Alone atop the coal mountain

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Peabody Energy’s North Antelope Rochelle Mine in Wyoming is one of the largest and most productive mines in America, with coal seams between 80 and 100 feet thick.

Wyoming is best known for Yellowstone National Park, Jackson Hole, Old Faithful and Vice President Dick Cheney — and don’t forget coal.
According to The Energy Information Administration, the state has recoverable reserves of more than 41 billion tons and demonstrated reserves, those considered technologically minable, of more than 64 billion tons.
Last year, Wyoming mines produced 456 million tons of coal, accounting for nearly 40 percent of America’s consumption. All Wyoming’s coal was used to fuel power plants, including the Martin Drake and Ray Nixon plants in Colorado Springs.
At present rates of consumption, Wyoming could supply the nation’s needs for many decades, even centuries. And thanks to its energy industry, Wyoming is awash in cash. This year’s state budget will show a surplus of nearly $1 billion, almost all because of taxes and fees levied on coal, gas and crude oil extraction.
Nearly $650 million of the surplus will be placed in the “Permanent Mineral Fund,” which is expected to reach $4 billion by 2010, and is intended to cushion the state against economic downturns.
However, concerns about global climate change have increasingly focused upon carbon dioxide emissions from coal-fired power plants, and if regulators demand sharp reductions in such emissions, Wyoming’s coal industry might contract, or even disappear.
But what if new technologies allowed the exploitation of these vast energy reserves without injecting additional carbon into the atmosphere? Could Wyoming become America’s Saudi Arabia — a virtually limitless source of affordable energy?
Wyoming’s future, and the future of the western coal industry, might depend upon the success of a revolutionary new power plant to be built in northern Colorado by Xcel Energy, in partnership with the Department of Energy.
Slated to cost as much as $1 billion, the plant will test an “Integrated Gasification Combined Cycle.” In an IGCC plant, syngas is produced and burned to power turbines, while steam generated in the gasification process is used for power generation. Carbon dioxide emissions can be captured and sequestered.
If the Xcel plant proves to be technologically successful, it will assure coal’s continued dominance of electrical generation markets for many decades. If not, coal may gradually disappear, to be replaced by natural gas, renewables and nuclear power.
Three IGCC plants have been constructed in the United States. All are smaller than Xcel’s proposed facility, and all received substantial government subsidies.
And all had problems.
“The problem with these leapfrog technologies is that they have a well-proven track record of mostly failing,” said Dale Simbeck, vice president of technology for SFA Pacific Inc., a Mountain View, Calif., energy industry consulting firm.
He said that there are only two IGCC power plants operating in the United States, despite years of federal subsidies. One, the $335 million Pinon Pine plant near Reno, Nev., whose cost was split between the power company and the DOE, has never been fully operational.
But Xcel is confident that any problems with the technology are in the past.
“We believe the development and commercial operation of clean-coal technology is needed in Colorado and throughout the nation,” said Xcel President Richard Kelly, “We want to lead the effort to demonstrate that this technology works using western coal at high altitude.”
It has yet to be proven that IGCC technology will work at higher altitudes, or that it will work with low British thermal unit/high moisture content Wyoming coal.
Marion Loomis, executive director of the Wyoming Mining Association, doesn’t believe that utilities will abandon coal for many decades if ever, regardless of technology.
“In Btu terms, we’re by far the biggest energy producer in the nation,” he said. “We’re building power plants right at the mine mouth, which helps us with economic development.”
So will Wyoming continue to dominate U.S. coal markets?
Loomis can’t see why not. He said that Wyoming coal is several times cheaper in Btu terms than natural gas, and that the state’s mines are five times more productive than their counterparts elsewhere.
He also said that the cost of extracting coal from the vast surface mines of Wyoming is minimal. Enormous deposits, in seams as thick as 200 feet, underlie the gentle, rolling topography of the Powder River Valley. Every day, more than 75 mile-long coal trains leave Wyoming, loaded with the coal that fuels power plants throughout the nation.
If ever the trains stopped, the national economy would shut down within weeks, and most of the nation would plunge into darkness.
“I never make predictions, but the railroads (Burlington Northern and Union Pacific) are gearing up to move 600 million tons in the future (a 30 percent increase),” Loomis said. “We’ll certainly continue to be a primary force in electrical generation.”
Gov. Dave Freudenthal thinks that Wyoming needs to move quickly to support research into methods and facilities to transform coal into natural gas and/or liquid fuel.
“I do support the development of coal conversion facilities in this state,” Freudenthal said during an address to the Wyoming legislature last month. “I believe that it is incredibly important that this state become a leader in this question.”
But he’s not willing to use state money to subsidize the work.
“I have spoken with any number of people who have the key idea for how do you convert coal and how do you do it in an environmentally rational fashion, and that means dealing with some of the pollution issues but also converting coal either to a form of synthetic natural gas or to diesel or a number of other liquids,” Freudenthal said. “Each of those discussions usually ends up with the individual saying, ‘And this will only work, governor, if the state gives me a hundred million,’ or 300 million or whatever it is. … I’m not prepared to support the state placing its funding into that process …”
And he also has to deal with residents who would like to save every nickel of the energy-generated budget surpluses and completely eliminate taxes.
“Some people (erroneously think) what if we put all (the energy industry taxes) in the trust fund?” Freudenthal said during his speech. “Then we can become essentially trust fund babies and we won’t have to pay any taxes. And we have created the impression in the public that somehow if we just save enough, they will never have to pay any taxes.”
In addition to the surplus savers and the synfuel subsidizers, there is a group of traditional progressives who would like to move Wyoming in a completely new direction.
That group includes state Rep. Jane Warren of Laramie, who cited the National Renewable Energy Laboratory’s decision to locate what will be the world’s most powerful computer in Cheyenne — rather than Boulder.
“We don’t have any way to change national energy markets,” she said. “We can invest in our own state, by strengthening education, high-tech, and using our natural advantages to create a kind of Singapore in the Rockies. We have clean air, open space — our future isn’t just coal, oil and natural gas.”
John.Hazlehurst@csbj.com