Cheap shale gas, emissions needs push Naughton 3 fuel switch

One of three coal-fired units at the Naughton power plant, the 330-MW Unit 3, could be switched to natural gas to meet various clean-air needs, PacifiCorp spokesman Dave Eskelsen told GenerationHub on April 20.

PacifiCorp is a MidAmerican Energy Holdings company.

The company is before the Wyoming Public Service Commission in a case where it is seeking approval of a certificate of public convenience and necessity (CPCN) covering upgraded existing emissions controls, including upgrades to a long-built SO2 scrubber, and new emissions controls, including pulse jet fabric filters (PJFF) to replace an existing electrostatic precipitator and a first-time selective catalytic reduction (SCR) system for NOx.

But recent analysis now shows that the most cost-effective control option for Unit 3 is to switch it to burning natural gas, Eskelsen said. That conclusion is now the subject of review by the PSC in the ongoing case.

There are no plans to fuel switch the 210-MW Unit 2 and 160-MW Unit 1 at Naughton, Eskelsen said. Units 1 and 2 have gotten recent installations of new SO2 scrubbers.

The commission website shows this case is up for a May 22 pre-hearing conference and a May 29-June 1 exhibit hearing.

A fact sheet on the PacifiCorp website shows that the Naughton plant can burn as much as 2.8 million tons of sub-bituminous coal. That coal comes from adjacent coal deposits formerly controlled by Chevron Mining, with the mine recently bought by Westmoreland Coal (NASDAQ: WLB). That coal is delivered on a 4,200-foot belt conveyor.

PacifiCorp official Chad Teply said in April testimony filed at the commission that conversion of Naughton Unit 3 to natural gas is predicated on the continued operation of the current boiler, turbine, and associated support systems. While certain ancillary systems and infrastructure would likely be idled in place, those instances would represent only a small fraction of the facility, he noted.

One of the air regulations forcing this conversion is the regional haze rule, with Teply noting that any delay of this rule would delay the switch. “An extended Naughton Unit 3 regional haze compliance timeframe, particularly with respect to the natural gas conversion compliance alternative, would be expected to benefit customers, the state of Wyoming, and the Company’s employees,” Teply said. “Naughton Unit 3, as currently configured, is a least-cost generation resource for the Company and its customers. Operating in its current configuration as long as possible provides value to customers. The unit is currently fueled from a Wyoming coal mine in a mine-mouth configuration. Deferring conversion of the unit to natural gas as a fuel source would extend the time frame during which customers receive lower cost power than will occur after natural gas conversion; would effectively extend the state’s revenue stream associated with the coal burned by the unit; would allow a more timely transition for affected employees, their families, and affected communities; and would ultimately result in additional long-term emissions reductions from the converted unit than would have otherwise been obtained by installation of the SCR and PJFF.”

Rick Link, the utility’s Director, Structuring & Pricing, also offered April testimony that said the company relied on its June 2011 official forward price curve (OFPC) in its base case analysis of the SCR and baghouse investments in last year’s CPCN application. The updated base case analysis that now points toward switching to gas was performed using the December 2011 OFPC. Over the six months between June 2011 and December 2011, average annual natural gas prices at the Opal market hub over the forward period 2015-2030 fell by about $0.66/mmBtu or approximately 10%. The downward price trend is largely a reflection of continued growth expectations for domestic shale gas production, Link noted.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.