities and Exchange Commission (SEC) is scheduled to vote Wednesday on whether to adopt rules that would require publicly listed companies to disclose more information about their carbon emissions and climate goals. The disclosure requirements have been among the most contested climate rules taken up under President Joe Biden, given the wide-ranging application of the regulations and a price tag the SEC estimated could be more than $6bn/yr. But the SEC, in the upcoming vote this week, is broadly expected to relax the final rule to lower the cost and reduce the risks of being blocked in court. The SEC first proposed the climate disclosure rule nearly two years ago, with a goal to finalize the rule by the end of 2022. But the agency repeatedly delayed that regulatory timeline amid staunch pushback by business groups and a shifting legal environment, including the US Supreme Court's 2022 ruling in a separate climate case that embraced the "major questions doctrine" to raise doubts over novel regulatory initiatives. The initial proposal would have required large companies with at least $700mn of outstanding shares to start reporting scope 1 and 2 greenhouse gas emissions that come directly from operations or from their energy use within about a year of the final rule, with smaller companies having more time to report. The rule would offer more flexibility for scope 3 indirect emissions from a company's value chain, with reporting only required if a company found that information would be "material" to investors. SEC chairman Gary Gensler has said the rules will help standardize the disclosure of climate-related data that many companies are already reporting to investors. The proposal would require public companies to provide more specific information to investors, if they have goals to reduce emissions or plans to reduce climate-related risks. Oil industry groups have warned the SEC that its rule could run afoul of freedom of speech protections in the US Constitution and drive up energy costs for consumers. By Chris Knight Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Sustainable resource use, economic growth possible: UN
Sustainable resource use, economic growth possible: UN
Edinburgh, 1 March (Argus) — The UN Environment Programme (Unep) said today that efficiency can cut natural resource use and environmental impacts, while boosting economic growth, providing a "fundamental" shift in the way resources are managed and financed. Including land use change, natural resource extraction accounts for more than 60pc of global greenhouse gas (GHG) emissions, with biomass contributing the most (28pc), followed by fossil fuels (18pc) and non-metallic minerals and metals (17pc), according to Unep. It "could derail efforts" to meet climate, biodiversity and pollution-curbing goals, and also impact economic prosperity and well-being. Unep said natural resource extraction could rise by 60pc by 2060 from 2020 levels, with primary energy up by 51pc, food and fibre biomass extraction up by 79pc and agricultural land up by 5pc. This would result in a 23pc increase in GHGs. "Where consumption levels are very high, greater focus on lowering resource and material consumption levels to complement action on production and resource efficiency can reduce around 30pc of global resource use as compared to historical trends, while growing the global economy," Unep said. "This can also create the space for resource use to grow where it is most needed." Per capita, high-income countries consume six times more resources and have 10 times more impact on climate change than low-income countries, according to Unep. Under its transition scenario, absolute reductions from high and upper middle-income countries outweigh increases in low and lower middle-income nations. Incorporating environmental externalities in trade agreements, strengthening regulation of financial commodity markets, and putting in place impact-related border adjustment mechanisms are some of the solutions countries can implement to "prevent a race to the bottom on environmental and social standards of resource extraction, and maximise and retain the value from extraction processes in country". Reforming public subsidies contributing to unsustainable resource use, as well as scaling up private finance, is also recommended. Under the scenario, the share of renewable energy rises from around one-sixth of supply in 2020 to around a third in 2035 and two-thirds in 2060. "The analysis identifies strong decoupling of energy supply and use from GHG, with the energy mix shifting decisively away from fossil fuels." But some natural resources such as battery minerals are key to the energy transition and to meet global climate targets. "To stay below a 2°C temperature rise by 2050, we will need over 3bn t of energy transition minerals... right now, however, resources are extracted, processed, consumed and thrown away in a way that drives the triple planetary crisis — the crisis of climate change, the crisis of nature and biodiversity loss, and the crisis of pollution and waste," Unep executive director Inge Andersen said. The ongoing UN Environment Assembly is discussing responsible mining and sustainable use of energy transition minerals, following the resolution last year on the environmental aspects of minerals and metals management. Unep said that policies must focus on production and consumption, with a stronger emphasis on the latter. "Concerted action to decrease material requirements for transitions to renewable energy systems — including by applying sustainable consumption and production, resource efficiency and circular economy strategies — can help facilitate the transition to clean energy for all countries, while minimising the socioeconomic impacts," Unep said. By Caroline Varin Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Indonesia’s PLN raises biomass targets at coal plants
Indonesia’s PLN raises biomass targets at coal plants
Manila, 29 February (Argus) — Biomass consumption at Indonesia's coal-fired power plants is likely to increase this year, in line with government efforts to cut down greenhouse gas (GHG) emissions from the power sector. PLN Energy Primer Indonesia (PLN EPI) — a PLN unit responsible for ensuring adequate fuel supplies to PLN-owned power plants — said it is aiming to supply 2.56mn t of biomass this year, more than double last year's volume of 1mn t. The higher biomass consumption in the power generation sector is expected to cut GHG emissions by up to 2.8mn t CO2 equivalent (CO2e). Biomass co-firing resulted in an emissions reduction of 1.05mn t in 2023. PLN EPI's biomass supply will come from agricultural, plantation and forestry residue and waste such as sawdust, rice husks, corn cobs, sugar cane bagasse, empty palm fruit pellets, palm shells, candlenut shells, and wood chips. Sourcing a variety of biomass products will allow for higher uptake as it addresses supply constraints that could arise if the types of biomass are limited, the company said. Sourcing is expected to be easier this year following the passage of a ministerial regulation from Indonesia's energy ministry (ESDM) in November 2023, which sets pricing for biomass products meant for power generation. Under the regulation, biomass products sold for power plant use will have a maximum price slightly above the HBA coal reference price, which is set monthly by the ESDM. This will allow power plants to incorporate co-firing without a significant increase in the cost of operations, PLN EPI said. PLN EPI is also expanding its sourcing to include farmers' associations, co-operatives, and community groups with the goal of having each coal-fired plant's biomass needs supplied by local businesses and communities. Biomass sources are currently scattered across the country and relatively far from power plant sites. But bringing biomass sources closer to power plants should stabilise supply, making it easier to implement co-firing at additional plants, PLN EPI said. By Antonio delos Reyes Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Japan eyes potential of summer power demand: Correction
Japan eyes potential of summer power demand: Correction
Corrects nuclear generation forecasts in paragraph 3 Tokyo, 27 February (Argus) — Japan faces potential similar consumption of thermal power generation fuels this summer with nuclear availability and forecast temperatures mostly in line with a year earlier. The Japan Meteorological Agency forecasts a 50-70pc probability of temperatures during June-August 2024 rising above the 30-year average in all parts of Japan. Average temperatures in Japan's major cities, such as Tokyo, Osaka and Nagoya, during June-August 2023 were higher than the long-term average. This implies that the country is likely to face similar summer temperatures as last year. Nuclear power output is projected to rise slightly in summer from a year earlier. The operating capacity of nuclear power plants is forecast at an average of 9,595MW during June-August, while average actual operating capacity was 9,563MW in the same period in 2023, according to Argus calculations based on data from Japan's Agency for Natural Resources and Energy and notices on the Japan Electric Power Exchange website. Hotter weather across the country in 2023 failed to lift thermal fuel demand, with power demand in Japan's 10 service areas averaging 104.3GW for June-August, down by 1.2pc from the same period a year earlier, according to nationwide transmission system operator the Organisation for Cross-regional Co-ordination of Transmission Operators. The rainy season normally cuts solar output. But sunlight hours were unusually longer in 2023 compared with 2022, which increased solar output and helped curb thermal generation. Continued energy saving efforts also helped to cut electricity use. Japan's LNG consumption for power generation totalled 9.8mn t during June-August 2023, according to the trade and industry ministry. Coal use totalled 26.5mn t, while oil consumption — including fuel oil, diesel and crude — was 57,651 b/d. LPG use was 6,014t. By Nanami Oki and Reina Maeda Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.