Minnesota commission staff backs gas-fired version of Excelsior project

The Minnesota Public Utilities Commission staff is recommending ahead of an Aug. 14 commission meeting that the commission find that the Mesaba Energy Project site and route permit issued in March 2010 for a coal gasification project is valid for a natural gas-fueled facility at the same site and no further environmental review is required.

Staff filed on Aug. 8 with the commission a summary of the arguments in this case. In August 2007 the commission found that the Mesaba project, when it was planned as a coal gasification facility, was an innovative energy project (IEP) under Minnesota statute. In March 2010, the commission igranted project developer Excelsior Energy a Large Electric Power Generating Plant (LEPGP) site permit for the project. The order also included issuance of the project’s associated high-voltage transmission line and pipeline route permits. All three permits are collectively referred to as the site and route permit. The March 2010 order also found that the environmental impact statement (EIS) and record created at the public hearing addressed the issues identified in the EIS scoping decision.

On May 31, Excelsior Energy asked the commission to confirm that the site and route permit, as they stand now, are valid for a natural gas-fired plant located at the same site, and that no additional environmental review is required. Between June 6 and July 20, the commission received initial comments from the state Department of Commerce–Energy Facilities Permitting (DOC EFP) staff, three members of the public, Excelsior, two legislators, the Sierra Club and opposition group mncoalgasplant.com.

The permit issued in March 2010 authorized Excelsior to construct and operate a fuel-flexible Integrated Gasification Combined Cycle (IGCC) power plant. The permitted plant would be constructed in two phases; each phase capable of producing about 600 MW of baseload power. Electric power for each of the two phases would be produced by two combustion turbines (about 220 MW each) and by one steam turbine generator (up to 300 MW). The site is referred to as the West Range site and is located in the city of Taconite in Itasca County, Minn. With the letter filed with the commission on May 31, Excelsior has indicated that it now wants to develop only the natural gas combined-cycle power block (NGCC) portion of the project at this time.

Excelsior noted that they had recently engaged in discussions with the Minnesota Pollution Control Agency (MPCA) regarding a revision to Mesaba’s air permit application in a manner consistent with a recently enacted Minnesota statute. Excelsior informed the MPCA of its intention to develop the combined-cycle power block portion of the project to which the MPCA requested Excelsior confirm with the appropriate agency that no further environmental review or EIS revision would be required.

Excelsior believes that the 2011 statute is clear that the site and route permits are valid and no further review is required if a natural gas plant is constructed at the Mesaba West Range site. Further, Excelsior argued that the revised natural gas project would fit within the physical and environmental footprint and would be a subset of the original project, resulting in reduced impacts relative to those examined in the original project’s EIS.

Department of Commerce staff also backs Excelsior request

The DOC EFP staff noted that the newly-enacted statutory language implies that the current site permit is valid for the construction of a natural gas-fueled plant on the approved site (West Range) and that the allotted time to commence construction of this natural gas-fueled plant extends to the earlier of four years from the date the final required state or federal preconstruction permit is issued or June 30, 2019. Furthermore, the existing site permit requires the commission to consider suspension of the IGCC permit if construction has not commenced within four years of issuance of the permit. The DOC EFP appears to question whether the amended statutory language extends to the time period for construction of the IGCC facility as well, commission staff noted. The DOC EFP staff indicated that they are unclear about the change in scope of the project since it is difficult to determine from Excelsior’s filing whether there are still plans to add the IGCC portion of the facility at a later date, if at all, beyond the timeframes outlined in the permit.

The DOC EFP staff noted that under a state statute, no other environmental review besides the review conducted for the commission’s site and route permit process is required for large electric power facilities. The DOC EFP concluded that if the commission finds that the site and route permits are valid for a natural gas-fired facility, then no other environmental review would be required.

Ultimately, the DOC EFP staff recommended that the commission request Excelsior clarify its future plans concerning the construction of the IGCC facility and require Excelsior to file additional information specifying the differences in system components, resource requirements and potential impacts of the IGCC versus the NGCC facilities.

On June 26, Excelsior filed comments in response to the DOC EFP. First, Excelsior noted that it plans to construct the gasification island if and when it becomes feasible to do so from economic and regulatory standpoints, and currently, both obstacles exist. Excelsior noted that recently-proposed federal regulations on greenhouse gas emissions (which require new coal-fueled generating units to capture and store CO2) as well as the recent downturn in natural gas prices both contribute to make the construction of new coal-fired capacity unlikely. Excelsior expects these obstacles to remain for at least the near future.

Excelsior disagreed with the DOC EFP analysis regarding the deadlines for construction of the natural gas-fired facility versus the IGCC facility. Excelsior interprets the newly-enacted statute to extend both the natural gas facility and the IGCC facility deadline for construction and therefore the site permit would extend beyond the dates outlined in the permit conditions.

Commission staff said it believes that sufficient information has been provided for the question at hand; whether the facility as currently proposed would have a valid site permit under the amended statute. It does not appear from the statute that an IEP facility must be built in conjunction with a natural gas-fueled facility in order for this statute to apply.

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.