The conversion of the Perry K steam plant in downtown Indianapolis from coal to natural gas is progressing, with initial unit conversions due later this year, with total conversion completed in mid 2014.
Robert Purdue, Director of Thermal Operations for Citizens Energy Group, provided Aug. 15 fuel adjustment testimony to the Indiana Regulatory Commission, which in August 2012 approved the Natural Gas Conversion Project.
The request for proposals (RFP) process was conducted for the design and build of the new gas burners. The Indiana Department of Environmental Management (IDEM) granted permission for construction to commence in August 2012, which allowed Citizens to start negotiations with the selected gas burner vendor for the design and build of the new burners.
“The engineering and design of the burners is complete and fabrication is progressing,” Purdue wrote. “We expect some burners to start arriving in August 2013. Mechanical bid packages have been sent out to six interested vendors and bids have been returned by five of those vendors. The mechanical bids have been evaluated by the Citizens Engineering and Supply Chain departments and BMW Contractors has been awarded the mechanical work. Electrical bid packages were sent to five interested vendors and were returned to Citizens by May 17th. The electrical bids have been evaluated by the Citizens Engineering and Supply Chain departments and Miller-Eads Electrical Contractors has been awarded the electrical work.”
Purdue added: “Engineering and Supply Chain is working with our current vendors for modifications to our boiler control and environmental monitoring equipment. Natural gas piping modifications at the Perry K yard have started and are expected to be completed early August 2013. Perry K will have two natural gas feeds where each can supply all of our natural gas fuel demand requirements.”
A boiler conversion schedule has been developed with these following approximate dates:
- No. 12 boiler construction Oct. 1, 2013-Dec. 25, 2013.
- No. 17 Boiler construction Dec. 16, 2013-March 16, 2014.
- No. 18 Boiler construction Jan. 11, 2014-April 1, 2014.
- No. 16 Boiler construction March 17, 2014-June 17, 2014.
An internal Citizens team is developing a natural gas purchasing policy for the steam division in preparation for the dramatic increase in the amount of the natural gas needs for the steam business. The team met with three local third-party suppliers (BP, Hess, and Proliance) to better understand what they can offer regarding supplies and strategy.
Coal contract runs until the end of 2013
In the meantime, Citizens is closing out coal use. It has a contract with an unnamed producer to provide coal over a three-year term, which ends on Dec. 31, 2013. For each of the calendar years 2010 through 2013, the quantity of coal to be delivered to Citizens is 175,000 tons, plus or minus 10%.
Transportation of coal to the Perry K plant is provided by Indiana Southern Railroad (ISSR) or Indiana Railroad (INRD) and CSX. Effective Jan. 1, 2011, the coal supplier notified Citizens that the coal supply for 2011 and beyond would be supplied by the Bear Run mine, which is served by INRD. Citizens purchases approximately 175,000 tons of coal per year, which has decreased the past couple of years from about 230,000 tons per year.
The spot coal price for Illinois Basin coal as of July 12, 2013, was $47.75/ton for 2.5 lb sulfur coal and the lookout price for calendar year 2014 is estimated to be $48.10/ton, which reflects the changing market dynamics of compliance coal contracts expiring and the effect of low natural gas prices on coal generation by electric utilities, Purdue noted. Therefore, the current contract price of $55.17/ton shows that Citizens has negotiated a competitive coal contract for its customers through December 2013, he added.