While some of the underlying clean air rules are in flux, Oklahoma Gas & Electric plans several new emissions-control projects, said an integrated resource plan that the utility filed Oct. 9 with the Arkansas Public Service Commission.
The planned projects include:
- Low NOX Burners on seven units, start construction in February 2013, finish February 2017, $122m cost;
- Dry Sorbent Injection on five units, construction start February 2014, finish May 2015, $126m cost; and
- Activated Carbon Injection on five units, construction start February 2014, finish May 2015, cost $21m.
OG&E, a unit of OGE Energy Corp. (NYSE: OGE), said it believes that it is premature to move forward with installation of SO2 dry scrubbers at this point, which is something the U.S. Environmental Protection Agency has been pushing for under its Regional Haze rules.
OG&E’s generation resources include coal-fired units, gas-fired steam units, gas-fired combined cycle (CC) units, gas-fired combustion turbine (CT) units and wind facilities. In 2011, OG&E generated about 59% of its electric energy from burning low-sulfur Wyoming coal at its coal units, 35% from natural gas and 6% from wind.
OG&E owns 51% of the gas-fired Redbud plant and 77% of the gas-fired McClain plant. All other facilities are fully owned by OG&E. OG&E is the operator of all of its plants, including McClain and Redbud. OG&E purchases 320 MW from AES Corp.’s (NYSE: AES) coal-fired plant at Shady Point and 120 MW from the natural gas-fired combined cycle PowerSmith plant. OG&E currently has four wind energy purchase power agreements: Sooner Wind at 50 MW, Keenan at 151.8 MW, Taloga at 130 MW and Blackwell at 60 MW.
The latest Capability Report was published in December 2011 and reported a net capability of 6,383 MW from OG&E’s nine fossil fuel power plants. The Crossroads wind farm has since been added to OG&E’s fleet and brings the net capability to 6,390 MW. The coal units are: Muskogee Unit 4, with 504 MW of capacity; Muskogee Unit 5, with 500 MW; Muskogee Unit 6, with 506 MW; Sooner Unit 1, with 515 MW; and Sooner Unit 2, with 523 MW.
Some gas-fired capacity on the retirement list
Previous resource plans assumed that each unit in OG&E’s fleet would perform for the entire study period. Since the last IRP, several studies have been conducted to analyze potential retirement dates. The first study analyzed gas-fired steam units and identified their expected end of life. The second study considered the economic impact of earlier retirements of those units. The third study is an evaluation of the gas-fired Enid and Woodward plants.
In 2012, consultant Burns & McDonnell completed a Condition Assessment Study for the gas-fired Mustang, Horseshoe Lake and Seminole plants. Based on this analysis, OG&E plans to retire these units by January 1st of various years, with the only retirements this decade being Mustang Unit 1 (50 MW) in 2016 and Mustang Unit 2 (50 MW) in 2018. These expected end-of-life projections are dependent on currently planned plant funding levels, future unit operations, and assuming the current set of environmental regulations.
The Enid and Woodward gas plants have five combustion turbines that were built in the mid-1960s. These plants have a combined rated capacity of about 53 MW. Enid and Woodward require an investment need of approximately $7m and an annual O&M expense of about $475,000. Emission reduction requirements will require installation of Selective Catalytic Reduction (SCR) to control NOx emissions. OG&E estimates these controls will cost at least $5m per generating unit. Installing controls significantly increases the cost of operating the Enid and Woodward plants but is still lower than the cost of a new CT.
An alternative to investing in the Enid and Woodward plants is to install chillers at the McClain and Redbud plants. Chillers increase summer capability to a similar value as winter capability. OG&E’s portion of each plant’s capability increases by about 40 MW at an approximate cost of $15m per plant. Annual O&M would increase at each plant by about $155,000. Based on this analysis, OG&E will continue to consider installing chillers on McClain and Redbud as an alternative to investing in Enid and Woodward.
Haze rule pushing utility toward major coal unit spending
As required by the federal Regional Haze rule, the state of Oklahoma evaluated the installation of Best Available Retrofit Technology (BART) to reduce emissions that cause or contribute to regional haze from certain sources within the state that were built between 1962 and 1977. Certain units at the Horseshoe Lake, Seminole, Muskogee and Sooner plants were evaluated for BART.
In February 2010, Oklahoma submitted its State Implementation Plan (SIP) to the U.S. Environmental Protection Agency, which set forth the state’s plan for compliance with the haze rule. The Oklahoma SIP included requirements for reducing emissions of NOX and SO2 from OG&E’s seven BART-eligible units at Seminole, Muskogee and Sooner. The SIP also included a waiver from BART requirements for all eligible units at the Horseshoe Lake plant based on air modeling that showed no significant impact on visibility in nearby national parks and wilderness areas. The SIP concluded that BART for reducing NOX emissions at all of the subject units should be the installation of low NOX burners with overfire air (flue gas recirculation was also required on two of the units) and set forth associated NOX emission rates and limits.
For SO2 emissions, the SIP included an agreement between the Oklahoma Department of Environmental Quality and OG&E that established BART for SO2 control at four coal-fired units at Sooner and Muskogee as the continued use of low-sulfur coal with limited emission rates. The SIP specifically rejected dry scrubbers as BART for SO2 control from these units because the state determined that dry scrubbers were not cost-effective.
In December 2011, the EPA rejected portions of the Oklahoma SIP and issued a Federal Implementation Plan (FIP). While the EPA accepted Oklahoma’s BART determination for NOX in the FIP, it rejected the SO2 BART determination with respect to the four coal-fired units at Sooner and Muskogee. In its place, the EPA is requiring that OG&E meet an SO2 emission rate of 0.06 lbs/MMBtu within five years. OG&E could meet the proposed standard by either installing dry scrubbers or fuel switching at the four affected units.
OG&E and other parties on Feb. 24 filed a petition for review of the FIP in the U.S. Court of Appeals for the Tenth Circuit. OG&E filed a stay request at the appeals court on April 4, which was granted on June 22. The stay will remain in place until the decision on the petition for review is complete, which will delay the implementation of the Regional Haze rule.
On June 15, OG&E, the state of Oklahoma and other parties filed their brief in support of the petition for review of the final haze rule of the EPA. The briefing by all parties is currently scheduled to be completed in October. “Given the grant of the stay and the pending petition for review, OG&E believes that it is premature to move forward with installation of scrubbers or fuel switching,” the IRP noted. “Instead, OG&E will only move forward with low NOx burners to comply with the portions of the Oklahoma SIP that were accepted by the EPA and are not subject to the judicial stay.”
Under EPA’s Cross-State Air Pollution Rule for NOX emissions during the ozone-season from May 1 through September 30 of each year, OG&E is required to reduce NOX emissions from its units within the state beginning in 2012. In December 2011, an appeals court issued a stay of the rule that is still in effect. OG&E said it cannot predict the outcome of challenges to the rule and is evaluating what emission controls would be necessary to meet the standards. OG&E believes that the installation of low NOx burners will allow it to comply with CSAPR. Since OG&E will already be installing the low NOx burners to comply with the Regional Haze rule, the only question is whether OG&E can have the low NOx burners installed in time to meet the compliance deadlines for CSAPR.
In December 2011, the EPA signed the Maximum Achievable Control Technology (MACT) rules governing emissions of hazardous air pollutants, which was to take effect in April 2015, with the chance of a one-year deadline extension. OG&E is planning to utilize dry sorbent injection (DSI) with activated carbon injection (ACI) at up to five coal-fired units in order to comply.
Coal-to-gas switching looked at in air plan
OG&E in the IRP identified five alternatives for controlling SO2 emissions. The first continues the use of low-sulfur coal and the other alternatives use different technologies to achieve higher levels of SO2 reductions. All alternatives assume Low NOx Burners on the seven Regional Haze-impacted units, ACI by 2015 on all coal units that are planned to run after 2017 and DSI on Muskogee 6 for acid gas removal. Installation dates for emission controls are for analysis purposes only and may differ based on construction constraints and the outcome of the pending review of the EPA’s FIP by the U. S. Court of Appeals for the Tenth Circuit. The alternatives are:
Benchmark – add DSI to all coal units by 2015 for acid gas removal;
Scrub – scrub four coal units by 2018;
Convert – convert four coal units to natural gas by 2018;
Hybrid Convert – scrub two coal units by 2018, and convert two coal units to gas by 2018; and
Hybrid Replace – scrub two coal units by 2018, and replace two coal units with new combined cycle capacity by 2018.
Coal is procured under long-term contracts utilizing a strategy of layering in contract expirations over time, the IRP noted. Contractual adjustments are made to the price of coal each quarter (up or down) due to quality variations. Currently, coal is purchased from four producers in the Southern Powder River Basin of Wyoming. Rail transportation is provided under long-term contracts with the BNSF Railway for the Sooner plant. For Muskogee, OG&E is currently operating under tariff service from the Union Pacific Railroad.