September 15, 2007

Global Monitor (September 2007)

Court blocks gas attack on coal project

Last month, the Oklahoma Supreme Court rejected a motion by an in-state natural gas supplier and its supporters to put the brakes on a planned $1.8 billion coal-fired power project. The gist of the complaint was that the coal plant would be less green than a gas-fired combined-cycle plant of similar capacity.

The court order, in one sentence, denied the complaint by Chesapeake Energy Corp. and the Quality of Service Coalition—a group of Oklahoma businesses and cities. The motion asked the Oklahoma Supremes to assume jurisdiction over the case, thus nullifying preconstruction approval of the project this June by the Oklahoma Corporation Commission (OCC).

Chesapeake, the largest oil and gas exploration and production company in Oklahoma (Figure 8), argued that the June OCC hearings at which the Red Rock Power Project was approved violated the state's constitution. The 950-MW plant would burn Powder River Basin (PRB) coal at ultrasupercritical pressure and temperature.

8. Oklahoma fuel fight. Chesapeake Energy, Oklahoma's largest natural gas producer, has lost a court battle over the constitutionality of a state agency's preconstruction approval of a large power project that would burn Powder River Basin coal. Courtesy: Chesapeake Energy

It should come as no surprise that Chesapeake's biggest supporters in the campaign against Red Rock are the proposed plant's developers: American Electric Power's Public Service Co. of Oklahoma (PSO), Oklahoma Gas & Electric Co. (OG&E), and the Oklahoma Municipal Power Authority (OMPA), a state agency that supplies bulk electricity to dozens of munis. Chesapeake et al. argued that a gas-fired, combined-cycle project would be more economical and environmentally sensitive than the coal plant.

Thomas Price Jr., VP for development at Chesapeake, said, "Natural gas is significantly greener and better for the environment, the state, and all of its citizens." The gas company also has the support of state environmental groups, including the Oklahoma chapter of the Sierra Club.

The Red Rock plant would be sited near OG&E's coal-fired Sooner Power Plant to take advantage of Burlington Northern rail service from the southern Powder River Basin in Wyoming. The Sooner plant burns 4 million tons of PRB coal annually. The Red Rock plant would require delivery of another 3.5 million tons.

In 2005, PSO issued requests for proposals for new baseload generation with an in-service date of 2011. The utility chose the bid by OG&E and OMPA that evolved into the Red Rock project. As the contract is currently structured, PSO would own 50% of the plant, OG&E 42%, and OMPA 8%.

In 2006, the Oklahoma legislature approved a bill to smooth the path for the Red Rock project, including preconstruction regulatory approval of cost recovery, needed to obtain financing. That's the provision Chesapeake and its supporters argued is unconstitutional.

In ruling that the OCC has jurisdiction to review the plant, the Oklahoma high court made no statement on the merits of the case; it simply affirmed that the state commission has initial jurisdiction. Lee Paden, an attorney for Chesapeake, said the company will continue to pursue the case at the OCC and beyond. "We are disappointed in the decision," he said, "but that doesn't deter us from moving forward."

New advanced energy initiatives

A rich amalgam of technical papers greeted those who attended the 50th ISA Power Industry Symposium in Pittsburgh June 10–15. Topics included simulation and modeling, plant instrumentation, asset management, advanced control techniques, performance improvement through advanced monitoring, nuclear plant issues and technologies, I&C system security, and installation and commissioning issues.

Jeff Kupfer of the U.S. DOE was the keynote speaker. In his speech, he detailed several advanced energy initiatives, such as:

• Three new bioenergy research, development, and demonstration centers.
• Incentives for biorefineries to achieve the DOE's goal of reducing U.S. gasoline consumption 20% within 10 years—what Kupfer called the "20 in 10" initiative.
• Identifying sites for new nuclear reactors by 2010, to facilitate permitting and regulatory approval.
• Solar and wind technologies.
• Clean coal.
• Energy efficiency.

Kupfer noted that the production of all initiatives will be delivered to electricity grids, which he said require "critical improvements." Supporting the increased electron traffic, he added, will require improvements in grid reliability. Kupfer conceded that the DOE's designation of national electric transmission corridors, mandated by the Energy Policy Act of 2005, is "controversial."

—Jason Makansi, Pearl Street Inc.

POWER digest

Siemens inks first U.S. gasification supply contract. Siemens Power Generation has received an order from Secure Energy Inc. for two entrained-flow gasifiers. The units will be used by a proposed plant in Decatur, Ill., to convert high-sulfur Illinois coal to pipeline-quality syngas.

Each of the gasifiers has a thermal capacity of 500 MW and is designed to produce 20 billion cubic feet of syngas annually. Siemens says the gasifiers will be delivered in early 2009, for placement in service within six months. The deal also calls for Siemens to do the plant's process and basic engineering design and to supply other key gasification island components. The financial terms of the agreement were not disclosed.

The deal is the first gasifier order for Siemens from the U.S. Randy Zwirn, CEO of Siemens Power Generation (www.powergeneration.siemens.com), said the order "is further evidence of the market potential for fuel gasification and the important role it can play in meeting our nation's energy requirements."

In other Siemens news, the company has been awarded an $819 million contract by the Kuwait Ministry of Energy to turn the Az Zour gas turbine plant into a combined-cycle facility. Siemens will be working with Belgium's Cockerill Maintenance & Ingénierie SA and Kuwait's Alghanim International on the project. Unit 1 is scheduled to enter service in March 2010, with Unit 2 following three months later. Siemens built the Az Zour plant in 2005 as a 1,000-MW simple-cycle turbine facility capable of burning natural gas or fuel oil.

Alstom lands order for 660-MW Aussie peaker. Alstom has won a turnkey order for a 660-MW simple-cycle gas-fired peaking power plant in Australia worth an estimated $342 million. The French firm will design, supply, install, and commission the Colongra Project, 75 miles north of Sydney, for state-owned Delta Electricity.

At the heart of the peaker will be four of Alstom's 165-MW GT13E2 gas turbine-generators, which Alstom (www.alstom.com) says offer the "high flexibility" needed for peaking operation. Alstom says the deal is its fifth in Australia since 2005 for turnkey gas turbine plants.

The Colongra plant will be built next to Delta Electricity's existing coal-fired plant on the New South Wales central coast. Alstom supplied the original four 350-MW steam turbine-generators for the coal-fired plant in the mid-1960s.