Coal will be a part of the U.S. energy future for many years despite what some are predicting, Frank Clemente told more than 800 guests and member system representatives at Basin Electric Power Cooperative’s 51st annual meeting held Nov. 7-8 in Bismarck, N.D.
Clemente is a professor of Social Science and Energy Policy at Penn State University. “Coal is the cornerstone of our electric power system, whether people like it or not. It’s there and it’s not going anywhere,” he said.
Clemente’s research specializes in the socioeconomic impact of energy policy. He said the U.S. Department of Energy predicts that coal will still be the leading source of power generation through 2035, but he thinks even those projections are an underestimation.
“This generation today doesn’t quite understand how important the United States’ endowment of coal is,” Clemente said. “Coal has tremendous flexibility (as a fuel source); it just isn’t a national resource – it’s a global resource. It’s a resource that will be used. Coal offers tremendous flexibility and there are tremendous things you can do with it. One of those things is coal gasification – which is an integral part of Basin Electric’s operation.”
In his remarks to the Basin Electric membership, Roy Ireland, president of Basin Electric, said the business of power supply has many challenges. “There have always been challenges to providing power to its member systems, but in 2012, we need to stay up to the challenge to provide cost-effective electricity and services to Basin Electric member systems as the world changes around us.”
Ireland said regulations continue to put pressure on coal as a fuel source for the future. “Institutions that have supported rural America, such as the Rural Utilities Service, continue to face funding and staffing pressures,” he said. “It is only through strong political leadership that we will meet these challenges.”
Ireland said that current challenges include:
- The U.S. Rural Utilities Service (RUS) policy that does not permit the financing of baseload coal power plants.
- The horizontal drilling with hydraulic fracturing that has dramatically increased supplies of oil and natural gas within the United States.
- The sweeping regulatory efforts by the U.S. Environmental Protection Agency that are impacting power plants; and
- The government support of regional transmission organizations (RTOs) that creates challenges for getting power to members and for selling surplus power.
Basin braces for impacts of cheap gas on gasification plant
Ireland’s speech had a particular focus on the benefits of the ownership of Dakota Gasification Co., which gasifies North Dakota lignite into synthetic natural gas, with byproduct CO2 sold into the Canadian enhanced oil recovery business. Basin Electric’s Antelope Valley Station power plant and the synfuels plant were jointly developed on adjacent plant sites in the early 1980s to save costs by sharing facilities including water supply, fuel supply, rail lines and electric transmission facilities.
After the original owners defaulted on federal loan guarantees in 1985, the government wanted to sell the synfuels plant. Other stakeholders had financial motives to buy the plant and then close it. “After a vote of the membership at a special meeting in 1988, Basin Electric formed a subsidiary, Dakota Gas, to buy the plant,” Ireland noted. “This enabled Basin Electric to keep the electric load and the shared facilities saving us more than $30 million dollars a year. Since 2007, Dakota Gas has paid nearly $200 million in dividends to Basin Electric. Low natural gas prices in North America; however, do threaten the plant’s viability. We expect an even larger entrance of shale gas into the U.S. market. This will keep natural gas prices low for some time. We are working on strategic plans for the Synfuels Plant that will be the next chapter to its story. One of those plans, announced just a few weeks ago, will be to study the addition of a urea plant to the site. This and other solutions will take Dakota Gas into the future for decades to come.”
Andrew Serri, Basin Electric CEO and general manager, said about future power development in the region: “We are projecting a need of an additional 1,650 MW of power for our system by 2025.” Serri described plans under way to build additional natural gas turbines in the Williston and Watford City areas and noted that Basin is engaged in siting efforts for a 345-kV transmission line that would enhance reliability throughout the region and facilitate delivery of much-needed power to northwestern North Dakota and beyond.
Mike Paul, vice president of Construction and Engineering, said Basin Electric began construction this year on the two natural gas-fired peaking stations near Williston and Watford City. He also reported the process is under way to build four additional peaking units at those sites.
Mike Risan, senior vice president of Transmission, said while Basin Electric’s combustion turbines north and south of Lake Sakakawea will support growth, the long-term solution ultimately requires additional high-voltage transmission. “Transmission analysis has identified that without improvements, the existing system will experience loading and voltage issues if the load continues to grow,” he said. “To resolve these issues, Basin Electric is proposing a 345-kilovolt line west out of the Antelope Valley Station (near Beulah, ND), around the western edge of Lake Sakakawea and terminating near Tioga. The line will be nearly 200 miles in length. Our goal is to have the line in service in 2016.”
U.S. Sen. John Hoeven, R-N.D., was welcomed to the Basin Electric meeting with a standing ovation. He said he’s introduced three bills in the Senate regarding energy legislation;
- the Coal Ash Regulation bill, which classifies coal ash as a non-hazardous waste;
- the Empower States Act, which gives states the power to regulate hydraulic fracturing in their own states;
- and the Domestic Energy and Jobs Act, which streamlines the process for the development of energy on public and private lands.
Hoeven said that following the recent elections, with a Democratic administration re-elected for four more years, that both parties can work together on energy issues.