Loading...
The URL can be used to link to this page
Your browser does not support the video tag.
Home
My WebLink
About
AK coal 2006
ALASKAN © COAL12/14/06"ER _,Coal White Paper,KER,12/9/06 Studies,News Releases,White Papers Arctic Slope Regional Corp owns Kuchiak Mineral Block in NW-AK.68-million ton mineable reserve.Deadfall Syncline may contain 2 billion tons bituminous coal.0.23%S, 3.0%moisture,7.0%ash,>12,000BTU/Ib.Probably involve DMTS.(Petroleum News 6/29/03).Entire North Slope could contain 3.7 trillion short tons. Domestic Coal Handling Study,ASCG 10/1997 e Omalik Lagoon,13,000BTU/Ib,some "coking quality”.1993 study 2.8 million ton/year $25.54/metric ton e Healy (1943),1.5 million Ib/year (50%local/50%export).1990 DOE estimate minemouth $16/short ton ($17.64/metric ton).1985 study (Harza-Ebasco minemouth $22.08/short ton ($24.34/metric ton).1997 $26.80/metric ton. e Sutton 11,000BTU/b,1997 $34.40/metric ton at 1 million tons/year. e Beluga 8.300 BTU/Ib,1990 DOE estimate to mine $16.60/short ton ($18.30/metric ton),transported to tide water at $5.25/short ton ($5.79/metric ton).1997 estimate total $25/metric ton. e Powder River (Wyoming &Montana,transferred via Vancouver,B.C.)8,500 BTU/Ib 1996 world steam coal benchmark price $40.30 metric ton FOB port of origin. AK JoC,1/12/02 coal-to-oil project in Fairbanks by Silverado Mines (Vancouver B.C.). Coal is pulverized,hydrothermal process/pressure cooked,60%energy of conventional fuel,technology developed an U.of North Dakota),$24 million project.Assuming coal at $13/ton,can compete with oil at $16/barrel. Western Artic Slope Coal Development Project,ASCE (consulting engineers),July 1986. Coal Gasification Power Magazine 3/2004:IGCC (integrated gasification combined cycle).Eastman Chemical Co.Competitive with NG fire CC plants when gas is $4 to 6/mmBTU.IGCC cap cost $1,200-1,400/kW.Two operating U.S.plants today,both DOE subsidized demo plants (Wabash River,Indiana,262-MW,start up 1995,E-Gas gasification technology by ConocoPhillips;Tampa Bay Electric Co.,Florida,250-MW, start up 1996,technology by Texaco).Two European plants (SEP/Demkoel project at Buggenum,Netherlands,Shell technology;ELCO-GAS project,Puertollano,Spain, Prenflo gasification technology).Process:feed coal (or petroleum coke,or heavy oil) with water &oxygen into reducing atmosphere at high pressure (up to 1,000 psi)=CO + H2 +H2S +CO2 =synthetic gas or syngas.Eastman operates a chemical plant,not a power plant.Uses Rectisol process to remove sulfur &CO.Removes mercury via sulfur- impregnated activate charcoal. ADN 1/22/06,Money,Tim Bradner,coal to liquids (Fischer-Tropsch process),players include:Sasol and Shell,Exxon Mobil,Conoco Phillips and BP. Outside the rate-base umbrella:can IPP's play the coal game?Power Engineering 7/2005.Lenders want PPA's (power purchase agreements). $25-Billion Program Generates Controversy,ENR 11/20/06.TXU Corp.,Dallas,TX. Environmentalists say this is an attempt to construct coal-fired capacity before new legislation limits carbon emissions.16,000 to 23,000 MW of new PC (pulverized coal) capacity in Texas,Pennsylvania,New Jersey,and Maryland.One critic says IGCC is the only carbon capture technology in use. Coal Cleans UP,ENR 12/5/05.Three technologies:circulating fluidized bed, supercritical,and IGCC.Sierra Club opposes Wisconsin Public service Corp.'s 500-MW Weston power plant #4,says does not comply with Clean Air Act (i.e.best available control technology).Utility says supercritical operates at high temps &pressures,result is 1 more efficient combustion.A/E=Black &Veatch.CM at risk is Washington International Group.Special alloy is P92 a high-chromium alloy.Environmentalists say IGGG-strips SO2,CO2,NOx,and mercury prior to combustion.However,utilities say IGGG_adds 25%to cap cost &100%to operating costs.CFB combustion at 1,400 to 1,700 F;PC|subcritical at 2,400-2,600 psi with cap costs $1,100 to $1,200/kWvs.PC supercriticalabove3,208 psi,steam at 1,050 to 1,100 F,cap costs $1,300 to $1,400/kW;IGCC cap costs $1,400 to $1,600/kW. e Coal Drying and KFx Process AIDEA white paper 1/13/05:consider coal drying only as part of a minemouth plant. e Blue Sky Cross-walk,AIDEA white paper 4/22/05:compares two studies offer use of Beluga coal:NETL (Nat.Energy Tech Labor.)Beluga Coal Project and Blue Sky Development Project.NETL-BCP participants include NETL/UAA/local A/E's.Study is an assessment of Beluga coal potential for coal,power,syngas,fuels/chemicals, byproducts.BSDP has been proposed by Agrium/HEA/various A/E firms.Studies coal gasification collocated with Agrium. e Cash Minerals Ltd.news,2/22/06 Basil Botha will meet with Sasol re F-T process.CML has Yukon coal reserves. Federalies e 3/13/04 Brent Sheets visit re retrofits for HCCP and coal to liquids plants.Also annual DOE grants for coal studies. Native Corps Alaska Native Claims Settlement Act 1971 established 12 corps (ASRC,etc.) Companies Usibelli Chuitna Project,subbituminous,Bass interests &Hunt interests PacRim Coal R.B.Stiles 711 "H”Street Anchorage,AK 99501 AIDEA &AEA Presentations i.e.visitors bearing presentations SOUTHERNCOS,POWERPLANT CONSTRUCTION Coal Power for Mississippi, But $2.9-Billion Cost Cap Set n an otherwise troubled time for new coal-fired projects,the Mississippi Pub- lic Service Commission has approved Gulfport,Miss.-based Mississippi Power's plans to build a new 582-MW integrated gasification/combined-cycle plant in Kemper County-but with a $2.88-bil- lion cost cap.Mississippi Power plans to complete the Kemper project as soon as 2014,said utility spokeswoman Cindy Duvall.The prime construction contractor will be se- lected soon,with project construction to be managed by Southern Co.Engineering and Construction Services.A sister com- pany,Southern Co.Services,will handle primary design,Duvall says.Kemper's "gasification island”is being designed by KBR,Houston. The Kemper project,which would use locally mined lignite,appeared to die in late April,when the Mississippi Public Service Commission said it would grant a certificate of public convenience and ne- cessity only if Mississippi Power agreed to cap the project's recoverable costs at $2.4 billion. The Southern Co.subsidiary,which initially had proposed a $3.2-billion cost cap,said that a $2.4-billion cap would make the project "impossible ...to fi- nance”and impose too much risk on the utility and its shareholders. The PSC,though,agreed in late May to a $2.88-billion cap proposed by Mis- sissippi Power.The utility said it will pro- ceed with the project. Kemper remains controversial,how- ever.Commission Chairman Brandon Presley opposed the approval as "terrible” regulation,and the Sierra Club's state chapter will likely challenge the project. Several coal projects are under con- struction in the U.S.,including Duke Energy's 800-MW Cliffside,N.C.,proj- ect and its 632-MW Edwardsport,Ind., project as well as LS Power's 900-MW Sandy Creek,Texas,project. Planned projects face regulatory road- blocks,legal challenges and other prob- lems.The number of project cancellations and suspensions continues to grow. In late May,for example,the Michigan Dept.of Natural Resources and Environ- ment denied an air-permit application by Wolverine Power Cooperative for a pro- posed 600-MW coal plant in Rogers City. A week later,Consumers Energy put on hold its plan to build an 830-MW coal plant in Bay City,Mich.,citing slumping demand for power.= By Housley Carr SPLIT THE DIFFERENCE Regulators set a $2.88-billion construction cap-after an initial $2.4-billion fimit-on Mississippi Power's planned 582-MW plant.The utility owner had asked for $3.2 billion. enr.com June 14,2010 =ENR =17 Pesala gt Sinksntsgeeew:Seg*ToMONTteManagement aR:Prouressive-Retion:pu ve Rifos, <a |nee*2 Ree ¥' Timeacy REINFORCE OUR FUTURE Of theUnion Tronworkerraining |ymcilitiesNorthAmericaDirectory:HeiaeaSBenesFollowIMPACTonFacebook,Twitter &YouTube "4 15 @ prupuscu seuiouy..While the company is confident it has the capability to drill Point Thomson wells,itwon't happen without challenges,Meeks said. One of the trickiest paris of the drilling will be to maintain a very high weight of drilling fluids,or "mud,”in the well-bore to contain the 10,500-pound pressures while drilling through the main Thomson Sand rocks,without causing fractures.A heavy mud of 16 pounds per gallon,almost twice as heavy as water,will have to be used in Point Thomson,Meeks told Irwin in the hearing. Thomson drilling from earlier work in thefield,but drillers today have new tools that can assure more safety and precision in drilling.For ,example,"measure while drilling equipment”installed at near the end of the bit of the drill pipe contains devices that give the drill crew at the surface almost real-time information on where the drill bit is and what rock it is drilling through. The planned wells also involve extended- reach drilling,where the wells reach out to considerable distances horizontally from the built or even after.In this case the drilling will start in 2009,under ExxonMobil's plan, and be completed by 2012,two years before surface facilities and a pipeline are com-plete and ready for production. For example,if the first wells planned in 2009 encounter reservoir rock that is not of sufficient quality to allow gas fluids to pass _through,either from injection or production of gas,there is time for the company to drilla"sidetrack”well to find better quality reservoir rock,Meeks said. to the existing Daddaiy pipenie.a wou ve mingled with oil from the Badami field, which is operated by BP,and shipped on to the Trans-Alaska Pipeline System at Prud- hoe Bay. ExxonMobil is the operator and one of the major owners of the Point Thomson field. Other major owners are BP,Chevron and ConocoPhillips.; Tim Bradner can be reached at tim.bradner@alaskajournal.com. Alaska companies to workon Silverado's planned green fuel plantBytheJournalofCommercewo A Canadian-based minerals company focused on gold exploration and environmentally friendly fuel technology announced plans March 11 for a green fuel commercial plant. Silverado Green Fuel Inc.,a subsidiary of Silverado Gold Mines Ltd.in Vancouver,British Columbia,initially planned to build a demonstration plant.Now workis under- way to scale up for a full-sized facility.The technical and development planin progress will identify costs,budgets and technicalissues,company officials said. Based on utilizing Mississippi lignite,Silverado will gen- erate a step-by-step green fuel facility design and imple- mentation action plan,the company said. Considerable hydrothermal treatment research has already ' Ilowever,understanding the unique properties of Mississip- pi lignite is critical in fine-tuning commercial production of green fuel,company officials said.Consequently,the firm isprovidinga$150,000 grant to the Mineral Industry Research Lab at the University of Alaska at Fairbanks to use their expert-ise and unique mini-reactor apparatus todevelop this data.'Great Northern Engineering of Palmer,which has provid-ed technical and engineering guidance during technologydevelopment,was awarded a contract for $21,500 to help with the initial commercial feasibility study. The work being carried out at the University of AlaskaandatGreatNorthernEngineeringwillbeintegratedinto the Silverado green fuel facility design and implementation' action plan,the company.said. Despite escalating costs for equipment and materials caused by rising fuel costs,Silverado estimates that its green fuel can. be produced commercially for less than $20 per barrel,on an oil equivalent energy basis.Costs are coal and site specific. Company officials said the fuel will be commercially pro- duced virtually emission free in respect to particulate mat- ter,sulfur and heavy metals.Carbon dioxide generated dur- ing production can be recovered efficiently and sold for enhanced oil recovery. According to Silverado,the green fuel can be used to power oil-fired power plants and industrial boilers.It is also a good feedstock for some advanced gasifiers to produce synthesis gas,which can be fired in turbines to generate power in IGCC plants and catalytically reacted to yield transportation fuels,petrochémicals and fertilizers.Synthe- sis gas can be further processed to yield only hydrogen,the only feedstock that truly does not produce any carbon diox- ide when combusted or reacted in fuel cells. DNeSNX .(\been done with numerous low-rank coals from around the world. Alaska Regional Office: XTO Energy Inc. _52260 Shell Road Kenai,AK 99611 Telephone:(907)776-8473 810 Houston Street www.xtoenergy.com Corporate Office: XTO Energy Inc. Fort Worth,TX 76102 Telephone:(817)870-2800 U.S.DerarTMENT OF ENERGY FE-20 1000 INDEPENDENCE AVENUE WASHINGTON,DC 20585-1290 VoaDaaQaTennEalaDDorcoeDDosslsalssUDvcatecl/afaclalssllal MR.DENNIS MCCROHAN __FE-20 AIDEA 813 W NORTHERN LIGHTS BLVD ANCHORAGE,AK 99503-2407 ee.)Printed with soy ink on recycled paper PRESORTED STANDARD U.S.POSTAGE PAID MERRIFIELD,VA PERMIT NO.1635 Orrice OF Fossit ENeRGy,U.S.DEPARTMENT OF ENercy ®DOE/FE-0513 ©Issue No.73,FALL/WinteR 2007 CLEAN GOAL TODAYtyYY News Bytes Secretary of Energy Samuel Bod- man spoke at the groundbreaking September 10,2007,of the Southern Company Services,Inc.(SCS)Dem- onstration ofa 285-M We Coal-Based Transport Gasifier project at the Stanton Energy Center in Orlando, Florida.Bodman lauded the project -a first-of-a-kind advanced clean coal electric generating facility -as a major milestone in the Clean Coal Power Initiative.The Kellogg Brown and Root (KBR)Transport Integrated Gasification (TRIG™)technology was developed by SCS at the Power Systems Development Facility in Wilsonville,Alabama,in partnership with DOE and KBR. On November 9,2007,the U.S. Department of Energy announced completion of its Final Environmen- tal Impact Statement for the Puture- Gen Project.A Record of Decision will follow no sooner than 30 days after an Environmental Protection See "News Bytes”on page 3... INsIDE THis Issue Air Quality Vi Conference ..............1 Membrane Separation Advances ....4 Small Business Research.............06 6 Student Carbon Sequestration PrOZraIM....eescsscserererserenstecenetsnessenenes 8 Clean Coal Centre Guest Article.....9 NETL System Studies...12 Status REPOMt 0...eescesessesreereneees 14 A NEWSLETTER ABOUT INNOVATIVE TECHNOLOGIES FOR COAL UTILIZATION Air Quatity VI DETAILS ENVIRONMENTAL PROGRESS The International Conference on Air Quality VI,organized and sponsored by North Dakota's Energy and Environmental Research Center (EERC) convened in Arlington,Virginia,over September 24-27,2007,to discuss key topics related to mercury,trace elements,sulfur trioxide (SO,),particulate matter and greenhouse gases.Nearly 450 representatives from government, industry,and the research and academic communities attended the confer- ence.In all,41 states,13 countries,and 239 organizations were represented. The importance and timeliness of conference topics were underscored by participation of such key officials as the new U.S.Department of Energy (DOE)Under Secretary C.H."Bud”Albright,Jr.,DOE's National Energy Technology Laboratory (NETL)Di- rector Car]O.Bauer,North Dakota Senators Kent Conrad and Byron L. Dorgan,and North Dakota Congress- man Earl Pomeroy.The Air Quality conference,which meets every two years,is co-sponsored by the DOE, NETL,the U.S.Environmental Protec- tion Agency (EPA)Center for Air Toxic Metals (CATM),and the Electric Power Research Institute (EPRI).MarriottOvertheyears,the conference has CRYSTAL GATEWAY kept pace with evolving issues.This year a separate track was added for f ::ee greenhouse gas reduction,with panels NETL Director Carl O.Bauer provides on greenhouse gas policy and markets,keynote remarks. CO,capture and sequestration,and monitoring,mitigation,and verification.As part of the more traditional agenda, panels met every day to address the issue of mercury emissions,regulations and technology development,and coal utilization by-products.A number of presentations addressed mercury measuring/monitoring technologies.Un- certainty exists over the best methods to meet the January 2009 requirement under the Clean Air Mercury Rule (CAMR)for installation and certification of mercury monitoring systems.Particulate matter (PM)was also discussed in various sessions dealing with PM transport,atmospheric chemistry and modeling,health effects,and regional haze concerns.The National Ambient Air Quality Standards (NAAQS)cycle for fine particulates (PM,,)is just See "Air Quality VI”on page 2... en __IIIT OO OOO_OO -_aTY OI CLEAN COAL TODAY Faut/Winter 2007 Ciean COAL ToDay Fau/Winter 2007 ..."Air Quality VI”continued beginning and,according to EPA speaker Lydia Wegman,will be the first under a new process which calls formore concise documentation,e.g., a Scientific Assessment instead of an encyclopedic Criteria Document. Processes for SO,removal were also discussed in a half-day panel. In keynote remarks,NETL Direc- tor Carl Bauer noted that emissions have gone down since 1970 even though coal consumption has in- creased.Energy solutions,he said, are complex because strategic com- ponents have competing needs.Eco- nomic sustainability calls for reduced energy consumption,focusing on efficient and effective use of limited resources.But two other strategic components -energy supply secu- rity and environmental mitigation -may require greater energy use. More energy will be needed to serve a growing population,and to power environmental control technologies such as carbon capture and storage. Technical innovation,Bauer sug- gested,can help to find solutions that can simultaneously meet otherwise competing strategic goals. Conference discussions showed that government and industry are well placed with technology to address environmental challenges.Mercury removal at the 90 percent level is, according to several speakers,close to being commercial.DOE began its field test program 10 years ago.Fruits of this work,especially in Activated Carbon Injection (ACI)technology, coincide with EPA's mercury regula- tory timetable.Phase 1 caps under the CAMR go into effect in 2010. According to the Institute of Clean Air Companies,about 30 GW of coal- fired capacity have procured ACI. EPA's Robert Wayland discussed the interim findings of EPA's Ad- vanced Coal Technology Working Group,which indicate that carbon capture technology is demonstrated and likely feasible,but integration costs are still uncertain.Tech- nical experts noted progress in pre-combustion processes such as membranes,and oxycombustion is showing promise in pilot tests.Plants such as FutureGen would involve both CO,capture and sequestra- tion,while producing electricity and hydrogen.Sequestration via enhanced oil recovery is considered the most near-term storage technol- ogy,evidenced by successful large projects such as the Weyburn project in Canada.In the United States and Canada,the seven DOE-sponsored Regional Carbon Sequestration Partnerships have characterized the sequestration resources (some 3,500 billion tons in candidate storage ca- pacity)and published results in the Carbon Sequestration Atlas of the United States and Canada. Deep saline reservoirs and unmineable coal seams are considered to have the greatest capacity.Regional partners are undertaking field tests and three projects for large-scale demonstration were just se- lected.No regulations apply specifically to CO,intended for permanent storage under- ground,but attendees largely insisted that CO,is aresource and nota waste. Liability and property rights issues remain,and an important part of the Regional Partnership efforts involve outreach and education to gain public acceptance. While technological headway is being made,Larry Monroe of Southern Company Generation, and George Offen of EPRI spoke of regulatory uncertainties that obstruct utility decision making and R&D planning.Monroe emphasized that decisions on coal need at least five years lead time,which is difficult in the face of uncertainties over CO, regulation anda value for CO,credits. Even for known regulations,Offen pointed out that,foreach new permit, conditions are becoming increasingly strict.The "big three”of concern, he said,are the Clean Air Interstate Rule issued in 2005 capping SO, and NO,in eastern states;the 2005 CAMR;and the Clean Air Visibility Rule and associated Best Available Retrofit Technology standards.Also important are ozone NAAQS due out early next year,and renewable portfolio standards imposed by some states.Michael Rossler of Edison Electric Institute spoke of the "patchwork quilt”adoption by states of mercury regulations.If too many states opt out of a trading program, some conference participants feared there would not be enough mercury allowances for a Federal trading program to function effectively. Trading of CO,was the topic of an overview given by Annika Colston of Blue Source,LLC,a private eq- uity firm with a portfolio of carbon offsets.Colston described programs for international "compliance”trad- ing,as well as voluntary programs in the United States.Environmental We Energies --TOXECON™Ret- rofit for Mercury and Multi-Pollutant Control.Testing has been completed ofTrona (hydrated sodium bicarbonate carbonate),as a potential SO,and NO, sorbent.Trona injection resulted in a reduction in SO,,no effect on NO,, virtually no effect on opacity,but a net decrease in mercury capture at a constant PAC injection rate.Increase in the PAC injection rate allowed for 90%mercury capture while main- taining 70%SO,reduction.Without Trona injection,90%mercury removal requires only 1.5 lb/MMacf PAC in- jection rate.A permit has been issued by Michigan Dept.of Environmental Quality (MDEQ)to allow WE Energies Presque Isle Power Plant to perform an ESP detuning test.ADA-ES has devel- oped a portable mercury CEM system for use as an Instrumental Reference Method (JRM)in response to industry needs.A real time IRM instrument has now been demonstrated for compli- ance testing at mercury concentrations which are below the Ontario Hydro measurement limit (<1.0 ug/m3)and which could save significant time and money forcoal-based power plants that required mercury instrument compli- ance measurement.(Marquette,MI) Western Greenbrier Co-Gen- eration,LLC -Western Greenbrier Co-Production (WGC)Demonstra- tion Project.The preliminary process design is completed.WGC continues to finalize key project areas including the plant engineering/procurement/ construction,and operations and main- tenance contracts.Arrangements are in progress for sale of power to support a public tax-exempt bond sale.A Nation- al Environmental Policy Act (NEPA) Record ofDecision (ROD)is expected later this year,following release of the final EIS.(Rainelle,WV) Great River Energy (GRE)-Lig- nite Fuel Enhancement.On September 1,2007,GRE proceeded to Budget Period 3 to build two more full-scale dryers.A four-dryer integrated system, to be completed next year,would meet the fuel needs of the 546-MW unit #2.In Budget Period 2,two dryers have been fabricated and site prepara- tion activities for the construction of the dryer system have been initiated. Detailed specifications for auxiliary equipment have also been developed. (Underwood,ND) Pegasus Technologies -Mercury Specie and Multi-Pollutant Control. Baseline testing was completed in No- vember 2007.All installed instrumen- tation systems functioned smoothly. Mercury data were compiled from the probes at the electrostatic precipitators as well as across the flue gas desulfur- ization system.Validation of mercury data is obtained using EPA method 30B (Sorbent Trap).Coal and ash samples were also obtained for off-site analysis, data validation and mercury balance.In the period prior to operation,additional software installation and development will continue and baseline testing will be performed.NeuCo acquired Pega- sus Technologies Inc.in May 2006.The Pegasus NeuCo technology provides plant operators the ability to assess detailed plant operating parameters which affect mercury capture efficiency as well as overall heat rate,and ESP particulate removal and flue gas desul- furization efficiencies.The technology, once demonstrated,should have broad application to existing coal fired boil- -ers and provide positive impact on the quality ofsaleable by-products such as fly ash.(Jewett,TX) Southern Company Services,Inc. -Demonstration of a 285-MW Coal- Based Transport Gasifier.Detailed engineering of the gasifier island is un- derway.The groundbreaking ceremony was held on September 10,2007,at the Stanton Energy Center in Orlando, FL.Secretary Bodman,David Rat- cliffe,Southern Company's Chairman, President,and Chief Executive Officer; Lonnie Bell,OUC Board President; and William P.Utt,KBR's Chairman, President,and CEO all spoke at the ceremony.The 285 MWe plant will demonstrate an air-blown Transport Integrated Gasification (TRIG™)com- bined cycle.The Transport Gasifier is an advanced circulating fluidized-bed system designed to operate at higher circulation rates,velocities,and riser densities when compared to a con- ventional circulating bed unit.The high circulation rates result in higher throughput,better mixing,and higher mass and heat transfer rates.(Orlando, ee a Re aes Sa aa Se CLeaAN CoAt TODAY Published quarterly by: The Office of Fossil Energy U.S.Department of Energy (FE-24) Washington,DC 20585 Editor:Phoebe Hamill Phone:202-586-6099 Fax:202-586-7085 E-mail: phoebe.hamill @hq.doe.gov Web site: http://www.netl.doe.gov/ technologies/coalpower/cctc/ newsletter/newsletter.html Comments are welcome and may be submitted to the Editor. 15 CLEAN Coat TODAY Fait/WINTER 2007 CLEAN Coat TODAY Faut/Winter 2007 Active CCT DeEmMonstTRATION,PPII,AND CCPI PROJECT STATUS CCT DEMONSTRATION STATUS Kentucky Pioneer Energy (KPE), LLC -Kentucky Pioneer Energy Proj- ect.The Cooperative Agreement has expired.The Draft Final Report is in progress.(Trapp,KY and West Terre Haute,IN) TIAX,LLC (formerly Arthur D.Little,Inc.)-Clean Coal Diesel Project.The Post Project Assessment is in review.The project is in close-out. (Fairbanks,AK and Beloit,WI) PPII Status Universal Aggregates,LLC - Commercial Demonstration of the Manufactured Aggregate Processing Technology Utilizing Spray Dryer Ash.The Cooperative Agreement for this project expired on December 31, 2006.Universal Aggregates continues to make equipment modifications to improve throughput capacity and to extend the continuous run time of the plant.The Universal Aggregates proj- ect team submitted the Final Report in September 2007.The plant is produc- ing and selling lightweight aggregate to the concrete block industry.(King George,VA) CONSOL Energy Inc.-Greenidge Multi-Pollutant Control Project. Testing of the emissions control sys- tems installed in Unit 4 of the AES Greenidge plant in Dresden,NY,has verified that the plant meets the guar- anteed performance parameters war- ranted by the technology suppliers. Plant operators are currently estab- lishing operating settings and injec- tion rates for optimum performance across a range of operating conditions, including output capacity.A series of performance tests are scheduled to be conducted over the next 12 months to measure the longer-term effective- ness of the emissions control systems. (Dresden,NY) CCPI Status MEP-I LLC (Excelsior Energy Inc.)-Mesaba Energy Project.Excel- sior's application for pre-construction site environmental permits continues through the Minnesota Public Utilities Commission (MPUC)approval pro- cess.The application included requests for a large electric power generating plant site permit and routing permits for a high voltage transmission line and natural gas pipeline.Also included was Excelsior's request for air and water-related permits.The Draft Envi- ronmental Impact Statement,prepared jointly with the Minnesota Department of Commerce,has been released and public hearings are scheduled for November 28-29,2007.The MPUC is also considering Excelsior's peti- tion for approval of a Power Purchase Agreement (PPA)with Northern States Power (i.e.,Xcel Energy),per the Min- nesota Innovative Energy Project and Clean Energy Technology statutes.The MPUC has not issued a ruling but has directed Excelsior and Xcel to enter into a dialogue with other Minnesota utilities to determine their interest in participating in the PPA.The Project Definition and Development phase runs through April 2008.(Itasca &St.Louis Counties,MN) NeuCo,Inc.-Integrated Optimiza- tion Software.Integrated Optimization Software.The project at Dynegy's Baldwin Energy Complex has com- pleted the planned efforts in Budget Period |within budget and on schedule. The Combustion Optimization module achieved the NO,reduction goal of 5 percent along with improvements in cyclone stability.NeuCo has shown thatitsSCROptimizationmodulereduces ammonia consumption by 18 percent. NeuCo has installed the Sootblowing Optimization module on two separate units,with and without an intelligent sootblowing control system.This dual approach allows NeuCo to address a wide range of sootblowing issues. The latest release of CombustionOpt, SCR-Opt,and PerformanceOpt pro- vide a variety of enhancements that were designed to make each of the Optimizers less of a "black box.”All three optimizers now support advanced functionality for real-time analytics. (Baldwin,IL) stewardship and preparation for a possible mandatory system may be a motivator in the voluntary market. Colston noted that in order for credits to be monetized,reductions must be beyond business-as-usual.Projects must represent a permanent CO, reduction,be unique,and verifiable by a third party. In terms of PM,.,the NAAQS issued in 2006 retains regulation based on the mass,not type,of PM. Panelists noted interest in "speciated” standards based on specific types of PM based both on source (such as vehicles)and associated health risk. EPA has identified this as one area needing more research. In all,Air Quality VI provid- ed an excellent overview of the state-of-the-science regarding key pollutants and CO,,the correspond- ing regulatory environment,and the technology readiness of mitigation techniques.Hi Kyoto Protocol. A Snapshot of the Carbon Market European Union Emissions Trading Scheme (EU ETS):Launched in 2005,with a cap on GHG emissions from installations representing 40%of total EU emissions.The installations were awarded allowances that permitted them to emit to a certain level.To avoid emitting above the allowance and incurring a penalty,the installation could reduce internal emissions,buy allowances,or buy a small amount of emissions reductions from projects registered under the Kyoto Protocol:Ratified in 2004 by 175 countries,with 36 countries required to reduce GHG emissions by an average of 5%below 1990 levels during the commitment period of 2008-2012.The emissions reduction can be achieved at lowest cost using three flexibility mechanisms:1)Emissions Trading whereby emissions can be created and sold between countries required to reduce emissions;2)Clean Development Mechanism (CDM)whereby emissions reduction projects are undertaken in the developing world and sold for compliance;and 3)Joint Implementation (ID whereby a party with a reduction target may implement an emission-reducing project in the territory of another party (in Economies in Transition)and count the resulting emission reduction units (ERUs)towards meeting its own Kyoto target. U.S.State Schemes:The Regional Greenhouse Gas Initiative (RGGI)is made up of nine Northeastern and Mid-Atlantic States committed to implementing a regional cap and trade program within the power sector.RGGI begins in 2009, and has set an emissions cap at 188 million tonnes CO,equivalent.Although other states have announced plans for reducing emissions,including California,none have determined the exact role of carbon offsets or cap and trade. Chicago Climate Exchange (CCX):CCX members have made a voluntary,but legally binding,commitment to reduce their GHG emissions to 6%below their baseline by 2010.Members can buy and sell Carbon Finance Instruments (measured as tonnes of CO,equivalent)on the exchange. Voluntary Carbon Market:|n the absence of regulation,projects that reduce GHG emissions beyond the business-as- usual scenario are being developed and sold on a voluntary basis to buyers,to improve corporate social responsibility, environmental stewardship,or to speculate and learn about a potential future compliance market.A retail sub-sector (a small %of total volume)sells carbon credits directly to end users to offset airline trips,car emissions,home energy use, etc.The majority of carbon credits are sold to large corporations,electric utilities or industry,and financial institutions. The voluntary market is rapidly developing with a number of new project standards emerging. (Adapted from a presentation by Annika Colston,Blue Source,LLC,September 26,2007) .."News Bytes”continued Agency's Notice of Availability is published in the Federal Register.For the EIS,or instructions on ordering a CD or paper copy,see www.netl. doe.gov/technologies/coalpower/fu- turegen/EIS/.In other FutureGen news,Australia has become the latest international partner to join the Alli- ance.Participation was announced as part of a Joint Statement on Climate Change and Energy issued on Sep- tember 5,2007,by the Prime Minister of Australia John Howard,and U.S. President George W.Bush.@ Round III of the Clean Coal Power Initiative is under way,with release October 4,2007,of the draft Funding Opportunity Announcement,Model Cooperative Agreement,and Model Repayment Agreement.A well- attended public meeting took place November 1,2007,in Pittsburgh. A final Funding Opportunity Announcement is expected in January 2008.Round II focuses on carbon capture and sequestration technologies.Hi CLEAN Coat TODAY Faut/Winter 2007 CteAn Coat Topay Fau/Winter 2007 MEMBRANE SEPARATION ADVANCES IN FE HYDROGEN PROGRAM Since its inception in Fiscal Year 2003 as part of the President's $1.2 billion Hydrogen Fuel Initiative,the Office of Fossil Energy (FE)Hydrogen from Coal Program has sponsored more than 60 projects and made advances in the science of separating out pure hydrogen from syngas produced through coal gasification.For hydrogen applications,recovery of as much hydrogen as possible from the syngas stream is important,as is the removal of contami- nants.These contaminants can have deleterious effects on hydrogen utilization technologies -such as fuel cells -that require a highly pure product. The current process to separate hydrogen from syngas involves several gas clean-up steps,followed by the water gas shift (WGS)reaction to convert carbon monoxide and water to hydrogen and carbon dioxide,and subse- quently the separation of hydrogen from the mixed gas stream by pressure swing adsorption (PSA).The PSA process has the disadvantage of parasitic power loss,and up to a 10 percent increase in capital costs.Consequently, the Program is focusing on advanced hydrogen separation technologies, which include membranes,and combining the WGS reaction and hydrogen separation in a single operation known as "process intensification.” Role of Hydrogen Dissociation Catalysts on Hydrogen Transport H-H H-H HydrogenDissociation ors H Wea HydrogenTransport ->:Membrane == Material Layers of Hydrogen Dissociation J Catalyst andH-H Desorption of H,H-H H-H HH H-H Schematic showing the mechanism of hydrogen transport membranes. TECHNOLOGIES The separation of hydrogen from syngas using a mem- brane is a function of several variables,including the flux (rate of flow of hydrogen per square inch of membrane),the pressure differential between each side of the membrane,and the temperature of operation. The flux in turn is affected by a variety of other factors.For example,membrane thickness inversely affects hydrogen flux, so membranes tend to be made as thin as possible.Thin membranes require a membrane support to assure sufficient rigidity during operation.Catalysts, which speed up the hydrogen separation process,may be coated on the membrane's surface or incorporated within the membrane.However,most catalysts are susceptible to poisoning by sulfur and other contaminants in the syngas stream,and eventually become ineffective.Contaminants also affect stability and durability of the membrane in the hot syngas environment.Vary- ing materials and blends of materials within a membrane can make it more stable and durable.Theoretically,an infinite number of candidate membranes may be produced by varying membrane thickness,construction materials and material blends,catalysts,and membrane supports.To minimize the testing necessary to evaluate the performance of each candidate membrane,the program has utilized computational chemistry and thermodynamic model- 4 ing of membrane processes.This process has determined optimum materials and material combinations, support materials,and other design parameters. Program research is investigating several different membrane types: microporous,metallic,and ceramic/ metal composites.Microporous membranes act like microfilters to separate hydrogen gas from contami- nants.Metallic membranes consist of a thin palladium metal or metal- alloy film layered on a strong sup- port.The metallic film only allows hydrogen atoms to pass through it, thereby blocking out all other con- taminants and producing very pure hydrogen.Ceramic membranes can be either pure ceramics or ceramic metal composites (cermets).Pure ceramics separate hydrogen by al- lowing hydrogen ions and electrons to diffuse through a ceramic matrix and recombine at the other side to form hydrogen molecules.Cermets, depending upon the type of materials used,can separate hydrogen either through the pure ceramic or metallic transport mechanism. Key FE MEMBRANE PROJECTS Most of the projects supported by FE involve separating 99.999 percent pure hydrogen from syngas,which is essential for fuel cell applications. Following are highlights of some of the many noteworthy projects.A major step in the development of a hydrogen separation membrane was recently reported by Eltron Research, Inc.Eltron's proprietary membrane was scaled up and demonstrated in continuous tests conducted for over 11 months on an artificial (or simulated)syngas.Laboratory tests showed a membrane flux of approxi- mately 300 ft3/hr/ft2 at 100 psi AP at 300-400 °C,which achieves the mined in the United States.Judging from the energy and environmental profiles the study developed for potential U.S.industrial customers, there are a large number of industrial plants (100-200)whose natural gas energy consumption rate is greater than the syngas or SNG output of a single BGL 1000 gasifier.Some of these plants may be in areas where in two ways.First,steam that could be used to generate power must be used for CO,solvent regeneration. Second,significant auxiliary power is required by the CO,capture and compression systems.The study investigated the performance and economic impacts of retrofitting an existing plant for various levels of CO,capture (30,50,70,and 90 |[Feedstock O&M (¢/kWh)|120 7 O Variable O&M (¢/kWh)100 yom =Fixed O&M (¢/kWh)| @ Capital C t (¢/kKWhz64apitalComponent(¢,)-_rm 100 $ro 80 +4 ==i=ee °gS;A +80 & w 4 " B 2 co}Ht 8 °3 ye 3£31 i 3 35340+-1 -= €2 40 = B27 : c =||20 +]tt 50 0+0 0 e g 2 g e 2 2 2 3 2 2 2 2 &&g &&(s)(3)(a)(é)re)° oa o a w 8 Impacts of Retrofitting Existing Plants with CO,Capture site constraints may inhibit instal- lation of coal gasification facilities on-site;however,it is likely that a large number will be acceptable can- didates,or can be served by remote location of the gasification plant. Carbon Dioxide Capture from Existing Coal-Fired Power Plants (December 2006):This study evaluated the technical andeconomic impacts of removing CO,from an existing pulverized coal (PC)power plant using an amine-based,post- combustion CO,capture system. The power plant analyzed in the study,American Electric Power's Conesville Unit 5,is a 30 year-old, subcritical PC plant with a nominal 450 MWnet output,and is considered a good representation of the current fleet of coal-fueled power plants. The addition of CO,scrubbing im- pacts the power plant performance percent),establishing greenhouse gas reduction benchmarks to help guide related Fossil Energy RD&D programs. As shown in the above figure,ret- rofitting for 90 percent CO,capture is projected to add about seven cents per kilowatt-hour to the cost of pro- ducing electricity.Furthermore,the incremental costs of carbon capture and CO,mitigation were found to have an almost linear relationship with the CO,capture level.Be- cause significant improvements are expected in amine solvent regenera- tion,sensitivity to this variable was analyzed.The results of this study also will serve as a foundation for follow-on studies that explore the impact of widespread CO,capture across the entire U.S.fleet of coal- fueled power plants.@ .."RECS”continued A closed chamber,which looks like an inverted bucket,is placed over the ground totrap air that then is pumped into the analyzer.Within the closed chamber,CO,absorbs the light com- ing from the laser.Researchers take measurements every 10 meters as the closed chamber is moved over the terrain.To study plant response, students used hyperspectral analysis. Sunlight reflects off the plants to a camera,and the amount of reflected light indicates degree of plant stress from CO,.Microbial DNA analysis was another part of plant study.Some microbes are known to thrive in the presence of CO,,so the discovery of such microbes indicates a leak. On the final day,students had the opportunity to make presentations on their own areas of academic research or professional activity.RECS plans to hold another program next summer and is inviting corporate sponsors and interested students and faculty.See the RECS website at:http://www. recsco2.org. The 2007 RECS students:Ben Bry- ant,Pardee RAND;Benjamin Court, Princeton University;Jason Deardorff, Colorado School of Mines;Andrea Feldspauch,Texas A&M;Brookie Galla- gher,Georgia State;Somayeh Goodarzi, University of Calgary;Tim Grant,DOE's National Energy Technology Labora- tory;Craig Griffith,Carnegie Mellon and NETL;Jonathan Levine;David Mann,National Hydrogen Association/ Technology Transition Corp.;David Mc- Collum,University of California-Davis; Juan Nogues,Princeton University;Ege- men Ogretim,Cesar Silva,West Virginia University;Artur Usanov,Pardee Rand; and Preeti Verman,World Resources Institute Climate Change and Energy Program. 13 er nes | CLEAN Coal TODAY Faut/WInTER 2007 CLEAN Coal Topay Fau/Winter 2007 1 SYSTEM STUDIES GUIDING Fossit ENercy RD&D The U.S.Department of Energy Office of Fossil Energy's (FE)National Energy Technology Laboratory (NETL)performs system studies to provide guidance to managers of FE's research,development and demonstration programs (RD&D).Examples of recently completed studies are described below,all of which may be accessed on NETL's website:http://www.netl. doe.gov/energy-analyses/ref-shelf.html. Cost and Performance Baseline for Fossil Energy Power Plants-Volume 1: Bituminous Coal and Natural Gas to Electricity (May 2007):This study established the baseline cost and performance for state-of-the-art power generation plants that are fueled with bituminous coal or natural gas.Each type of plant was modeled with and without the capture of carbon dioxide (CO,).This baseline data is essential for guiding the FE RD&D Program because it establishes the key environmental and economic benchmarks that new technologies must surpass in order to justify the investment required for their development.Comparing projected or measured performance against the baseline data allows research managers to efficiently screen out less prom- ising concepts while quantifying the benefits of technology breakthroughs. The baseline data also is critical for informing energy policy decisions that relate to the cost and performance of the current generation of new power plants.NETL plans to complete two additional volumes that will focus on: i)the conversion of coal to substitute natural gas,and ii)the conversion of low-rank coals (sub-bituminous and lignite)to electricity. Increasing Security and Reducing Carbon Emissions of the U.S.Trans- portation Sector:A Transformational Role for Coal with Biomass (August 2007):NETLis investigating how the synergistic benefits of co-gasifying coal and biomass,along with the use of carbon capture and storage (CC&S),can enable the nation to utilize secure,domestic energy resources while reducing greenhouse gas emissions.This study,conducted jointly with the U.S.Air 12 11.4as 11.08 10.23 - 10 8 {7.79 6.83 6.4 6.33 om 3 6+é befom 4 TH :cay 2 aoyheatqe 0 :-r t ¥T T AvgIGCC AvgIGCC PC-Sub PC-Subwi/PC-Super PC-Super NGCC NGCC wi wi CO,CO,wi CQ,co, Capture Capture Capture Capture Cost of Electricity Comparison (May 2007 baseline study) January 2007 dollars,Coal cost $1.80/10°Btu.Gas cost $6.75/10°Btu 12 Force,estimated the cost and perfor- mance ofa facility that converts coal, together with biomass,into liquid transportation fuels while capturing and sequestering carbon dioxide. The study concluded that utilizing a modest amount of biomass (7-11% by energy or 10-18%by weight) in a coal-and-biomass-to-liquids (CBTL)facility with CC&S could meet the Air Force goal of limiting life-cycle greenhouse gas emissions to a level 20 percent less than that of the conventional petroleum pro- duction pathway.Furthermore,the analysis found that such a facility would be competitive when crude oil prices are at or above about $60 per barrel.Although this study did not assign a value to the captured CO,, the economics would be improved if revenues were obtained from en- hanced oil recovery. Industrial Size Gasification for Syngas,Substitute Natural Gas, and Power Production (April 2007):Fluctuating natural gas prices can significantly impact energy- intensive industrial gas processes. Industrial-scale coal gasification offers the opportunity to provide such processes with synthesis gas or synthetic natural gas (SNG)that is derived from plentiful,and price stable,domestic coal resources. This study evaluated the technical and economic viability of using in- dustrial-scale gasification to refuel energy-intensive U.S.industries that have been challenged by the volatility and magnitude of domestic natural gas prices. Conceptual plant designs were assessed for different refueling sce- narios based on the BGL 1000 (Brit- ish Gas Lurgi)gasifier -a dry feed, fixed bed,slagging gasifier that can gasify essentially all of the coal types 2015 Program flux target but needs to be verified at increasingly larger scale.Eltron plans to scale up from a 1.3 lb/day hydrogen separation unit to a 220 lb/day prototype facility, and eventually to a 4 ton/day unit for engineering-scale demonstration. The use of vacuum deposition methods for the fabrication of free- standing palladium-alloy membranes is being investigated by the South- west Research Institute (SwRI), Texas.Free standing membranes do not require supports and seals, thereby reducing overall costs.Us- ing vacuum deposition,membranes are deposited onto flexible supports that can be chemically removed or separated using a water-soluble re- lease agent and recycled after use. To date,SwRI has produced several membranes that are less than 3 um thick with areas of 110 in'.The high- est hydrogen flux obtained was 242 ft?/hr/ft?at 20 psi at 400 °C,with a feed pressure of 20 psig.This ex- ceeds the program's 2010 target for hydrogen flux.Further work involves screening an initial set (six)of ternary alloys using pure gases (hydrogen and nitrogen),fabrication of a mini- mum of 20 membrane specimens with different copper concentrations for the 2-3 most promising ternary alloys,and production of aminimum of 5 sq.ft.of optimized membrane material for an independent third- party evaluation. The Gas Technology Institute has developed a single membrane configuration using a new class of dual-phase,microporous and proton conducting membranes.So far,a novel reactor using such membranes has been built as a high-temperature, high-pressure unit. Another project of interest is that of the Aspen Products Group,which has developed a robust WGS membrane reactor using acontaminant-tolerant WGS catalyst and a palladium- copper (Pd-Cu)-coated tantalum membrane.The system has shown itself to be active and stable in the 300-500 °C range. Aspen is also preparing and test- ing finely dispersed,unsupported and alumina-supported Mo,C and metal sulfide catalysts,along with the commercial Fe,O,-Cr,O,catalysts to identify the most active and stable candidates for the reactor.It will use an electroless plating method to fabricate Pd/Cu-coated Ta membrane tubes with different wall thicknesses and test them for hydrogen separa- tion.Based on the results,Aspen will design,construct and testa small bench-scale WGS membrane reactor that processes one liter of hydrogen/ hour to demonstrate their proposed technology.The final stage of the project is a cost analysis to estimate the cost of a membrane reactor and identify potential issues relating to its manufacturing and scale-up. COMPUTATIONAL CHEMISTRY Computational chemistry,as well as thermodynamic modeling,is be- ing used to identify promising metal alloys,supports,and catalyst com- binations that may be constructed and tested as hydrogen separation membranes.United Technologies Research Corp.utilized atomistic and thermodynamic modeling studies to identify a stable,Pd-Cu trimetallic alloy membrane that should provide commercially viable hydrogen permeation rates in the presence of trace amounts of carbon monoxide and sulfur.The modeling effort extends to the development of arobust WGS catalyst by identifying target catalyst structures and synthe- sis methods,and determining micro reactor kinetics. NETL has employed both com- putational chemistry and laboratory testing to evaluate various sulfur-re- sistant Pd alloys.These membranes have the potential to meet or exceed the program's 2015 target for sulfur tolerance (>100 ppmv).Preliminary results show that above 635 °C, al!Pd-Cu alloys tested exhibited no detectable permeability loss on exposure to 1,000 ppm H,S.Other WGS gases showed little effect on the hydrogen flux of an 80 wt%/20 wt%Pd-Cu membrane,but certain gas combinations and temperatures affected the membrane surface.A study of 5-day exposures to 1,000 ppm HS on different Pd-Cu alloys (100,80,60,53 wt%Pd)showed that a 60 wt%/40 wt%Pd-Cu alloy exhibited the highest permeability at temperatures below 500 °C,but with little sulfur tolerance.The tests also showed that an 80 wt%/20 wt% Pd-Cu alloy exhibited the highest permeability at temperatures above 500 °C with high sulfur tolerance. Developments in membrane tech- nology can make a key contribution to production of hydrogen from coal in large plants such as FutureGen by recovering increasing amounts of hydrogen from the syngas stream, and by producing high-purity hy- drogen for fuel cell applications and a highly concentrated stream of carbon dioxide for sequestration. Membranes show potential to reduce the cost of hydrogen separation, increase process efficiency,and, through process intensification,can simplify the hydrogen-from-coal production process.Further details on FE's hydrogen program are avail- able at http://www.fossil.energy.gov/ programs/fuels/index.html.Hi CLEAN Coat TODAY Fatt/WINTER 2007 CLEAN COAL ToDaAy Fatt /WinTeR 2007 FE ENCOURAGES SMALL BusiINess RESEARCH Small Business Innovation Research (SBIR)and Small Business Technology Transfer (STTR)are U.S.Government programs in which federal agencies set aside a specified percentage of their research and development (R&D) funding for competitions among small businesses only.Award recipients keep the rights to any technology developed,and are encouraged to com- mercialize the technology.For purposes of this program,a small business is one with no more than 500 employees at the time of award.More criteria are provided by the Small Business Administration's Small Business Size Regulations (13 CFR Section 121).Each year,the 11 federal agencies that participate in SBIR and/or STTR set aside 2.5 and 0.3 percent,respectively, of their extramural R&D budgets.Each agency has similar but unique pro- grams tailored to their specific needs.For the Department of Energy (DOE) in Fiscal Year 2007,these set-asides corresponded to $112.7 million and $13.5 million for SBIR and STTR,respectively.The DOE Office of Fossil Energy (FE)share of this was $11.7 million.In addition,DOE's Office of Basic Energy Science funds several FE projects. DOE issues the SBIR/STTR solicitation annually,and since 2000,these two programs have been part of one solicitation.Proposals are invited in energy production (fossil,nuclear,renewable,and fusion);energy use in buildings,vehicles,and industry;fundamental energy sciences (materials, life,environmental,and computational sciences,and nuclear and high energy physics);environmental management;and nuclear non-proliferation.Pro- posals are subject to external peer review.During the past six years,small business has shown growing interest in the SBIR/STTR programs,leading to arise in the number of high-quality proposals. SBIR and STTR projects begin with Phase I,which explores the feasibility of the innovative concepts with awards up to $100,000 for studies up to nine months in duration.Only Phase I award winners may compete for Phase J, the principal R&D effort,with awards up to $750,000 over a 2-year period. There are over 70 fossil energy-related Phase I and II projects.In Phase III, federal agencies may award non- SBIR/STTR-funded,follow-on grants or contracts,or the companies may proceed with commercialization on their own.Proposal-to-award ratios are about 5-to-1 for Phase I,and 2-to-1 for Phase II. Over the 24 years the DOE SBIR/ STTR Program has been in operation,4,413 Phase I projects and 1,816 Phase II projects have been funded.Since 1993,Phase I]grant applications have been required to submit commercialization plans.Commercialization as- sistance and market training also are provided to awardees.Other program enhancements include increased outreach,and data collection on the Small Business Administration Historically Underutilized Business Zones (HUB Zones).Phase II awardees can participate in the annual Commercialization Precision Combustion,Inc.'s RCL™ catalytic combustor. 6 Opportunity Forum,which assists small businesses in developing a business plan and introduces them to potential investors. SUCCESSES The SBIR/STTR program has provided seed money for a number of fossil energy technologies that are now commercial.One such project is Precision Combustion,Inc.'s breakthrough catalytic combustor, which has demonstrated below 3ppm NO,emissions when utilized in advanced,natural gas-fueled gas turbine engines.Successful Phase III performance led to full engine trials in 2003/2004.The developed technology is applicable to large utility,industrial,and microturbine gas turbines,and can be utilized in the pilot embodiment or as a full RCL™catalytic combustor.The full RCL™catalytic combustor enables lower emission operations of gas turbines without the use of expensive after-treatment systems such as selective catalytic reduc- tion.PCI has been selected as one of Connecticut's fastest growing technology companies by Deloitte and Touche,and has been identified as a Connecticut "Fast Fifty”award winner.PCI also was honored with the Tibbetts Award from the Small Business Administration. A Phase II award made in 1998 has allowed NexTech Materials,Ltd.to develop key technology for nanoma- terials in solid oxide fuel cells.Anew coating methodology was developed and applied to the Siemens Westing- house tubular fuel cell.NexTech is offering a partnership program for supply of materials,components, services,and intellectual property to major DOE contractors involved in the Solid State Energy Conversion Alliance (SECA)program. achieve high efficiency.Materials developments have resulted in steels that have given high availabilities, for example over 96 percent at Isogo.The extent of confidence of utilities in using high steam condi- tions is illustrated by the fact that many are building sister units using higher parameters.These systems can be purchased for a wide range of coal types.Wangqu showed that even low-volatile coals can be suc- cessfully wall-fired in S/C systems.In Canada,Genesee 3 fires an Albertan sub-bituminous coal in a modern sliding pressure S/C plant,and the USC NiederaussemK fires a lignite of 50-60 percent moisture content. FLEXIBILITY AND INNOVATION All modern plants need flexibility. Although new units are generally operated at high capacity factors,this cannot be depended on in the deregu- lated environments in which most generators have to compete.Sliding pressure S/C and USC systems have good efficiency at reduced output. Improved thermodynamic cycles have evolved as a result of innova- tion by utilities and manufacturers. Examples are the double reheat cycle at Nordjylland 3,and the heat extraction and utilization systems on Niederaussem K.In the latter, one new feature is heat extraction downstream of the air heater in a flue gas cooler utilizing non-metal- lic components to avoid corrosion. Another innovation is a lignite dry- ing demonstration on 25 percent of the fuel flow,using low-grade heat from the plant,and returning much of this for low-pressure feedwater heating.When applied to the full flow of a plant,a four percentage points efficiency improvement would be realizable. NEAR-ZERO EMISSIONS It is well known that IGCC can achieve very low levels of dust and SO,.What is less well recognized is that emissions from PCCs can also be taken to very low levels.The fol- lowing performance was achieved among some of the PCC case study plants using conventional systems: Particulates:emissions down to 10 mg/m?( 0.008 Ib/MMBtu)even with ESPs;SO,:Limestone/gypsum FGD capable of getting SO,below 20 mg/m?( 0.02 Ib/MMBtu);NO,: Combustion measures (LNBs and OFA)plus SCR capable of NO, of 50-100 mg/m?( 0.04-0.08 Ib/ MMBtu). The most impressive environ- mental performance was at Isogo, where the dry regenerable flue gas desulfurization system (known as Re- ACT)also removed further dust and NO,emerging from the conventional systems,resulting in extremely low emissions:NO,:20 mg/m?( 0.02 Ib/MMBtu);SO,:6 mg/m ( 0.005 Ib/MMBtu);Particulates:|mg/m? ( 0.001 Ib/MMBtu). ReACT is now being marketed abroad for multi-pollutant control, including mercury. Costs Although the capital costs of power projects have been rising sharply since these units were built,some trends remain relevant.PCC-specific capital costs,after bringing toacom- mon basis,were observed broadly to correlate with steam parameters and with efficiency,reinforcing the subjective view that one "gets broadly what one pays for.'Construction times varied from three to five years, depending on site constraints. TECHNOLOGY COMPARISONS IGCC could play a major role if recent commercial offerings suc- ceed.However,the technology still has hurdles to overcome,including higher capital cost,lower availability, and lack of recent orders.Both PCC and IGCC system suppliers are likely to be able to offer systems approach- ing 50 percent efficiency in about 10 years,and both can be supplied now to be CO,capture-ready.Natural gas- fired combined-cycle plants are more efficient,less expensive,and quicker to construct than systems based on coal,but coal-fired generation is likely to remain more economic because of relative fuel costs. High coal costs,tightening envi- ronmental standards,and the need for operational flexibility have led to continuing advances in PCC with adoption of new steels and innova- tive water/steam cycles.This process is continuing,with efficiencies and emissions improving all the time.At atime when IGCC is receiving much attention,it is important to ensure that clean combustion technologies also remain available as one of the platforms for future carbon capture plants. Further information on IEA CCC reports and its other products can be viewed on the Centre's website at: http://www.iea-coal.org.uk The full report on the G8 case studies prepared by the Clean Coal Centre will be published shortly by the IEA:http://www.iea.org Colin Henderson,who wrote this article,is a senior author and con- sultant to the IEA CCC.He led the G8 case studies work. 11 CLEAN Coat TODAY Fatt/WInTer 2007 CiEAN Coat Topay Fatt/Winter 2007 --"CCC”continued SELECTED PHASE II SBIR/STTR PROJECTS |Project Title}Title 1 Table 1.Case study plants with some summary data Field-Deployable Gas Analyzer for MMV Applications (to determine sequestered CO,leakage)|Los Gatos Research "A Low-Energy,Low-Cost Process for Stripping Carbon Dioxide from Absorbents AIL Research,Inc.i" ;Early Remote Risk Assessment Survey Technolo Physical Optics CorporatioPlant(commissioning i vers:boiler?- Op g Factors affecting vy y technology ; y p porationHSuppliers:boiler;}'Coal apital ¢c efficiency and other Efficient Treatment of Toxic Metal-Contaminated Wet Scrubber Wastewater from Coal-Fired Lyantech,|A turbine SSkvi comments Power Plants ynntech,Inc. i.-we Intelligent Control (boiler-related)of Advanced Power Generation Systems Using Model-Free |CyboSoft,General CybernationEurope-Denmark:FLS miljo/BWE,International |No data.NO,146 mg/m?29/582/580/44.9 (not High steam parameters Adaptive Control Technology Group,Inc.Nordjyfland 3 (1998)Aalborg Industries,|bituminous |1,500 (2006)for)SO,13 mg/m?580 annual)Cold sea water cooling :Hybrid Ceramic/Metallic Recuperator for SOFC Generators Acumentrics Corporation384-MWe Volund Energy new 800-MWe |Dust 18 mg/m?Double reheat .usc Systems;GEC excluding Low auxiliary power Novel Supports and Materials for Oxygen Separation and Supply Eltron Research,tnc.Alsthom (now owners costs faery ow "or disooe 'Novel Surface Modification Method for Ultrasupercritical Coal-Fired Boilers Inframat CorporationAlstom)or IDC sone wasie lor lsposa j H,Separation Membranes TDA Research,Inc.Europe -Germany:EVT (now Alstom),j Lignite 1,175 (2002)|NO,130 mg/m*27/580/600 37 (base Lignite fuel,50-60%Robust,Low-Cost Membranes for Hydrogen Production from Coal-Derived Syngas Aspen Products Group,Inc.Niederaussem K (2002)|Babcock and SO,<200 mg/m?load)moisture content Proton Conducting Solid Oxide Fuel Cell C ,965-MWe Steinmiiller (today Total project Dust <50 mg/m?High steam parameters roton Conaucting soll xiade Fuel Celis eramatec,Inc. USC HPE);Siemens cost Large cooling tower for low Sorbents for Air Separation TDA Research,Inc.Iinovative heat recovery Advanced Coal Gasification Systems (chemical looping)Eltron Research,Inc. Low auxiliary power Water-Conserving Steam Ammonia Power Cycle Energy Concepts CompanyLignitedryingdemonstrationHighVolumeUtilizationofFlyAshContainingMercury-Impregnated Activated Carbon Ceramatec,Inc.North America -Canada:|Babcock-Hitachi |Sub-1,100 (2005)|NO,170 mg/m?25/570/570 39.6 (base -_|Moderately high steam Adaptable Sensor Packaging for High Temperature Fossil Fuel Energy Systems Sporian Microsystems,Inc.Genesee 3 (2005)450-bituminous 50,295 mg/m?load)parameters Utilize Cementitious High Carbon Fly Ash (CHCFA)to Stabilize Cold In-Place Recycled (CIR)MWe Overnight cost |Dust 19 mg/m?Low auxiliary power Asphalt P Base C Bloom Consultants,LLCSICFirstNAmericanslidingsphaltPavementasBaseCourse pressure supercritical Foil Gas Bearing Supported High Speed Centrifugal Blower R&D Dynamics CorporationSub-bituminous coal ::: _Low-Cost Hot Anode Recycle Blower Phoenix Analysis and DesignAsia-Japan:Isogo New |IHI;Fuji Electric International 1,800 (2006)-|NO,20 mg/m?25/600/610 40.6 (base Extremely low emissions TechnologiesUnit1(2002)(Siemens)bituminous ; SO,6 mg/m?load)High steam parameters Development of Electrically Mediated Electrophoretic Deposition for Thermal Barrier Coating568-MWe USC Total project |Dust 1 mg/m?Moderately warm sea water System Faraday Technology,Inc.cost cooling Low auxiliary power Nanostructured Coatings by Pulsed Plasma Processing for Alloys Used in Coal-Fired Karta Technologies,|No solid waste for disposal Environments arta Technologies,Inc. Asia-Korea:Doosan Heavy International |993 (2003)NOx 83 mg/m?25/566/566 39.7 (capacity |Moderately high steam An Economic Process for Coal Liquefaction to Liquid Fuels Specialties Group,Inc.Younghung (2004)industries &bituminous |Basis uncertain |SO,vain factor not Pararneters Accelerated Biomethanation of Sequestered Carbon Dioxide and Paraffin in Coal Beds Altuda Energy Corporationemissions ,; 2x774-MWe SIC Construction Co.Dust 10 mg/m nown)Low auxiliary ower Multicontaminant Warm Gas Cleanup TDA Research,Inc. ,;Optimization of Metal Alloys for High Pressure Hydrogen Separation Membranes Eltron Research,Inc.Asia -China:Doosan Babcock;|Chinese lean |580 (2006)NO,650 mg/m?24/566/566 40 design Moderately high steam P y 8 me EP Chemb R h andWangqu1,2 (2006)Hitachi Overnight cost |SO,70 mgim*(des)parameters Membrane-Based Hybrid Process to Capture CO,from Warm Flue Gas embrane inesearcn an2x600-MWe S/C Dust 50 mg/m?Low auxiliary power Engineering,Inc.Advanced low-NO,leancoalcombustionsystem Rigorous Screening Technology for Identifying Suitable CO,Storage Sites Advanced ResoonAsia-India:BHEL 80%ash |822 (2002)|SO,unabated 15/540/540 32.1 (base |Suberitical cycle Multiple-Input Data Acquisition System (MIDAS)for Measuring the Carbon Content in Soil.XIA,LLSuratgarh1-5 (1998-Basis uncertain Dust 50 mg/m?load)High ash coal Using Inelastic Neutron Scattering IA,LLC2002)(unit 5) 5 x 227-MWe Sub-crit (drum)In other important work,Alchem -Alchem won the Tibbetts Award for _ability to enrich CO,streams up toAfrica-South Africa:Steinmilller;Alstom | 30%ash -|410 (2001)SO,unabated 17/540/540 32.8 (two-Suberitical cycle Field Services,Inc.was awarded a 2006 in recognition of significant 90 percent was demonstrated in theMajuba1-6 (1996-2001)Total project |Dust 50 mg/m?shifting)High ash coal ..°. ° .3 x 612-MWe (dry)cost Dry cooling from water Phase II grant in 2005,and has de--_achievements involving technologi-_laboratory.The membrane scrubber3xBooMWe(wet n supply constraints veloped a technology for capturing _cal innovation related to the federal __should provide a safe,environmen-all sub-cri -throu . ;,methane emissions from landfills . i i -Europe United Kingdom:|Alstom Natural gas |950(1999)-[NO,128 mg/m?Reheat GT 47 (40%|Combined-cycle with reheat ;SBIR program tally friendly,economical,and effi-Enfield Total project |SO,negligible 3 pressure R/H ST |capacity gas turbine and converting nearly 100 percent of ..cient method for capturing CO.,themoetinDustzerofactor)Low auxiliary power wo ;..Still another success is Carbozyme P rea(2002)cos mary these emissions into a high-quality ;.key greenhouse gas,thereby reducing373-MWe Advanced Zero solid waste oo..Inc.'s novel gas separation mem-;GTCC ,synthetic diesel fuel,using a com-;global warming. >hace ai Combnedava . ially viable gas-to-liquids brane -awarded a Phase I]grant inIGCC|revie PCC+20%NO,50-75 mg/m ombined-cycle mercially v -to-liqul :ws ::.athena "80, 20 mgim?Syngas-fired gas turbine 2003 and a Phase III grant in 2006 For additional information,in-Dust <1 mg/m?Inert solid waste USC:ultra-supercritical (steam temperatures of 580 °C and above);S/C:supercritical;sub-crit:subcritical 10 (GTL)process.This proprietary GTL technology,now being used in oil and natural gas fields,will be adapted for use with municipal solid waste landfills.As a result, -which features high permeance (flux),selectivity,and efficiency,as well as potentially low energy costs for removing CO,from flue gas.The cluding upcoming conferences, refer to the following websites: http://sbir.er.doe.gov/sbir/and http://www.sbirworld.com/Hi aaa aaa CLEAN Coat ToDay Fatt/Winter 2007 CieAn Coat Topay Faut/WINTER 2007 as RECS STUDENT SEQUESTRATION PROGRAM The 2007 Research Experiment in Carbon Sequestration (RECS)met at the Montana State University (MSU)and a variety of field sites over the 10-day period of July 29 -August 10.This year's group consisted of 17 students from graduate and doctoral programs in the United States and Canada,as well as early career professionals in fields related to carbon mitigation.Appropri- ately,because greenhouse gas reduction and storage is a global problem,the group included seven international students -from France,Iran,Paraguay, Turkey,Russia,and India.RECS isa first-of-a-kind classroom instruction and field program in carbon sequestration,and is a collaborative effort between MSU's Big Sky Carbon Sequestration Partnership,MSU's Zero Emissions Research and Technology Center (ZERT),Los Alamos National Laboratory (LANL),and EnTechStrategies,LLC.EnTech's managing partner,Pamela Tomski,founded the program in 2004 and serves as RECS program director. RECS was sponsored in 2007 by the U.S.Department of Energy's Office of Fossil Energy,with sup- port from PPL Montana,the State's leading electric utility. Previous RECS programs were held in Santa Fe,New Mexico in 2004 and 2005.To date,the RECS program has graduated over 60 students from 15 different countries, and is starting an active alumni networking group. Classroom talks featured experts from academia,gov- ernment,national laborato- ries,and the private sector, who discussed carbon capture and storage technologies and related policy issues.Then,students traveled to Colstrip,Montana to visit PPL Montana's coal-fired power plant and view the local geology along the Montana/Wyoming border.Finally,students spent several days in hands-on work at ZERT,using carbon dioxide (CO,) detection and monitoring equipment. Somayez Goodarzi displays a poster on her doctoral research in geomechanical effects of CO,sequestration.Jason Deardorff (left)is also researching CO,sequestration in geological media. The several-day geology field trip allowed students to understand how vari- ous geologic features in surface outcrops were formed,and their potential impact on the integrity of subsurface CO,storage.The group visited the Elk Basin Oil Field and Clarks Fork Canyon on the Wyoming-Montana border. The well-exposed and accessible Elk Basin Oil Field gave participants an opportunity to learn about the geologic structure of a typical Rocky Mountain oil-producing anticline,and gain an understanding of its structural geometry through the distribution of outcrops surrounding the field.Fracture patterns in surface outcrops were described in the context of how they may affect the integrity of a geologic carbon storage site.Following this,the group traveled to the mouth of the Clarks Fork Canyon along the southeast front of the Beartooth Mountains.This spectacular locality helped participants 8 understand the regional distribution of oil and gas fields in the central Rocky Mountains,which are poten- tial carbon storage sites. Another visit included the west flank of Sheep Mountain anticline in the eastern Bighorn Basin.This deeply eroded structure is breached to the level of Paleozoic reservoir rocks that will likely be the host rocks for carbon sequestration in more deeply buried structures in the region.This locality provided an unparalleled,close-up view of the primary sequestration reservoir rocks (fracture patterns,lithology, porosity,permeability). Returning to the MSU campus at Bozeman,students prepared for hands-on field work at ZERT.The ZERT is funded by DOE and headed by Dr.Lee Spangler,who also heads the Big Sky Regional Partnership and serves as RECS technical co-Direc- tor (along with Julianna Fessenden of LANL).ZERT began operating last December,and is the only edu- cational test facility of its type in the country.The students learned how to measure carbon movement in the near-surface environment,and used various techniques to track the carbon plume and examine water chemistry, CO,concentration and flux (concen- tration over time),plant response using hyperspectral analyses and microbial population changes. Students used two devices to mea- sure CO,flux,orconcentrations over time.In one,a tunable diode laser and a detector are contained ina hous- ing placed two inches above ground, directly above the underground pipe. Light is bounced off mirrors 30 feet away.Interference with the light beam will indicate CO,leakage to the atmosphere.RECS students also tested an infrared gas analyzer. See "RECS”on page 13..."eeweCase STUDIES ON RECENT FossiL-FIRED PLANTS The Clean Coal Centre (CCC),established in 1975 under the auspices of the International Energy Agency (IEA),is a collaborative project funded by member countries and industrial sponsors that provides impartial informa- tion and assessment services on coal technologies.Products include topical reports on all aspects of coal use,and on-line databases of coal information as well as facilitation of R&D.The U.S.Department of Energy is a major contributor to the program. The Plan of Action on Climate Change,from the Gleneagles G8 Summit of World leaders in July 2005,mandated the IEA,among other actions,to: "...carry out a global study of recently constructed plants,building on the work of its Clean Coal Centre,to assess which are the most cost effective and have the highest efficiencies and lowest emissions,and to disseminate this information widely ....” Behind the request was the recognition that an effective,economic way to minimize growth in emissions of CO,from fossil-fired power generation is to ensure that new plants,being built to meet demand growth and replace old capacity,be as efficient as possible.High efficiency design will be equally as important in carbon capture plants.The work was carried out by the IEA Clean Coal Centre.Findings are being disseminated at conferences and workshops and through a report,to be issued shortly. Recent coal-fired power plants of high efficiency use pulverized coal com- bustion (PCC)with supercritical (S/C)or ultra-supercritical (USC)steam turbine cycles,so most of the case study units were of this type.Examples were chosen from four continents,because local factors (such as ambient conditions,cooling water availability and temperature,coal type)influence attainable efficiency.To cover such effects,it was necessary to include two subcritical units.There was no recently built example of acoal-fueled integrated gasification combined-cycle (IGCC)plant using a modern syngas combustion turbine.So,to ensure inclusion of this potentially important technology,a review of IGCC developments was included instead of a specific case study. There also was a case study of a natural gas-fired combined-cycle plant to facilitate comparisons. Most of the plant data and descriptions were collected by questionnaire and site visits.Some information was obtained from published sources.Informa- tion gathering was carried out during 2006,and was followed by analysis and report preparation.The report underwent several stages of peer review. Case StuDY PLANTS The plants in Europe were a cold sea water-cooled plant fired on interna- tionally traded bituminous coals (Nordjylland 3,Denmark),and an inland, lignite-fired unit in Germany (Niederaussem K).Both are leading examples of USC systems.The case study plant in Canada (Genesee 3)is the first sliding pressure supercritical unit in North America,and fires sub-bituminous coal. In Asia,three plants were included. In Japan,Isogo New Unit 1 has near- zero conventional emissions and the highest steam conditions in the world among operating sliding pressure USC units.The first two S/C units at Younghung Thermal Power Plant in the Republic of Korea illustrate the progression in steam condi- tions there,and the first two units at Wangqu in China mark a develop- ment in firing low-volatile coals in S/C systems.The subcritical plants in India,at Suratgarh,and SouthA frica, at Majuba,cover high-ash coal burn- ing in difficult locations,with Majuba illustrating the use of dry cooling.The gas-fired plant at Enfield in the UK has an advanced reheat combustion turbine.Table 1 summarizes infor- mation on the plants.Following are a few highlights. Most EfFFicigNT PLANTS The most efficient plant is the Nordjylland 3 unit in Denmark.This is a USC system with double reheat and cold sea-water cooling.Double reheat was selected for its ability to keep the steam wetness in the low- pressure turbine sufficiently low to prevent erosion while enhancing ef- ficiency.Nordjylland 3 also exports heat,but the 44.9 percent HHV ef- ficiency is for power-only mode.The world's most efficient lignite-fired plant is Niederaussem K in Germany. The 37 percent HHV efficiency has been achieved through acombination of USC steam conditions with novel heat recovery arrangements.It was notable that the operating efficiencies of the base-loaded plants generally lay close to design values. CURRENT PRACTICE PCC projects now use S/C or USC conditions as a matter of routine to See "CCC”on page 10... 9 ee] -ON CA Karl Reiche From:Mike Harper Sent:Monday,July 09,2007 9:35 AM To:David Lockard;Chris Mello;Sara Fisher-Goad;Karl Reiche;Martina Dabo;Peter Crimp; James Strandberg;Amanda Kolker;Chris Anderson;Christopher Rutz;Ron Miller Subject:RE:Hawaii is Second State to Limit Greenhouse Gas Emissions David ,et al:WE have been contacted by DEC to be part of the subcabinet group charged with Greenhouse Gas Emissions issues .At this point the Governor is calling upon her chief policy makers to assist her in developing the state 's position.AEA will have to weigh in,with our recommendations .While DEC is lead state agency ,we will be looked upon for alternative energy and energy conservation strategy as part of a policy. |will be visiting with Ron Miller and then look to setting up meetings this week to initiate discussion.David ,please get with Chris Mello and |to see about available time . Thank you for forwarding the article on Hawaii 's action.Mike Harper From:David Lockard Sent:Monday,July 09,2007 8:56 AM To:Mike Harper;Chris Mello;Sara Fisher-Goad;Karl Reiche;Martina Dabo;Peter Crimp;James Strandberg;Amanda Kolker;Chris Anderson;Christopher Rutz;Ron Miller Subject:Hawaii is Second State to Limit Greenhouse Gas Emissions Folks- Since Alaska is impacted by climate change more than any other state,should AEA have a policy on tracking greenhouse gas emissions from its programs and projects? Has the Governor made any statements about greenhouse gas emissions? With our involvement in coal-fired and alternative energy power generation,successful track record of managing consulting contracts,and ties to the banking and business sector,AIDEA and AEA could provide valuable input and perspective to State policy on climate change. David Hawaii is Second State to Limit Greenhouse Gas Emissions The Hawaii state legislature has passed The Global Warming Solutions Act of 2007,distinguishing Hawaii as the second US state after California to place a cap on greenhouse gases (GHGs).The law,which took effect on July 1,establishes a state policy to bring Hawaii's greenhouse gas emissions down to 1990 levels by 2020.The legislation contains strong language linking climate change to GHGs."The scientific evidenceis nowcompellingthatrecentclimatechangeiscausedatleastinpartbyhumanactivities,especially the burning of | fossil fuels,which has driven atmospheric carbon dioxide concentrations to their highest levelsin 420,000 years,"the bill says. The bill charges the state Department of Business,Economic Development and Tourism with updating a list of all sources of greenhouse gas emissions by the end of 2008.The Hawaii Department of Health will be responsible for enacting rules to limit GHG emissions.A 10 member GHG Emissions Reduction Task Force comprised of four members from business,two state department heads,two University of Hawaii representatives and two environmental group members will have until the end of 2009 to develop a plan for 1 "maximum practically and technically feasible and cost-effective reductions in GHG emissions."The task force must deliver to the 2010 Legislature its plan and regulations for accomplishing the reduction. Click on the following link for more information: http://www.ens-newswire.com/ens/jul2007/2007-07-05-09.asp#anchor2 http://www.capitol.hawaii.gov/sessioncurrent/Bills/HB226 CD1 .htm ¢oie. .ak,aedTENS. USIBELLI COAL MINE,INC. For more information on the Emma Creek Energy Projec t,contact: Steve Denton Vice President,Business Development Usibelli Coal Mine,Incorporated P.O.Box 1000 Healy,Alaska 99743 (907)683-2226 Fax:(907)683-2253 * 12 Emma Creek Energy Project Coal seams #3 and #4 are exposed in this spectacular natural outcropping of the coal-bearing rocks north of Hoseanna Creek. These two coal seams continue deep below the surface until they outcrop again near the mouth of Emma Creek,about 6 miles to the north.Near-surface coal from #3 and #4 seams southeast of Emma Creek contain enough reserves to feed the Emma Creek Energy Project for over 50 years.Seam #3 is approximately 25 feet thick and seam #4 is approximately 40 feet thick.The two coal seams are typical of the ultra-low sulfur coal found in the Nenana coal field and,using modern combustion equipment,can provide environmentally friendly heat for electricity generation to meet the needs of the Railbelt's growing economy. Emma Creek Energy ProjectProjectConceptSummary "_USIBELLI COAL MINE,INC.'Introduction_Usibelli Coal Mine,Inc.acquired approximately 12,400acresofnewcoalleasesfromtheStateofAlaskainFebru-ary of 2001.Portions of these leasesnear the mouth of ©Emma Creek contain shallow coal reserves amenable to © efficient,low cost surface mining.Limited natural gas resources in the Cook Inlet Basin and the uncertainty of natural gas supply and pricing from the North Slope place ©ce,*>®Alaska Railbelt electricity consumers at risk of rising prices <_and uncertain supply.The Emma Creek coal resourcesprovideauniqueopportunitytosecurelong-term price Lg.?stability and assure adequate supply of low cost electricity SU ey,uvwoe for the Railbelt.This report provides abrief summary of.:the Emma Creek Energy Project Vee Ea as Project Costs”aN eS ACapitalCostEstimateeeExecutiveSummarya?Project Opportunities .2 4 oe i Operating and Maintenance Cost Estimate |S:Project IDescription -_ypical StaffingGeneralPlantDesignCriteria"Project Economicc AnalysisBasis) 2 3 3 3 Permitting and Environmental Summary -: 3 "Air Quality Permitting -aes oo i a)5 5 8 8 8 8 _Sensitivity DiscussionCapitalCost Operating Costs .Economic Assumptions Lg Interest.Rates > Conclusions _:"Schedule:: Wetlands Permitting,oe ac"National Environmental Policy Act Compliance”State Land Use PermittingFishHabitatPermittingDamSafetyPermitting” 'Location &Topography MapConclusion _Cover iimageis aa naturally occurring coal 'outcrop near'the EmmaCreek Energy Project."he IS Executive Summary Usibelli Coal Mine Inc.has performed a conceptual design and fatal flaw analysis for a coal fired power plant to be built near their coal leases about 16 miles northeast of Healy,Alaska,close to the new Healy to Fairbanks Intertie. *The intended project will be a 200 megawatt (MW)net plant,fueled by Usibelli coal from their Emma Creek Mine.This is based on an analysis of the Alaskan power grid,comparison of the economics of this plant versus existing plants in Alaska and discussions with Usibelli regarding the capability of the coal mine. ¢The unit will have two half-size fluidized bed boilers and a single steam turbine producing 232 MW gross. The emissions controls will include limestone addition to the fluidized bed boilers for SO,control,controlled NO,production in the fluidized bed boiler via specific low NO,combustion design and a baghouse for particulate control.Ash will be returned to the mine. There will be a new raw water reservoir constructed to provide a consistent flow of water to the plant. *The technology chosen for the combustion of the fuel is a circulating fluidized bed (CFB)boiler.A sketch of the combustor is included with this summary.The choice of this technology is based specifically on its environmental and commercial characteristics .The emissions from a CFB meet and exceed the existing environmental regulations.CFB's are tried and proven technology with hundreds of units in operation, demonstrated reliability and competitive capital and operating costs. ¢The permitting requirements for the project are outlined in Section 4.At the present time,there do not appear to be any permitting fatal flaws.There are also no technical fatal flaws associated with the project. There do not appear to be any economic fatal flaws based on today's economic conditions. The schedule for the project anticipates a permitting duration of 38-months and an engineer,procure,and construct (EPC)schedule of 52-months for a total duration of 7.5 years. *The total Capital requirement is estimated at $421 million.. *Operating and Maintenance costs,exclusive of fuel are estimated at $10,197,000 or $0.00646/KWh on a yearly basis.Fuel costs are estimated at $22,066,000 or $0.0140 /kWh based on coal supplied at $1 per million BTU (mmBtu)delivered. ¢The economic analysis shows power cost at $0.0411 / kWh,compared to current Railbelt firm cost of ap- proximately $0.050/kWh.Based on a 30-year debt term at 6%interest,the cost components are: Fuel $0.0140/AWh Labor $0.0030/AWh Fixed O&M $0.00154AWh Variable O&M $0.0020/:AWh Debt Service $0.0205AWh *Emissions are expected to be less than: SO,0.167 Ib/mmBTU or 1842 tons/yr NO,0.180 Ib/mmBTU or 1986 tons/yr CO 0.220 lb/mmBTU or 2427 tons/yr Particulate 0.030 lb/mmBTU or 331 tons/yr It is expected that these emission levels are permittable at the Emma Creek site. Note Harris Group Inc.provided the conceptual design and cost analysis and Steigers Corporation provided the environ- mental analysis. USIBELLI COAL MINE,INC. Emma Creek Energy Project Concept Summary prepared by Harris Group Inc.&Steigers Corporation,April 2003 2 Emma Creek Energy Project Economic Assumptions If the actual escalation rate for O&M costs were only 2%over the life of the project,the project would provide about $73 million in added revenue over those 30 years. If the actual escalation rate for O&M associated costs were 4%,the required wholesale price of power would have to increase by $0.0016 to $0.0427. Interest Rates The economic analysis for the project is based on an interest rate of 6%.A one percent decrease or increase in the interest rate will decrease or increase the required price of power by about $0.0018/kwh.This is,the price of power at a 5%interest rate will be $0.0393/kWh and conversely,at a 7%interest rate,the price of power would be $0.0429/kWh. Conclusions The project is not as sensitive to capital costs as it is to escalation factors and O&M costs.However,it is important to note that we believe the assumptions made and the estimates of capital costs and O&M costs are conservative. Schedule The schedule for the project shows a 7.5-year dura- tion.This is comprised of 38 months of permitting and 52 months of engineering,procurement and construction.It is possible that the permitting cycle could be somewhat shorter;however,this schedule is based on other recently permitted projects in the lower 48 states and on input from project personnel knowledgeable of the Alaska permitting process. Note that there is a break in the construction schedule in the first winter.This is consistent with the HCCP sched- ule and normal for major construction projects in Alaska. Activity oatty Years |iption Wks 1 I 2 I 3 4 I §I 6 I Z I 8 [a Proje svelopme eke B100 {Environmental Studies 35 Geer StudiesB105{Meteorological Data Gathering 53)y Mi gical Data 3) B110 |Permitting 86 y Permitting|B1i20 =|Preliminary Engineering 40 Pretimi ineering i B130__|Financial Closing 56 Fh Closing B140_|Soils Testing 5 vySoils Testing a a 5 ''D100 Engineering-Detailed Design 122 "Y Engineering -Detailed Design &Delive a 2 ' P100 |Boiler-No 1 191 I V Boiler-No 4 P160 {Coal Handling 122 aN ¥7 Coal Handling P10 |Boller-No 2 19t &V/Boiler-No 2 P120 |Turbine 156 I 'VTurbine P1470 |Plant Controls 88 1 TY Plant CP130|Air Cooled Condenser 139 oF T 'V Alr CooledC P140_-|Transformers 105 &VT P150 |Switchgear 70 )a hg -bC100{Hire Contractor 0 ire Contractor C120 |Site Opening 0 Sita Opening |130 |Site Work &Foundations 26 'Site Work &Foundations i C110 |Finalize Cost t)Finalize Cost i £140 |Construction 104 &Ye C150 |Mechanicat Completion 0.| Jn Comp O issioning ei S OR $100 |Start-Up 30)Jetty $110 |Performance Testing 9 Performance Testing $120 {Commercial Operation t)Commercial Operation Feat cea a ewe Usibelli Coal Mine,Inc. swan }Date Rew §Feat Approved Run Date S3MAROS 11:14 sy CaActivity Emma Creek Healy,Alaska ©Primavera Systems,Inc.Classic Schedule Layout Emma Creek Energy Project 11 Project Economic Analysis Basis The economic analysis for the project was developed on the basis that all of the capital required would be financed as debt.This $420.2 million is then paid at a 6% interest rate over a 30-year period.The analysis also assumes that the project will not generate a profit on its own,that is,all power will be sold at cost.This cost number is based on payment of the debt over 30-years and covering all operating costs. We have assumed the following economic escalators: Coal and ash disposal cost 2% Power cost to the project 2% Electric sales price 1% All other O&M costs 3% These estimated costs and economic assumptions derive an initial wholesale price requirement for power generated by the project to be $0.0411/kWh. Sensitivity Discussion Capital Cost If the capital cost is actually 10%different than the estimate,plus or minus,the electric sales price required for a breakeven analysis would change by $0.0018 or about Typical Staffing 4.3%,plus or minus.Ona practical basis,assume that the project design is changed from a single 200 MW unit to two 100 MW units with independent boilers,steam turbine/generators and transformers,the net price increase in the capital cost is estimated to be about 12 million.This would result in an increase in the wholesale electric sales price of about 1%to $0.0415. Or,if one assumes that Selective Non-Catalytic Reduc- tion (SNCR)is required for further NOX reduction,the additional 1.2 million in capital costs and additional $500,000 in yearly operating costs would require adding $0.0006/kWh to the initial sales price. Operating Costs If the manpower requirements are 10 personnel higher or lower than projected in this analysis,or if rates were 20%higher or lower,the operating costs change by about $1,000,000 per year.The initial wholesale price of power would have change by $0.0011 to either $0.0422 for an increase or would drop to $0.040/kwh. If the limestone requirements can be reduced by 20%, and Foster-Wheeler has proposed that this is possible by hydrating of ash and re-injection,the project would provide $35 million in added revenue over the 30-year life. Plant Manager - Operations Maintenance Executive Plant Manager Manager Sect./Recp.Engineer (4)Shift (2)DCS/inst.(2)(2)Electronic}Warehouse PurchasingSupervisorsTechnicians]]Supervisors |}Technicians Clerk Agent Cd }| (4)(4)Fuel Supply (12)(2)LabOperatorsOperatorsMechanicsTechnicians (4)Asst.Plant (4)(2) Operators Laborers Helpers (4)Utility Operators 10 Emma Creek Energy Project Project Opportunities The proposed Emma Creek Energy Project provides unique benefits to the Railbelt utilities.1200 MW of capacity is currently interconnected by the Railbelt trans- mission system,which distributes energy to the Railbelt utilities.Approximately 4.0 million megawatt-hours (MWID of energy are currently sold by these Railbelt utilities.Oil and gas units over 25 years old produce over 70%of this capacity and energy.The Railbelt utilities are likely to experience decreasing reliability and unpredictable escalating retail energy prices due to aging units and dependence on oil and gas fuel. Emma Creek will add 200 MW of new base loaded firm coal fired generation to the Railbelt,providing energy for future growth and retirement of aging oil and gas fired units.As a new unit with boiler redundancy,Emma Creek will be capable of a high capacity factor adding reliability to the Railbelt.Emma Creek can produce 1.6 million MWH of energy annually,while adding stability to energy prices for the Railbelt consumers. Non-firm electricity on the Railbelt has varied between an average of 3.4 cents per kWh in 2000 to over 4.2 cents during oil and gas cost spikes in 2001.During this same period,firm electricity on the Railbelt averaged 4.7 cents per kWh.Emma Creek will produce firm wholesale elec- tricity at approximately 4.11 cents per kWh or about 0.6 cents per kWh less than current firm electric rates on the Railbelt.If oil and gas prices are assumed to escalate 2% per year faster than coal,Emma Creek firm energy after five years of operation could provide approximately $15 million annual savings to Railbelt utilities. Project Description The intended project will be a 200 MW net atmo- spheric circulating fluid bed power plant,fueled by Usibelli coal from their Emma Creek Mine.The unit will have two half-size fluidized bed boilers and a single steam turbine producing 232 MW gross.The emissions controls will include limestone addition to the fluidized bed boilers for SO,control,controlled NO,production in the fluidized bed boiler via specific low NO,combustion design and a baghouse for particulate control.Ash will be returned to the mine. General Plant Design Criteria A 44.4 acre site is selected near new coal leases about 16 miles northeast of Healy,Alaska at 2,200 ft elevation. The site is located about 3 miles east of the Golden Valley Electric Association (GVEA)Northern Intertie transmission line.Coal is trucked via coal mine haul roads to the site. Cycle heat is rejected to atmosphere via a cooling tower. Both bed and fly ashes are trucked back to the coal mine and used as restoration material.Cooling tower and boiler makeup waters are supplied from a raw water reservoir to be built adjacent to the plant,located on Emma Creek. Coal used by the plant has a BTU content of approxi- mately 7,200 BTU/b and an average sulfur content of 0.2%. The plant generates nominally 200 MW net,232 MW gross output with two circulating fluidized bed boilers. The steam turbine generator (STG)is designed for 250 MW gross,at valves wide open and throttle conditions of 1,250 psig and 950°F,however,expected output is 232 MW gross. Crushed limestone from Alaska is trucked to the site and pneumatically unloaded into 60-day storage silos (5,400 tons). Process wastewater is used to condition ash to meet the landfill requirements or returned to the raw water reservoir. Coal storage pile storm drainage is collected and treated before being routed to the raw water reservoir.A single,storm drainage point is formed by grading open channels that are routed to a low point and then pumped or routed by gravity to the raw water reservoir. An earthen containment consisting of approximately 2 million cubic yards of mine overburden is planned to hold 5,855 acre-feet of water drained from Emma Creek during periods of high run-off flow and pumped from Marguerite Creek when Emma Creek can't supply the needs. Permitting and Environmental Summary Usibelli Coal Mine,Inc.(Usibelli)has had a permitting feasibility and fatal flaw analysis performed for construc- tion of the 200 MW net circulating fluidized bed coal-fired power facility to be located near Healy,Alaska.The gener- ating facility would be located near a proposed surface coal mine to be developed by Usibelli.This is a preliminary assessment of major issues based on limited data and as such provides only a basic review of these issues.Some of the information presented in this assessment was provided or corroborated through consultation with federal,state, and local agency staff,and we have relied on their repre- sentations in this assessment. Emma Creek Energy Project 3 Circulating Fluidized Bed Boiler A number of environmental issues were evaluated,and several major permits and investigations required for project development were identified.Project development will likely require a number of less significant permits,but these typically have a lesser effect on project feasibility and were not included here.A list of major permits and investigations that either would likely be required or could be required based on current project design alternatives includes: ¢Air Quality Permitting *Wetlands Permitting *National Environmental Policy Act Compliance ¢State Land Use Permitting 4 Emma Creek Energy Project ¢Fish Habitat Permitting *Dam Safety Permitting ¢Transmission Line Construction Permitting. Each of these permits and investigations was evaluated for any potential major issues that could complicate or impede project development.Our analysis did not identify any fatal flaws or exceptionally problematic issues associ- ated with permitting the proposed facility. The following is a summary of the permitting and environmental assessment results,including the estimated relative level of effort for permitting and the anticipated schedule. Project CostsCapitalCostEstimate The capital cost estimate or "Total Capital Require- ment”for the project is $420.2 million.This equates to $2,101 per net kilowatt.This estimate is based on vendor budgetary quotes for major equipment,factored estimates for other equipment,construction cost estimates from the recently constructed Healy Clean Coal Project and informa- tion from other recent projects constructed in the lower 48 states. Capital Cost Estimate Area Total Installed Equipment Cost $10 $met kw 100 Coal Unloading and Handling 5.8 28.83 200 Sorbent Unloading and Handling 2.8 14.11 400 Combustion/Steam Generation 130.6 653.00 700 Power Generation 65.0 325.00 Dam,Reservoir,Pumps and Condenser 10.0 50.00 1000 Particulate Removal 9.8 49.07 1400 Ash Collection and Removal 4.3 21.47 1500 Civil/Structural/Architectural 29.3.146.68 A Total Process Capital 257.6 1,288.18 B_General Facilities (10%of A)25.8 128.82 C_Engineering &Home Office (15%of A+B)42.5 212.50 D_Total EPC Contract (A+B+C)325.9 1,629.53 E Development (Owners &Permits)5.1 25.26 F Project Contingency (10%of D)32.6 162.95 G_Electrical Interconnect 1.7 8.50 H_Bank's Reserve Fund 6.8 34.00 I Total Plant Cost (D+E+F+G+H)372.1 1,860.50 J Interest During Construction (14%of EPC)45.6 228.00 K Total Plant Investment (E+F)417.7 2,088.50 L_Preproduction Costs (3 months of startup)1.2 6.13 M_Inventory Capital 1.2 6.13 N Initial Chemicals 0.1 0.50 O Total Capital Requirement Q+K+L+M)420.2 2,101.00 Operating and Maintenance Cost Estimate The O&M cost estimate shows yearly fuel costs of $22 million based on coal supplied at $1 per million BTU's and 10.2 million yearly for other fixed and variable O&M costs. This equates to a total of about $0.0205/kWh.The O&M estimate is based on utilizing 53 personnel,experience at Healy unit 1 and the Healy Clean Coal Project,historical data from other projects of similar size and commodities estimates from Usibelli personnel and local providers. Operating and Maintenance Cost Estimate Units Qty $/Unit $10%/r Fixed O&M Costs Operating Labor Man hrfhr 32 45.00 2.880 Maintenance Labor 21 45.00 1.890 Maintenance Material and Land Lease *2.100 Administration/ Support Labor 0.200 Subtotal Fixed Costs 7.070 Variable Operating Costs Fuels Coal ton/hr 190.145 14.40 22.066 No.2 Fuel Oil gallons/hr 79.0 1.40 0.126 Sorbent Limestone tons/hr 3.58 85.00 2.466 Utilities Raw Water kgal/hr 4.7 0.60 0.023 Cooling Water kgal/hr included 0.60 0.000 Station Service Electric Power kWh/br 2,000.00 0.05 0.070 Waste Disposal Charges Ash Trucked and Landfilled tons/hr 21.958 2.50 0.442 Subtotal Variable Cost 25.193 Total O&M Cost (Fixed +Variable)32.263 Note:Non-Fuel O&M:Total O&M ($32,263,000)minus coal ($22,066,000)equals $10,197,000 Emma Creek Energy Project 9 result in the application of NEPA to the project.However, for the purposes of this evaluation it is assumed that project development will require preparation of the less involved EA.This assumption is based on the project's ability to minimize its overall impacts and an evaluation of the conditions that typically result in the requirement for an EIS. State Land Use Permitting It has been determined that all project development will be located on state or University of Alaska (UA)owned lands.As a result it will be necessary to secure a right-of- way and/or a lease to meet the regulatory requirements under Alaska Department of Natural Resources (ADNR) jurisdiction.The final location,project configuration,and consultation with ADNR will determine which of the land acquisition requirements will apply to the project.A state and/or UA land lease will likely be required for the facility area,the reservoir,and possibly the water pipeline.A right- of-way will likely be required for the transmission line. There is no indication that any portion of the land acquisi- tion process will be particularly difficult or costly or could result in significant project delays.It is anticipated that land use permitting could be accomplished in approxi- mately 6 months. Fish Habitat Permitting The Alaska Department of Fish &Game (ADF&G)Fish Habitat permit is designed to guarantee efficient passage of fish and to protect and conserve fishery resources and fish habitat in waters designated as important for the spawning,rearing,and migration of resident and anadro- mous fish.Given the distance of dam/reservoir construc- tion and water withdrawal from waters known to support anadromous fish species,the potential for impacts as a result of the project are very unlikely.It is anticipated that analysis of potential impacts will still be required by ADF&G while a Fish Habitat permit will not.A fish habitat assessment will be required to demonstrate that project related impacts will not impact downstream anadromous fisheries. Resident fish species are most likely only seasonal occupants of these streams.Consultation with ADF&G staff indicates that regulatory requirements for impacts to these species is unlikely.ADF&G historically has not required a Fish Habitat permit for impacts to resident non-anadro- mous fish species and it is likely that this will also be the case for this project.It is anticipated that the habitat assessments and consultation with ADF&G to resolve fisheries issues will require approximately 27 months. 8 Emma Creek Energy Project Dam Safety Permitting ADNR Division of Mining,Land,and Water,Dam Safety Construction Unit (DSCU),regulates all dams in the State of Alaska that impound 50 acre-feet of water or more and are at least 10 feet high.The dam proposed for the Emma Creek Energy Project will impound 9500 acre-feet of water and will be approximately 120 feet high,which would require inclusion of the structure in the State Dam Safety Program.It is assumed that the project will be able to construct a dam that will meet DSCU approvable design criteria.Therefore,no difficulties are anticipated in secur- ing the necessary dam safety permits.Due to the possibility of the dam receiving a Class II hazard rating,it is also anticipated that the project will require an Emergency Action Plan for dam operations.Dam Safety permitting is usually accomplished in approximately 1 month. Transmission Line Construction Permitting As an additional component of project development, the installation of an approximately 3-mile-long 230 kV transmission line from the substation located on site to the GVEA Northern Intertie will be required.Permitting for the transmission line is expected to require a number of relatively minor permits and clearances,assuming that no major resource complications are encountered.By locating the transmission line in a corridor without wetlands or potentially sensitive sites,additional permitting effort may be avoided.Approvals for construction of the transmission line should be completed in approximately 6 months. Conclusion As with any large development project there will be issues that arise during development that were not antici- pated.However,our analysis did not identify any signifi- cant issues that would prevent or significantly complicate project development.Additional effort will be required to resolve issues associated with construction of the reservoir and the water collection structure as well as visibility issues but there is no indication that this level of effort will be excessive or resolutions to permitting issues will be unavailable.Considering the project as a whole,it is anticipated that the overall permitting effort,schedule,and cost would be moderate and consistent with a project of this size. The overall permitting effort would likely be com- pleted in 38 months and permitting costs are estimated at $1,850,000. _b =foe}\ i es NE ER SS SB |a SO OO OO ENi!, "| J i |-1 \iil5:if { |i : i i I i"|it |SITE AREA =44.4 ACRESei}Loewe ee ee ee nn a ee en ee ne ee eee +"tH I-}Vf 1y1,4 IotOHt4OCOOLINGTOWER1 |UMESTONE SILOS f4S00(Dy OOCO @eo|\COM.PILE ul 7 eacnousss ISB]1;if ee r initob:8 Ay STACK 1WwermedSetHTPagefi, PRANSEORMERS]ore .F verasn suo if|cS Les O reel FICIali:1 t i S Ffaoun or CRUSHER TOWERotaaBLOGtr|-{ }DIL_t IjJ1i{tfjI | j1tLe--- Emma Creek Energy Project Civil/Structural Site Plan Air Quality Permitting As a new fossil-fuel-fired source of air pollutant emissions with a heat input rating of more than 250 mmBtu/hr and the potential to emit more than 100 tons per year (tpy)of nitrogen oxides (NO,),carbon monoxide (CO),sulfur dioxide (SO,),and particulate matter (PM,,), the Emma Creek Energy Project will require a Prevention of Significant Deterioration (PSD)air quality construction permit from the Alaska Department of Environmental Conservation (ADEC). Review of the air quality requirements did not identify any fatal flaws or exceptionally problematic issues associ- ated with development of the PSD air quality construction permit.Because there are no existing meteorological data available that are representative of the project site,a 1-year pre-construction meteorological monitoring program would be required before dispersion modeling,which is an essential part of the PSD permit application process, could begin.Existing ambient air quality data are available that should be deemed by ADEC as representative of the project site;therefore,no pre-construction air quality monitoring should be necessary.The main air quality- related issue is expected to be the visibility impact to Denali National Park and Preserve (DNPP).The post- construction visibility monitoring for the Healy Clean Coal Project (HICCP)did not result in any concerns at DNPP and this is expected to be the case for the Emma Creek Project, which is located farther away from DNPP than the HCCP. Air quality permitting for the project,including the 1-year pre-construction meteorological monitoring program,is estimated to take approximately 38 months to complete. Wetlands Permitting The United States Army Corps of Engineers (USACE) regulates impacts to wetlands and waters of the U.S.by enforcing the requirements of Section 404 of the Clean Water Act.It appears that development of the Emma Creek Project would result in permittable impacts to wetlands and/or waters of the U.S.It also appears that USACE Section 404 permitting for the project would likely be accomplished through securing an Individual permit. There is no indication that securing an Individual permit for the Emma Creek Project will require an unusually high level of effort or require an unusually long processing time for permit approval.It is expected that wetlands permit- ting could be accomplished in approximately 14 months. National Environmental Policy Act Compliance Major federal actions require compliance with the National Environmental Policy Act (NEPA),and NEPA compliance generally requires an analysis of the environ- mental effects of the action,typically through preparation of an Environmental Assessment (EA)and/or an Environ- mental Impact Statement (EIS).Assuming a USACE Section 404 Individual permit will be required for project develop- ment,then it is likely that issuance of this permit would Emma Creek Energy Project 5 OIr fre tatio 2 32AN Were te re oe oe eowongtaeek, ag , y v. fRaw PRIS. +aerespiseekP)Cr ryi:vfqa tN,” aeineAr ine 7 ° ' 1amissio! r ansIt ap ne ea ee coe a { 10a cae es ary wheScenetrapeee\ PROJECT LOCATION IM t one waems, rd A2: .?fa af eases - yeott a!ovhe dome L 5 1: a thomx"éFae'-Te poee re toe. ireZpos Re yhoaeifyor 0=ul2 TELEeefey £=| ; |2 UY tar 8;rs & ms,Rae uci <5 EsWi< Es} S. '"Teya 4a 2zU5 4 \ae, 3\2ygW wy 80 £55 EFIG Fws t,"eaeasesKLeyy PROJE AND TOPOGRAPHY 4 USIBELLI COAL MINE,INC. Emma Creek Energy Project Harris Group,INC. afbomenengs loseanna:x noeaR wokeaaa a ad! ff qrNUpS : Ym4WV+ Nod j{.4. . aivqseteeb gs 4'f 63,360 Quadrangle ukon-Kovukuk Census Area jectro] S "Fairbanks A-3”1 Fairbanks Meridian,UTM Zone 6,Alaska Zone 4 Emma Creek P SE/4 Section 28,T-10-S,R-6-W Denali Borough,\ 6-4°00°S2"N,148°43°35"W USG Emma Creek Energy Project 76EmmaCreekEnergyProject NPR:Coal-Fired Plants Scrapped as Part of Utility Deal Page 1 of2 February 27,2007 Environment Coal-Fired Plants Scrapped as Part of Utility Deal by Elizabeth Shogren Morning Edition,February 27,2007 -The largest electric utility in Texas, TXU Corp.,has agreed to be sold for $32 billion to a group of private-equity firms.In a nod to environmentalists,the utility's new owners would drop plans to build 8 of 11 proposed new coal-burning power plants and make other environmental concessions. LM Otero Aview of the TXU building in downtown Dallas.AP Business Ata Glance:The TXU Deal acquired by an investment group led by private-equity firms Texas Pacific Group and Kohlberg Kravis Roberts. Some news sources say the deal is valued at $45 billion,others say $32 billion.The higher value includes the amount of TXU debt that the buyers would take on.Subtract the debt and you arrive at a still-significant $32 billion payment,making the TXU deal the largest-ever private-equity deal -even with the debt excluded. LM.Otero Joining the private-equity firms in the acquisition of TXU are Goldman A TXU sign in downtown Dallas.TXU Sachs Group,Morgan Stanley,Citigroup Inc.and Lehman BrothersCorp.,Texas'largest electricity producer,Holdings Inc.said it has agreed to be sold to a group of ivate-equity firms for about $32 billion ..Rewhat aan be the largest orivate The investors will pay TXU shareholders $69.25 a share.That's a 15 buyout in U.S.corporate history.AP percent premium to TXU's closing price on Friday. In order to win regulatory approval,TXU's new ownership has promised to scrap eight of the 11 coal-fired electric power plants that the utility had In Depth planned to build.The private-equity firms worked with the Read more about the debate over Environmental Defense Fund and the Natural Resources Defense Council TXU's and other Texas utility in order to gain their endorsements. companies'plans to build coal-fired power plants in the state.The cancellation of eight coal-fired power plants will prevent additional http://www.npr.org/templates/story/story .php?storyId=7615613 2/27/2007 NPR:Coal-Fired Plants Scrapped as Part of Utility Deal Page 2 of 2 annual carbon emissions of 56 million tons,according to TXU's statement. TXU is also pledging to support a mandatory cap and trade program aimed at regulating carbon emissions. The new owners have promised to cut electricity rates by 10 percent.That adds up to $300 million of annual savings for residential consumers,according to a statement on TXU's Web site.This "price protection,"as the company Calls it,is good only through September 2008. The proposed buyout still has to be approved by state regulatory officials and by TXU shareholders.Either one could prevent the deal from happening. TXU will have 50 days to see rival bids.A bidding war could develop as other private-equity firms eye the opportunity. Related NPR Stories Feb.26,2007 Marketplace'Report:Texas Power Buyout Related NPR Stories Feb.26,2007 Energy Giant TXU to Go Private in $32 Billion Deal Feb.27,2007 How Environmental Advocates Shaped TXU Purchase http://www.npr.org/templates/story/story.php?storylId=7615613 2/27/2007 Cen'-Cird inn od Mining Karl Reiche Subject:Gary McCarthy and coal gasification presentation Location:AIDEA Board room Start:Wed 1/10/2007 10:00 AM End:Wed 1/10/2007 11:00 AM Show Time As:Tentative Recurrence:(none) Meeting Status:Not yet responded Required Attendees:Ron Miller;Mike Barry;Mike Harper;Mark Schimscheimer;Peter Crimp;Karl Reiche Thisis a reminder for this Wednesday's meeting in the AIDEA Boardroom for a presentation of a newly-developed coal gasification technology.Meeting with Gary McCarthy/President of Girdwood Mining Co.and his affiliates.Topic ofdiscussionisapatent-pending systeni developed by Thermo Conversions,LCC-And its demonstration project with possible application to Alaska. The presentation will be made by Mark Wiley of Wiley Consulting LLC and Don Nelson of Advanced Applications Group(AAG),a technology incubator company and research affiliate.They will bé meeting with GVEA and Usibelli Coal laterin the weekin separate meetings. Minnesotans Against Coal Railroad Boondoggle Win a Big Victory Page 1 of 1 Minnesotans Against Coal Railroad Boondoggle Win a Big Victory By James Rowen Created 02/26/2007 -5:14pm Over in Rochester,MN,activists had teamed up with counterparts in South Dakota to raise awareness about an impending Federal giveaway:a $2.3 billion sweetheart loan to a private railroad to bring coal east from Wyoming. The railroad is the DM &E:Google will get you information about the hassle that been associated for years with this plan. The new railroad line would have torn up farm and grazing land across several states courtesy of largest federal loan to a private company in more than 30 years.And the loan availability was approved in Congress through the now-discredited "earmarking"procedures. But today:a big development:citing fiscal questions and other matters,federal railroad officials rejected the DM &E loan.Some details are here [1]. The political backstory is also interesting.Before he defeated US Senate Majority Leader Tom Daschle in 2004,now-US Senator John Thune (R-SD)was a lobbyist for the railroad. Now helping to successfully lobby the feds against the loan --along with South Dakota ranchers and the Mayo Clinic,in Rochester,MN: Tom Daschle. Source URL: http://www.uppity wis.org/minnesotans_against_coal_railroad_boondoggle_win_a_big_victory Links: [1]http://www.rapidcityjournal.com/articles/2007/02/26/news/top/news0001j%20dme%20loan%20denied.tx http://www.uppitywis.org/node/91 8/print 3/1/2007 | U.S.turns down loan for DM&E coal train project Page 1 of 2 -1 Posted on Tue,Feb.27,2007 U.S.turns down loan for DM&E coal train project Rochester,Mayo Clinic fought upgrade on safety concerns BY MARY CLARE JALONICK Associated Press WASHINGTON -The Federal Railroad Administration on Monday denied a $2.3 billion federal loan for the Dakota,Minnesota and Eastern Railroad's coal train project. The DM&E wanted to add track in Wyoming's Powder River Basin coalfields and upgrade its existing line in South Dakota and Minnesota.The $6 billion project would involve building about 280 miles of new track and upgrading 600 miles of existing track so trains could haul coal bound for power plants. The Mayo Clinic and the city of Rochester,Minn.,strongly opposed the project,arguing increased high-speed train traffic through the city could threaten the safety of patients at the clinic,which is only a few hundred yards from the tracks. Federal Railroad Administrator Joseph Boardman said "there remained too high a risk"that the railroad could not repay the massive loan. Department of Transportation spokesman Brian Trumail said there is to be no appeal process. DM&E President Kevin Schieffer said the company is reviewing the decision and that it is too soon to say whether it dooms the project. "It's obviously a disappointment,but not the first we've had in the last nine years,and I'm sure it's not the last,"he said."We will continue to develop the project,and we obviously wouldn't be doing that if we didn't think it would be able to happen." He declined to say what the company would do next.In the past,he has said OM&E could look for private investors or even go public. The Sioux Falls,$.D.-based railroad says it could haul 100 million tons of coal a year bound for Eastern power plants. A Federal!Railroad Administration statement said several factors concerned Boardman,"including the DM&E's current highly leveraged financial position,the size of the loan relative to the limited scale of existing DM&E operations,and the possibility that the railroad may not be able to ship the projected amounts of coal needed to generate enough revenue to pay back the !oan." Minnesota Gov.Tim Pawlenty,a Republican,called the decision "really good news." "We wanted to find a compromise between some real concerns of the Mayo Clinic and the Rochester community and the DM&E,and that wasn't achieved,so I'm glad the loan was denied,"he said. South Dakota Gov.Mike Rounds,also a Republican,was not immediately available for comment. An American Association of Railroads spokesman has said the project represented the largest new rail construction in the United States since well before World War II. The DM&E also wants to carry coal across Iowa,Missouri and Illinois on its sister line,the Iowa,Chicago and Eastern railroad.The federal loan would have covered little more than one-third of the total cost. The loan would come from a little-used program Sen.John Thune,R-S.D.,had amended to meet the DM&E's needs.Thune was a lobbyistfortherailroadbeforehiselectiontotheSenate. In a statement Monday,Thune said the South Dakota congressional delegation saw the project "as an opportunity that only comes aroundonceinalifetime"and would benefit small agricultural communities. "This is a major setback for our agriculture,ethanol and energy industries,and small towns struggling to survive,"he said. Thune criticized intense Mayo Clinic lobbying efforts. "Simply put,there was a huge amount of money spent to sabotage this project by powerful special interests and their hired guns,"he said. http://www.twincities.com/mld/twincities/news/local/16790285.htm?template=contentModules/printstory.jsp 3/1/2007 U.S.turns down loan for DM&E coal train project Page 2 of 2 "This.6 a case of special interests beating the little guy." \- The Mayo Clinic spent more than $200,000 lobbying Congress and the federal government on the issue. Minnesota Sens.Norm Coleman,a Republican,and Amy Klobuchar,a Democrat,praised the decision. Coleman said he applauded the Department of Transportation "for the effort that they made to really look at this and do the right thing, protect the interests of American taxpayers." "I'm very pleased with the result today,”Klobuchar said. Tim Walz,a Minnesota Democrat who represents Rochester,called it "a victory for good government and accountability." A taxpayer group also lauded the loan denial. "Today's announcement marks a huge victory in the battle against wasteful spending,”said Tom Schatz,president of the Council for Citizens Against Government Waste. ©2007 St.Paul Pioneer Press and wire service sources.All Rights Reserved.http:/Awww twincities.com http://www.twincities.com/mld/twincities/news/local/16790285.htm?template=contentModules/printstory.jsp 3/1/2007 FW:Steve Clemmer seminar ler Page 1 of 2 Karl Reiche From:Christopher Rutz [crutz@aidea.org] Sent:Wednesday,February 21,2007 10:32 AM To:Mark Schimscheimer Ce:Karl Reiche Subject:FW:Steve Clemmer seminar Attachments:Clemmer Gambling with Coal TX Feb 07.ppt;Gambling with coal final report.pdf This sounds like somethin'for you guys. Christopher Rutz C.P.M. Procurement Manager AIDEA/AEA 813 West Norther Lights Anchorage,AK 99503 Phone:907-269-3015 Fax:907-269-3044 ----Forwarded Message From:Martina Dabo <mdabo@aidea.org> Date:Wed,21 Feb 2007 08:44:47 -0900 To:Reg <Reg@aidea.org> Conversation:Steve Clemmer seminar Subject:FW:Steve Clemmer seminar FYI Best regards, Martina Dabo Wind Program Manager Alaska Energy Authority 813 West Northern Lights Bivd. Anchorage,AK 99503 Phone:(907)269-3027 Fax :(907)269-3044 E-Mail:mdabo@aidea.org www.akenergyauthority.org -----Original Message----- From:Flowers,Lawrence [mailto:larry_flowers@nrel.gov] Sent:Wednesday,February 21,2007 7:21 AM Subject:Steve Clemmer seminar WPA colleague:on Feb 26,@ 2 PM (MST)UCS'Clean Energy Program Research Director,Steve Clemmer,will be the at NWTC giving a seminar entitled "Gambling with Coal:How Future Climate Laws Will Make New Coal Power Plants More Expensive."You can call in and view his slidesontheinternet(see below).Please join us for this important seminar. Regards,Larry AUDIO PARTICIPANT ACCESS: CALL DATE:FE8-26-2007 (Monday) CALL TIME:02:00 PM MOUNTAIN TIME DURATION:1 hr 30 min LEADER:MS STACEY BURGE DIAL-IN NUMBERS: 2/21/2007 FW:Steve Clemmer seminar Country °*Toll Numbers Freéphone/Toll Free Number USA 888-970-4128 Restrictions may exist when accessing freephone/toll free numbers using a mobile telephone. PASSCODE:4209958 For security reasons,the passcode and the leader's name will be required to join your call. NET CONFERENCING PARTICIPANT ACCESS INFORMATION: URL:https:/Avwww.mymeetings.com/nc/oin/ CONFERENCE NUMBER:PG6014872 AUDIENCE PASSCODE:4209958 You can join the event directly at: https:/Avwww.mymeetings.com/nc/join.php?i=PG6014872&p=4209958&t=c ---Original Message----- From:Steve Clemmer [mailto:sclemmer@ucsusa.org]. Sent:Tuesday,February 20,2007 12:19 PM To:Flowers,Lawrence Cc:Burge,Stacey Subject:Re:FW:webcast of Steve Clemmer seminar Opps.forgot the report... Larry, The title of my presentation will be the same as the title of our report: I'm attaching a presentation |gave on this last week in Texas.The presentation |give at NREL will be slightly different than this (a bit longer).How much time do |have to present? I'm also attaching a copy of the report,which we hope to update in the next month or so. Tom Holcomb,a friend of mine from Boulder and a geologist who ispursuingworkintheenergyfield,is interested in attending the seminar in person.Can you put him on the invitee list? !will call you in a few minutes to discuss another matter. Steve Steve Clemmer Research Director,Clean Energy Program Union of Concerned Scientists 2 Brattle Square Cambridge,MA 02238 617-301-8014 617-864-9405 (fax) sclemmer@ucsusa.org www.ucsusa.org Make your voice heard on important environmenta!and security issues.Join the Union of Concerned Scientists Action Network at www.ucsaction.org --It's quick,easy,and FREE. ------End of Forwarded Message 2/21/2007 Page 2 of 2 Gambling with Coal How Future Climate Laws Will Make New Coal Power Plants More Expensive Steve Clemmer Research Director,Clean Energy Program sey Union of Concerned Scientists Legislative Forum Austin,TX February £2,2007 cert Climate policy response -global EU Carbon Allowance Closing Price >Kyoto and beyond:.US isolated and s .under pressure to o *act Cc£”>EU cap-and-tradeg"system »G8 agreement POLISIEIISISIEIIIES Source:EU:PoiniCmbon.com using an average exchange rato for 2008 of 1.25 US dollars par oure FS vrineered Policy response -state and local >Northeast Regional Greenhouse Gas Initiative (RGGD cap and trade model rule >»California climate policies -economy wide cap:1990 levels by 2020,80%reduction by 2050 -CO,"adder”in electricity planning and procurement -greenhouse gas performance standard for electricity -motor vehicle standard:30%reduction in CO,by 2016 >Renewable electricity standards in 21 states plus DC -covering over 40%of US electricity »376 cities (56.4 million Americans)adopted Kyoto targets and pressuring federal government for emissions trading Caneel Climate Change in 109th Congress »Sense of the Senate Resolution: "It is the sense of the Senate that Congress should enact a comprehensive and effective national programofmandatory,market-based limits and incentives onionsofgreenhgases...” -adopted June 22,2005,supported by 54 Senators >»Seven cap-and-trade proposals advanced >»Hearings held by Senate Energy Committee oncap-and-trade design concen'110 Congress >Climate policy is priority of Democratic- controlled Senate and House »Multiple cap-and-trade proposals already -Sens.McCain/Lieberman/Obama (S.280) -Sens,Sanders/Boxer (S.309) -Sens.Feinstein/Carper (S.317) -Sens.Kerry/Snowe (S.485) -Sen.Bingaman -House bills expected to be reintroduced (Waxman and Udall) >Hearings in House &Senate in January re Union ofGaoncerned Coal plants targeted by all bills ee Sources of U.S.Energy Related CO,Emissions:2004 >»Largest source:more than all cars,trucks, planes,andtrainscombined »500 MW coal plant =600,000carsCO, >EIA studies show reducing coal useismostcost- effective way toreduceCO, -power plantsaccountfor 0%66-85%of Source:EPA 2006 .reductions SseSed Growing support by private sectorOnTN >Five of nation's top 10 power companies support federal CO,cap-and-trade legislation >2004 survey of power executives:half expected CO, laws within 5 years >Wal-Mart,GE,Ford,Google &many other major corporations supporting CO,limits >»New US Climate Action Partnership report calls for Congress to act "as quickly as possible” -seeks 10-30%emission cuts within 15 years and 60-80%by 2050 >»Major banks and investments firms under pressure to avoid financing new coal plants ce Utilities expect grandfathering? »Betting new plants built "under the wire”will be rewarded withfreeallowancesunderclimatelaw >Dangerous gamble:«this flawed thinking will bea tragedy fortheoftheicarbond:this old technology creates.It is also a dangerous businessstrategyfortheutilities'investors and shareholders... -Senators Jeff Bingaman and Barbara Boxer,Chairs of Senate Energy andEnvironmentCommittees(Dallas Moming News,dan.19,2007) >»RGGI model rule:At least 25%of allowances must be auctioned; many states have already opted for 100%auction »David Crane,CEO of NRG,renounced carbon windfall from favorable allocations for new coal plants >US Climate Action Partnership:allowances should not beallocatedtonewcoalplants >»White paper for TXU indicates they should not reduce CO,emissions "in advance of uncertain future emissions regulations.” Coal {Gee Coai PC Coal PC wiCCS Coal IGCC wiCCs Gas cc Nuclear 50 r 0 10 20 »40 sO Carboa Price (S/tom CO2) Source:Preliminary infurmation developed by Black &Vestch for AWEA,except Coat PC w/CCS,which addePretimineryIPCCoatimatcsforthecostofCCStoBlack&Veatch's CoalPCcost, e Union of Costs for new pulverized coal re Union of What is the cost Sine plants are on the rise Sanus of future CO,limits in the US? Se a New purverized coal capital costs 10teeet>Supply es ASpringfield(1)a 2 constraints due 0 Li howe 2 edWesterRarvised(KS ZA }to US and global PeenrnCryr a ha coal rush am Big Stone 8 Origine (50)EENCaaSESS 8Btack&Veatch (2006)|EEERNEARINEE SaaS CaREETE >At least 4 plants §"pron Oniral KS),a have announced 3comaaus(A)oe 30-50%capital gx Weston 4 (wp [=r Cost increases in 2EPA@oos)(re ac.the past year npra2004)a aanCimsidemontane--a---Orel »TXU's costs 16 Praite State Original (L)[ar appearTXU11plants(1X PREPRESS unrealistically ° ©©-500.-1,000 1,800 2000 2500 3,00 low 2005 mw 'Noms:EIA,EPRI,EPA,and Block &Voutch cotinastes mad dow is i i we Sows:Synapec Enorgy Eoonoenica,Climate Change and Power:Dicecide Exeisrions Ct Plarming,not clear whether the other calimates inchide [DC._Mast of the catimates arc in 20058 for a %PC pla.May 2006. ee)Union of CO,costs make pulverized ee Lin of CO,prices make renewablesSeancecoalplantsuneconomicScientistscheaperthannewcoaleeASEss Levelized Cost of Electricity (2010)vx.CO2 Price Levelized Cost of Electricity (2010)vs.CO2 Price 120 ”|sours100WindOffshore ie -Coal IGCC wiCcs Biomass (GCC wiCCg705WindClase4 60 Wind Class 6 sO T ¥T >No PTC,windtegrationor0102030badSOtransmission Carbon Price (S/tom CO2)costs included 'Source:Pretiminary information developed by Black &Veatch for AWEA,except for Biomass }GCC wiCCS,which is bared ondatafromIEA(2004)anal Rhodes and Keith (2005),and assuming biomass fuel costs of $2.50MMBnu { re CO,costs change economics ofionof..Scone electricity generation options 'es NE De eee se ee Coal Generation under Xcel's Preferred Plan (Reference >Xcel Energy's 2004 IRP Case)and Carbon Regulatory Scenarios (GWh)SIN fcded 1125Wofnewcoalinits"Preferred Plan.”VvWhen future CO,costswereincludedinveels using CO,gosts similar 310Synapse's low caserelat'vXcel now Proposinwind-hydro"ong aalternativeafterfollow-4 analysis showedSeatthannewcoaltonofCO,.BEEEEEEEEEEEBEEZS AT ALG Wit DWi3 5 Wl?Die Wi 7d WS A As aM Aq Source:Xcel responses toWLA/ME3/UCS/MCEA Information Requests7dand[9b. FEE oo Potential CO,cost ofSao”TXU's proposal a ee ee ee ee ee es es >11 plants are projected to emit 78 million tons of CO, »Would more than double TXU's emissions and make it 34 largest emitter among US power companies (currently 10%) >Could increase costs by $660 million to $2.3 billion per year (@ $8.50-$30/ton of CO,),assuming all allowances would have to be purchased or offset snae Conclusions a eS ee »Future limits on global warming emissions are coming soon >These limits pose a major financial risk to power companies who are proposing new coal plants (and ratepayers) >Power companies should factor CO,risk into planning and procurement and aggressively pursue cleaner alternatives »Decisionmakers should not allow new coal plants in TX to go forward without a thorough evaluation of these financial risks >Shareholders not ratepayers should bear the risk >Shareholders and investors should recognize inevitability of CO,regulations,require reporting and accountability,andinvestincompaniesthatareproactivelymanagingtheserisks MI NNN ;;."9 Union of Concerned Scientistsis"eal Gambling with Coal How Future Climate Laws Will Make New Coal Power Plants More Expensive by Barbara Freese and Steve ClemmerUnionofConcernedScientists' September 2006 Abstract New conventional coal plants are an imprudent financial investment.The world scientific community warns that carbon dioxide (CO2)emissions from our use of fossil fuels,especially coal,is leading to dangerous global warming.Policies to reduce CO emissions are emerging at every level of government,including in the US Congress, which is actively considering several mandatory,market-based CO.proposals with increasing support from the private sector.Laws requiring coal plants to pay to emit CO)will be adopted in the next few years,substantially raising the costs of coal power. Nevertheless,many utilities have proposed investing in new conventional coal plants that will operate for decades,ignoring the economic impact of these virtually inevitable CO)reduction laws,perhaps because they believe they will be able to pass these costs on to ratepayers.Utility managers and shareholders should reconsider the financial risks to their companies and customers.Regulators should prevent utilities from making these major investment mistakes by refusing to approve the construction of new conventional coal plants and by requiring them to invest in cleaner alternatives,or at the very least, by warning utilities that CO:costs must be borne by their shareholders,not by ratepayers. Executive summary It is now virtually inevitable that America will adopt a federal law limiting global warming pollution from power plants.Indeed,given the momentum of emerging policy responses to global warming on the local,state,and regional levels in the United States (as well as internationally),federal legislation will probably be adopted within the next five years.This document discusses why such a law is so likely,what kind of new costs coal plants will face as a result,and how these future costs make building new, conventional coal plants a reckless financial gamble. 'We would like to thank the Garfield Foundation for providing funding for this work. The need for legal limits to America's global warming pollution is undeniable. Scientists have long known that the burning of fossil fuels releases heat-trapping carbon dioxide (CO)into the air,where it is building up.Scientific concern that this buildup could disrupt our climate has been growing steadily since the late 1980s.Every year,the science has become even more compelling:Earth continues to experience record- breaking warmth,humans'dominant role in this warming becomes clearer,and we see the planet reacting to the warming in troubling ways. Most developed nations have responded to this evidence by ratifying the Kyoto Protocol,which requires them to reduce their CO2 emissions.The United States has not ratified Kyoto,but as the world's largest emitter of heat-trapping gases by far,it is under increasing international pressure to act.Along with almost every other nation in the world,the United States did ratify the 1992 Framework Convention on Climate Change, a treaty with the objective of preventing dangerous global warming.And in 2005 the U.S. Senate passed a landmark resolution stating that mandatory federal CO.limits should be enacted.Several proposals establishing CO,limits are being considered by Congress,and a series of hearings have been held in the Senate to discuss the design of such limits. The congressional response is being spurred in part by a growing policy response on the state and regional level,including the regional CO;limits and trading system being established by eight northeastern states.Within the last year or two,a substantial number of major companies-including half of America's 10 largest power companies- have called for such regulation,and most utility executives believe that such regulation is coming. There is no doubt that the burden of future CO2 regulations will fall heavily on coal plants.Power plants are the largest source of U.S.CO2 emissions,accounting for 39 percent of the nation's energy-related emissions,and most of these emissions come from coal plants.In fact,coal plants produce one-third of America's CO2 emissions-about thesameamountasallourcars,SUVs,trucks,buses,planes,ships,and trains combined.” Each new coal plant represents an enormous long-term increase in global warming emissions.A 500-megawatt (MW)plant,for example,produces the annualglobalwarmingemissionequivalentofroughly600,000 cars,°but unlike a car,a coal plant is designed to operate for 40 to 50 years (and they often operate even longer). Global warming cannot be effectively addressed without limiting coal plant emissions,so the congressional proposals under consideration all target coal plants. 2 U.S.Environmental Protection Agency (EPA),"Inventory of US Greenhouse Gas Emissions and Sinks: 1990-2004,”April 2006.Online at http://vosemite.epa.gov/oar/globalwarming.nsf/content/ResourceCenterPublicationsGHGEmissionsUSEmi ssionsInventory2006.html.Also see U.S.Energy Information Administration (EIA),Emissions of Greenhouse Gases in the United States 2004,December 2005,20-22.Online at fip://ftp.eia.doe.gov/pub/oiaf'1 605/cdrom/pdf'ggrpt/0573 04 pdf. 3 Based on average annual emissions of 13,500 Ibs/vehicle as estimated by the EPA (http://vosemite.epa.gov/oar/globalwarming.nsfcontent/ResourceCenterToolsGHGCalculator.himl)and annual emissions of 4.1 million tons from a 500 MW plant as estimated by the Public Service Commission of Wisconsin (hitp://pse.wi.govw/utilitvinfo/electric/cases/weston/document/Volumel/W4_FEIS pdf). It is widely expected that future CO2 regulations will take the form of a "cap-and- trade”system,similar to the national law for controlling the sulfur dioxide (SO) emissions that cause acid rain.Such a system would establish a national cap on CO, emissions,and power plant operators would have to own an "allowance”for each ton of CO,they emit.Operators could buy and sell these allowances for a price established by market forces.Economists believe such a cap-and-trade system would provide the flexibility and incentives to meet a given CO cap at the lowest cost. Utilities are increasingly quantifying the risk they face from future CO allowance costs in their planning documents.In some cases,they do so because state regulators demand it,and in other cases they do it at their own initiative.Studies forecasting the price of future CO2 allowances range widely,but useful estimates are emerging from the literature.These estimates indicate that coal plants face CO?costs that will increase the cost of coal power substantially and perhaps severely.Mid-range projections of CO allowance prices could increase the cost of electricity from the average new coal plant byroughlyhalf.*Because coal plants are designed to last for decades,these added financial costs-along with the environmental costs created by coal plants-will be borne by both the present and future generations. These allowance price forecasts generally assume the adoption of federal policies that aim for modest CO?emission reductions at best.However,the science now indicates that if we hope to avoid dangerous global warming,developed nations will need to reduce their CO2 emissions dramatically-as much as 60 to 80 percent or more-by2050. This evidence has prompted governments including California,New Mexico,the New England states,the eastern Canadian provinces,the United Kingdom,and the European Union to adopt long-term CO emission reduction targets in the 60 to 80 percent range.It is therefore reasonable to expect that even if the emission cap initially enacted establishes only modest,short-term targets,it will be followed with increasingly strict national caps in the decades ahead-that is,throughout the operating lifetime of coal plants proposed today. Meanwhile,climate policies are likely to accelerate the development of energy resources that significantly reduce heat-trapping emissions (reducing the cost of these resources relative to coal)and the development of energy efficiency technologies (reducing electricity demand below currently projected levels).In all likelihood,these changes will improve the economics of coal alternatives just as ever-tightening emission caps are worsening the economics of coal plants. *For CO;price projections see Synapse Energy Economics,"Climate Change and Power:Carbon Dioxide Emissions Costs and Electricity Resource Planning,”May 18,2006.Online at hitp:/www.synapse- energy.com. >European Environment Agency,"Climate Change and a European Low-Carbon Energy System,” Copenhagen,2005.Online at Attp://reports.eea.eu.int/eea report 2005 l/en/Climate change-FINAL- web.pdf. Given these highly foreseeable trends,why are so many utilities still proposing to lock themselves into capital-intensive coal plants rather than investing in options that do not expose them to such financial risk?These utilities may be betting on their ability to pass the risk on to ratepayers in the form of higher electric rates-the same way they routinely pass through environmental compliance costs today.Utilities holding this belief have little incentive to assess and avoid the risks of future CO2 regulation.That places on state utilities regulators an enhanced responsibility to assess for themselves the risks associated with gambling huge amounts of money on a large,multi-decade source of CO2 emissions just as the nation is about to launch a large,multi-decade effort to reduce CO2 emissions that will surely target coal power. Utilities may also be ignoring these political developments under the reckless assumption that any plant built before a federal CQ cap is adopted will be allocated allowances for free.This gamble ignores the growing opposition to granting such a windfall to utilities (particularly those that could avoid new allowance costs by simply investing in alternatives to coal).The Northeast Regional Greenhouse Gas Initiative (RGGI)model rule,for example,requires that at least 25 percent of allowances beauctionedratherthanallocated,°and Vermont,the first Northeast state to pass enablinglegislation,requires all allowances to be auctioned.'In fact,28 different stakeholdersin the RGGI model rule draft-including businesses,consumer groups,environmental organizations,state agencies,and an electricity distribution company-supportedauctioning50to100percentofallowances.® At the federal level,Senators Pete Domenici (R-NM)and Jeff Bingaman (D-NM) issued a white paper describing the design elements of a mandatory system to reduce emissions.The paper notes that auctioning off all allowances would minimize the costs to the U.S.economy as a whole,streamline the administrative process,and avoidunintendedcompetitiveadvantagesandwindfallprofitsforcertainmarketparticipants.' A recent Wall Street study also predicts that the United States will have an auction-basedratherthanallocation-based cap-and-trade system.'° If regulators do authorize the construction of a new coal plant,they should notify the utility up front that it will not be allowed to pass future CO2 compliance costs on to ratepayers.The last time the nation's utilities embarked on a large-scale campaign to build new baseload plants (plants that operate most of the time)was the 1960s and 1970s; the result was scores of abandoned nuclear projects and a great deal of excess generating capacity.Disputes over whether ratepayers or utility shareholders should pay for these ®Regional Greenhouse Gas Initiative (RGGI)Model Rule,subpart XX-5.3.Online at hittp://www.rggi.org/docs/model_rule 8 15 06.pdf 7 The Vermont law (H.860)is online at hitp://massclimateaction.org/RGGVVTRGGISignedMay06.pdf. 8 Environment Northeast,Natural Resources Defense Council,and Pace Law School Energy Project, "Summary of Comments on the RGGI Model Rule Draft,”2006. °Sen.Pete V.Domenici and Sen.Jeff Bingaman,"Design Elements of a Mandatory Market-BasedGreenhouseGasRegulatorySystem,”February 2006.Online at http:/;www.nam.org'/s_nam/bin.asp?CID=43&DID=236483&DOC=FILE.PDF. 0 Hugh Wynne,"U.S.Utilities:The Prospects for CO,Emissions Limits in the United States and Their Implications for the Power Industry,”Bernstein Research,April 19. investment mistakes led to a series of decisions requiring shareholders to pay for at least a portion of the losses.Those decisions stressed the importance of forcing utilities to assume financial risk in order to give them an incentive to track events that could increase the cost of construction projects and to réassess the viability of those projects as conditions warrant. Given the momentum now driving the nation toward CO.limits-and the substantial impact such limits will have on the cost of coal power-it has never been more critical to ensure that utility managers are staying abreast of current developments. Placing the financial risk of future CO2 costs on shareholders,clearly and up front,will create that incentive.This regulatory approach is not only fully consistent with rate- making principles,but also builds on the lessons learned from the expensive investment mistakes of the past. Scientific evidence clearly establishes the need for policies limiting CO2 emissions _ now and reducing them dramatically over a period of decades.\ A.The scientific consensus about the reality of global warming is strong and growing stronger. The world scientific community spoke with one voice recently to deliver an unprecedented and remarkably pointed message to world leaders.Eleven of the world's most respected national science academies,including the U.S.National Academy of Sciences (NAS),issued this joint statement in anticipation of the 2005 G8 Summit: "Climate change is real.There will always be uncertainty in understanding a system as complex as the world's climate.However,there is now strong evidencethatsignificantglobalwarmingisoccurring.vl The statement called on world leaders to acknowledge that "the threat of climate change is clear and increasing,”and urged all nations "to take prompt action to reduce the causesofclimatechange.”” The NAS is generally considered America's preeminent scientific association.It was chartered by Congress in 1863 and tasked with the role of advising the nation on scientific matters.Its 2,000 members-all elected to the academy in recognition of their distinguished achievements in original research-include the nation's most respectedscientists;roughly 10 percent have won a Nobel Prize.'?When the Bush administration |The "Joint Science Academies'Statement:Global Response to Climate Change”was issued by the NAS and its counterpart academies in Brazil,Canada,China,France,Germany,India,Italy,Japan,Russia,and the United Kingdom.Online at http://nationalacademies.org/onpi/06072005.pdf. 21:Ibid. 3 See the NAS website:Attp:/Avww.nasonline.org/site/PageServer?pagename=ABOUT main page. NPR :How Environmentalists Shaped TXU Deal Page 1 of 3 March 1,2007 Interviews How Environmentalists Shaped TXU Deal Morning Edition,February 27,2007 -Environmental advocacy groups were called in to help structure the deal for TXU Corp.,the Texas electrical utility. Fred Krupp,president of Environmental Defense,speaks with Steve Inskeep about the process of winning environmental commitments from TXU's suitors. What was it that you were pressing TXU to do,or not to do? We were unhappy,initially,that they had suggested building 11 new [coal power]plants,which would have put 78 million tons of additional carbon dioxide into the atmosphere.That is a tremendous amount of carbonFredKrupp,president of Environmental pollution.Defense,at a news conference organized by the U.S.Climate Action Partnership on Jan.22,2007 at the National Press Club in Washington,D.C.AFP/Getty ;.Images Yes.We had taken [out]a federal lawsuit.We also had an aggressive advertising campaign.We were doing everything we could to make the case. Mandel Ngan Had you sued? Did all of that protest and activity give you some leverage when it came time to sell the company? What I can tell you is,a little over a week ago I got a call from Bill Reilly,an old friend,who said that Texas Pacific Group and KKR (Kohlberg Kravis Roberts &Co.,a private equity firm that specializes in buying and selling companies)were interested in purchasing TXU,but would only go forward if they could recreate the company as a "green"power generator. This is a former head of the Environmental Protection Agency who calls you up,and he's helping to broker the deal? Yes.That's right. What did you demand of them? We hada series of discussions that started,actually,one day at 8 a.m.and went through 1 a.m.the next morning. We very much wanted to reduce the number of power units they were planning,to get that 11 number down substantially.And Bill Reilly,from the first phone call,was offering to withdraw eight of the proposed applications. And one of the biggest things that we did get is a commitment to reduce their carbon emissions back to 1990 levels by 2020. That's what's called for under the Kyoto Agreement that the United States didn't sign. Yes.So the idea that a Texas utility is going to roll back any increase in carbon pollution from building new power plants,I think it clearly means that the world is changing and there is an awareness that we're moving into a carbon-constrained world. http://www.npr.org/templates/story/story.php?storylId=7615616 3/1/2007 NPR :How Environmentalists Shaped TXU Deal .Page 2 of3 Did the question cross your mind about whether you were being co-opted or bought off in any way?° ' Any time we deal with any company,we want to make sure that we are getting a substantial good result for the environment.We think this is a watershed and that this will help us get to the day where the nation enacts a cap on carbon pollution.Because,as good as this is,we do need a law that puts a legal limit in place. What did you have to give up in order to gain the results that you did? We agreed to drop,or to settle,I should say,a federal lawsuit.We also agreed to be positive about this transaction, which is easy for us to do given its environmental features.And,finally,we agreed to introduce our new friends at the Texas Pacific Group and KKR to our old friends at Public Citizen and in Robertson County who are litigating the construction of two units that the new company is going to want to continue to construct. I assume that TXU was planning 11 new power plants because they made a decision that the demand was there and that people needed more power generation.How are they going to get the power? They are going to double the amount that they spend to purchase wind power.And they're also going to double the amount they spend on energy efficiency. This is becoming a new model,where utilities are understanding that they can make money by helping customers save energy. Are those steps enough to roll back the amount of greenhouse gas emissions,just more efficiency and more wind power? I think they're going to go a long way.There will be other steps as well the company needs to take.And we'll be working with them on an advisory board. But there's probably no one silver bullet.There's probably a whole lot of silver buckshot that needs to be deployed by this utility,and others as well. Business Ata Glance:The TXU Deal NPR.org,February 26,2007 -Dallas-based TXU has agreed to be acquired by an investment group led by private-equity firms Texas Pacific Group and Kohlberg Kravis Roberts. Some news sources say the deal is valued at $45 billion,others say $32 billion.The higher value includes the amount of TXU debt that the buyers would take on.Subtract the debt and you arrive at a still-significant $32 billion payment,making the TXU deal the largest-ever private-equity deal -even with the debt excluded. LM.Otero oe .::segsJoiningtheprivate-equity firms in the acquisition of TXU are Goldman Sachs Group,Morgan Stanley,Citigroup Inc.and Lehman BrothersATXUsignindowntownDallas.TXU Corp.,Texas'largest electricity producer,Holdings Inc.said it has agreed to be sold to a group of 6 ivate-equity firms for about $32 billion ..bahat man be the largest private The investors will pay TXU shareholders $69.25 a share.That's a 15 buyout in U.S.corporate history.AP percent premium to TXU's closing price on Friday. In order to win regulatory approval,TXU's new ownership has promised http://www.npr.org/templates/story/story.php?storyId=7615616 3/1/2007 NPR :How Environmentalists Shaped TXU Deal Page 3 of 3 eranna nnn nnnIEAEDIAIIAERIEAAO EERIE to scrap eight of the 11 coal-fired electric power plants that the utility had"InD epth planned to build.The private-equity firms worked with the Environmental Defense Fund and the Natural Resources Defense CouncilReadmoreaboutthedebateover:;:in order to gain their endorsements.TXU's and other Texas utility companies'plans to build coal-fired power plants in the state.The cancellation of eight coal-fired power plants will prevent additional annual carbon emissions of 56 million tons,according to TXU's statement. TXU is also pledging to support a mandatory cap and trade program aimed at regulating carbon emissions. The new owners have promised to cut electricity rates by 10 percent.That adds up to $300 million of annual savings for residential consumers,according to a statement on TXU's Web site.This "price protection,"as the company calls it,is good only through September 2008. The proposed buyout still has to be approved by state regulatory officials and by TXU shareholders.Either one could prevent the deal from happening. TXU will have 50 days to see rival bids.A bidding war could develop as other private-equity firms eye the opportunity. Related NPR Stories Feb.26,2007 'Marketplace'Report:Texas Power Buyout http://www.npr.org/templates/story/story.php?storyld=7615616 3/1/2007 Page 1 of 3 sie te Digital Wires from ENR.com |News McGraw-Hill Construction "ITS YOUR HOVE.- |REGISTER TODAY, EE ogiesraw Hil Wet OurSites search P BERR Content Purchase Questions ©View Cart @ My ENR Content .comEngineeringNews-Record HOME |NEWS |FEATURES |PROJECTS |PRODUCTS|PEOPLE [OPINIONS | RESOURCES |TOP LISTS digital wire news from AP and other sources 'Clean coal'label doubted October 20,2007 Rex Bowman UxIMMEL aASSOCIATES. Buildings Cost Indexes Education Oct.20-A $1.6 billion coal-fired power plant proposed for Wise County is touted by the utility company that wants to build it as an eco-friendly "clean coal"model of environmental design. Environment Finance &Business Power &Industrial But if built to the company's specifications,it would be one of the biggest air polluters in firms fri --Virginia,according to documents filed with the state.warid,nformation Technology Gel.cr .The plant would give Dominion Virginia Power an extra 585 megawatts of power,FreetInternationalenoughtosupport146,000 new homes. Construction FTechnologyTheproposedVirginiaCityHybridEnergyCenterwouldbeallowedtopumpmorethanconConstruction12,500 tons --or 25 million pounds -of pollution into the air each year if Dominion ENIWeekVirginiaPowergoesthroughwithitsplans.The pollutants include nitrogen oxides,an Transportation ingredient of smog;sulfur dioxide,a major cause of acid rain;and carbon monoxide,(f which can pose serious breathing problems for those with respiratory ailments.S| Safety &Health ne Workplace The emissions are in addition to the 5.3 million tons of carbon dioxide the plant could Washinaton discharge annually,according to company officials.Carbon dioxide,though recognizedObserverbytheU.S.Environmental Protection Agency as a greenhouse gas,is not regulated as a pollutant.Corrections Dominion points out,however,that the Wise facility would pollute less than older plants. Dominion is allowed to call the power plant a "clean coal"operation under rules laid down by the U.S.Department of Energy,which is encouraging utilities to use certain coal technologies by giving the technologies the environmentally friendly sticker. But environmentalists fighting to stop state approval of the power plant say the "clean coal"label,though sanctioned by the federal government,is a deceptive marketing practice that could dampen opposition to the plant even though its construction could spell disaster for the ecosystem of Appalachian Virginia. If approved by the State Corporation Commission,the plant would join other coal-fired power plants at the top of the list of roughly 2,000 polluters monitored by the Virginia Department of Environmental Quality. "Any time the utility industry adopts a really effective messaging strategy,it makes our -advertisement-lives more difficult,”said Matt Wasson of Appalachian Voices,one of several groups http://enr.construction.com/news/othersources/article.asp?SMDOCID=knightridder_2007_...10/21/2007 Digital Wires from ENR.com |News McGraw-Hill Construction >»>Marketplace Sponsored Links FindEngineeringConsultants Post Your Project for Free. Get Bids from Thousands of Pre-Screen... Construction Industry Software Directory of construction industry software products for contract... Sliding Glass DoorsOpenupyourlivingspace with sliding glass doors. Memmo Williams Construction Consultants Cost Estimating,Cost Management, Price/Technical Proposals &Mor... Buy.a Link Now! -advertisement- http://enr.construction.com/news/othersources/article.asp?S MDOCID=knightridder_2007_... opposing the power plant."The label of clean coal is,in my opinion,a focus group's phrase,and a very effective one,to justify all these planned coal-fired plants." James K.Martin,a senior vice president at Dominion,defends the use of the term as accurate,illustrating that the proposed plant can be seen two ways.While environmentalists view the plant as a setback in the context of nationwide efforts to curb pollution,power industry officials such as Martin see the plant as a step forward in the context of evolving energy technology because it pollutes less than older plants. For instance,while Dominion is asking for permission to annually emit more than 12,500 tons of pollutants in Virginia City,the company's Chesterfield County power station --the state's biggest air polluter --released more than 76,800 tons of pollutants into the atmosphere last year. Furthermore,said Dominion spokesman Dan Genest,a plant the size of the one planned for Virginia City could potentially emit more than 167,000 tons of nitrogen oxides and sulfur dioxide into the air each year if none of the state-of-the-art technological controls were in place.With controls,the amount is projected at about 5,340 tons per year. "We think it's an exciting technology,”Martin said of the proposed plant's cleaning system.He also noted that the plant would likely operate at 90 percent of capacity, meaning emissions would never hit the 12,500-ton mark. Dominion wants to build the power plant on 1,700 acres of abandoned strip mine just west of the town of St.Paul and fuel it with Virginia coal and waste wood products. The company,which hopes to win approval from the State Corporation Commission by April and have the plant up and running by 2012,says the electricity is necessary to helpitmeetananticipated4,000-megawattjump in demand from Dominion customers by 2017. The General Assembly gave its blessing to the plant in 2004,when it decreed as a public good any power station in Southwest Virginia that used only Virginia coal.Sen. William C.Wampler Jr.,R-Bristol,pushed for the measure,and he recently said he still supports the plant. "We have to have it as part of the mix to power Virginia,"he said,adding that the state should also look at using more nuclear power. The federal Energy Department regards the proposed Virginia City plant as a potential "clean coal"operation because it would use a process known as "circulating fluidized bed combustion technology,”or CFB.The process involves dumping limestone into the boilers with coal to capture sulfur dioxide and reduce nitrogen oxides emissions. But Kathy Selvage,a Wise County resident and member of the Southern Appalachian Mountain Stewards,says no coal-fired plant that would be among the top polluters in the state has a right to call itself a "clean coal"power station. "People can call something anything they want to,"she said."|can look at someone with gray hair and say they have purple hair.But others have got to look for themselves." Contact Rex Bowman at (540)344-3612 or rbowman@timesdispatch.com. chart To see more of the Richmond Times-Dispatch,or to subscribe to the newspaper,go to http:/Awww.timesdispatch.com. Copyright (c)2007,Richmond Times-Dispatch,Va. Distributed by McClatchy-Tribune Information Services. Page 2 of 3 10/21/2007 Digital Wires from ENR.com |News McGraw-Hill Construction Page 3 of 3 For reprints,email tmsreprints@permissionsgroup.com,call 800-374-7985 or 847-635- :»6550,send a fax to 847-635-6968,or write to The Permissions Group Inc.,1247GreenSQuNceMilwaukeeAve.,Suite 303,Glenview,IL 60025,USA. - PERE TOONS HONE Subscribe to ENR and get unlimited access to ENR.com terms of use |privacy policy (updated)|advertise |about us |site map Our Sites McGraw-Hill Sites ==| Copyright 2007©The McGraw-Hill Companies,Inc. All Rights Reserved Content Map http://enr.construction.com/news/othersources/article.asp?SMDOCID=knightridder_2007_....10/21/2007 Page:8 ©July 29,2007 °Alaska Journal of Commerce Critics protest building proposed Chuitna coal Construction By Dan Joling Associated Press Writer (AP)-Environmental groups are taking aim at a massive proposed Alaska mine that's just 45 miles away from the state's largest city. PacRim Coal LP proposes to mine coal near the Chuitna River across Cook Inlet from Anchorage. The company initially is apply- ing for a permit covering 10,000 acres and will mine half that,said project director Bob Stiles.The company hopes to pull out 300 million metric tons of sub-bitumi- nous coal,roughly equal to the energy of a billion barrels of oil, over 25 years. Mine construction would mean up to 300 jobs,and peak mine oper- ations would put 350 people to work. Unlike the proposed Pebble Mine targeting gold and copper in Southwest Alaska,which may be years away from submitting a mine development plan,the coal devel- opers expect to tum in a coal mine permit,including development and reclamation plans,to the state Department of Natural Resources by the end of July.Hearings on var- ious permits could be scheduled as early as January,Stiles said. Critics are gearing up to stop it. They say the mine and adjacent leases threaten more than 55 square miles of wildlife and fish, including tributaries of the Chuit- na River,which supports five species of wild salmon. They also want the mine stopped for a more fundamental reason. Greenhouse gases emitted by the burning of fossil fuels led to global warming.Climate change has harmed Alaska's forests,streams, glaciers and sea ice.Burning mil- lions of tons of Alaska coal will foul the state's own nest,critics say. "Coal is the dirtiest of the fossil &STORAGE CONTAINERS Sales «Rentals »Maintenance Quality-built modular space delivered to your place. Classrooms«Clinics »Permanent Offices »Man Camps Alaska | 4 Modular SpaceiJustMakesSense. 562.1000 Phone -562.1082 Fax 310 Karluk Street,Anchorage,AK 99501 www.alaskamodularspace.com info@alaskamodularspace.com Fssens*9*0AL cum4 AP Puoto/Dennis Gann This photo provided by Dennis Gann shows setnet fisherman Terry Jorgensen in his fishing work truck during an Inde- pendence Day parade in Beluga on July 4.Environmental groups oppose a plan by PacRim Coal to mine coal near the Chuitna River across Cook Inlet from Anchorage. fuels,”said Beeca Bernard,an attorney for Trustees of Alaska. It doesn't matter that the coal may be burned in Asia,she said. Warming affects the Arctic and sub-Arctic more than other regions,she said,and prevailing winds send over Asia's harmful emissions,such as mercury,that affect Alaska's fish. Alaska is rich in minerals and developers have long hoped to make Alaska a major exporter of coal.Alaska holds roughily half of America's coal reserves. But Alaska coal mines have been bedeviled by competitive roadblocks since the Russian- American Co.opened the first one in 1855 at Port Graham on the Kenai That couldn't compete with coal from Canada,Australia,England and Chile.Other Alaska coal mines closed because of competition from petroleum. The only mine currently operat- ing is Usibelli Coal Mine Inc.of Peninsula.mine Healy in interior Alaska,which sells to customers in Alaska and South Korea. Stiles acknowledges difficulties in starting up a new mine.Coal is not a pure commodity like gold and the going price can't be checked in New York markets like oil,he said. "Your sales are relational as opposed to transactional,”he said."It takes a long time to develop relation- ships with prospective customers.” See Mine,Page 17 Sherwood unearths two new ore zones By Margaret Bauman Alaska Journal of Commerce Sherwood Copper Corp.has iden- tified two significant copper-gold sys- tems at its Minto project in the Yukon as a result of its 2007 exploration program,company officials said. A July 17 statement from Sher- wood Copper defined the areas of discovery as Ridgetop,about a kilometer south of the open pit mine,and area 118,approximately 350 meters south of the current open pit,and immediateiy adja- cent to the area 2 deposit. Stephen Quin,president and chief executive officer of the Van- couver,British Columbia,mining firm,said at Ridgetop,shallow, wide-spaced exploration holes confirmed their geological assess- ment of potential strip ratios.At area 118,another 13 widely spaced reconnaissance drill holes have resulted in the discovery of a potentially extensive new zone of mineralization,he said. CONTRACTOR _REQUIREMENT?- SeaTac Marine Services 6701.Fox Avenue South,Seattle,WA 98108:(206)767-60005,._www.seatacmarine.com With encouraging resuils from both areas,further work is planned, once assay results and interpreta- tions have caught up to the drill progress.These are early days for both targets,which remain wide open to expansion,and meanwhile, the company is testing some of its other priority targets,Quin said. To date Sherwood Copper has completed 25 exploration holes and five geotechnical holes in its phase 2 chill program at Minto.The phase 2 exploration program is the major component of 2007's exploration activities and consists of an expan- sion of the existing geophysical sur- veys and more than 60 drill holes. Company officials said their objec- tive for the drill program is to expand resources at area 2 and to ageres- sively test several other highly prospective multi-anomaly targets. The project bodes well for Southeast Alaska's economy. Officials of the Alaska Industrial Development and Export Authority signed an agreement in January for use of AIDEA's Skagway Ore Ter- minal by the mining operation. There will be a terminal opera- tor employing several Skagway residents year-round,plus docking fees paid to White Pass and Yukon Route for winter docking,other associated costs and fees for dock- ing and any expenses paid by truckers on the American side of the route,AIDEA officials said. Further information on the Minto project is available at www.sherwoodcopper.com. Margaret Bauman can be reached at margie.bauman@ulaska journal.com. July 29,2007 ©Alaska Journal of Commerce ®Page 17: Alaska garners $26 million in federal highway disaster funds Emergency federal relief highway funds totaling nearly $26.3 million will be allocat- ed to restore Alaska roads damaged by severe storms in 2006,Sen.Ted Stevens said July 20. Stevens worked earlier this year with Sen.Patty Murray,D-Wash.,to secure disas- ter funds for Alaska from the Federal High- way Administration within the 2007 Emer- gency Supplemental spending bill.Murray chairs the subcommittee that makes recom- mendations on distribution of those emer- gency transportation appropriations. Two storms caused extensive damage to transportation infrastructure in Alaska in 2006,in or around the Matanuska-Susitna Borough,Cordova,Valdez,the Chugach rural education attendance area,the Delta/Greely rural education attendance area,the Denali Borough,Seward,Seldovia, Glennallen,the McCarthy area,plus other areas of the state. The FHWA's emergency relief program helps pay for repairs to roads and bridges damaged by inclement weather or natural forces.A total of 8675 million was included in the 2007 supplemental spending bill to help recovery efforts in 23 states and by federal agencies,which manage federal lands including our national parks and forests. Mine:Four agencies to review proposal before permits are issued Alaska unemployment rates steady State labor officials said Alaska's season- ally adjusted unemployment rate was unchanged in June,at 5.9 percent,while the comparable national rate was _also unchanged at 4.5 percent. Anchorage,Fairbanks and Juneau regis- tered unemployment rates for June that were about half a percent lower than June 2006, according to the Alaska Department of Lalor. Among the state's six economic regions, Southeast had the lowest overall unemploy- ment rate,although the region has seen little employment growth.The lower rates are being caused instead by a decline in unem- ployment likely due to a combination of eco- nomic factors,including the migration of workers and the aging of the workforce, labor economists said. The number of people on payrolls rose by 15,400 in June,led by seasonal hires in con- struction,seafood processing and tourism- related businesses.Over-the-year compar- isons show growth of 2,500 jobs,a little lower than in recent months. The oil and gas industry continued to lead the way in employment,adding 800 jobs from June 2006 to June 2007.Seafood processing,construction and government all had year-to-year declines. The labor force by borough and census area,which is not seasonally adjusted, showed a statewide labor force of 352,582 people in June,with 331,203 employed and 'Business briefs 21,379 unemployed. That compares to a labor force of 352,389 in June 2006,with 329,077 employed and 23,312 without jobs. -Alaska Journal of Commerce UAF settles museum dispute The University of Alaska has agreed to pay $4.65 million to resolve a dispute with the contractor it hired for the expansion of the Museum of the North in Fairbanks. The settlement ends Alaska Mechanical Inc.'s $17.4 million claim against the uni- versity.The agreement was approved by the Board of Regents. The company had maintained the univer- sity owed it more money because the $42 million project was plagued with design flaws,changes.delays and cost overruns beyond the control of the contractor. Beside the university's payment,the project design team has agreed to pay AMI another $1.6 million as part of the settlement.Members of the design team are GDM Inc.;Hammel,Green and Abrahamson Inc.;Planning Design and Consult- ing Inc.;and Coffinan Engineers Inc. "This provides finality to the project.”said university spokeswoman Kate Ripley."Al claims previously pending through the admin- istrative hearing officer will be dismissed.” The settlement was reached after three days of six-party mediation last month,Ripley said. The university's settlement amount is above the $23 million contract the universi- ty already had with the company for the con- struction of the building,which formally opened in September 2005.The additional money will come from the university's reserve contingency fund,Ripley said. Associated Press Natural gas 'supercenter'coming to Vilonia VILONIA,Ark.-Plans are underway for construction of a natural gas "supercenter” lo extract the fuel from shale,according to Randy Hudgeons of CUDD Energy Services. Hudgeons said his company is responsi- hle for the fracturing of wells. "Our business is to bring in oil and gas wells,”Hudgeons said."What we do is to stimulate the gas underground.” The local project,he said,is referred to as the Fayetteville shale project.And it is anticipated to last at least 20 to 30 years, possibly even 50.The gas that you burn in your home,Hudgeons told those in atten- dance at a recent luncheon,is what is being produced locally. Plans are now underway to build five buildings to house CUDD,which earies an estimated cost of $3 million to $4 million to construct.Hudgeons said.The facilities will include a large office building,a training cen- ter and a 10-bavy truck facility.He anticipates a slaly may be poured for some of the struc- tures in the next 30 to 45 days.The comple- tion date,he said,may be in November. -Morris News Service Continuedfrom Page 8 PacRim is controlled by Texas businessmen Richard Bass,Her- bert Hunt and the Hunt Family Trust.The Hunt family was an original partner of Arch Coal, which contributes 11 percent of America's coal supply,according to its Web site. "We know a little bit about the market,”Stiles said. The primary market for Chuitna would be countries in northern Asia,he said. The mine's proximity to the ocean is an asset.So is electricity available from a natural gas power plant near- by in the community of Beluga. But the lack of any other infra- structure -roads,export terminals, support facilities,housing is a challenge,Stiles said. The developers propose a strip mine.Miners remove overburden -dirt,rocks or anything over the coal -from a long strip of land, extract the coal,then start another strip.Overburden from succeeding strips is dumped into the previous- ly dug hole. "You just move the hole,”Stiles said. Coal would be crushed and trans- ported on a 12-mule,partially covered conveyor and stored at tidewater.A trestle nearly 2 miles into Cook Inlet would take coal to occan vessels, Resident of Beluga,population 21,and nearby Tyonek,population 199,fear damage from coal dust blowing into creeks and communi- ties.Beluga whales,recommended for a listing as endangered in April,swim off the coast.Fisher- men with set net permits fear min- ing will affect their catch. Mine opponents say strip min- ing will damage thousands of acres of habitat for moose,bear,birds and fish and interrupt subsistence hunting and gathering.One of the biggest objections focuses on the area's aquifer.Coal would be extracted from bog and fen wet- lands that contribute to the capac- ity of the watershed to provide high quality fish habitat,said Bernard of Trustees for Alaska. "They will have to de-water the area before they dig the main pit,” Bernard said,pumping out ground water,dumping it elsewhere. Strip mining will affect the com- plex hydrology -groundwater and surface water systems -of the lands Serving Alaskans tor over 29 yearsYUKON4FIREPROTECTION NICET Certified Technicians CERTIFICATION INSPECTION Fire Alarms,Sprinklers, CO2,Extinguishers,Marine, Clean Agent Systems,More! KIDDE-FENWAL,KIDDE, ”SERVICES |Deore Salesy istalationify.Servic Alaska Distributor for: AMEREX,ANSUL, FCI-GAMEWELL Phone:(907)563-3608 Fax:(907)561-2352 0601 Silverado Way Anchorage,AK 99918 that enrich the streams,make them rich habitat and regulate flow,she said.Once disturbed,such complex wetlands are difficult to put back together again,she said. "The literature is clear:They're difficult,if not impossible,to restore,”she said. Last month,mine opponents fired a pre-emptive shol.The Chuitna Citizens No-Coal Coali- tion,Cook Inletkeeper,Alaska Center for the Environment and Alaskans for Responsible Mining, plus Beluga residents Judy and Lawrence Heilman and set net fisherman Terry Jorgenson,filed a legal petition requesting that the Department of Natural Resources designate all lands within the Chuitna River watershed as unsuitable for surface coal mining. Under the Alaska Surface Coal Mining Control and Reclamation Act,which mirrors a law passed by Congress,the depariinent must designate an area unsuitable for coal mining if it's not technologi- cally feasible to reclaim it. Stiles disagrees with the groups'assessment. "We'll dig up wetlands and then well replace them,”he said. PacRim says the deadline has passed for filing an unsuitability petition.Stiles also says the peti- tion,which would apply to more than 130.000 square miles of the Chuitna watershed,is long on con- tention and short on proof to back it up."It seems a little broad,”he said."You just can't throw stuff over the transom and expect some- one to run with it.” He contends that mine plans will receive a thorough regulatory review by four federal agencies -the Envi- ronmental Protection Agency,the Army Corps of Engineers,the U.S. Fish and Wildlife Service and the National Marine Fisheries Service - and three state agencies,Natural Resources,Environmental Conser- vation,and Fish and Game. A 1990s application for a simi- lar project filled 35 3-inch binders.With additional require- ments,this one will fill 50,he said, including proof that reclamation can be performed. "You have to make an affirmative showing that you can do it before you get your permit,”he said. LEISier People Mover 343-6543 big wild life Learn more today at www.peoplemover.org . a Karl Reiche From:Karsten Rodvik Sent:Monday,July 30,2007 12:07 PM To:Ron Miller;Sara Fisher-Goad;Valorie Walker;Mike Harper;Chris Anderson;Karl Reiche; James Strandberg;Chris Mello;Brian Bjorkquist;Mike Mitchell;John Wood Subject:7/30 clips Alaska oil Friday's closing price per barrel on West Coast open markets $80, Thi 70 654 60 ? 55;7OtM1State's price estimate ° at for current budget year: MOpem--d_-Average price|__!1997-2006,$31.15eeeaca 39 25 20 DEC JAN FEB MAR APR MAY JUN JUL Metcalfe to challenge Young -Daily News Proposed Chuitna coal draws protestors -Daily News San Fran Fed Reserve Bank head says oil buffers Alaska economy -Daily News Beaver fire News-Miner Indictments may doom PPT -Empire Perfect Storm may be brewing for Chugach Electric -Journal of Commerce Sherwood unearths two new ore zones -Journal of Commerce ANCHORAGE DAILY NEWS Metcalfe says he'll challenge Don Young for U.S.House seat HOUSE SEAT:Ethics issues seen as making incumbent vulnerable. By JULIA O'MALLEY jomalley@adn.com (Published:July 30,2007) Jake Metcalfe,former Anchorage School Board president and former head of the state Democratic Party, announced late Sunday that he plans to run against Don Young in the 2008 congressional election. "All this stuff has been coming out,there's been a barrage of new information about the corruption and the ethics violations,and I thought,'You know,somebody's got to run against him,'"he said. "I just figured I'd do it." Metcalfe,an attorney for IBEW,grew up in Southeast Alaska in a large,well-known Juneau family.He worked previously as a prosecutor in Bethel.He said by cell phone from Washington,D.C.,Sunday night that he plans to file the paperwork today. Young's campaign manger,Steve Dougherty,didn't immediately return a call for reaction. The Wall Street Journal reported Tuesday that Young is being investigated for his ties to Veco,whose former top executives pleaded guilty earlier this year to bribing state legislators.The Democratic Congressional Campaign Committee has been searching for a strong candidate to run against him,and on Thursday called on Republican House leadership to pull his committee assignments. Young's only official challenger is Diane Benson,who ran against him last year,garnering 40 percent of the vote with a fraction of the campaign funds.Benson has officially filed to run for the seat again in 2008. Her campaign manager was also unreachable Sunday evening. In a recent interview,Young said of the Democratic Congressional Campaign Committee efforts against him:"They are welcome to try....I know that I'm the one they would like to eliminate.It doesn't bother me as long as I run a good campaign and do what's right for this state." Metcalfe said that former state Rep.Ethan Berkowitz and Mayor Mark Begich have also been considering a run against Young.Neither could be reached. Young has a large campaign war chest and any candidate who runs against him needs to start early raising money and making connections across the state,Metcalfe said. "People have to quit waiting for other people to make up their minds,"he said. "The Democrats are in the majority,and we've got a back-bencher for an incumbent,"he said."He's no longer powerful....We need someone that's in the majority.” Proposed coal mine across Cook Inlet draws protesters CHUITNA RIVER:Papers may be filed by August;residents gear up to fight. By DAN JOLING The Associated Press (Published:July 30,2007) Environmental groups are taking aim at a massive proposed Alaska mine that's just 45 miles away from the state's largest city. PacRim Coal LP proposes to mine coal near the Chuitna River across Cook Inlet from Anchorage. The company initially is applying for a permit covering 10,000 acres and will mine half that,said project director Bob Stiles.The company hopes to pull out 300 million metric tons of sub-bituminous coal,roughly equal to the energy of a billion barrels of oil,over 25 years. Mine construction would mean up to 300 jobs,and peak mine operations would put 350 people to work. Unlike the proposed Pebble project targeting gold and copper in Southwest Alaska,which may be years away from submitting a mine development plan,the coal developers expect to turn in a coal mine permit, including development and reclamation plans,to the state Department of Natural Resources by the end of July.Hearings on various permits could be scheduled as early as January,Stiles said. Critics are gearing up to stop it.They say the mine and adjacent leases threaten more than 55 square miles of wildlife and fish,including tributaries of the Chuitna River,which supports five species of wild salmon. They also want the mine stopped for a more fundamental reason.Greenhouse gases emitted by the burning of fossil fuels led to global warming.Climate change has harmed Alaska's forests,streams, glaciers and sea ice.Burning millions of tons of Alaska coal will foul the state's own nest,critics say. "Coal is the dirtiest of the fossil fuels,"said Becca Bernard,an attorney for Trustees of Alaska. It doesn't matter that the coal may be burned in Asia,she said.Warming affects the Arctic and sub-Arctic more than other regions,she said,and prevailing winds send over Asia's harmful emissions,such as mercury,that affect Alaska's fish. Alaska is rich in minerals and developers have long hoped to make Alaska a major exporter of coal.Alaska holds roughly half of America's coal reserves. But Alaska coal mines have been bedeviled by competitive roadblocks since the Russian-American Co. opened the first one in 1855 at Port Graham on the Kenai Peninsula.That mine couldn't compete with coal from Canada,Australia,England and Chile.Other Alaska coal mines closed because of competition from petroleum. The only mine currently operating is Usibelli Coal Mine Inc.of Healy in Interior Alaska,which Sells to customers in Alaska and South Korea. Stiles acknowledges difficulties in starting up a new mine.Coal is not a pure commodity like gold and the going price can't be checked in New York markets like oil,he said. "Your sales are relational as opposed to transactional,"he said."It takes a long time to develop relationships with prospective customers.” PacRim is controlled by Texas businessmen Richard D.Bass and Herbert Hunt and the Hunt Family Trust. The Hunt family was an original partner of Arch Coal,which contributes 11 percent of America's coal supply,according to its Web site. "We knowa little bit about the market,"Stiles said. The primary market for Chuitna would be countries in northern Asia,he said. The mine's proximity to the ocean is an asset.So is electricity available from a natural gas power plant nearby in the community of Beluga. 'But the lack of any other infrastructure --roads,export terminals,support facilities,housing --is a challenge,Stiles said. The developers propose a strip mine.Miners remove overburden --dirt,rocks or anything over the coal -- from a long strip of land,extract the coal,then start another strip.Overburden from succeeding strips is dumped into the previously dug hole. "You just move the hole,"Stiles said. Coal would be crushed and transported on a 12-mile,partially covered conveyor and stored at tidewater. A trestle nearly 2 miles into Cook Inlet would take coal to ocean vessels. Residents of Beluga,population 21,and nearby Tyonek,population 199,fear damage from coal dust blowing into creeks and communities.Beluga whales,recommended for a listing as endangered in April, swim off the coast.Fishermen with setnet permits fear mining will affect their catch. Mine opponents say strip mining will damage thousands of acres of habitat for moose,bear,birds and fish and interrupt subsistence hunting and gathering. One of the biggest objections focuses on the area's aquifer.Coal would be extracted from bog and fen wetlands that contribute to the capacity of the watershed to provide high quality fish habitat,said Bernard of Trustees for Alaska. "They will have to de-water the area before they dig the main pit,"Bernard said,pumping out ground water,dumping it elsewhere. .Strip mining will affect the complex hydrology --groundwater and surface water systems --of the lands that enrich the streams,make them rich habitat and regulate flow,she said.Once disturbed,such complex wetlands are difficult to put back together again,she said. "The literature is clear:They're difficult,if not impossible,to restore,"she said. Last month,mine opponents fired a pre-emptive shot. The Chuitna Citizens No-Coal Coalition,Cook Inletkeeper,Alaska Center for the Environment and Alaskans for Responsible Mining,plus Beluga residents Judy and Lawrence Heilman and setnet fisherman Terry Jorgenson,filed a legal petition requesting that the Department of Natural Resources designate all lands within the Chuitna River watershed as unsuitable for surface coal mining. Under the Alaska Surface Coal Mining Control and Reclamation Act,which mirrors a law passed by Congress,the department must designate an area unsuitable for coal mining if it's not technologically feasible to reclaim it. Stiles disagrees with the groups'assessment. "We'll dig up wetlands and then we'll replace them,"he said. PacRim says the deadline has passed for filing an unsuitability petition.Stiles also says the petition,which would apply to more than 130,000 square miles of the Chuitna watershed,is long on contention and short on proof to back it up. "It seems a little broad,”he said."You just can't throw stuff over the transom and expect someone to run with it." 'He contends that mine plans will receive a thorough regulatory review by four federal agencies --the Environmental Protection Agency,the Army Corps of Engineers,the U.S.Fish and Wildlife Service and the National Marine Fisheries Service --and three state agencies,Natural Resources,Environmental Conservation,and Fish and Game. A 1990s application for a similar project filled 35 3-inch binders.With additional requirements,this one will fill 50,he said,including proof that reclamation can be performed. "You have to make an affirmative showing that you can do it before you get your permit,"he said. Oil buffers Alaska from downturn FED:District head notes state economy's sturdy underpinnings. By MELISSA CAMPBELL Alaska Journal of Commerce (Published:July 30,2007) The head of the Federal Reserve Bank of San Francisco said Alaska's oil-rich economy should help dampen the inflationary risks that the rest of the nation is facing. Janet Yellen,president and chief executive officer of the Fed's San Francisco district,said with weak housing markets,higher energy prices,which include $70 a barrel oil and $3 a gallon gasoline,personal consumption nationally is expected to slow. Alaskans,too,pay more for gasoline and heating,but because Alaska is an oil-rich state,residents also benefit from the higher oil prices. "You've seen the side of higher oil prices and the pinch at the pump,"she said."But high oil prices bring substantial income to the state,and no doubt,this has helped to keep employment and personal income growing here at a healthy clip." Yellen spoke to about 120 business leaders during an invitation-only luncheon earlier this month at the Anchorage Marriott Downtown. During her first trip to Alaska as the district's president,Yellen visited the Anchorage Museum of History and Art,had plans to tour the Red Dog Mine and take a trip to the village of Kiana. "One of our responsibilities is to try to understand the different economies that make up the country,"she said."Alaska is a special place;there are notable differences in the characteristics from the rest of the district and the nation.I'm aware there are different issues between rural and urban areas." While in the state,she also spoke with economists from the University of Alaska Anchorage to learn of the differences between rural and urban economies in the state.The visits to the mine and the village will help solidify that understanding,she said. SEEKING FEEDBACK The Federal Reserve is the nation's central bank,responsible for formulating monetary policy,regulating financial institutions and administering consumer protection laws.It is also the fiscal agent for the U.S. government. -As president of the 12th Federal District,which includes nine Western states and several!Pacific territories, Yellen participates in meetings of the Federal Open Market Committee,which is headed by Fed Chairman Ben Bernanke. "Through our directors,our advisory councils,and through meetings like this one,we are able to get some insight into the public's viewpoint on issues that are vital to the conduct of monetary policy,whether about labor market conditions,expectations about inflation and industry-specific developments,"Yellen said at the Anchorage luncheon, Yellen told Anchorage business leaders that she expects moderate growth nationally this year and next. Personal consumption spending and exports have shown robust activity in recent months but are expected to slow moderately.Residential investment,a weak sector in the past,is expected to have less of a negative impact on overall activity going forward. HOUSING STAYS SLOW Housing is likely to remain a drag on the economy,she said.The cooling in the housing market has been partly in response to a rise in financing costs. Interest rates on variable-rate mortgages have risen in recent years,along with other short-term rates. Traditional fixed-rate mortgage rates are also up. This could be only a correction in the housing prices after years of run-ups that were prompted by record- low interest rates,which with time have proven to be unsustainable.Since the end of 2005,housing sector spending has dropped more than 16 percent nationally. Alaska has not been excluded from this trend,but due in part to high oil prices,good economic conditions in the state have dampened the housing sting,Yellen said. In 2006,residential sales in Alaska rose as sales declined nationally.Residential building in the state's fastest growing areas has since dropped dramatically,though specific figures are hard to find because many communities don't require permits to build homes. Builders have said recently they are putting up fewer homes in Anchorage and the Matanuska-Susitna valleys.Anchorage is running out of land on which to build.Developers are leaning more toward investing in multi-family units and condominiums.Several traditionally residential builders have moved to small commercial projects. The Valley,which in the past two years has seen an explosion of housing activity,has by some accounts declined by half this year. Housing in Fairbanks,meanwhile,is strong,growth that is driven by the need to house hundreds of military families recently transferred to the area. The rate of home appreciation in the state has also slowed since 2005,but remains above the national average.Delinquencies on adjustable-rate mortgages in the prime and the sub-prime markets in Alaska have increased only slightly. The Federal Open Market Committee met June 27 and 28,and voted to hold the current interest rate at 5 percent,the rate for the past year. "The reason for adopting and maintaining the current stance of policy is that it promises to keep the overall economy on an adjustment path where growth is moderate and sustainable,"she said. ""I believed a year ago,and still believe now,that such a path is likely and will enable us to achieve our dual mandate --given by Congress --of low and stable inflation and maximum sustainable employment." FAIRBANKS DAILY NEWS-MINER Fire knocks out power in Beaver By Stefan Milkowski Published July 30,2007 A fire at the power plant in the village of Beaver left residents without power Sunday but was put out before causing greater damage. State emergency response agencies were activated after a report that the fire could threaten residents and the village fuel storage area,according to a news release from the Division of Homeland Security and Emergency Management.Alaska State Troopers and the deputy state fire marshal both traveled to the roadless village, located 110 miles north of Fairbanks along the Yukon River,in the afternoon. Nora Billy,a Beaver resident,said Sunday night that the fire started around noon during the installation of a new generator. 'What I hear is that one little spark ignited the whole thing,”she said. Residents turned out to help fight the fire and sprayed water on the nearby post office to keep it from burning, she said. There were no reports of injuries. "The community contained the fire with the tools they had there,”said John Madden,director of the Division of Homeland Security,in the news release."Their efforts are admirable and demonstrate the resourcefulness of Alaskans who are faced with an emergency.” According to the news release,the local communications provider set up a small back-up generator Sunday afternoon for emergency communications.A representative from the Division of Homeland Security will assess the scene and assist recovery efforts today. Billy said she thought she was the only one who's phone still worked. "No lights,nothing,”she said."Can't even read.” Billy added that villagers have just finished fishing and have freezers full of fish.She said people were putting wet blankets and tarps over the freezers to keep the fish cool until the power comes back on. JUNEAU EMPIRE 'Indictments may be downfall of tax Lawmakers aim to shift tax from profits to gross revenues House Democrats led by Rep.Beth Kerttula,D-Juneau,would like the opportunity to do what they were unable to do last year:Adopt a system that taxes oil on gross revenues,instead of a net tax on profits alone. They may get that chance this fall. With doubts looming about the honesty of the Legislature's vote last year on the controversial Petroleum Profits Tax,Gov. Sarah Palin said she's likely to call a special session to reconsider the tax. "I don't have any question in my mind,this law needs to be changed,no ifs,ands or buts,"Kerttula said. Three House Democrats last week issued a report saying the state was losing $1.5 billion a year by taxing the state's oil at below the world average.Reps.Les Gara and Bob Buch,both of Anchorage,and David Guttenberg of Fairbanks based their conclusion on information provided by three consulting firms hired by Legislature. They said the world average for "total government take"was 67 to 73 percent.Total government take is how experts calculate average tax rates around the world. In Alaska the take was at 61 percent,they said. Some Republicans were skeptical that Alaska could get that much more money out of the oil industry,and skeptical of the Democrats'motives as well. "If Les Gara had his way,he'd tax the oil industry right out of the state,"said House Speaker John Harris,R-Valdez. Given what has happened since Alaska adopted the Petroleum Profits Tax last August,Harris said a new look at the PPT tax may be merited,however. "Was it done correctly?Was there undue influence put on legislators?"Harris asked. "I don't have the answer to that,but that's one of the things the governor is concerned about,"he said. Since the tax was adopted last year,half a dozen members of the Legislature have fallen under suspicion of taking bribes from oil industry advocates of the PPT.The chief executive officer of VECO Corp.,an oil field services firm and one of the state's most politically connected companies,has pleaded guilty to bribing several legislators. Former state Rep.Bruce Weyhrauch,R-Juneau,pleaded not guilty to bribery charges and is awaiting a fall trial. The tax so far has brought in millions of dollars less than expected when it was adopted,but Palin administration officials said they're still not sure why because the tax is difficult to audit. Department of Revenue officials last week declined to say how much the tax had brought in since spring,when their earlier statements were made. Palin said earlier she is "likely"to call a special session to look at the Petroleum Profits Tax again,but has since said she is awaiting a review of the tax receipts so far from the Department of Revenue. Kerttula said analysis isn't needed to address the obvious flaws in the PPT. "There are a lot of changes that you don't need to wait for numbers on,"she said. 8 Abandoning the PPT and going to a gross tax could be done immediately,she said. Sen.Kim Elton,D-Juneau,is making similar arguments in the Senate.He and fellow Sens.Hollis French,Bill Wielechowski,and Johnny Ellis,all Democrats from Anchorage,have introduced Senate Bill 175 to go back to a gross tax. "If we don't fix this tax in a special session this year,Alaskans may stand to lose another $2 billion.That would be irresponsible,"Wielechowski said. Loss estimates vary due to changing estimates of oil prices and production volumes. The Democratic senators introduced their bill after Gara and others introduced a similar bill in the House of Representatives,but it never got out of the House Oil and Gas Committee,chaired by oil industry ally,former Rep.Vic Kohring. House leaders removed Kohring from his chairmanship after he was indicted by federal prosecutors and accused of taking oil company bribes.He resigned his legislative seat,but has pleaded not guilty and is awaiting trial. Sen.Bert Stedman,R-Sitka,agrees the PPT needs to be changed,but for different reasons.The tax was adopted as part of former Gov.Frank Murkowski's plans to get a North Slope gas pipeline. Now that the new governor is using the Alaska Gasline Inducement Act to try to get a pipeline instead,that part of the tax system is no longer needed. The previous effort called for the state to take its royalties and severance payments in-kind,meaning that the state would have to market and sell its share of the gas itself.Palin proposes the state take its payments in cash. "That needs to be fixed,in my opinion,and sooner rather than later,"Stedman said. Stedman is worried,however,that the Legislature may go too far and adopt an oil tax system and rate that discourages development. "Do we,the state,want to have an oil tax rate set to stimulate development?"he said. One way to do that is to include a tax credit for oil company investments that help them bring up more oil.The PPT includes such a credit,though Kerttula and others have criticized how it is structured. The challenge with a gross tax,Stedman said,is that it taxes the heavy,viscous oil at the same rate it taxes the easy-to- recover light oil.That might lead oil companies to abandon marginal heavy oil fields,said Stedman,co-chairman of the powerful Senate Finance Committee and a member of the Senate Working Group coalition that controls the Senate. "We're going to leave potentially billions of dollars in the ground,”under a gross tax,he said. A fellow Republican senator,Tom Wagoner of Kenai,though not a member of the majority coalition,said during the session that he would support a gross tax simply because it was the only one that was easily verifiable. With a profits tax "you don't know what the companies are trying to write off,"he said."One thing I always worried aboutwasthegamingofthesystem,"he said. Speaker Harris said there was no chance of getting a gross tax through the Legislature last year because even if it had passed the House,it would not have made it past former Senate President and oil-industry ally Ben Stevens,R-Anchorage, and Murkowski. "You had a governor who wouldn't approve a gross tax,and a Senate that wouldn't approve a gross tax,"he said. 9 :Palin so far has not committed herself,but Harris and Kerttula said that if Palin were to propose a gross tax,she could frame the discussion at a special session the way she wanted. 1s at Chugach spark utility overhaul idner 1al of Commerce "m may be brewing for Chugach Electric Association. irgest member-owned electric utility in 2011 and alloon payments of $270 million on debt,for which vave been set aside. yach may lose its two largest wholesale power latanuska Electric Association and Homer Electric nvhich amount to 30 percent of Chugach's revenues. ic and MEA have notified Chugach that they intend to olesale power purchase agreements with Chugach rent contracts expire. 2m:the need to negotiate new natural gas supply Chugach Electric Association board chairhCookInletproducers.Chugach generates most of Elizabeth Vasquez is taking stern look at the h natural gas.Given the current direction of gas member-owned utility company.Aging Southcentral region,it seems a good bet that the generators and increases in the cost of fuel paying more under new contracts than under the and balloon payments of $270 million are ments.throwing the cooperative into financial doubt. Photo/Rob Stapleton/AJOC ach's power plants are aging and need to be »r replaced.Building new power plants is costly. 'out of this briar patch of problems,Chugach's board has tapped a group of experienced Alaska lers for suggestions. n”panel,which is being coordinated by former state Commerce Commissioner Bill Noll,is on a have an interim report to the board by Aug.20 and a final report,with recommendations,by Nov. as decided that it is time for a review of Chugach's situation,”Noll said."Management is telling it facilities need to be renewed,but funds are not set aside for their replacement.There is no set debt.It's almost a typical Alaska problem.” he blue ribbon panel include Dynamic Capital Management president David Gottstein,Hickel 'o.president Robert Hickel,former state commerce commissioner Loren Lounsbury and Seattle- 'curities vice president John Wanamaker. itiative Chugach launched,along with Anchorage Mayor Mark Begich,is a possible consolidation or thugach and Anchorage's city-owned Municipal Light and Power.ML&P,like Chugach,generates atural gas for its customers in Anchorage. be a challenge to structure an actual merger between a municipal-owned utility and a member- rative unless one side buys out the other,there are many areas where the two utilities could work 10 h astin building new power plants. retired Chugach CEO,says there have been several initiatives in past years for the two utilities to ative relationships,including one in which there was nearly an agreement. 3 with ML&P are being done by separate committee,which includes Chugach board chair Elizabeth Anchorage Mayor Begich as co-chairs,along with Anchorage businessmen Mike Barry and Bob cipal assemblyman Chris Birch,utilities consultant Mark Foster and Steve Pratt,who is an 10 specializes in utility issues. ormer chairman of the Alaska Energy Authority and is familiar with issues the utility faces. yon payment on Chugach's debt,meanwhile,is $120 million,due in February 2011.A $150 million ue in 2012,Vazquez said.One option is to negotiate a rollover of the debt,in which it would 'ended with the same or new lenders,but the question is what this might cost. ment is telling us that the debt can be rolled over,but we don't know what the interest rate might ther conditions might be attached,”Vazquez said.Conditions or new rates may be added after 3 consider Chugach's other problems,such as the possible loss of revenues when the contracts ika Electric and Homer Electric expire. 1,as board members,is why reserves were not set aside to deal with this?”she said. zism of Chugach's previous boards that goes to the heart of what may be one of the utility's more ams -its tumultuous board elections and the turnover of board members. ard elections have been lively in recent years.Slates of directors backed by the utility's unions, ternational Brotherhood of Electrical Workers,have been pitted against slates of reform if which Vazquez is one,that are hotly opposed by the unions. 1,head of Dittman Research,and who follows Chugach affairs closely,said he has not found any ere in the U.S.where union workers regularly field candidates,participate actively in elections and ect the boards of the utilities. ate now dominates the utility's board,but it has a narrow 4-3 majority,which may not give the members the margin they need to tackle complex or controversial issues,said Pat Kennedy,a ach board member who is now active on a Chugach member committee pushing for renewable board tilted toward the unions.The pendulum has swung back and forth between pro-union and iated boards in recent years. the constant churning of Chugach's board is a worry for wholesale customers,who depend on the deliver cost-effective wholesale power. |the split on the board was reflected recently in a vote on the proposed Fire Island wind project, ird voted 4-3 to put the project on hold. Uwe Kalenka,another reform board member,said the economics of the Fire Island wind project ood because of the high cost of the transmission system connecting wind turbines on the island 1's power grid.Kalenka said he supports renewable energy as long as it makes business sense. es there is potential for hydroelectric projects in the region that,while costly on the front end,can cost energy over the long term. Chugach's board members are making efforts to mend relations with MEA and HEA,hoping to 11 3 wholesale customers after 2014,but the effort is slow going. ig efforts to smooth things out but there has been years of bad blood and animosity,”that is ercome,Kalenka said. 9d unearths two new ore zones 3auman of Commerce pper Corp.has identified two significant copper-gold systems at its Minto project in the Yukon as a )07 exploration program,company officials said. ement from Sherwood Copper defined the areas of discovery as Ridgetop,about a kilometer south of line,and area 118,approximately 350 meters south of the current open pit,and immediately adjacent to osit.: ,president and chief executive officer of the Vancouver,British Columbia,mining firm,said at llow,wide-spaced exploration holes confirmed their geological assessment of potential strip ratios.At ther 13 widely spaced reconnaissance drill holes have resulted in the discovery of a potentially 7 zone of mineralization,he said. ging results from both areas,further work is planned,once assay results and interpretations have caughtprogress.These are early days for both targets,which remain wide open to expansion,and meanwhile, is testing some of its other priority targets,Quin said. vood Copper has completed 25 exploration holes and five geotechnical holes in its phase 2 drill into.The phase 2 exploration program is the major component of 2007's exploration activities and expansion of the existing geophysical surveys and more than 60 drill holes.Company officials said >for the drill program is to expand resources at area 2 and to aggressively test several other highly \ulti-anomaly targets. ydes well for Southeast Alaska's economy. ie Alaska Industrial Development and Export Authority signed an agreement in January for use of gway Ore Terminal by the mining operation. a terminal operator employing several Skagway residents year-round,plus docking fees paid to White on Route for winter docking,other associated costs and fees for docking and any expenses paid by e American side of the route,AIDEA officials said. nation on the Minto project is available at www.sherwoodcopper.com. ournal of Commerce Online 12 «Karsten Rodvik Project Manager,External Affairs Alaska Industrial Development and Export Authority Alaska Energy Authority (907)269-3024 13 Cash Minerals Ltd.-News Releases Bae ee ES mates cies -Cash Minerals to Meet with SASOL (South Africa)to Ass...Page 1 of 2 ) "Sea We "machorsfoeswbbielitiaitacatia CORPORAAERAOEGe RT Mon Feb 6,2006 Cash Minerals to Meet with SASOL (South Africa)to Assess Potential Coal Liquefication Projects . Vancouver,B.C.---February 6 --Cash Minerals Ltd.(CHX:TSX Venture Exchange) announced that Basil Botha,President and CEO,is scheduled to meet with Sasol in South Africa to discuss the potential for producing alternative fuels from the Fischer- Tropsch process for the Company's Yukon coal reserves.Sasol is a world leader in the production of alternative fuels from coal. With an oil shortage looming,there are going to be many opportunities in the energy sector for alternative fuels.One such opportunity will be sources such as coal-to-liquid- fuel,otherwise known as synthetic fuel or SynFue!l.SynFuel is rapidly becoming a popular alternative to increasingly expensive petroleum.The International Energy Agency recently released a report which projected energy demand to grow over 50%by 2030.It is unlikely that sufficient funds will be invested in time to keep energy markets from reaching supply deficiencies.This means that the price of oil will continue to rise "-+il the increasing demand is met with an additional supply."Our intention is to ition Cash Minerals to take advantage of the ensuing oil shortage,”said Basi]Botha. The outlook for clean burning alternative fuels produced from coal is extremely positive. In addition to long-time producers in countries such as South Africa,the process is receiving considerable attention in North America.For example,with its vast coal reserves,Montana is looking at using the Fischer-Tropsch process to reduce its dependence on imported oil,as reported by the New York Times on November 21, 2005.In his State of the Union Address of January 31,2006,U.S.President George W. Bush supported clean coal and nuclear energy and proposed to replace more than 75% of U.S.oil imports from the Middle East by 2025. In the meeting with Sasol scheduled for February 14,2006,Mr.Botha will have initial discussions on the potential for converting Cash Mineral''s Yukon coal resources utilising the Fischer-Tropsch process.According to a preliminary conceptual study by MVS Consulting LLC,the three main products produced from coal would be high quality sulphur-free gasoline,diesel/distillate fuel and propane.Together with the meetings with Sasol,Cash Minerals will use the report to assist in determining whether Fischer- Tropsch conversion is a viable alternative for the Yukon coal resources. Mr.Botha stated,"The meetings with Sasol are important.As the world's leading practitioner of the Fischer-Tropsch process,they will be able to provide invaluable insight on the potential for Cash Mineral's Yukon coal reserves.With Yukon currently being fully dependent on imported gasoline and diesel fuels,as well as the need for additional energy to develop its resource sector,our coal reserves could play a key role in the Yukon's economic growth.” The Updated NI 43-101 Report dated December 21,2005 by T.C.Becker,B.Sc.,P.Geo. of Norwest Corporation reports a confirmed coal resource at Division Mountain of 52.5 million tonnes of High Volatile "B"Bituminous coal entirely in the measured category (Refer to www.sedar.com).The Division Mountain coal resource occupies only 5%of sh Minerals'coal properties in the Braeburn to Carmacks area.Previous exploration ivity confirms the existence of additional coal resources in this area.Cash Minerals holds other Coal Exploration Licences for the area and has budgeted $1 million in 2006 on further coal exploration,with a view to expanding the Company's coal resources.The confirmation of additional significant coal resources could support the development of a http://www.cashminerals.com/s/NewsReleases.asp?ReportID=128665&_Type=News-Releases...2/22/2006 Cash Minerals Ltd.-News Releases -Cash Minerals to Meet with SASOL (South Africa)to Ass...Page 2 of 2 fe zility to produce Fischer-Tropsch liquids. In February,Mr.Botha will also travel to China to conduct further due diligence ona coal-to-methanol project in Inner Mongolia. In addition to the work on alternative fuels,preparation of the Division Mountain feasibility study is continuing and is nearing completion.The study will assess the feasibility of preducing coal for the export market and a mine-mouth electricity generating station. About Cash Minerals Ltd. Cash Minerals Ltd.(www.cashminerals.com)is an emerging energy resource company listed on the TSX Venture Exchange under the symbol "CHX"and has approximately 60.0 million shares outstanding.Current activities are primarily focused on the development of its significant base of coal and uranium assets in Yukon. The Division Mountain Coal Project's five Coal jeases measure 776.4 hectares and the 30 Territorial Coal Exploration licenses cover some 360,000 hectares in coal-bearing stratigraphy.The Updated NI 43-101 Report dated December 21,2005 by T.C.Becker, B.Sc.,P.Geo.of Norwest Group (filed with SEDAR on January 10,2006)confirmed coal resources of 52.5 million tonnes entirely in the Measured category and a feasibilitystudyisnearingcompletion. Cash Minerals'Uranium exploration projects boast major stakes in seven quality projects all of which were previously drilled.Four resemble an Olympic Dam-type project,two are modeled after the prolific Rossing Deposit in South Africa and one is testing possible unconformity-related,high grade,vein-and-fracture-controlled uranium mineralization. -30- Cash Minerals Ltd. Peter Arendt,Vice President Tel:1-780-707-4235 Fax:1-780-460-5393 E-mail:parendt@cashminerals.com www.cashminerals.com CHF Investor Relations Cathy Hume,CEO Tel:1-416-868-1079 x231 Fax:1-416-868-6198 Email:cathy@chfir.com www.chfir.com Should you wish to receive Company news via email,please email julla@chfir.com and specify "CHX News"in the subject line. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release. You can view the Next News Releases item:Mon Feb 20,2006,Cash Minerals Expands Its Uranium Interests in Southern Yukon You can view the Previgus News Releases item:Tue Jan 10,2006,Cash Minerals Reviews Highlights Of 2005 And Announces Exploration Plans For 2006 You can return to the main News Releases page,or press the Back button on your browser. Subscribe to our Email List:Your Email {SEND")©2005 Cash Minerals Ltd.All Rights Reserved.|Disclaimer http://www.cashminerals.com/s/NewsReleases.asp?ReportID=128665&_Type=News-Releases...2/22/2006 legeSJ brs eo 4-2-5Mts,of VE 7TZE-TO AMIEA Blue Sky Cross-Walk This is a comparison of the scope and intent of two project proposed to examine the use of Beluga coal. NETL Beluga Coal Project Overview This is a project that the National Energy Technology Laboratory (NETL)of the US DOE has been developing since October 2004.NETL has been working closely with the Alaska Industrial Development and Export Authority (AIDEA)onthisconcept. Project Proposal Briefly,it is intended to be assessment of the potential for Beluga coal to be mined,sold as mined (or processed),converted to valued-added products,and .used to produce electric power for the region.By design,the project will assess a broad range of production and conversion options.Products to be consideredinclude: =Run of the mine and dried coal Electric power o For regional grid o For Pebble mine and other potential users Synthesis gas from a coal gasification unit o For direct use by customers (Agrium for example) o For electrical power productionin existing NG power plantsoForfuel/chemical production Fuels and chemicals produced from syngas o Fischer-Tropes fuels -white diesel o Alcohols o others By-products from coal production and conversion o COQOcfor enhanced oil recovery o Nitrogen o Hydrogen o Ash for construction materials o Others The assessment will include analysis of optimum power and conversion plant sites.The site options range from mine mouth,shipping terminal (on the east or west side of Cook Inlet),and existing power plant. The seven parts of the project are: 1)Coal Supply -5)Coal Plant Technology 2)Coal/Product Market Potential Options 6)Environmental,Shipping,3)Electric Power Market Stakeholder Issues 4)Cook Inlet Natural Gas 7)Economics It is intended that a detailed analysis will be conducted of the various plant type and sizes,product mixes,sites,shipping terminals,etc.to develop a base-case to be used for comparison with other proposed projects.Tne economic assumptions used will be consistent with those used in the recent South Central Alaska natural gas supply/demand analysis. This seven month study is estimated to cost about $400,000. Participants in the work include NETL personnel and contractors,University of Alaska Anchorage staff,and local consultants.Input from mine owners and operators,natural gas and power utilities,industrial users,and stakeholders will be critical to the success of the work. Blue Sky Development Project Overview The Blue Sky project has been proposed by a private group consisting of the Agrium fertilizer company,Homer Electric Association,and several engineering firms.It is focused on building a coal gasification plant,co-located with the Agrium plant on the Kenai Peninsula.The benefits of such a facility are; production of synthesis gas as input to the Agrium plant (replacing natural gas) and produce sufficient electric power for HEA to be able to meet local grid needs and the requirements of Northern Dynasty's Pebble Mine. The project will have four phases: 1)Feasibility Study (4 months)-the current proposal 2)Basic Engineering Design (24 months) 3)Detailed Engineering,Procurement,and Construction (24 months) 4)Commissioning and Startup (6 months) Phase 1 Proposal The current proposal is for the Phase 1 -Feasibility Study.The study is proposed to consist of eight parts: 1)Establish a commercial basis for coal supply,produced power,and syngas economics 2)Select Design Basis 3)Select Technology 4)Process Integration and Optimization with Agrium and HEA 5)Analysis of Benefits to Local Communities and State 6)Develop Overall Project Economics 7)Generate RFP(s)for required engineering and environmental Phase 2 work. 8)Define corporate structure for NEWCO Power Company,develop initaitial business plan and funding strategy for Phase 2. This fast-track four month study is estimated to cost $2 million. Project participants include Agrium,HEA,Scimation,Black &Veatch,and ENTRIX. Project Comparison It should be noted that the two projects have many similarities and overlaps; however,the basic intents are very different.The NETL Beluga Coal Study is designed to build on existing data and information to determine,in light of current and projected markets,what mix and size of coal processing,shipping,and conversion operations are optimal for the Cook Inlet region.The optimum site of the plant(s)will be determined as part of the work.The Blue Sky feasibility study is based on a gasification plant,sized to meet the needs of Agrium for input raw material and for the Agrium and HEA power needs (including the Pebble Mine). The products,size,and location have already been determined. Figure 1.directly illustrates the relationship of the tasks in the two projects.The NETL Beluga scope emphasizes input from market assessments to determine product selection and as a guide to selecting siting and technology options.The Blue Sky scope builds on plant specific needs and delves into much more detailed engineering and business organization issues.With this in mind, comparing the projects shows that NTEL Tasks 1)through 4)are broader and are comparable with Blue Sky Task 1,but they provide input to all engineering design considerations.Beluga Task 5 captures,in a more general sense<the engineering aspects of Blue Sky Tasks 2,3,and 4.The economics of the two are found in NETL Task 7 and Blue Sky Task 6.Issues relating to environmental,shipping,and benefits are in NTL Task 6 and Blue Sky Task 5.SN Blue Sky Tasks 7 and 8 deal with development of a corporation and developingbusinessplansandfinancing.While extremely important,they are outside the scope NETL proposal and are not an appropriate activity for NETL to support. Figure 1.Project comparison -the dotted lines illustrate the corresponding tasks in the two projects. Comparison of Beluga Coal Project Proposals NETL Beluga Scope of Work Blue Sky Scope of Work -Phase 1: Feasibility Study 1.Coal Supply 1.Establish Commercial Basis for eee eeresanenscueeeeacnnannecneccaes Coal Supply,Produced Power,and Team ,[Syngas Economics 2.Beluga Coal &Product (on teen,2.Select Design Basis Market Potential o 3.Electric Power Market Pe 3.Technology SelectionPotentialpoivvwcenecernscennnnnes 4.Interaction with Cook Inlet a 4.Process integration andNGSupply/Demand D "weer?”Optimization with Agrium KNO andeeeHomerElectAssoc 5.Coal Plant Technology weyee”5.Analysis of Benefits to LocalEvaluationPa-'|Communities and State 6.Envir,Shipping,and =Jane aro 6.Develop Overall ProjectStakeholderIssuesesasamausanuane”een Economics '7.System Economic ome ww 7.Generate RFP(s)for requiredAnalysesbese"engineering and environmental Phase 2 work 8.Define corporate structure for NEWCO Power Company,deveiop initial business paln and funding strategy for Phase 2 Comparison of Beluga Coal Project Proposals Blue Sky -Phase 1:Feasibility Study 1.Establisn Commercial Basis for Coal Supply,Produced Power,and Syngas Economics ge cae Pesce Seen NER SHURE REE ER NEEN SSR OReamanesononse+ 2.Select Design Basis 3.Technology Selection 4.Process Integration and Optimization with Agrium KNO and Homer Elect Assoc 5.Analysis of Benefits to Local Communities and State 6.Deveiop Overail Project Economics 7.Generate RFP(s)for required engineering and environmental Phase 2 work 8.Define corporate structure for NEWCO Power Company,develop initial business pain and funding strategy for Phase 2 Beluga Coal Mine &Coal Plant Development Study 1.Coal Supply 2.Beluga Coal &Product Market Potential 3.Electric Power Market Potential 4.interaction with Cook Inlet NG Supply/Demand _-Coal Plant Technology'|Evaluation 6.Envir,Shipping,and Stakehoider Issues 7.System Economic Analyses Overview: Benefits: Cost & Timeline: CROSS-WALK Blue Sky Feasibility Study compared to the NETL Beluga Coal Mine &Coal Plant Development Study Blue Sky Feasibility Study Proposed by a group consisting of Agrium,Homer Electric Association,and several engineering firms.Study would focus on building an IGCC plant to be co- located with the Agrium plant on the Kenai Peninsula.IGCC plant would be sized to meet the needs of Agrium for raw material input,and for the Agrium and HEA power needs (including Pebble Mine).The products,size,and location of the IGCC plant are assumed. Focus is on building an IGCC plant co-located with the Agrium facility. Benefits of the IGCC plant are production of synthesis gas as input to the Agrium plant (replacing natural gas)and produce sufficient electric power for HEA to meet local grid needs and the requirements of Northern Dynasty's Pebble Mine. About $2 million over 4 months. Page 1 of 2 Beluga Coal Mine &Coal Plant Development Study Proposed by AIDEA and coordinated with NETL's Arctic Energy Office beginning in October 2004.Study will focus on evaluating the economics and applications of Beluga coal.Areas to be considered,but not limited to, include:coal gasification/synfuel production for export and chemical feedstock (Agrium);generation of electricity for residential (Anchorage area)and industrial use (Pebble Mine);and sale and export of coal. Study will also consider the use of CO2 for enhanced oil recovery in the Cook Inlet. Study will determine economic feasibility of Beluga coal mine development and optimal siting for a coal-based IGCC (or other technology)plant in the Cook Inlet region for the co-production of electric power and products (synthesis gas,F-T liquids,alcohols, hydrogen,nitrogen,carbon dioxide) for local use or for sale in domestic and foreign markets.Study will be coordinated with the ANS Natural Gas Spur Line Study to insure common market assumptions. About $400,000 over seven months. Comparison of Beluga Coal Project Proposals Blue Sky Feasibility Study i 1.Establish Commercial Basis for Coal Supply,Produced Power,and ], Syngas Economics Beluga Coal Mine &Coal Plant Development Study 1.Coal Supply 2.Select Design Basis be:Tresesestanennetaeveecetassesssnecn yea*e,. 3.Technology Selection 4.Process Integration and Optimization with Agrium KNO and Homer Elect Assoc 5.Analysis of Benefits to Local Communities and State 6.Develop Overail Project Economics 7.Generate RFP(s)for required engineering and environmental Phase 2 work 8.Define corporate structure for NEWCO Power Company,develop initial business paln and funding strategy for Phase 2 Page 2 of2 2.Beluga Coal &Product Market Potential . : 3.Electric Power Market Potential 4.Interaction with Cook Inlet NG Supply/Demand 5.Coal Plant Technology "fEvaluation 6.Envir,Shipping,and "Stakeholder Issues .}7...System Economic Analyses From:Michael Eastman MVE Tle To:Der,Victor Date:4/15/2005 12:52:50 PM Subject:Update:Alaskan IGCC feasibility study Vic, Brent and I have discussed the recent feedback from Sen.Stevens'Office and provide the following input: NETL will carry out the Alaska coal conversion study using RDS as our prime contract vehicle (the draft statement of work provided earlier would be used to establish the DOE/RDS relationship and guide the scope of the study--it also provides for opportunities for stakeholder input/feedback).RDS is the current technical support service contractor to the National Energy Technology Laboratory (NETL)and is comprised of some of the most respected engineering firms in the industry (e.g.Parsons Engineering,SAIC,and EG&G). Although not envisioned as a subcontractor on this study,Agrium and their interests figure prominently.They will be consulted at the outset to learn more about their specific requirements so their needs can be incorporated into the overall analysis.Agrium will also be consulted numerous times as the study proceeds to ensure the DOE study will accurately develop specific information that should be useful for their own business development purposes. It has always been intended that those conducting the study will work closely with the stakeholders,which include Agrium,HEA,ML&P,Enstar,AIDEA and others. Agrium's proposed Blue Sky study is based on a gasification plant sized to meet the needs of Agrium for input of raw material and for the Agrium and HEA power needs (including Pebble Mine).The NETL Beluga Coal Mine &Coal Plant Development Study has many similarities to Agrium's proposed study.For example,the NETL study will assess current and future power needs for the entire region (including electricity at Pebble Mine as well as the potential to displace Cook Inlet methane with coal),provide a recommendation regarding a mix of value-added coal conversion products for in-state use (especially feedstock for Agrium)and for export to the West Coast (clean FT fuels)or internationally,evaluate possible plant locations (which side of the Cook Inlet for example),compare appropriate coal conversion technology (similar to Blue Sky)and address shipping issues of coal and the coal products.While there is considerable overlap in the two studies,the NETL study is some-what broader and will be of benefit the entire South Central Alaska region in addition to providing specific and useful information for use by Agrium. We will renew our contacts with Agrium at the onset of the study (to be initiated by Brent Sheets-AEO).Let us know if any additional input is needed at this time. Thanks, Mike Eastman (NETL) 412-386-6136 and Brent Sheets Regional Manager Arctic Energy Office National Energy Technology Laboratory U.S.Dept.of Energy P.O.Box 750172 539 Duckering Bldg/UAF Campus Fairbanks,AK 99775-0172 Phone:907-452-2559 Fax:907-452-3345 >>>"Der,Victor"<Victor.Der@hq.doe.gov>4/13/2005 4:26 PM >>> Mike See the questions that are being asked of Maddox.He wants an answer asap from us. Thanks vic -----Original Message----- From:Rudins,George Sent:Wednesday,April 13,2005 4:23 PM To:Der,Victor Subject:FW:Alaskan IGCC feasibility study -----Original Message----- From:Maddox,Mark Sent:Wednesday,April 13,2005 3:27 PM To:Rudins,George Subject:Fw:Alaskan IGCC feasibility study Sent from my BlackBerry Wireless Handheld coer Original Message----- From:Waller,Karina (Stevens)<Karina_Waller@stevens.senate.gov> To:Maddox,Mark «<Mark.Maddox@HQ.DOE.GOV> Sent:Wed Apr 13 13:48:50 2005 Subject:RE:Alaskan IGCC feasibility study Mark: Your folks have been working hard and this looks like a good proposal.I do have a few questions.You reference RDS in several positions in the project team.Is this the company which has a research and development contract with DOE?The reason I ask is because Agrium is negotiating with 3 groups-Black &Veetch,Seimation,and Entrix-to perform some of the tasks of this project (environmental studies,engineering,etc).Is there George Mike Eastman just finished the draft statement of work for the Alaska study. The IGCC coal plant studyis one of 6 tasks as part ofa broader scope tht Brent Sheets of the NETL-Arctic Energy Office had proposed at a $400,000 level.The Statement of Work has a schedule of milstone/deliverables associaged with it.The other attachment isa crosswalk between the BlueSky proposal and the Beluga coalplant study inclduing a crosswalk chart.The two areas not covered in this workscope,which the Blue Sky proposal includes, relate to generating an RFP for engineering and environmental work and the definition of a corporate structure and business plan --these are not proper functions for the fedral government to be engaged in funding.We will wait for your comments or Mark's comments and ok before proceeding. Vic ----+-Original Message----- From:Eastman,Michael Sent:Friday,April 08,2005 11:31 AM To:Der,Victor Cc:Carabetta,Ralph Subject:Re:Alaskan IGCC feasibility study Vic, Fresh off the presses.... Attached is the scope of the planned study...including the IGCC piece. The other file is a summary-level crosswalk comparing to the Blue Sky proposal. I have given Brent the go-ahead to seek a proposal from RDS consistent with the attached SOW...it includes a detailed timeline. I will be out till next Thursday 4/14.I will leave to coordinate with FE/HQ to you.I was planning to discuss with Brent next Friday (4/14)the issue of ensuring that the Alaskan interests are being satisfied with this plan.If you have any input before then...let me know. Mike >>>"Der,Victor"<Victor.Der@hg.doe.gov>4/8/2005 10:49 AM >>> Mike I left a voice mail for you on this today. Maddox wants asap a chronology (milestones and dates)of how the IGcC feasibility study will proceed,e.g.,who will do the work;when will it start;what will be the key activities involved in getting the study done; when will it be completed.He also wants to be sure that the scope of the study will satisfy what is being asked,(as much as possible for the amount of funds to be put on this)and the cost.I know that you will be or hae been in touch with Brent Sheets which involved a broader scope of work that he had descibed for about $400K.If that broader scope encompasses this feasibility study and will address what was in the Blue Sky proposal then we flexibility in this proposal to allow Agrium (and others it negotiates with) to participate in the feasibility process?I know that Agrium wants to be involved in this process and it is unclear from my reading of the proposal whether that will be the case. My apologies for my naiveté-we generally only deal with the appropriations side and not on the actual awarding of contracts.Thanks for all of your hard work on this.Karina Karina M.Waller Legislative Director Senator Ted Stevens (202)224-3004 (office) (202)224-2354 (fax) oe---Original Message----- From:Maddox,Mark [mailto:Mark.Maddox@HQ.DOE.GOV] Sent:Wednesday,April 13,2005 9:50 AM To:Waller,Karina (Stevens) Subject:FW:Alaskan IGCC feasibility study Sensitivity:Confidential Karina, Your thoughts would be appreciated on this ..... -----Original Message----- From:Rudins,George Sent:Friday,April 08,2005 3:13 PM To:Maddox,Mark Cc:Der,Victor Subject:FW:Alaskan IGCC feasibility study Mark,you requested information on the Alaska project.See below and attached ---e-Original Message----- From:Der,Victor Sent:Friday,April 08,2005 2:39 PM To:Rudins,George Subject:FW:Alaskan IGCC feasibility study should include a description of that as well. If you could have that by early Monday, Thanks. Vic ce:Carabetta,Ralph;Sheets, I would appreciate it. Brent * \ey January 13,2005 Coal Drying of Beluga Coal and Application of the KFx Process. Introduction Western US coals include low sulfur high moisture 15 to 30%sub-bituminous moisture coals and 25 to 40%moisture lignites.Beluga coal is similar to these types and has a moisture content of approximately 25%.KFx has proposed a coal drying process to be used on Beluga coal to enhance its value and provide dry coal for export.Various coal drying processes have been developed for western US and other high moisture coals, which may be applicable to Beluga coal.The benefits and risks of coal drying vary depending upon the extent of drying and the method of shipping.The benefits and risks are reviewed and other processes are described and compared to the KFx process in this paper. Benefits e Drying of coal will decrease shipping costs due to weight reduction.This will decrease the delivered cost of coal to mid-west coal markets where low sulfur coal is in high demand and to Pacific Rim markets where coal from Beluga may be marketable.However it should be noted that the dry coal is less dense and therefore the shipping volume is not significantly reduced.While costs for coal are typically based upon a §$per ton price for a particular coal,the $per ton price for a coal must consider the total shipping cost which is a function of volume and weight,depending upon the transport means.Coal transport cost estimates cannot simply assume the same §per ton rate for wet and dried coal. e Drying of coal will improve power plant efficiency thereby reducing overall energy costs and also reducing net plant emissions,particularly CO2,when dried coal is direct fired in a boiler or converted to gas to be used a gaseous fuel.This will enhance the value of the dry coal for direct firing in conventional boilers or for use as a fuel gas.While these economic benefits are significant,the fuel user will accrue a share of these benefits and so these benefits may only be partially reflected in the mine price for the dried coal. e Gasification processes and to some extent fluid drying have the capability to remove trace elements such as mercury from the coal.This is a result of high temperature chemical reactions.For example the fluid bed dryer to be used at the DOE funded Great River Energy project has been shown in pilot tests to remove some mercury from the coal. Gasification processes also have the capability to minimize most regulated pollutants such as particulates,SO2 and NOx.Particulates and a portion of the sulfur are removed with the waste coal products as ash.The remaining sulfur is converted to hydrogen sulfide and must still be scrubbed from the coal gas at the power plant assuming typical emission regulations.Since a gasifier operates in a reducing atmosphere,formation of NOx is minimal.In addition NOx is minimized with oxygen blown gasification by reducing the nitrogen available for transformation to NOx.However oxygen blown gasification is extremely expensive.Air blown gasification,which is the less expensive alternative,also operates in a reducing atmosphere but does not have the advantage of minimum available nitrogen. Drying processes operate in either a batch or continuous mode.Unless the ultimate coal user is adjacent to the drying process,the drying process will typically operate in a batch mode.Ifthe dryer is pressurized which is necessary for high moisture removal,it is extremely difficult to feed the coal continuously into a pressurized chamber.Such non-continuous batch operation creates instability,which may be hazardous or decrease reliability.Dry coal is fundamentally unstable and subject to fires and sometimes explosions if the coal is enclosed or if the coal is not continually moving. Moisture may be reintroduced after drying while awaiting shipping if the coal is stored near water or in a high rain area.If the coal is stored outdoors which is typical,the coal may be relayered to alleviate some of these problems during long-term storage.Special covers and treatment provisions may also be required for storing the dry coal. Transit of the dry coal is typically by ship/barge or rail.The problems of storing dry coal and protecting the coal from moisture re-introduction are similar to those at the drying process.However the option of moving or turning over the coal to prevent buildup of combustible products is extremely limited due to spatial restrictions and available coal handling equipment on a barge or ship.In addition if the coal is shipped on an open ship,barge or rail containers,fugitive dust emission during transit from the dry coal can become a severe problem.Open transit of dry coal will expose the coal to moisture.This can create a coal runoff waste stream,which must be disposed during transit or at the receiving port. A coal drying or gasification process would be subject to air and water emission rules and regulations.The stringency of these regulations will vary depending upon the plant location and process.Any process involving use of hot air in contact with the coal drying will require particulate removal equipment.Ifa combustion process is used to heat the air,air permit rules will apply to the flue gases.In addition,a drying process such as gasification or fluid drying,which includes steam or hot water in direct contact with the coal,will be subject to extremely stringent wastewater treatment rules. e Gasification processes operate at a high temperature.The coal gas must be quenched prior to transport or use.The quenching process produces an ammonia rich liquid waste steam,which may be a disposal problem.Liquid wastes may also include sulfuric acid. e Disposal of the solid products can also be a problem,particularly if a chemical process such as gasification is used.Solid wastes from gasifiers have been considered carcinogenic under some regulatory climates.Storm runoff from an open coal pile whether at the mine or in transit to the user is also a regulatory concern. e Economic risks are an issue.The energy required to dry the coal increases exponentially as the dryness level is reduced so that operating costs for drying plants have been shown to be too high to make the delivered coal competitive compared to other coals. Processes Coal drying is not new.There are basic process types,which have been used for coal drying.These include: 1.Mechanical Drying-Coal Moisture Content Reduced by 0 to 5 percentage points. Historically coal drying has been accomplished by mechanical techniques developed in the minerals processing industry.These mechanical processes reduce coal moisture content by about 5%percentage points.There are numerous simple methods for coal drying using basically mechanical methods.These have proven to be effective and range from simple management techniques in coal piles to use of centrifuges,cascade dryers,and rotary feeders.These processes are used throughout the mining industry with a high degree of success.Rio Tinto,an international mining consortium,has beena leader in this type of drying. 2.Thermal Drying-Coal Moisture Content Reduced by 5 to 15 percentage points (Also fluid bed dryer) Thermal dryers have been used to further reduce moisture content about 15 percentage points.These technologies include direct dryers or kilns,fluidized bed dryers,and indirect coal dryers.These processes use combustion burners to produce hot air or steam for drying the coal.These processes operate at atmospheric pressure.Ifthe hot air or steam is in direct contact with the coal,the air or steam must be treated. Examples: The fluid bed dryer process is the basis for the current Department of Energy (DOE)project for Powder River Basin coal.This is a thermal drying process not likely to reduce coal moisture content significantly more than 15 percentage points.The drying plant is to be adjacent to the Coal Creek Power Station of Great River Energy.Pilot plant facilities have been operated at the Coal Creek Power Station for test burns of dry coal.Hot air is bubbled through an atmospheric fluid bed to fluidize the coal.Simultaneously hot circulating water is fed through tubes in the fluid bed chamber to provide additional thermal energy to dry the coal.Powder River Basin coal moisture will be reduced from about 30% to 15%with a 5%improvement in heat rate or efficiency.The atmospheric process eliminates the problems associated with pressurizing coal.Coal dust is removed from the hot air with conventional fabric filter removal equipment.The dry coal will be burned in an adjacent power plant,minimizing storage problems. A variation of the process has been used in Eastern Europe on a 380 MW plant where coal mine methane is used to heat the drying air. The "Cowboy Process”was proposed unsuccessfully to DOE for Beluga Coal as part of a submittal for a DOE matching grant as part of the CCPI program.The project includes a commercial scale low rank coal drying plant in conjunction with the repowering of an existing coal-fired power plant in Anchorage,known as the Knik Arm Power Plant (KAPP).The process is based upon low temperature low pressure fluid bed technology,similar to the Great River Energy project.The process also appears adaptable to production of coal water fuel.Significant development of coal water fuels occurred in the 1970's in Florida but was shown to be uneconomic due to necessary boiler deratings.There is also ongoing coal water fuels work at UAF with some Federal funding. The proponents claim a 25%improvement in power plant efficiency as a result of drying which appears optimistic when compared to other fluid bed dryer and gasifier applications.The KAPP boilers have long been inactive so there would be major problems in restarting the plant on coal.Locating a drying plant and restarting the KAPP in Anchorage would face major environmental hurdles.The coal usage of the KAPP may be insufficient to demonstrate a large scale commercial application.The cost of drying and the location in Alaska make it doubtful the dried Beluga coal could be 3.Chemical Drying-Coal Moisture Content Reduced by 15 to 25 percentage points (Also referred to as Pressurized Fluid Bed (PFB),Fluid Bed Gasifier,or Coal Gasification) These processes rely on a chemical change of the coal when steam or air/oxygen is introduced.For coal drying this process has evolved around pressurized fluid bed (PFB)or coal gasification.These processes have the distinct advantage that the moisture removed from the coal is subsequently driven off in the coal gas combustion process.Coal is dried under pressure by direct contact with a stream of the hot gas from the gasifier.The dried coal is recycled to the gasifier.The resulting gas is burned in a gas turbine.While using air as the gasifying agent,the gasifier does not produce pipeline quality gas,it does produce a low Btu gas acceptable for a gas turbine.The combined process improves efficiency of production of energy by about 15%.Problems associated with coal storage and transport are minimized since the power plants are adjacent to the mine. Examples: In recent years further development for coal drying has taken place in the western US on Powder River Basin sub-bituminous low sulfur coal and in the Latrobe Valley of Australia on brown coals using chemical drying.A fluid bed gasifier process that uses an air blown fluidized bed gasifier combined with thermal drying has been built and being demonstrated on Australian brown coal in the Latrobe Valley of Victoria,Australia.The project includes a 10 MW gasifier, which dries a coal stream for use in 4x500 MW conventional coal units.The coal gas is burned in a small gas turbine.The project is intended to demonstrate all the components necessary to facilitate the development of an integrated coal drying and gasification facility. The KFx process might be considered a chemical process,which has been developed over several years for application to upgrade western sub-bituminous coal.KFx integrates proven coal gasification technology with KFx technology to produce a stable product superior to US eastern compliance coal.KFx claims to reduce the coal moisture content by up to 25 percentage points while reducing associated drying problems of dusting and moisture re-absorption.However, previous testing has shown their products to decrepitate,reabsorb moisture,and spontaneously combust.The process uses heat and pressure to change the physical and chemical structure of sub-bituminous or lignite coal to yield a clean and stable high energy,low moisture product. KFx constructed their first project in Wyoming in the mid 1990's.The process was based upon coal gasification technology.A heat transfer fluid was heated by gas or oil and fed into the shell side of a pressure vessel.The pressurized hot fluid was used to indirectly dry the coal stored in coal pipes within the vessel shell.The moisture in the coal was subsequently flashed to steam,the waste gas incinerated,and the coal recovered.The objective was to reduce Powder River Basin coal down to 3%moisture.The project cost $80,000,000 and relied on proposed substantial tax credits in pending energy legislation for its viability.The current availability of these tax credits is unknown at this time. The fundamental problems with the project were that the process could not operate on a batch level without excessive start up and shutdown problems and also that the Power River Basin coal became extremely unstable and combustible at the low moisture levels,and produced a significant quantity of fine particles. Batch operation of the process requires a complete shutdown and purge of the process.A complete purge of combustibles after shutdown and restart is time consuming and expensive.The pressurized process is a batch system and the restart is energy intensive requiring significant amount of thermal energy and auxiliary power.Process conditions during start up and shutdown have shown to be unstable.The condensed flashed moisture from the coal contains hazardous materials,which made disposal difficult.The Wyoming project had operated for only a short time when a major fire occurred.To be fair,the fire was associated with the hot oil heater,caused by poor field installation and not related to the process.Litigation resulted causing KFx major financial losses.The project has not been restarted.The major factors in the failure of the project were:1)the process generated 4 to 10 times the amount of fines that had been predicted by KFx which plugged down stream equipment and overloaded the waste steam cleanup systems,2)Decrepitation of the product caused even further fines to be generated,causing the product to be less attractive to buyers,3)the tendency of the product to reabsorb moisture and then spontaneously combust was also seen. While the initial KFx process demonstrated in Wyoming on a 40 ton per hour plant (equivalent to approximately 40 MW)wasa failure,KFx has modified the process with the assistance of Lurgi,SASOL,and Rio Tinto.Lurgi and SASOL are world leaders in gasification development with SASOL being the early 1970's industry leader with major projects in South Africa.Rio Tinto is a world leader in mining and associated conventional mine drying processes. The modified KFx process uses proven Lurgi SASOL technology but operates at a much lower temperature and pressure then previously used in Wyoming.It uses a low-pressure fluid bed concept similar to the atmospheric fluid dryer but not pressurized to the levels (10 atmospheres)of pressurized fluid bed (PFB).This eliminates the need for expensive materials of construction,facilitates coal flow through the process,and provides better control of moisture.Operating the process at much lower pressure greatly reduces the problems associated with removing waste products from a pressurized process.These problems are significant in conventional gasification and PFB.It also facilitates a batch process since start up and shutdown coal feeding problems to the process are greatly reduced.The extremely low moisture levels of the original project however will not be achieved.As noted earlier a fluid bed dryer reduces moisture about 15 percentage points while chemical drying can reduce moisture about 25 percentage points.The higher moisture and thus more weight decrease the value of the product for export. The proposed KFx process for Beluga has not been demonstrated to operate safely and reliably under the conditions proposed for the Beluga facility.The proposed process includes better moisture control and operating at a higher moisture level output through design modifications reducing pressure and temperature in the drying chamber.However the effectiveness of these improvements has yet to be tested.Even if the improvements reduce problems associated with the extremely dry coal,the drying process as applied to exporting coal may be economically compromised since the coal moisture content will be higher.Demonstrating an application of the KFx process on Beluga coal would be a vital element in KFx development since a Beluga/KFx development would involve substantial technical risks.Ideally,KFx should run tests at their planned new facility on a significant quantity of the Beluga coal.Representatives from potential investors or purchasers should attend the tests to verify results and that the data taken is consistent with normal testing.The substantial infrastructure requirements necessary to open a new mine coupled with the unknown problems and costs associated with coal drying with an undemonstrated process would create significant risks requiring confirmation of results and applicable mitigation measures as needed. Summary While coal drying processes have been developed,currently there are no significant commercial applications of coal drying in the western US.Also,there are no known processes that produce a product that can be transported without decrepitation or reabsorbtion of moisture.There are two reasons.First,although drying has been applied to Powder River Basin low sulfur coal,the volatility and dusting problems from this coal have not been fully resolved according to our review of the Industry.Second the energy required to dry the coal increases exponentially as the dryness level is reduced so that operating costs for drying plants have been shown to be too high to make the delivered coal competitive compared to other coals.Proponents of coal drying may disagree with this assessment ,however,there are no processes that are commercially viable at this time without government subsidies. In general however,the cost,risk,and environmental impacts increase as the final moisture level in the coal is reduced.In particular,as dryness approaches a final moisture content of 10%or lower,operating costs become extremely high due to increasing energy costs to remove water bound to the coal.The economics of coal drying are therefore dependent on the final moisture content,and the cost of drying,transport, and storage.For Beluga coal it would be feasible to establish a competitive value of the coal at Beluga as a function of moisture content since the cost of mining and shipping the raw Beluga coal is known.An economically justifiable moisture content competitively priced for export could be determined.The level of economically justifiable moisture content could then be used to determine the optimal drying method.If the desired final moisture content is in the 10 to 20%range,the fluid bed drying process,currently being demonstrated by DOE,may be suitable.If however a lower final moisture level is desired,a more costly conventional coal gasification or fluid bed gasification process may be applicable. To justify a higher cost process with significant moisture reduction,it would seem logical that a higher value product,such as coal gas,would also be produced since the higher temperature chemical process will produce some gas.At Beluga the ideal combination would be an integrated drying and gasification process where the coal is dryed for eer shipment and coal gas is produced for use in local gas turbine generation.The planned DOE IGCC feasibility study could include an evaluation of combining a dry coal export facility with IGCC. If a coal drying process fits within a feasible cost range suitable for the markets,and can produce the desired moisture level,the benefits and risks of the technology can be assessed with a pilot or demonstration plant.Assessment would include evaluation of the drying process on plant operations,application of the process on Beluga coal in consideration of the risks described including size distribution,resistance to reabsorbtion and spontaneous combustion,and ability of the process to achieve the final moisture level.) "over Story >Electric Generation By Thomas F.Armistead with E.Michael Powers AS Electricity Demand Heats Up Coal is returning to favor as a powerplant fuel,driv- en by rising electricity demand and rising costs for competing fuels.As utilities and private-power developers seek to get ahead of the next surge in powerplant construction,they are proposing,in record numbers,plants using technologies that reduce coal's notoriously dirty emissions.Coal- fueled powerplants that produce .>> near-zero emissions also are coming,, thanks to intensive public and private research programs. Renewed interest in coal "is clearly driven by fuel-cost issues,”says Gregory A.Anderson,executive vice president of fossil-power technologies for Sargent & Lundy LLC,Chicago.The firm is ana- Advanced Coal Projects Proposed and in Construction Number of Projects $Value MW Capacity #Plants $Bi MW in Thou. 18 18 18 yy 15,r 4 15 --15 1214 =12 -12;/- iS ¢a 9 :a 9 q 4 6 iH 6 7 a 6 3 '4 T I i 3 .i ii =3 j 4 Fr 4 rel 4 0 : 5 } 0 . CFB Supercritical 1GCC CFB Supercritical IGCC CFB Supercritical IGCC SOURCE:U.S.DEPT.OF ENERGY 20 =ENR ®©December 5,2005 enr.com Coal-Fired Generation Development Status (0 Under Construction 4 Proposed TechnologyOAdvancedTechnology*Csuberitical Pulverized Coal Unit Capacity (MW) Greater than 650 L\(_)32510 650 4 O Less than 325 Coal Mine [5]Anthracite [}Subbituminous Lg Bituminous -_Lignite lyzing a variety of coal-generation tech- nologies for several utilities."If they can close old [simple-cycle]gas-fired genera- tion,they will do it now,”he says. Clean coal technology helps over- come community resistance to coal's emissions."Coal is a four-letter word,” Using technologies born in the U.S. but proven abroad é Wash. wn yfOn- idaho {. 4 Wyo.aN Texas 4 ND. S.D. SeeHUN INTNNS SE gamnaeue!-WN. y NPA fa i Ni Ln | =Hl Narn ei = :-e a Ee ['Ny '\' a -a MaineAA4SupersizeThat. Wisconsin's 80-ton feed-andreduceMinn,Wi ; f water heaters are mu flue-gas emis-eston arger than a subcritical N.Y sions while gen-Chowerplant s.Nass:erating elec- Wis..N.Y.1 eric) Council Bluff mich.a)ye Ra cce'y.D5)a ..Energy Center 4 Ii.ae zt Gasification allowsMeAN ate D.C|AassNO ME>FS3 'AEE val! Kan.|7 Mo Ky.ygiaal _}r N.C.Poo:j (Tenn.3Okla,"lo ' S.Cee"”_4 Ark.pre A toward Z we Ga.Powe |Ala.PHOTOTOPCOURTESYOFBLACK&VEATCH;A BOTTOMCOURTESYOFHITACHIAMERICALTD.near-zero separation of impuri- Del.ties before combus- tion,while circulating uidized-bed and super- critical pulverized-coal processes cut emissions in the combustion cycle. Now,tested and demon- strated,they are moving commercial operation. rplant owners and researchers,pursuing the goal of emissions and higher efficiency,are pushing stil]others through the development pipe- line.The $1-billion FutureGen program, using $650 million in Dept.of Energy funds to build the world's first powerplant with near-zero emissions,took a major step forward in September with the for- mation of an alliance to develop the proj- ect (ENR 10/3 p.22).In mid-November,° DOE selected two other projects valued at nearly $10 million to demonstrate "oxycombustion,”a carbon-capture tech- nology that combusts coal with oxygen instead of air.Observers expect these pilot technologies to become commer-cially viable over the next 10 years as more stringent environmental regula- tions reduce marginally higher costs over conventional powerplants. Fast Growth After a lengthy period of slow growth, the U.S.electric system from 1999 to 2004 grew by 25%,adding more than 200,000 MW of generation capacity. Most of these new plants burn natural gas, which was cheap,easy to permit and burns cleaner than coal.In 2003,DOE's Energy Information Administration fore- cast that by 2025,74,000 MW of new coal capacity would be added to the nation's generation capacity,making up 17%of projected new capacity.Two years later, EIA is forecasting 87,000 MW of new coal capacity by 2025.Coal's proportion of projected total new capacity is up to 33%by 2025.Even more striking,18,154 MW now proposed would use advanced says John Thompson,advoca Fla.\cy coordinator for Boston-based ' Clean Air Taskforce,an environ-yimentalgroup."If we don't radical-4}?rob ly change the nature of how we use coal,our options for global warm- ing are going to be zero.Particu- lates and global warming are the main concems in this century.” Many environmental activists still call "clean coal”an oxymoron. But as a baseload fuel,"coal is not a good thing or a bad thing;it's just a reality,”Thompson says. Clean or advanced coal tech- eitPALAire,|ScagALESSETSBy } _Material Success.New alloys stand up under supercrit- ¢ical's high temperature and pressure conditions. nologies increase energy efficiency ' ' enr.com December 5,2005 .ENR =21 over Story >Electric Generation ermit litigation,steel pricePiresfirst-of-a-kindmaterialsandatightlabor market are among the challenges facing a Wisconsin utility one year into a supercritical pulverized-coal powerplant project,one of only two in progress in the U.S.So far,the Materials and tabor challenges have not adversely affected the project's schedule and budget,but a state court decision could seri- ously delay it if the utility loses. The Sierra Club contends the permit for Wisconsin Public Service Corp.'s 500-MW Weston power- plant unit 4 does not comply with the Clean Air Act.The dry scrubber lowed in the permit is "not best- ailable control technology under "me Clean Air Act,"argues Bruce Nilles,a Sierra Club attorney.The court decision is due the first week in January,he says. An adverse decision "could delay the project a year to two years,”says Kelly Zagrzebski, WPSC community-relations coor- dinator,adding that the Green Bay- based utility probably would not appeal if that happens. Construction began in October 2004 on the supercritical Weston unit in Marathon County,Wis.Labor availability is the main challenge, says Matt Kurian,B&W project manager.In the drought of coal- plant construction after 1980,con- struction skills were lost through attrition.Now,with several coal- fired plants under construction in Wisconsin,labor is tight,says Kurian., The plant will burn low-sulfur .coal from Wyoming's Powder River Basin.The utility selected a super- Critical system for its efficiency and because supercritical's "availability has proven equivalent to subcriti- cal,”says Dan Yagodinski,WPSC engineering manager.Supercritical systems operate at very high tem- peratures and pressures,and pro- vide more complete combustion while using less fuel The $752-million Weston 4 will use a spiral-wound universal-pres- sure boiler.The system will deliver a maximum of 3.641 million 'b per hour of steam at 3,775 psig pres- sure.Steam will be superheated to 1,085°F and reheated to 1,085°F at 630 psig. "This is the first application of P92 [a high-chromium alloy]in the U.S.for main steam and hot re- heat,”says Stephen Pieschl,Black &Veatch project director.B&V is project engineer for design,per- mitting support,procurement, startup and training., The use of new materials has required some training for craft workers,but it has not been an issue."From a materials stand- Challenges Dog Wisconsin Utility's Supercritical Project point,this is basic powerplant con- _Struction like it was done 20 years ago,”says Charles Meyer,project construction manager for Wash-| ington Group International,fhe construction manager at-risk. In supercritical systems,"the feedwater heaters are heavier,” Pieschl notes.Weston 4's feedwa- ter heater weighs 80 tons."It was set with a crane instead of jackup and rolling into place,”Meyer says. The unit's air-pollution-control equipment includes a dry scrubber to conform with the plant's permit. But the Sierra Club wants the per- mit to require a wet scrubber,more commonly used at plants that burn high-sulfur eastern coal and which removes more sulfur.It also wants 90%control efficiency in the unit's selective catalytic reduction sys- tem,to reduce NOx emissions. There have been a few surpris- es,including higher steel prices a year ago,says Meyer.But at 21% completion,the plant is on sched- ule for June 2008 commercial operation and the budget is still holding at $752 million,he says. Another supercritical unit began construction in September 2003 at MidAmerican Energy Co.'s Council Bluffs Energy Center in Council Bluffs,lowa.A 790-MW Babcock- Hitachi supercritical sliding-pres- sure-operation Benson boiler de- signed for 5.5 million Ib per hour at 3,690 psi will be Council Bluffs Unit 4.It will have main stearn temperature of 1,050°F and reheat of 1,100°F.Hitachi America Ltd., Tarrytown,N.Y.,is contractor for engineering,procurement and construction.The $1.2-billion proj- ect is on schedule for commercial operation in 2007. LG&E Powergen's Trimble County Unit 2 in Kentucky could be next. The $1-billion,750-MW unit received its permit from the state and is negotiating an EPC con- tract with Bechtel Power Corp.Scott Straight, LG&E director of project engineering,says he ex- pects to complete the contract next year.The plant is scheduled for commercial operation in spring of 2010. "Ninety percent of all new boilers from this point will be supercriti- cal,”Straight says.= coal technology (see graph p.20). Many environmentalists consider gasification the best use of coal for gen- eration.With gasification,sulfur dioxide (SO,),carbon di- oxide (CO,),mer- by the Environmental Protection Agency,will make massive cuts in SO2, NOx and fine particulate (PM)levels. Affecting 28 states in the eastern U.S.and cury and oxides of nitrogen (NOx) are stripped from the synthesis gas stream before combustion."We have all the tech- nology to isolate CO,from syngas commercially 'demonstrated and --y to operate ay,”Thomp- The Clean Air Interstate Rule, Heat-recovery Steam drum Coal silos +E ='Air heater Transport gasifier the District of Columbia,it will cut NOx by 68%in 2009 and by 72%in 2015 from its current allowable average level of .46 Ib per million Btu of coal fired. int SulfurCOOHsales--_-andGascooler>Ammoniaomsales Gasification ash 4Coatdisposal/sales Ci=a leanSteamPe Air Stack Steam Generator Steam =steam genera' Steam turbine Gas turbine / SOURCE:ORLANDO UTILITIES COMMISSION issued last spring A In the Game,Circulating fluidized-bed (left)and IGCC are two clean coal technologies with near-term promise. 22 =ENR =December 5,2005 enr.com Superheaters Primary|_-superheater PrimaryMoyo,fre reheater EconomizerFinalreheater74°= Overfire air ports: eaialgppersenelnapeemcneyinnmy |sr a Low NO,' burners Wisconsin Public Service Corp.'s Weston powerplant unit 4,one of only two supercriti- cal pulverized-coal plants in construction i eS * &a in the U.S.,is expected = to be followed by oth-- ers soon.ee 4: phere to form fine par- ticulates,says Gary Brown,senior technol- ogist in the air quality group of CH2M Hill Cos.Ltd.,Denver. Despite President Bush's 2001 rejection of the Kyoto Protocol, a large number of U.S. SOURCE:THE BABCOCK &WILCOX CO. Circulation Axial forced pump draft fan industrial companies assume regulation is inevitable and have Primary air fan PHOTOCOURTESYOFTHEBABCOCK&WILCOXCO.A 0n Deck.Typical B&W 750-MW spiral-wound universal pressure boiler is similar in concept to the supercritical addition at Weston. Emission allowances for SO,under the cap-and-trade program will fall by 50%in 2010 and 65%in 2015 in the affected region.Particulate rules are still being discussed,but the regulation of SO,and NOx will dramatically reduce particulates because those compounds react with other matter in the atmos- joined the Chicago Climate Exchange,a market for carbon-emission allowances. Current and anticipated emission reg- ulations are still forcing generators using subcritical pulverized-coal to add to cap- ital costs with back-end equipment like scrubbers,selective catalytic reduction and baghouses or electrostatic precipita- tors.Even power developers using advanced coal technologies,which already have lower emissions than sub- critical systems,must add the equipment to achieve permitted emission levels. "We don't see supercritical costing us more.If we do,it'll be 1 to.3%{capital cost],but we would offset it in operating cost,”says Marty Swartz,project director of the,supercritical Granite Fox Power Project.IGCC capital costs,in contrast, are 25%more,and operating costs are 100%more,he says."The gasifier requires a lot of maintenance,”he notes. Granite Fox Power LLC,a wholly owned subsidiary of San Diego-based Sempra Generation,is proposing a two- unit,1,450-MW supercritical PC power- plant in Gerlach,Nev.,costing an esti- mated $2.5 billion."There's a lot of environmental pressure to reduce CO, emissions,”says Swartz.Supercritical PC overall emissions are lower because supercritical combustion is more efficient enr.com December 5,2005 =ENR =23 Dit oS atte ee a PE Bey woe eee,ers ere Electric Generation «<Cover Story Technologies Offer Electricity Generation Capacity by Energy SourceNATURALGASMWinThou.|=COAL wm NATURAL GAS Sy NUCLEAR mm HYDRO | 500,Hl i ',:itH 375}/ 250}TT 125 beh 7 i096979899000102030405060708091011 12 *=PROJECTIONS SOURCE:ENERGY INFORMATION ADMINISTRATION 1314 15 1617 18 1920 2122 23 24 25 _tion.Efficiencies of fluidized-bed combustion can be than subcritical.It uses less fuel. If the permits are in place in early 2007,as scheduled,construction would begin soon after,aiming for completion in 2011 for both units,Swartz says. Rebirth Many supercritical plants have been con- structed in Europe,South Korea and Japan,where high fuel costs made their efficiency especially attractive.But Bar- berton,Ohio-based Babcock &Wilcox Co.claims the first supercritical system,a 125-MW universal-pressure boiler built in 1957 for Ohio Power Co.More than 150 supercritical plants were built in the USS.in subsequent decades,but the gen- eration market became overbuilt and fad- ed about 1980.Advances in metallurgy since then have made the technology more reliable. A bad experience with early genera- tions of supercritical technology in the USS.left "a sour taste,”says Ray Kowalik, vice president and general manager of the energy division at Kansas City-based Burns &McDonnell.Supercritical PC requires "tighter control with operating temperature in the boiler,”he says. "We're about the only place in the world still using subcritical.” Today,two supercritical plants are under construction and a third is expected to begin next year (see p.22).CFB boilers have been increasingly specified in recent years (ENR 12/2/02 p.39).And three teams of engi- neer-constructors and equip- ment makers are developing opportunities to construct IGCC plants in the U.S.In September,the GE Energy and Bechtel Power Corp.team began front-end engineering design for a $1.2-billion,629- MW IGCC project in Ohio for American Electric Power Co., Columbus (ENR 10/17 p.9). With an emission profile close to a natural-gas com- bined-cycle plant's,IGCC is the apple of the clean-coal power market's eye.Its most serious drawback is its cost.An analysis early this year by the Electric Power Research Institute (EPRD),Palo Alto,Calif.,found that electricity from the next few IGCC plants will cost about 15 to 20%more than electricity from conventional pulverized coal plants.The high cost and relatively untest- Options Plus Clean Air lean coal technologies reduce emissions either _| in the combustion cycle or through gasification of the coal.Circulating fluidized-bed combus- tion (CFB)and supercritical pulverized-coal systems use temperature and pressure in the combustion cycle. Integrated gasification combined-cycle (IGCC)systems convert coal to a gas before combustion.Until recently, all of them have been less reliable than conventional subcritical pulverized-coal (PC)powerplants,the back- bone of the U.S.generation fleet.Some also cost more to construct,operate and maintain, In CFB,a bed of coal particles is "fluidized”by sus- pension in flowing combustion air and entrained witha | sorbent such as limestone to remove SO,.Fluidizing promotes complete combustion at relatively iow tem-- peratures of 1,400 to 1,700°F,inhibiting NOx produc-,| similar to those of pulverized-coal.CFB's environmen- tal performance with low-rank coals and its fuel flexi- bility make it attractive.In a PC plant,finely ground coalis burned to make steam and flue gases are cleaned up.Most U.S.coal- fired plants are "subcritical”units in the 2,400-2,600- psi range.Supercritical steam is above the supercriti-. cal point of water (3,208 psi).Temperature of main: steam and reheat steam is 1,050°to 1,100°F.Higher- efficiency steam may be designated ultrasupercritical. With "back-end”emission controls,modem plants can have very low emissions of pollutants.Supercritical : units can be 45%efficient,compared with subcritical efficiencies of 35%.Supercritical's low emission profile results from its greater efficiency,because less coal is bumed per kW-hour of power generated. :Gasification of coal is a chemical process,involving reaction with oxygen and heat or steam under pressure to produce a "synthesis gas”containing carbon monoxide,hydrogen and methane.For IGCC,sulfur and: particulates are removed from the gas before it is burned in a gas turbine.The exhaust heat is used to make steam to drive a steam turbine.NOx is controlled in the turbine by combustion controls.Postcombustion,° selective catalytic reduction can further reduce NOx. Sulfur emissions can be lowered by more than 99.5% and NOx can be comparable to gas combined-cycle emissions.Impurities removed can be sold as com- Mercial chemicals or byproducts.Fuel is high-rank bituminous coal or low-rank coal with petroleum coke. New IGCC designs may be better for low-rank coal.The - largest constructed to date is 300 MW.m | enr.com December 5,2005 =ENR =25 - | *Cover Story >Electric Generation *technology were cited the Public Service wummission of Wiscon- sin in 2003 in rejecting Wisconsin Energy Corp.'s plan to construct a gasification plant. Capital costs for gasi- fication plants run in the range of$1,400 to $1,600 per kW,says Scott Klara, deputy director of the Office of Coal and Power Systems at Pittsburgh- based National Energy Technology Laboratory (NETL).That is higher than $1,200 to $1,400 for -CapitalCostperUnitofCapacitya From Lab Bench to Commercial ScaleDoneSHRROteengtartdntanBeetgy roe ese supercritical technology Research Development Demonstration A 8:2 Deploym oar aaa Teno SeeRVRLipala4 ent Mature Technology and well above the $1,100 to $1,300 per kW for subcritical. High capital cost and technology risk were confirmed as the largest perceived risks of IGCC in a study of owners,regulators,financial institu- s and vendors by Deloitte Financial tisory Services LLC this year for DOE's Office of Fossil Energy.But the report also noted that uncertainty about 'regulation of carbon makes owners reluc- tant to commit to a technology for which carbon capture is a major selling point. Of the major clean coal technologies,circu- lating fluidized-bed com- bustion is the most proven.But "CFB will be a real niche market,”with 3,000 to 3,500 MW installed in the next 10 years,says Kowalik.Its niche is the industrial market,where it will displace gas boilers,he says. Support Advanced coal plants now in the pipeline owe a lot to government programs pro- moting research,development and deployment.The Energy Policy Act of 2005,signed in August,authorized DOE end $200 million per year through to co-fund clean coal projects with 26 =ENR ©December 5,2005 enr.com Time industry.At least 70%of the funds are earmarked for technologies related to coal gasification.The act also authorized loans and loan guarantees for Clean Pow- er Projects,again mostly focused on gasi- fication technology. This comes on top of longstanding programs such as Vision 21,whose goal is to develop a fossil-fuel plant that will As a baseload technology, "coal is not a good thing or a bad thing.It's just a reality.” -JOHN THOMPSON,ADVOCACY COORDINATOR, CLEAN AIR TASKFORCE,BOSTON co-produce multiple commercial prod-ucts while achieving the ultimate in fuel- to-power efficiency and environmental cleanliness,say DOE officials. In 2004,EPRI launched CoalFleet for 'Tomorrow,a joint effort of 17 generation companies and Fluor Corp.,Aliso Viejo, Calif.,to accelerate deployment of advanced coal technology and develop options for managing powerplant CO, emissions.In its first year,at the requestofitsmembers,CoalFleet has concen- trated on IGCC technology,"but it has SOURCE:EPRI A Long Trek.EPRI-led CoalFleet for Tomorrow aims to move supercritical CFB,ultrasupercritical PC and IGCC tech- nologies past the "mountain of death,”the high cost of market entry where new technologies'progress often stalls. always been our contention that more than one option is needed for advanced coal,including options for postcombus- tion CO,capture and storage,”says Stu- art Dalton,EPRI director of generation. 'CoalFleet now has 45 members from eight countries. CoalFleet has met its goals for the first year,including beginning preparation of broad plant design guidelines for IGCC. Now,while refining the guidelines,"we will start a parallel effort in combustion to accelerate deployment of more advanced combustion options,such as high-temperature,high-efficiency ultra- supercritical coal plants and supercritical fluidized-bed plants,”says Dalton. "The next wave of coal units is going to be supercritical technology,”says John R.Black,Babcock &Wilcox manager of business development.NETLs Klara agrees that supercritical is ready to take off and foresees commercialization of ultrasupercritical technology beyond 2010.The tipping point for commercial- ization of gasification will come after 2015,he predicts.By then,"clean coal” 'may become a term even the most adamant environmental activist can embrace.=meseeeaearSECAeae2Easwi"aarseee:"zitetK Rims a)efsothe oe 1s arecerinemmmeron--apePHOTOCOURTESYOFTHEBABCOCK&WILCOXCO.POWER SUPPLY $25-Billion Program Generates Controversy nvestment could top $25 billion for the coal-fired powerplant construc- tion program of a major Southern utility company.TXU Corp.,Dallas, is billing its program as "the largest vol- untary emissions reduction in U.S.histo- ry”because the plants will use clean coal technology with state-of-the-art emission controls.But some analysts question the premises for making a huge investment in pulverized-coal generation when legisla- tion to limit carbon emissions is widely anticipated.Environmental advocates ac- cuse TXU of trying to construct coal- fired capacity before any such legislation can take effect in hopes of gaining a large allocation of carbon allowances. CEO C.John Wilder outlined TXU's plans to construct 16,000 to 23,000 MW of new PC capacity earlier this month at Edison Electric Institute's Annual Finan- cial Conference in Las Vegas.The total includes 9,100 MW TXU proposed last spring for construction in Texas (ENR 7/10 p.17).At the EET conference,TXU announced it has "line of sight”on devel- opment of 7,000 to 14,000 MW of addi- tional new capacity,including opportuni- best =re ne A Proven Design.Supercritical boiler planned for TXU program already operates in Australia. ties outside Texas.The latter include sites for 2,000 to 4,000 MW in the Pennsyl- vania,New Jersey and Maryland market, some of which are already secured,and 5,000 te 10,000 MW of capacity in oth- er regions.TXU has letters of intent or is obtaining customer approval for 2,500 MW of that capacity.The company did not release details. Wilder said TXU aims to develop new baseload generation throughout the U.S.,adding 3,000 MW of new capacity each year and constructing it 35%cheap- er and faster than conventional pulver- ized coal plants.He said TXU is broadly on target to construct the 9,100 MW of Texas capacity by 2010 for $1,100 per kW. For the subsequent new capacity,his tar- get is $850 to $900 per kW,using a "ref- erence plant”whose design can be repli- cated with minimal adaptations to local conditions.Bechtel and TXU are seeking permits for the reference plant,aiming for a construction start under an engi- neering,procurement and construction contract in the second quarter of 2007. Completion would be scheduled for fall 2009., The reference plant uses a Babcock & Wilcox supercritical pulverized coal boil- er with selective catalytic reduction, scrubber,sorbent injection and baghouse for control of Clean Air Act criteria pol- lutants.TXU officials say the design will reduce total emissions in Texas by 20%, offsetting emissions from the new plants. They also note that the reference plant's design makes it "carbon-capture ready,” with features allowing future retrofit for carbon capture and sequestration. The Union of Concerned Scientists disputes TXU's environmental claims. "It's a very profound kind of retrofit that they're talking about,”says Barbara Freese, a consultant to the environmental orga- nization.Integrated gasification com- bined-cycle generation is the only design that incorporates carbon capture,and "every bit of it is already in commercial use,”though it is not yet cost-effective in a single package,she says.oo Michael Pickens,an industry analyst with Wood Mackenzie,Boston,ques- tions the wisdom of a huge program of new coal-fired construction."What's the carbon assumption?”he asks.He specu- lates TXU may be trying to get new coal capacity built now in hopes it will be grandfathered in any legislation of a car- .bon tax or other carbon constraints. UCS President Kevin Knobloch last month wrote to Wilder,saying,"Volun- tary restraints on greenhouse gas emis- sions are clearly failing....If you will not abandon your construction plans,we urge you to publicly state that you do not ex- pect-and will not accept-any econom- ic windfall under future climate laws from this planned increase in global warming pollution.” In a response written for ENR,TXU says UCS'premise is awed.TXU's pro- gram is needed to meet Texas'"pressing need for additional reliable,affordable and environmentally sound power,”says the response,adding,"Texas faces the loom- ing threat of falling below reliable electric supplies by 2008.”= By Thomas F.Armistead enr.com November 20,2006 =ENR ®17 ee eee ee WORKPLACE MINISTRY -One company has taken its employee-assistance program to a higher level:It uses chaplains to help workers cope with life's stresses. Monday's Money section. 7 os ge orm Re = ANCHORAGE DAILY NEWS *www.adn.com SUNDAY,JANUARY 22,2006 ECONOMY I've always been intrigued with alter- native energy,particularly new fuels thatcanbemadefromcoalandothersub- stitutes for conventional crude oil that are cleaner and less harmful to human health and the environment. Who could argue against less-pollut-ing fuels,particularly if they are now eco- nomic and can use undeveloped Alaskaresources?What ['m talking about are liquidproductsmadefromanysolidcarbon- coal,biomass or even municipal waste -through a chemical reaction known as the Fischer-Tropsch process.Profes- Technology enhances potentialfor sors Fischer and Tropsch were the Ger- man scientists who developed the reac- tion in the 1920s.The process has been used since the 1950s in South Africa to make fuels from coal and,from the early1990s,natural gas. More recently,major oil companieshavedonealotofworktomakethepro-cess more efficient and economic.South Africa's Sasol and Shell are leaders in the field,with Exxon Mobil,Conoco Phil- lips and BP as well as smaller technolo- gy companies hard at work on their own variations.Exxon pushed the technologyforseveralyearsasawayofcommercial- izing stranded North Slope gas,though the company now believes a gas pipeline will be more profitable. The undeveloped coal fields at Beluga, 50 miles west of Anchorage,are a huge untapped energy resource,and now that a coal mine is being seriously considered a lot of other things are possible.A coal mine could export to Asia but people al- so investigating a Fischer-Tropsch plant that would make ultra-clean diesel and other products from the coal.The antic- ipated market is California,where fuel distributors are desperate for clean die- sel to meet the state's stringent air-quali- ------anaes en gmt atte peluga coal ty requirements.These clean fuels would also be available for Alaska. ;How clean are the fuels?For starters, a diesel produced in a Beluga coal-to-liq-uids plant would contain no sulfur or ar- omatics,both of which pollute air.Aro- matics in conventional diesel create the soot in the exhaust.U.S.Environmental Protection Agency studies indicate that pollution from conventional diesel can cause cancer.Diesel produced in Fisch- er-Tropsch plants,used as a substitute, would remove that danger. ige J-4,BRADNER jJ-2 Sunday,January 22,2006 MONEY Anchorage Daily News a ;Weekly interest rate survey BankBankruptcy lawDEPOSITSLOANSCREDITCARDS]mun Lending Regular 6-month 1-year 2-year New Car Used Car Home Imp.RVs Unsecured Interest Annual doesn t stop filingsinstitution”savings certificate certificate -_-_certificate $20,000 $10,000 $10,000 Loan Rate Fee $1,000 $1,000 $1,000 .$2,000 BANKS ™DEBT:Counselors say 4 debt-management plan.Alaska First ©4.21 1.46 2.62 3.43 6.48.18 69-84 6.14-1.74 6.9-8.9 95105 WA A ;.Financial industry execu-First National Bank Alaska 1.01 2.4 3.05 3.4 705-1142 7,054.42 -7.05-1142-7.05-11.42 811642 13.9 $0 many don t qualify for tives,who had pushed for the KeyBank ae ce 2 09 228295 3.75-3.85 :44t oe 7.03-8.74 | 88113.26 7.251256.PALS8 16.75-22.49 :14.24-22.24 :$0830 management programs.new law to reduce the recordNorthrim652a8A3.5%we 7.75 8.257 12.75%N/A number of bankruptcy cases, WelisFargo 6354 218257)2713.18.3.2880 7748.78 8.24-10.25 919-9691 899-18 13.76-17.78 Bg By CAROLINE E.MAYER say it is too early to tell how well,_,The Washington Post the new credit-counseling re- CREDIT UNIONS WASHINGTON -Three quirement is working -espe-Advanclal Foderal MOS eT a4 358 488557 |488587 5.34-6.36 5.3-6.18 119 a etae _*))months aftera new bankruptcy cially because so many consum-Alaska Alr,Employees 2 3 3.5-3.75 WA 4.25-5.75 4.25.5 5.5 7.75-8.25 10.5 N/A WA law took effect,the overwhelm-ers rushed to file under the old,asheDitEng Wa as 3.55 "4999 4999"65 79-109 9°984490 |N/A N/A ing majority of debtors seen by less-restrictive law.In the two Alaska USA Federal i388 42 46 6.45 6.45 8.88 7.15-8.45 149 105-145 $0835 credit counseling agencies are weeks before the new law took'Credit Union neg gg gag ga ga granta gas anes ageta9..sosis.filing for bankruptcy instead of effect,more than 600,000 debt-Denall Alaskan 12-14 3.3.05 3.75-3.8 4-44 65-18 65-18 78 TABLAS 149-163 11.5 andup $0 using repayment plans envi-ors filed for protection fromMatanuskaValley"45 o ass ag 3.85 "6.25 andup 625andup OS andup.7.0Sendup,1442...1043.$028.+sioned bythe law's supporters.__creditors.Northern Skies 12 3.1 4 4.25 625-1165"6,.25-11.45'-8.5-10.75'-6.95-11.954 11.9-16.9'WA N/A The law requires debtors to Previously,filings had aver-True North Federal a 27 3.58 3.95 6143.78 64-13 4845.25 885-117 $2.4-17.75 "es go see credit counselors before aged about 30,000 a week.The Interest rate figures are as of Jan.20 and may change.All interest rates for deposits are annual percentage yield.N/A-not applicable;1Discounts may apply;2Rates effective Jan.30;3 From $2,500;rates supplied by institutions. Japeiese executives turn to tea Eu EN TES eae they file for bankruptcy protec- tion.It is a prerequisite that banks and credit card issuers hoped would steer consumers away from bankruptcy court and into plans that would allow them to repay debts over a few vears. number dropped to about 3,600 a week right after the new law took effect but is now about 5,000 a week and expected to climb as holiday bills come due. During congressional de- he old law neem BRADNER:2 technologies,one old and one new could be used at mineContinuedfromJ-1Thesefuelsalsocontain no ben-zene,another carcinogen.If this fuel is spilled,it wouldn't have the toxic im- 'pacts that conventional fuels cause.If this stuff is so good,and its tech- nology has long been proven,why aren't these plants operating all overournation? That's an interesting question.An initial response is that the costs to build Fischer-Tropsch plants are high, and while big strides are being made in reducing costs,until recently these plants couldn't compete with conven- tional crude oil refineries that are al- ready paid for.' Higher oil prices now appear to™ have overcome this disadvantage,but anyone building a plant like this runsariskthatoilpricesmightfall.Con- ventional wisdom is that it's unlikely we'll see low oil prices again,but it's still prudent to plan a project to ride out possible slumps.I'm told people working on the Beluga plant are plan- ning their project to remain profitable if oil prices dropped $28 per barrel for a short period. There are also some,of course,who believe the major oil refining compa- nies are less than enthusiastic about this technology because they have huge sunk investments in existing con- ventional refineries.They could see Fischer-Tropsch plants making ultra- clean fuel from coal as a serious threat. I don't believe this,but who knows? I do know the federal government is solidly behind these kinds of clean- fuel initiatives.Congress put generous tax incentives in the 2005 energy bill to jump-start these plants. A Beluga plant would have other ad- vantages because of the location.First, I'm told waste heat from the plant eould provide energy,estimated at 400 megawatts,for power generation.That would make it one of the biggest pow- er plants in the state,and Southcen- tral Alaska's power grid is only 12 miles away. Secondly,carbon dioxide from the plant could be used to coax more crude | 'from Cook Inlet's aging oil fields.That could result in new oil production,pos-isiblyasmuchas200millionbarrels. The Fischer-Tropsch plant isn't the only plan for making valuable products from Alaska coal.Another process,a coal-water fuel technology,is being worked on by a group in Fairbanks.This procedure makesa liquid fuel thatcanbeusedinboilersandlargediesel engines,and its proponents say it cancompetewithheavyfueloilanddieselmadefromcrudeoilforpricesaslow as $13 per barrel.This plant could also be done at Be-luga.In fact,it could be built alongside the Fischer-Tropsch plant,as the two make different products. There hasn't been a lot of publici- ty about these ideas because the de-velopers don't want to get public'ex-pectations up until plans are fairly well along.There have been too many Alas- ka projects announced that have failed to materialize. -'That's a wise course.Still,we should be proud that we have technology pio- neers in this state on the leading edge of new industries,and that our govern- ment has tools,like the state Alaska In- dustrial Development and Export Au- thority and the U.S.Department of En- ergy,that can,prudently of course,nur- ture these projects along. Wi Tim Bradner writes for an Alaska economic report- ing service.He also consults for private clients and writes for business publications.His opinion column appears every fourth Sunday.He has worked on feasibility studies on alternative fuels for the federal | goverment.\ By 1VM ADA aSanFranciscoChronicle< Silicon Valley,which has survived 40 years of boom and bust in defense,semicon- ductors,computers and the dot-coms,is re- inventing itself again.After three years of job losses,the valley has steadied itself and is re-emerging as the world headquarters of concepts for gadgets,Web sites and con- sumer products. That's the gist of a new report by Joint Venture Silicon Valley,a public-private part-nership that tracks trends in this mythicrealm, "We have repositioned ourselves in a fiercely competitive global economy,”said Joint Venture president Russell Hancock. "Creativityis the key word.”The 56-page document,the 11thin a se- ries,offers statistical snapshots of every- _thing from jobs to education in a region thatishometo2.43 million people.The report;paints an optimistic portrait of how Silicon employment peaked,and only managed a slim payroll gain of 2,000 during the period covered by the latest survey.But the hopeisthatitwillmaintainitspre-eminence by creating fewer,super-productive jobs -al- though this runs the risk of causing a sort of regional gentrification that is making it tougher for families of modest means to live in the area. The report,"2006 Silicon,Valley Index,”argues that rumors of the region's demise . are greatly exaggerated,in part because the best and brightest from around the world still flock to it. At the same time,it notes that,from kin-. dergarten to community college,regional schools will be hard-pressed to prepare lo- cal children for the increasingly lofty jobs ofSiliconValley2.0.Among today's many positive indicators,,the report notes that while total venture'capital investmentin the United States has vawasayy BULIUUG UUUBIC,WUUSe SuCUESS Nas overshadowed Web predecessors Yahoo and eBay,not to mention valley stalwarts like Intel and Hewlett-Packard.The report notes the growing importance of the re- gion's biotechnology industry and the emer- gence of nanotechnology expertise. But the most tangible icon of the new, uber-creative,consumer-driven valley is the iPod music player,a device so wildly suc- cessful that roughly 100 were sold every minute during the fourth quarter of 2005,ac- cording to Apple Computer chairman Steve Jobs,whose career exemplifies the valley's penchant for rising from the ashes. "We are shifting from an economy that is industrially focused to one that relies on creativity for the consumer,”said Mountain View economist Doug Henton,principal au- thor of the report.He cited the iPod as the sort of hit Silicon Valleyis uniquely posi-tioned to create thanks to the talent avail-able here. alg WIG £COL UL LUC YCAL,COprenmmay s op -gy peeeees ow ee 7Awasratedthelowestofanysatisfactiondriveracrossallretailcategoriesmeasured.The highest-scoring retailers among the Top40duringtheholidayswereNetflixandAmazon.The lowest were CompUSA.com,Kmart and Sears. Otl|staffing group -Daily News wire services Imagine,No Limits. wVisitusatwww.optistaffing.com 9 677-9675 «* OUTSIDE THE RATE-BASE UMBRELLA:Can IPPs PLAY THE Coat GAME? utilities and some non-utilities to look at new coal plant development.Modern coal technologies -including circulating fluidized combustion (CFB),greatly improved emission control systems,supercritical boilers,and integrated gasification combined cycle GCC)-allow coal to be used with dramatically lower emissions than was possible when the last round of coal plants were built.The catch,of course,is that coal plants are more expensive to build than combined-cycle sas plants,meaning that independent power producers (IPPs), he segment that built virtually all new capacity over the past lecade,are far less likely to develop coal plants. That would seem to leave the job of developing new coal- fired capacity back upon the broad shoulders of the companies that have always built them -regulated utilities that serve rate- base markets composed of defined customer bases.The regu- lated sector bows to intense regulatory scrutiny and settles for a restricted yet steady rate of return over three or more decades. But the trend toward deregulation in the United States -ten- tative and inconsistent though it may be -has nonetheless altered the U.S.power market dynamic forever.Few utilities believe there will ever be a total retrenchment to the days of closed transmission access and power purchases made only between mutually consent- ing regulated utilities.Meanwhile,the independent power provider segment,despite the beating it has taken in recent years,will almost surely remain a major force in the U.S.power supply.That begs the question:Will some new coal projects be developed outside,or at least partially outside,the rate-base umbrella? "It's now fashionable to say no one will build new power plants without either rate-base treatment or long-term contracts,” John Rowe,chairman,president and CEO of Exelon Corp.told a power industry gathering earlier this year."T do not believe that is true.I believe there are circumstances in which my company would build merchant plants,and I believe we would be likely to do that before we would submit to some kinds of regulation.” Such a statement from the man who heads one of the nation's largest electric utilities underscores how much the landscape has "ianged.Many traditional vertically integrated electrically utilities ready operate some or all of their plants outside a customer rate- se,allowing them the flexibility to maintain service to their native Sistts,higher natural gas prices are forcing many POWER ENGINEERING/JULY 2005 *28 The high cost of coal plants has generally limited theirdevelopmenttoutilitieswithlargerate-base markets.Will rising natural gas prices spark coal plant developmentbynon-rate-base energy providers? BY:STEVE BLANKINSHIP,ASSOCIATE EDITOR customer load and still capitalize on wholesale transactions beyond their customer base.Some coal projects that will _operate exclusively outside the rate-base are already well into the development phase.Others are already operating. The State of Illinois has issued the air permit for the $2 billion- plus Prairie State Energy Campus,Peabody Energy's mine-mouth coal project in Washington County,Ilinois consisting of two 750 MW coal-fired units.A group of Midwest rural electric cooperatives and municipal agencies have entered into a definitive agreement to acquire 47 percent ownership of the Prairie State Energy Campus and an equal amount of the plant's output.Peabody is also devel- oping an identical 1,500 MW Thoroughbred Energy Campus in Kentucky that would sell power to utilities,co-ops and municipals through long-term contracts.Also in development is Peabody's Mus- tang Energy Campus,a 300 MW plant planned near Grants,N.M. that will demonstrate state-of-the-art clean coal technology using an advanced sodium scrubbing system.Mustang has received a US. Department of Energy Clean Coal Power Initiative grant. Chicago-based Midwest Generation,an unregulated subsidiary of Edison Mission Energy,recently restarted two coal-fired units in Will County,Ilinois,with a combined capacity totaling 310 MW. Other coal plants originally built as rate-base facilities but now operated largely in the merchant arena include coal plants owned by Atlanta-based Mirant and Houston-based Texas Genco.Mirant has close to 5,000 MW of coal-based generation at four plants in the Mid-Atlantic Region,all of which serve merchant markets. TexasGenco owns more than 4,000 MW of coal-fired generation at its Parish and Limestone plants serving the Texas wholesale market. And Reliant Energy's Seward plant near Johnstown,Pennsylva- nia began commercial operation last summer,providing power exclu- sively to the merchant spot market through the PJM Interconnection. The 521 MW circulating fluidized bed (CFB)plant is the largest waste coal-fueled plant in the world.It's a high-profile operation in other terms as well."Seward Station enjoyed its best month of operation to date in May with availability and capacity factors of 99 and 92 percent www.power-eng.com a eel _Coat PLant DEVELOPMENT respectively,”said Dave Freysinger,senior fired station for the co-op or municipal few if any IPPs will be willing or able to th'ice president of generation operations at :Jutilityandtakesomeoftheplant's output -_ante up,says Jeff Schroeter,president Xeliant Energy.He notes that Seward has for some period of years.That would allow _of Dallas-based Genovation Group.ne received the state's Governor's Award for the utility to grow Schroeter has de-. Environmental Excellence.into a larger project veloped more than ac as its power needs IPPs TH AT C AN 8,000 MW of gas-Be TAPPING THE IPP increase.”fired combined-wh BRAIN TRUST Fiorelli even AFFO RD AND cycle capacity,100 - The U.S.Department of Energy sees a place for MW of peaking 'se(DOE)identifies about 100 new coal-fired IPPs to participate WILT,ACCEPT THE cpacity,500 MW : projects,representing 65 GW of genera-with investor-owned of lignite-fired CFB Pr |tion,in various stages of development in utilities."In areas RISK AND COST and 6 MW of wind oc :the United States.In light of how drasti-that ot are regulat-generation.ce cally US.electricity markets have changed €@,utity commis-iting factors over the past 15 years,it seems almost sions have become TO SOLVE THE that are changing shincreasingly'CHICKEN AND THE the opportunities for mcertainthatsomeoftheprojectseventu- ally built will be outside of the traditional concemed with the ;small developers,la regulated utility rate-base umbrella.Cost ol new genera-e recounts how t"We definitely believe that indepen-_tion,”he says."By EGG DILEMMA in the qualifyingdentpowerproducershaveaplaceincontractingwithan coal-fired generation development,”says IPP fora turnkey Dave Fiorelli,president of the business coal-fired project,development group for Omaha-based an investor-ownedTenaska,Inc.Tenaska has developed utility can leverage SHOULD BE ABLE Ghvtoperswereine a TO FINANCE COAL feutpes IntheearlyQFdays,they 9,000 MW of generating capacity and the experience of an PLANTS.had tremendous - currently owns and manages 7,600 MW _--IPP''s staff and shift N R uphill battles with a)in operation or under construction.The the risk of construc--NATALIE TLOLPH,the investor-owned trcompanyhasraisedmorethan$7.3 biJ-_tion cost overruns to BLAcK &VEATCH utilities for avoided i, F lion in aggregate financing.the IPP.In addition,cost power purchase b Fiorelli says highly qualified IPP long-term contracts with IPPs for coal-agreements.Then with the EPAct of wstaffsoversawthedevelopment,engineer-_fired generation can help utilities avoid 1992,it became much easier to sell powering,design and construction of the vast the rate shock experienced by customers _with market driven pricing.But now with , i majority of gas-fired power projects placed when large,capital-intensive projects retail deregulation in retreat or stasis,the J i into commercial operation in the United are placed into rate base.”big utilities are again more in control of |States over the last decade.He believes So far as going it on their own,new generation decisions.”4 t some of them are now ready to tum their playing the coal game is expensive,and Furthermore,says Schroeter,gas o skills to coal-fired development.projects take two to three years and bh "IPPs bring creativity and anywhere from $2 million to $6 e innovative thinking to the de-million to develop,while coal takes a velopment process,”he says."T three to six years and $7 million il believe these attributes will allow to $20 to develop."The cost and IPPs to assist municipal utilities,time duration of development is a al cooperatives and even investor-huge barrier to entry for the small owned utilities in solving some of developer.”Since coal projects are ' the issues associated with bring-so capital intensive,Schroeter be-b ing a large,complex and costly lieves they are far more likely to be e coal.project to fruition.”developed by utilities with captive " For example,Fiorelli ex-ratepayers because merchant risk ° plains how a co-op or municipal for power sales is just too large.He fi utility might want to build a coal adds,however,that IPPs may act as ' project,even though its current jump starters or consultant advisors.eneedmaynotbeenoughtobuilda project big enough to take advan-Coat By Wire tage of economies of scale inher-If significant amounts of new rentinsuchplants."They may not coal capacity are to be built -becontrolareainNorthAmerica.PJM's regional transmission orga-nization (RTO)coordinates the movement of wholesale electricitysuchalargeandcomplexproject.in all or parts of Delaware,Illinois,Indiana,Kentucky,Maryland,base --there must be a way to gethavethestaffneededtomanagetheyinsideoroutsidetherate- So an IPP might Michigan,New Jersey,North Carolina,Ohio,Pennsylvania,low-cost -ed power to :construct igh agree '|develop,Tennessee,Virginia,West Virginia and the District of Columbia.coal produce po i ct and operate a large coal--Seward's CFB combustion technology allows it to burn low-grade customers who need it most.Trans-rrefusecoalaccumulatedovermanyyearsofmining.mission infrastructure inadequacies, POWER ENGINEERING/JULY 2005 «30 www.power-eng.com BMisfans!CoAL PLANT DEVELOPMENT therefore,remain a huge issue.And additional rail infrastructure needed to move more coal to more sites is at least of equal concern. "Tt certainly makes more economic sense to construct additional transmission capacity for coal fueled,baseload generating capacity than for intermediate or peaking capac- ity in order to spread the cost over as many kilowatt hours as possible,”says Natalie Rolph,Black &Veatch chief econo- mist for enterprise management solutions."It also makes sense because it is harder to site coal generation near major population centers than it is to site gas-fueled generation near cities.Moreover,the major low-cost,low-sulfur western coal producing regions are very distant from major population centers.” She says that unless a way to permit and finance new transmis- sion is found,states like California -and most major cities for that matter -will be dependent on high-cost gas-fired generation for a large part of their future electric energy requirements."We are still struggling in this country with the issue of how to pay for transmis- sion improvements or how to induce transmission investment,”she lamenis."Complicating the situation is the fact that in more than afewlocations,existing owners of coal-fired generation oppose addedtransmissiontofacilitatecompetition.” Colin Kelly,vice president of generation development at Peabody,says baseload capacity will be needed in all regions of the United States by the end of this decade,and any large-scale baseload project will require substantial transmission upgrades ranging between 5 and 10 percent of project costs."Expanding the transmission network for baseload facilities that run 24 hours a day,seven days a week at very high capacity and transact over long-term periods makes good sense,”he says."The cost can be justified by generators and load-serving entities alike.” Kelly thinks that the RTO obligation to conduct re- gional transmission planning should help in time.He also believes the long lead times associated with permitting and constructing coal fueled facilities will allow concerns with transmission to further evolve and find resolution."Almost everyone agrees we need more transmission,and many also are realizing it is far more cost-effective to move coal by wire than by rail.” LonG Term Contracts/PartTNers NEEDED Clearly,the single biggest issue for the merchant sector is financing."Unless the merchant share of a project is to be very small,merchant coal plants are not even in consid- eration by the financial community for IPPs,”says Rolph. "Lenders want to see guaranteed revenue streams in the form of long-term power purchase agreements (PPAs)or off-takes for a large portion of a new plant's output.For IPPs,that's a 'chicken-and-the-egg'problem because the developer mustguaranteeapriceforthecoal-fueled energy in order to getPPAsbutcan't secure financing or obtain the interest of EPC contractors to firm up costs -due to the high cost of such proposals -without showing he has committed customersandadealthatcanbefinanced.”Furthermore,says Rolph,in states without retail ac- cess,investor-owned utilities have incentives to build their own coal capacity because ownership is the key to rate-base maintenance and continued stockholder returns.She says www.power-eng.com CASH ON YOUR ASH ON-LINE CARBON IN ASH MONITOR 17 REPS.IN USA/CANADA PLEASE SEE WWW .M-W.DK ¢PF SAMPLING &MONITORING *ASH SAMPLING &ANALYZING *CLEAN COAL SAMPLING SYSTEM M&W 1-866-742-9170 Circte 27 on REA WWW.M-W.DK M-W@M-W.DK POWER ENGINEERING/JULY 2005 «31 CoaL PLANT DEVELOPMENT there was a time when PPAs might have relieved IOUs of debt obligations. "However,”she remaining portion will be shared between Peabody and the future operating partner.” Kelly says says,"the financial community now views long-term capacity payments much the same as it views debt.” She notes that since over-building of merchant capacity occurred largely in states with retail access,it is yet to be determined if IPPs can overcome the financing hurdles and develop coal- fueled generation for electric service providers."Their best chances to suc- ceed should occur in states like Texas and markets like PIM that clearly need ad- ditional generating capacity.” With the large amount of capital required for a coal plant -$1400/kW versus $600/kW for a combined-cycle project -the asset must access long- IPPs'CREATIVITY AND INNOVATION WILL ALLOW THEM TO ASSIST MUNICI- PAL UTILITIES, COOPERATIVES AND EVEN INVESTOR OWNED UTILITIES IN SOLVING SOME OF THE ISSUES ASSOCIATED WITH BRINGING A LARGE, COMPLEX AND COSTLY COAL PROJ- ECT TO FRUITION. -Dave FIORELLI,TENASKA,INC. municipal and co- operative agencies will be encouraged to band together in projects to get the economies of scale, which can save 10 to 25 percent on the capital cost. And in states that tion,he believes some large price-.sensitivé.customers will move toward long-term partici- pation in new coal plants to hedge the volatility in the power market driv- en by volatile gas 'generation,which is on the margin. "You also may expect some of the industrials to work with municipal and cooperative agen- cies that have lowcostofcapitalto procure power from these very capital- intensive projects at a discount to the lived debt to keep its annual fixed charges in an acceptable range,says Schroeter."Most coal plants have 25 to 30 years of debt.It would be very difficult for debt holders to accept only a three-year power purchase agree- ment without additional contingent equity support from the project sponsor.That is effectively what rate-based projects are - they have captive ratepayers and if costs become excessive,rates can be raised but only to a politically acceptable level.” The size and complexity of a project like Prairie State requires partners,says Kelly."While Peabody will maintain a long-term interest in Prairie State,the facility is being developed by the Prairie | State Generating Co.,comprised of Pea- body and the Prairie State Interest Group, made up of the six electricity suppliers owning a combined 47 percent interest,and a future operating partner.Most of the POWER ENGINEERING/JULY 2005 *32 market,due to the low capital cost of their providers.” Is Pusiic PERCEPTION CHANGING? Certainly,the length of time to achieve permitting for any project is critical,and a significant factor tied to the longer permitting time required for coal plants relates to public acceptance,or, more likely,lack of it. "The public still thinks electricity comes from a socket,”says Schroeter. "They don't have a clue where it comes from except when the price goes up, like it is now with $6/MMBtu gas,and they can just maybe associate it with the price of natural gas.The other time they are aware of it is when an environmental story appears about air pollution say inalocalmetroarea.Somehow,the publicneverthinksaboutautosaspollution go to full deregula-- sources,but big central station coal plants must be big polluters because they have tall stacks.” And although Rolph doesn't seemuchchangeinpublicattitudesto- ward coal,she believes some coal plantdevelopershavebeensuccessfulin education efforts to obtain local support. Peabody is a good example.Kelly says his company's proposed projects enjoy extraordinary support from area residents, community leaders and elected officials of all political stripes in regions where their projects are being planned."Proactive, candid communication facilitates better understanding of project fundamentals,” he says."Third party surveys show that project approval increases as residents ' learn more about creating low-cost elec- tricity,hundreds of local jobs and millions - in annual economic benefits.” Diverse PARTNERSHIPS Nay Emerce Consortiums may be the solution to IPP developed coal plants,says Rolph. Recent conversations and information exchanges hosted by Black &Veatch with the financing community would indicate financing is available for certain coal plants,specifically,for projects based on PPAs for the majority of their capac- ity,and projects developed with sound contracts and with credible engineering and construction firms. "According to some reports,the few i coal plants with excess capacity in areas that can leverage retail markets are mak- ing a killing,”she says."This has caught the interest of the financing community. The IPPs that can afford and will accept the risk and cost to solve the 'chicken and the egg'dilemma should be able to finance coal plants.This may require ; consortium,or partnering type agree-.| ments between IPPs,OEMs and qualified EPC contractors.Most OEMs and EPC contractors will not enter such endeavors on an at-risk basis.”[3 For a more in-depth look at the various issues impacting the coal-fired generation sector -including new coal projects,environmental regulations, emission control,and coal supply and handling -plan to attend COAL-GEN 2005,Revival of the Fittest,August 17- 19 in San Antonio (www.coal-gen.com). www.power-eng.com freeeCoenenreer f 1 1 1 t 1 -_-i t ' i t f 1 ! 1 i y ' J i 1 1 t tT t ' q 4 i 1 t t t t t t ' ' i t ft i 1 ¥ i 1 Lj $ ft ' i 1 ' t I t ' t ' t 1 i ' t i i ! ' t i t t ' 2 t t 1 1 a i ' t 1 £ ' t i i i 1 t ' 1 t ' i] 3 1 t t t t i i t i t t ) 1 i t t ' t r t ! ' i a t Tt t i i i t ! f ' 1 ' i t t : t ' Page 1 of 4 4 - Karl Reiche From:Becky Gay Friday,September 01,2006 9:54 AM To:Mark Schimscheimer;Karl Reiche;Brian Bjorkquist Ce:Brenda Applegate Subject:from Energy Business mag on the value of clean coal to the fuel mix Cleaning house:Alliant Energy Corporation Published :May 2006 Cleaner-burning coal plants and continuing improvements to its current facilities are key to Alliant Energy Corporation's providing a sufficient,efficient flow of electric and gas energy to its customers into the future,Gary Toushek discovers A major issue in the utility industry right now is the future direction of energy generation. President George W.Bush has called on the nuclear power sector to build new facilities throughout the US,since nuclear energy is relatively low cost and reliable.But the unresolved matter of how to dispose of spent uranium has been a nagging problem and a cause of endless debate. iral gas is relatively clean,but domestic reserves are somewhat limited without drilling uccper in the Gulf of Mexico or building a pipeline from Alaska.Importing overseas gas requires liquefying it for transport and building expensive port facilities to contain it.These are exorbitant undertakings that keep the cost for end-users rather volatile. Coal,on the other hand,is not only viable,it's domestically plentiful;reserves are estimated to easily exceed 200 years.New coal-burning processes are much cleaner,as is reducing harmful emissions drastically by moving from high-to low-sulphur content.As well, aging coal-burning facilities are being improved with various efficiencies. For example,Alliant Energy Corporation,based in Madison,WI,has reduced nitrous oxide emissions by up to 40 percent with some internally developed technology,and it's now focusing on substantially reducing mercury emissions in the next year or two,according to regional director Charlie Ohl."And the NOx emissions were done voluntarily,without any regulation or pressure from environmental lobbyists.”Roughly two-thirds of its energy is coal based,and Alliant is considering adding a new facility in six or seven years.In the meantime,the company has made major capital investments in two of its natural gas plants in the last 18 months:$400 million in a combined-cycle natural-gas-fired generating facility in Clear Lake,IA,that came on-line in 2004,and $140 million in a plant in Sheboygan Falls, WI,that came on-line in 2005. nt was formed in 1998 from a merger of three smaller companies and operates as a nnu-size public utility holding company,providing energy-related services through its subsidiaries to about a million consumers in Iowa,Wisconsin,Minnesota,and Illinois.The first-tier subsidiaries of Alliant include Interstate Power and Light Company,Wisconsin 9/1/2006 Page 2 of 4 1 Power and Light Company,Alliant Energy Resources,and Alliant Energy Corporate Services. Alliant's principal activities are the generation,transmission,and distribution of electric and energy,and the company generates revenues ($3.28 billion in 2005)through its two ness divisions:domestic utility (about 90 percent of total revenues)and non-regulated businesses,including wind farms and energy generation and delivery systems in New Zealand (as well as investments in environmental engineering and site remediation, synthetic fuel/energy technologies,oil and gas pipeline gathering systems,and a biomass facility). In 2003,in an effort to lower costs and increase the various efficiencies involved in the generation and distribution of energy to its customers,lean manufacturing methods were introduced in each of Alliant's facilities through lean/six sigma black belts,who trained employees and led a comprehensive program of continuous improvement.In terms of safety issues,they took a proactive approach and identified why accidents were happening, performing process mapping,root-cause analysis,and mistake proofing.In human resources they effected value stream mapping of the various processes,beginning with the "values”in all company departments,and looked at staffing for an appropriate head count and how each department interacts with others,to make sure the services being provided were addressing customer needs. In fact,the entire customer information services process was analyzed:how customer meters are read and whether they need to be read every month.Re-reading was determined to add no value and was therefore greatly reduced,and automatic meter ling is currently being reviewed.In accounting they looked at billing processes, nining what customers need and finding ways of streamlining and integrating those processes.In the call centers they reduced cycle times in answering customer calls with proper resolution,thereby solving concerns in one call.They not only looked at reducing the cycle time of how they recruit and hire personnel to fill an open job position,from identification of a job opening to selection of the candidate;they also used a kaizen approach to examine whether they're getting the maximum use out of the position,so that they're not merely refilling it. They looked at overtime issues,why some job functions seemed to require working overtime,and those were mapped for corrective action.In the IT department they ascertained whether efficient use was being made of various software packages."We've touched every department with some version of a lean exercise,”says black belt Mike Trueg."We've completed more than 850 lean projects in the past three years,and the vast majority of them were successful.”They made some very significant improvements, lowering costs,reducing waste,and gaining process efficiencies. The maintenance program for energy transport lines was improved,and they're examining "repeatability”to see if there are ways to increase efficiencies;for example,they studied not only how outages can be predicted but how the company can be more proactive so that outages don't occur.In the generation group,they analyzed the various processes dealing |the handling of coal,identifying value-added and non-value-added processes and aging equipment should be replaced to maintain peak reliability."We did a lot of work calculating how we could achieve maximum output levels during peak demand periods,” 9/1/2006 4 Page3of4 o says Ohl."We haven't experienced rolling blackouts,for example,and we've saved our customers upward of $30 million annually,which we're proud of.” .wager of strategic procurement John Mazunik says his department integrates six sigma into planning,and the way it uses data is changing the way it does business.Instead of doing things the way it has always done them,the department examines where the data are taking them."When we make a program change,we're being challenged by management to show the data that back up our decisions.Our supplier relationships are becoming better as a result of kaizen events,looking at the processes and identifying areas of improvement.It trickles down the line not only internally but to our providers of goods and services.” In a traditional utility it's typical to have one group procuring goods and services for the generation group,the energy delivery group,and support areas.A year ago Alliant formed a strategic procurement group and an operational group to focus on opportunities and to concentrate on the top 80 percent of its spending."We needed to know we were focusing the right effort in the right areas of spending,”says Mazunik."We're into year two and progressing well.”The second aspect of the procurement department is in the cross- functional nature of what it's doing in the major areas of spending.In 2005,category teams were created in energy delivery and the support-shared services area,and this year in the generation area-bringing together key common areas of spending,led by an appointed manager in each business unit,with key end-users and procurement people,and with scheduling and finance involvement as needed."We take it outside the realm of an ineering group planning it and a plant being responsible for a budget in a generation _._4,and handing it to a procurement group to exercise commercial workout.To employ common goals together in that cross-functional basis means bringing our individual areas of expertise into play.Pulling the power of each group together and realizing the focus on common goals has made a huge impact,”he says.Last year Alliant exceeded its goal of $10 million in savings. Looking into the future,black belt Ken Bott says that the speed at which you grow with lean/six sigma starts to become a challenge in terms of when to go to a different model. "Right now it's early,but we have a core group of master black belts who are educating our workforce.As we get more people trained to the green belt level,for example,the need will shift to other activities rather than focusing on training and education.The challenge is to make those transitions painless,to a natural acceptance of them as part of the company's culture.” From a procurement perspective,Mazunik says the company has to recognize the way its markets are dealing with Alliant,including the pressures of price and delivery,and become more nimble and reactive."We need to take advantage of the international marketplace, how we link in,and realize that our scope of supply is beyond the continental US.We need to understand and cultivate it on behalf of our customers and shareholders.” notes that Alliant Energy is a member of the Midwest Independent System Operator, wie Operator of the electric transmission and distribution system,which also manages a competitive marketplace in electrical energy."We've been surveying the utility industry with a series of key performance indicators,and the data confirm that we're one of the best 9/1/2006 Page 4 of 4 (5 performers around,even though we're a mid-size player.Operationally our biggest challenge is to prudently meet growing levels of demand and consumption,”he says, ause we have to be an efficient producer.Like almost everyone else in our industry,our unavd asset facilities are getting old,so we have to continue to meet demand reliably and economically.” A _back to top Becky Gay Project Manager Alaska Industrial Development and Export Authority andeyAIDES.(=ALASKA Alaska Energy AuthorityMEEENERGYAUTH813W.Northem Lights Bivd. Anchorage,AK 99503-2495ossPhone:(907)269-3024 .Fax:(907)269-3044 Email:bgay@aidea.org 9/1/2006 Friday Morning -November 4 7:00AM UAF School of Mines &Friends Breakfast tones (Josephines -15th Floor) 7:00AM -5:00PM REGISTRATION (Lobby) 8:00AM -2:00PM TRADE SHOW 8:00AM -5:00PM TECHNICAL SESSIONS (Ballroom B&C) 11:00AM 2:00PM AKGeology.info (Room 31 1) ADVANCED EXPLORATION AND PRE-FEASIBILITY PROJECTS Session Chair:Stan Foo,Placer Dome U.S.,Inc. Ss 8:00AM Donlin Creek Project Update, Jaries Fueg,Piacc:Dore US.,Inc. 8:30AM An Update on Nixon Fork -2005,William J.Burnett and Paul C.Jones,Mystery Creek Resources Inc. 9:09AM Rock Creek,Big Hurrah,Saddle, Doug Nicholson;NovaGold Coffee Break Sponsor:Dowland-Bach 10:00AM Chuitna Coal, Bob Stiles,PacRim Coal 10:30AM Northern Dynasty's Pebble Project, Stephen Hodgson,P.ng.,Northern Dynasty Mines Inc. 12 Friday Afternoon -November 4 "LUNCHEON 12:00 Noon -1:00 PM Dennis Wheeler,Chairman and CEO Coeur d'Alene Mines - MC:Larry Hartig,Hartig Rohdes Hoge &Lekisch DEVELOPMENT AND MINE OPERATIONS Session Chair:John Wood,AIDEA 2:00PM Tailings Expansion at the Greens Creek Mine, Eric Sundberg,Kennecott Greens Creek Mining Company 2:30PM BEMA Gold Corporation's Kupol Guid-Siiver Project:Exploration and Development Update, Hugh MacKinnon ,Bema Gold Corporation 3:00PM Red Dog Mine -15 Years Of Economic Impact in 'Northwest Alaska,Rob Scott,Teck Cominco Alaska Incorporated Coffee Break Sponsor: Duane R.Gibson 4:00PM Pogo,Karl Hanneman,Teck-Pogo 4:30PM Kensington,Timothy Arnold,P.E.,Coeur Alaska,Inc. Coa |Use Shfz, Alaska Industrial Development and Export Aut rgy Authority March 8,2004 Mr.Brent Sheets,Regional Manager -Arctic Energy Office U.S.Department of Energy,National Energy Technology Laboratory P.O.Box 750172 Fairbanks,Alaska 99775-0172 Subject:Grant Funding for Alaska Coal Use Studies Dear Mr.Sheets: Thank you for your presentation on February 13,2004 regarding possible retrofits for the HCCP facility.We are following up on the concepts presented for a liquid fuels/synthetic gas plant at Healy and/or Beluga and will be in contact regarding the results of our preliminary evaluations. During the presentation there was mention of annual DOE grants for coal related studies.We would be interested in any additional information available on these annual grants.The Authority is interested in studying the use of coal in Northwest Alaska to provide power for the Red Dog mine and for export at the Delong Mountain Transportation System port. Thank you for your assistance in this matter. Sincerely, KirOeoedes Karl Reiche t Projects Development Manager KER:bjfH:MLL\kreiche\Project HCCP\Ltr to DOE re grant final.doc cc:Mike Barry,Chairman Ron Miller,Executive Director Art Copoulos,Project Manager 813 West Northern Lights Boulevard *Anchorage,Alaska 99503 907 /269-3000 *FAX 907 /269-3044 *Toll Free (ALASKA ONLY)888 /300-8534 *www.aidea.org if EA EE _ Coal gasification: Ready for prime time Interest in integrated gasification combined-cycle plants is increasing because. they have proven their ability to burn coal cleanly.The key roadblock has been the reliability of the gasification process itself.Now Eastman Chemical Co.,which has operated a high-pressure gasification plant for 20 years,seems to have solved that problem. By Bill Trapp,Nate Moock,and David Denton,Eastman Gasification Services Co. has long been the Holy Grail of power production.Now that grail is within reach.The ownership cost of an integrated gasification combined-cycle plant (GCC)has become competitive with that of conventional,natural gas-fired com- bined-cycle plants when gas prices rise into the $4 to $6/mmBtu range.IGCC plants have a number of very appealing qualities: G asifying coal to facilitate burning it m Exceptional environmental performance, including cost-effective removal of mercury and the potential for low-cost CO,capture and sequestration. m Their potential to be retrofit to and supply natural gas fired plants,potentially putting some of that idle generation back on-line. m Production of hydrogen-one objective of the DOE's Clean Coal Power and Future- Gen initiatives (see POWER,May 2003, p.52)-to fuel the next energy economy. m Decreasing costs.The capital cost of an IGCC plant is now estimated to be between $1,200 and $1,400/kW,and it is trending downward.This range is competi- tive with that of the newest generation of supercritical pulverized-coal power plants. IGCC progress has been slow in the 20 years since the pioneering 120-MW Coolwa- ter plant began operation in the California desert.You could count on one hand the num- ber of new IGCC plants commissioned aver the past decade.There are two IGCC plants operating in the U.S.today,and both were ini- tially subsidized by the DOE's Clean Coal Technology demonstration program.One is the 262-MW Wabash River repowering pro- ject in Indiana;it started up in October 1995 and uses E-GAS gasification technology from ConocoPhillips (formerly Destec).The other is a 250-MW Tampa Electric Co.project in Florida that started up in September 1996;its gasification technology is from Texaco.Both projects have demonstrated that they can pro- 42 duce enough synthetic gas to fully fuel a Gen- eral Electric 7F turbine. Europe has also served as an IGCC test track.There are two significant projects on the Continent.One is the SEP/Demkolec project at Buggenum in the Netherlands;it uses Shell gasification technology and commenced oper- ation in early 1994.The other is the ELCO- GAS project in Puertollano,Spain;its Prenflo gasification technology was first applied to coal in December 1997.Both projects use Siemens V943 engines with silo combustors. NO,emissions are controlled by saturating the fuel gas with hot water and by adding to it nitrogen extracted from the air by a separation unit.However,the turbines at both plants have experienced combustion-induced vibration and overheating of their combustors. Last July,Japan also tossed its hat into the ring with the commercial startup of Chevron- Texaco Worldwide Power and Gasification's 342-MW IGCC plant at Nippon Petroleum Refining Co.'s 340,000-barrels per day Negishi Refinery in Yokohama.The feedstock for the IGCC facility is asphalt from the refinery. Adapting on the fly For any IGCC plant,the road to success- as measured by its availability-is a steep -O&M learning curve.At both U.S.pro- jects,many fixes had to be implemented after startup to address the unanticipated. The gasification industry in general has had difficulty in bringing new plants on-line quickly,sometimes taking as long as three to four years to reach mature reliability. Even after reaching steady state,reliability (<85%)has been below expectation. Experience:The best teacher Eastman Chemical Co.,originally a sub- sidiary of Eastman Kodak and spun off as a separate company in 1994,was founded in 1920 to supply methanol from wood distil- lation as an alternative to foreign supplies that were interrupted during World War I. Over the ensuing decades,Eastman Chemi- cal's interests expanded to include coal gasification.Its Chemicals from Coal facili- ty located in Kingsport,Tenn.(Figure 1) was the first commercial-scale coal gasifi- cation plant in the U\S.,and it has now been operating continuously for over 20 years.To put that into perspective, Kingsport has literally an order of magni- tude more operating experience with coal gasification than all other U.S.IGCC plants combined.What makes the gap even more 1.First in the U.S.In 1983,Eastman Chemical Co.put the first commercial coal gasification facility in the U.S.into service in Kingsport,Tenn.The open structure in the middle houses the gasi- fier block,and the white building to the right contains the rod mills that grind its coal input.On the left and in the background are the plant's acid gas-removal columns.Courtesy:Eastman Chemical Co. www.powermag.platts.com POWER |March 2004 o- ed id. ad ne ee y. ty The coal gasification pprocessConceptually,coal gasificationis a relativelysimpleprocess.A carbonaceous fuel-usual- ly coal,petroleum coke,or heavy oil-is co- fed with water and oxygen in a reducing atmosphere at high pressure (up to 1,000 -psig)to produce the desired products of car--bon monoxide (CO).and hydrogen (Hz).=:Sulfur in the form of H2S and some amount|of C02 is also produced and removed in the.,process.This gaseous mixture is commonly.referred to as synthesis gas or syngas.«'.At .Kingsport,:Eastman's gasification .°process (Figure 2)uses two high-pressure.(1,000 psig):Texaco quench gasifiers:to.convert about 1,250 tons/day of bitumi-nous -coal.into»acetyl 'chemicals.'The-Rectisol process removes 99.5+%of sulfurandCOfrom.the.:syngas.,The:'sulfur is=recoveredin elemental form using a com= bination.of -Claus SRUs'(sulfur:recovery*units)and SCOT (Shell Claus off-gas treat-;ing):processes.A Linde AG-designed.cold-:box is:used to'cryogenically:separate CO'from a portion of the syngas.-3 -7"":=The downstream chemical plants use 'techologypurchasedfrom:Lurgi AG:and "Air=Products &Chemicals Inc."{Lehigh.Valley,”Pa.)for methanol production.Eastman devel-" ,Mercury Temovalis key. *ular,some of the acetyl-based products have7end-use requirements thatimpose extremely :after they exceed pressure-drop limitations or to' ADVANCED CLEAN COAL TECHNOLOGY; atastman"oped the 'technology.for making methyl'acetate,acetic acid,and acetic anhydride >from syngas.Only one of the gasifiers is required for normal production,and one is a "processing units are required for full rates,.but there are no complete spare trains for any-other section,of the Plant..temeee Because Eastman manufactures "chemicals ”from 'the syngas.produced,by the gasifier"block,”the downstream catalysts.and end©"products must'be protected.from volatile -:acontaminantsinthesyngasvapor.In partic low limitson mercury contamination..." 'because of mercury breakthrough.'In 1999,-:Radian Intemational performed an independent __assessment that validated greater than 90%- spare.There are several key pieces of equip-- : 'ment that are also spared,and in places two |. 'At Kingsport,mercury is removed from the ."?Syngas by a single packed bed of sulfur-impreq-:"fated activated carbon (Figure 3)with a con-tact time of about 15 to 20 seconds '(based on":total adsorber"vessel volume).Inlet process.,conditions are approximately 80-90F and 900 |:.to 1,000 psig,Bed lifetimes typically exceed 12:"to 18 months,The beds are usually replaced : :"3 Mercury 'removal.'Eastman.has"been removing 90+%of the mercury from«the 1,000-psig syngas using a single packed:=:bed of sulfur--impregnated activated carbo!"Bed lifetimes -'typically exceed ”.12.to:18 coincide with shift catalyst change-outs,not - mercuryFemoval from tthee syngas 'vapor.a months.Courtesy:Eastman Chemical Co:Ce.Airproductsries2 syngas <2" |cO,/H,$.removal 7 Texaco; 4 gasifier |-; 4 (1 +spare) Moe 5removal March 2004 |POWER 43 remarkable is that Kingsport isn't a demon- stration facility;it's an industrial plant that as to turn a profit. At Kingsport,the syngas (synthetic gas) produced by a licensed Chevron/Texaco process (see box,page 43)is used to produce chemicals rather than to fuel power genera- tion.About 1,250 tons/day of high-sulfur Appalachian bituminous coal are converted to acetyl chemicals.CO and H;are first com- bined to produce methanol.The methanol is then reacted with CO to produce acetic acid and other derivatives used in the manufacture of a variety of consumer products. O&M stats:Industry-leading and improving A key operating metric of a gasification plant is its availability.One measure to express this is the on-stream time,the num- ber of hours it actually operates during a specified time frame (usually a year), expressed as a percentage.Kingsport's availability during its most recent two-year maintenance cycle (the operating period chosen)was very impressive.As Figure 4 shows,from September 2000 through Sep- tember 2003 the gasification block-from air separation and coal handling through syngas cleanup,including one gasifier plus a spare-was on-stream 98.1%.Of the 2.0% downtime,0.8%was planned (the plant's biannual maintenance shutdown in May 2001),now extended to every three years, making the plant's forced outage rate 1.1%. Eastman estimates that if no spare were available,the gasifier's reliability would be between 88%and 90%,Over the two-year period,the gasifier's average annual load- ing capacity (or capacity factor)was 132% of its original design rate:125%during the year with the planned shutdown and 139% during the other year.The typical daily syngas production rate is about 145%of the original design rate. Another measure of the process's avail- ability -and reliability-is the average time between gasifier switches.As a result of continuous process improvements,that number has increased steadily and now is about 60 days (Figure 5).In addition,the average gasifier run time (the period between a gasifier's startup and shutdown, regardless of whether it is switched or restarted)has also been climbing and is now more than 47 days. Although the gasifier has had to shut own for a number of reasons over the past - 20 years,the most significant one has been the longevity of its feed injector.After plant staff redesigned that piece of equip- ment in 1998,reliability and availability of the entire process improved,leading to a 44 g|ADVANCED CLEAN COAL TECHNOLOGY 4.Forced outage rate.Kingsport's forced outage rate was less than 9%during its first full year of operation but has averaged less than 2%over the past 19 years.Source: Eastman Chemical Co. 10-.Forcedoutagerate(%)Qe or Spey meg "t+a wood i 'l 'i84'BS '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '9B '89 'OO '01 '02 Aug Year '03 5.Gasifier run data.The average time between gasifier switches is currently around 60 days.The record run,in 2002,was 122 days.The longest run last year was 95 days. Source:Eastman Chemical Co. 70 65. Bo 50 45 35 dy 0 Numberofdaysrecord run of 122 days in 2002.The longest run last year was 95 days.To further improve Kingsport's reliability,availabili- ty,and performance,Eastman relies heavily on preventive maintenance.During the planned shutdowns mentioned earlier,the plant is shut down for an 8.5-day mainte- nance blitz/vessel inspection every three years (Figure 6).During the last outage,520 work orders were completed,expending 22,000 work hours.Maintenance of the acid gas removal columns (which use the Recti- sol process jointly developed by Germany's Linde AG and Lurgi AG)is typically the crit- ical path due to warm-up/cooldown and dein- ventory issues. -m™-Time between switches ©- @-Time between shutdowns me Qo poe ey fay eke yy ot 1 t '1 ''83 '84 '85 '86 '87 '88 '89 '90 '91 '92 "93 '94 95 '96 '97 '98 '99 '00 '01 '02 '03 Year 6.Acid gas removal area.A night shot of activity in the acid gas-removal area of Kingsport during the last triennial maintenance/inspection blitz.Courtesy: Eastman Chemical Co. POWER|March 2004 ADVANCED CLEAN COAL TECHNOLOGY 7.Reliability determines maintenance.The maintenance program used at Kingsport allows equipment reliability to dictate maintenance schedules.Between 1996 and 2002,this program reduced the plant's maintenance costs 20%while the availability and pro- duction of the gasification process remained essentially constant.Source:Eastman Chemical Co. . 70 =fer]ao50 :- pte es ey _ 1996 1897 1998 Note:Cost normalized to 1996 and adjusted for inflation. At Kingsport,Eastman uses a reliability- based maintenance system whose elements include expertise,work practices,training, and technology.Between 1996 and 2002,it lowered the plant's maintenance costs by 20%while the availability and production of the gasification process remained essentially constant (Figure 7).A key aspect of the sys- tem is that it allows equipment reliability to dictate maintenance work schedules.That has enabled Eastman.to transition from almost entirely shift maintenance in the early years to much more planned mainte- nance on the day shift.Maintenance data is collected on most individual pieces of equip- ment and then analyzed against a criticality ranking to develop a preventive maintenance schedule.Critical equipment is routinely refurbished before failure,while some pieces of nonessential equipment are run until they fail. Lessons learned Now let's look at some of the design and operating issues that prospective develop- ers and owners of coal gasification processes must consider when evaluating available technology options.The stellar performance of the Kingsport plant has not been due to any one design or operating method or change to them,but rather to a long history of incremental improvements. As with most successful power projects, the devil is in the details. The first and perhaps most important thing a gasification process developer 46 -a-Availability ©-®-Maintenance costs,adjusted for inflation ey boa?mye Et *eee 2000 2001 20021999 Year * must consider is which coal or other car- bonaceous feed to use.The obvious con- siderations such as price,Btu value,sulfur content,ash content,and availability read- ily come to mind.But of these,a coal's ash content has the most impact on the performance of a slagging gasifier. Figure 8 plots the slag viscosity vs.tem- perature for two different coals with exact- ly the same ash fusion point,as reported by the standard laboratory procedure.Howev- er,these two coals would behave very dif- ferently in a gasifier.The ash from coal #2 would be very difficult to gasify without 'high refractory wear because its slag would be very viscous,even at 2,550F.By com- parison,the ash from coal #1 (the curve with the more gradual slope)would be much more forgiving and could be gasified at much lower temperatures with fewer slag removal problems.In many cases,coals can be modified to make their slag behave as desired.For example,a fluxant can be added to low-ash pet coke to remove heavy metals from it and encapsulate or vitrify them in the slag. Another consideration in choosing a feed source is the impact of trace minerals.All coals contain most of the members of the periodic table of elements at some level of concentration.But for most elements,their concentration is low,and the gasifier vitri- fies the impurities in the nonhazardous slag it produces.However,chlorides,arsenic, nickel,mercury,and vanadium need special consideration.The concentration of these chemicals will determine the plant's metal- lurgy,equipment fouling factors,catalyst life,solids handling and disposal practices,- water discharge rate,and personal protec- tive equipment needs. For example,if a coal has a high level of chlorides,those chlorides will build up in the gasifier and lead to two problems:limits on the use of stainless steel piping (which is prone to stress corrosion cracking)and an increased need for water blowdown.Vana- dium also is troublesome,for two reasons: its concentration is usually high (particular- ly in pet coke),and it has a very different melting point at normal reducing gasifier operating conditions than it does in the oxi- dizing environment present during preheat, startups,and shutdowns. The consistency of a coal's physical properties also is important.Wide varia- tions in the feed require a gasifier to oper- 8.Slag viscosity vs.temperature.Coals with the same ash fusion temperature behave very differently in a slagging gasifier.Coal #1 could run at much lower temperatures,while coal #2 would be difficult to run without high refractory wear.Source:Eastman Chemical Co.Slagviscosity(cP).2,200 2,300 2,400 Coal #1 2,500 --Coal #2 2,600 2,700 2,800 Temperature (F) POWER|March 2004 ate over a wider range of temperatures,O/C ratios,and slurry concentrations,and may result in less-efficient operation (lower con- version,more CO,)and increased refracto- ry wear.Other considerations for a coal are its compatibility with slurry additives,the slurry solids concentration achievable vs. a\ADVANCED CLEAN COAL TECHNOLOGY mercury at a 90+%removal rate.The bed operates at normal process pressure of 1,000 psig and 80 to 90F.The adsorbent bed material is changed out every 12 to 18 months on the basis of its fouling and pres- sure drop,not its mercury loading capacity, which is estimated at up to a 10-year life. All coals are not created equal,but gasifiers are very flexible and can acceptawiderangeofcoalsaslongasthe important characteristics of the coal orotherfeedstreamareunderstoodand accounted for. desired concentration,the choice of flux- ants and the resulting impact on water chemistry,and its grind distribution and the effect that has on slurry properties and car- bon conversion.All coals are not created equal,but gasifiers are very flexible and can accept a wide range of coals as long as the important characteristics of the coal or other feed stream are understood and accounted for. Solving permit problems Developers of IGCC plants also must address their environmental impact. Recently,regulators have expressed con- cerns about the flaring of raw syngas con- taining sulfur during plant startups.The crux of the problem is this:Because syngas is difficult to store,and all of the plant's units are started in sequence,there is a time window when the gasifier is producing raw gas but the sulfur recovery unit is not yet running.This aspect of operations should be considered when permitting the plant. Flaring gas is particularly troublesome during the early years of a plant when star- tups are more frequent.But there are alter- natives.Eastman developed a patented technique to start the gasifier and sulfur recovery units up on a sulfur-free,liquid fuel and then transition to the normal slurry feed without interruption.This avoids the flaring of raw syngas during startup and reduces the plant's total SO,emissions. As for another pollutant,Eastman has always been sensitive to levels of mercury in Kingsport's output of syngas because some of the end product is used by the pho- tographic industry whose processes are very sensitive to mercury contamination. --Mercury is removed from the syngas using relatively small absorbent beds that trap the 48 Stops acid gas After the choice of a feed for his IGCC plant,the next decision a developer must make-the earlier the better-is which acid gas-removal technology to use.That decision should take into account both the plant's permit requirements and the expected end use of the syngas.For exam- ple,Eastman chose the Rectisol process because it excels at removing sulfur and CO,and because Kingsport's output is used in chemical production processes involving downstream cryogenic separa- tion and sensitive catalysts. The sulfur level in the syngas produced at Kingsport is less than 1 ppm,meaning that total sulfur removal and capture effi- ciency is 99.5+%.For power production applications (where permitting allows),a less-intensive removal process such as methyldiethanolamine (MDEA)adsorption or Selexol may suffice.As you might expect,the capital cost of an acid gas-removal system reflects its effective- ness at removing sulfur,but the added cost for significantly higher sulfur removal lev- els is much lower than for other coal tech- nologies.For a 500-MW IGCC,a Selexol system capable of removing 99%of the sulfur from the syngas might add $20 mil- lion to $30 million to the capital cost over the standard MDEA option.Getting to the 99.5+%level would require a Rectisol sys- tem priced at an additional $40 million to $50 million over MDEA. So,pick your sulfur emissions target and read the price,right?Well,it's not quite that simple.The sulfur loading capacity of a given system depends on the sulfur and CO,content of the gas as well as the sys- tem pressure.Generally speaking,chemical solvent processes such as those in MDEA systems (which typically can remove around 98%of sulfur)are more efficient at lower pressures,but the physical solvents like methanol in a Rectisol process are more efficient at higher pressures. Two are better than one It's as true in coal gasification as it is other engineering endeavors:Redundancy can be an asset when individual pieces of equip- ment or systems are unreliable,but redun- dancy also can be a liability if it obscures poor performance.The only question is how much redundancy to design in,because big pieces of hardware have big price tags.The intelligent approach to answering that ques- tion is to base redundancy decisions on the 9.Availability vs.run time.At low gasifier run times,plots of the system's overall out- put and percentage time at maximum rate show the expected steep curves.However,the gasifi- er's overall reliability flattens out at around 40 to 50 days,indicating that no significant increase would come from adding redundant equipment beyond that point.Source:Eastman Chemical Co. --Gasifier output 100 Time at full runrate Availability(%)S50 20.''' 0 10 20 30 40 50 60 70 80 Average time between gasifier switches (days) POWER|March 2004 perme7iakA i ¢is | hard operating data,criticality rankings,and performance history of equipment,and make them targeted to specific areas.For example,at Kingsport a spare quench water pump has been deemed appropriate because these kinds of pumps are both known to have a short mean time to failure and are absolutely essential to plant operation. Another example might be a set of exchang- ers that are known to foul frequently,must be cleaned after every run (and sometimes during a run),and cannot be bypassed. The authors'most frequently asked question about redundancy is,"How many gasifiers should I have to give me X% availability?”For the 7/24/365 Eastman operation,there is one gasifier and one spare.The cooling train and water system are single-train,but with carefully selected equipment spared. Eastman feels so strongly about intelli- gent redundancy that it has created statisti- cal models,based on Kingsport historical records,to refine its decision-making process.For example,in analyzing the effect of gasifier average run time on over- all system reliability,plots of the system's overall output and percent time at maxi- mum rate show the expected steep curves at 'ae |gcd:ADVANCED CLEAN COAL TECHNOLOGY low run times (Figure 9),However,the curves start flattening out at around 40 to 50 days,indicating that no significant increase in reliability would result from adding more redundancy beyond that point. So in the design and operation of the plant, the redundancy target clearly should be around 40 to 50 days;any extra redundancy or expense to get more than 50 days proba- bly would not be economic. Safety first At Kingsport,Eastman pays more than lip service to both process safety and personal safety.The plan's long-term OSHA recordable rate is between 1.0 and 2.0, which is in the upper quartile of the chemi- cal industry and means that an Eastman chemical plant operator is much safer at work than at home.The last injury that required a day away from work (a turned ankle)was more than 11 years ago and was not related to the process. Eastman uses a behavior-based system as © the primary means of ensuring safe plant work practices.Naturally,it includes provi- sion and mandatory use of personal protective clothing and equipment.For example, mechanics must use fire protection suits when FOR FUEL &SORBENT PREPARATION -DIRECT FIRED MILLS FOR COAL,PETROLEUM COKE,&LOW RANK FUELS :.i.4;Limestone sorbent preparation ..--"systems for fluidized bed combustors._ts.S903 FLEA:iTiU:!RIE SWEeT, -+Reduces amount of unburned carbon ....F'Y 3 (or loss on ignition-LOl)in ash : a:Bre,teeheePhas, Incorporates Dynamic Classifier for infinite turndown with constant particle size control .petroleum coke for reburn Capable of micronizing coal or Pulverizes high moisture fuel without de-rating § Reduced energy requirements Instant response to energy requirements PRBS Patent Crusher &Pulverizer Company CRUSHERS @ PULVERIZERS @ SHREDDERS @ GRINDERS 2701 North Broadway,St.Louis,MO U.S.A.63102 PHONE (314)621-3348 Visit our Web Site!http://www.williamscrusher.com FAX (314)436-2639 50 CIRCLE 29 ON READER SERVICE CARD changing out the feed injector while the unit is still hot.Syngas containing CO and H,S are highly toxic,and when H,S has been taken out,the syngas is also odorless.The gas is processed at very high pressures,increasing the potential for leaks.Because of the poten- tial dangers,all Eastman operators wear per- sonal CO and H,S monitors that alert them to potentially hazardous concentrations of those gases.Area monitors are also strategically located throughout the buildings. Training is another vital element of process and personal safety.At Kingsport, there are two basic types of training for operations personnel.New operators must take and pass three years of courses to be certified by the U.S.Bureau of Apprentice- ship Training.The curriculum includes general education on pumps,valves,instru- ments,and processing equipment,as well as job-specific training on all of the individ- ual tasks a fully competent gasifier operator is likely to be given. But an operator's initial training is not the end of his learning,which will continue for his entire career.There are also manda- tory safety training sessions such as fire extinguisher use,emergency evacuations, and environmental inspection and response. But just as important,process refresher training is also provided on a three-year repeating cycle-over and above what OSHA requires. IGCC's promise Interest in coal gasification is at an all- time high in the U.S.because the process has the potential to provide a big share of America's future energy needs in an envi- ronmentally responsible way.Kingsport is proof that a carefully designed,managed, and operated gasification unit can run very reliably over a long period of time. Getting there hasn't been easy.But over the past two decades,Eastman has been able to effectively deal with the many complex issues involving coal gasifica- tion.The company is proud to offer this article as expert advice to developers in the nascent industry. In fact,Eastman has such faith in the future of gasification that it has formed a subsidiary-Eastman Gasification Ser- vices Co.-to help prospective gasifica- tion developers and owners improve the value and performance of their plants. Eastman Gasification Services has also signed a cooperative agreement with ChevronTexaco under which Eastman can readily provide operations,maintenance, management,and technical services to other ChevronTexaco gasification process licensees.m POWER|March 2004 Karl Reiche 'rom:Art Copoulos sent:Monday,January 31,2005 3:37 PM To:John Wood;Karl Reiche Subject:FW:LTIL.RDS_DraftAlaskaQuestions_012505.doc IGCC scoping study FIRST DRAFT...Can you take a look at this and provide any comments/edits?This is an outgrowth of the IGCC report we have discussed. -----Original Message----- From:Art Copoulos Sent:Monday,January 31,2005 3:20 PM To:'Brent Sheets' Ce:Dennis McCrohan Subject:RE:LTI_RDS DraftAlaskaQuestions_012505.doc Brent, Enclosed is a VERY ROUGH FIRST DRAFT for initial discussion purposes only based on a very brief review by myself and Dennis McCrohan.Lets talk anytime about this or the next step. Art -----Original Message----- 7rom:Brent Sheets [mailto:Brent.Sheets@NETL.DOE.GOV] sent:Monday,January 31,2005 2:04 PM To:Art Copoulos Cc:Charles.Thomas@saic.com Subject:LTI_RDS_DraftAlaskaQuestions_012505.doc Art, I totally forgot about getting this list of Q's to you.Sorry about the oversight.Talk to you soon. Brent Sheets Arctic Energy Office National Energy Technology Laboratory U.S.Dept.of Energy P.O.Box 750172 539 Duckering Bldg/UAF Campus Fairbanks,AK 99775-0172 Phone:907-452-2559 Fax:907-452-3345 BELUGA IGCC FEASIBILITY STUDY SCOPE OF WORK VERY ROUGH FIRST DRAFT ONLY Revise base case economic IGCC (Integrated Gasification Combined Cycle)feasibility with air (vs oxygen)driven gasification.Assuming this is still uneconomic,re-evaluate the economic feasibility of an IGCC facility at Beluga by evaluating whether there is incremental economic benefit associated with adding one or more of the following processes make the overall project economic: e CO;Production and Sales:Evaluate the market potential for a "CO,enhanced recovery”in Cook Inlet through discussions with Cook Inlet Oil Producers.If it is determined that there is market potential,evaluate the economics and process feasibility for CO2 production,sales,and delivery from the IGCC plant to the reservoirs.Consider whether it is more economic to inject CO2 or raw flue gas and if there are any economic benefits associated with "'carbon sequestration.”Consider whether CO can be used in a coal slurry process and the market potential for coal slurry export. e Excess Syn-gas Production and Sales:Evaluate the market potential for sale of syn-gas to Agrium or other potential purchasers in Alaska or other nearby markets,assuming excess syn-gas is manufactured,from air or oxygen driven gasification,above the amount used for base load power requirements.If it is determined that there is market potential,evaluate the economics and process feasibility associated with excess syn-gas production from the IGCC plant. Evaluate the Beluga port facility expansion necessary to support export of syn-gas products or whether products could be piped to ports on the East side of Cook Inlet. e Hydrocarbon Residual Utilization as Feedstock:Evaluate the market potential of utilizing hydrocarbon residuals from area refinery's or TAPS (Alaska and West Coast)as a lower cost,refinery waste minimization supplement to coal. If it is determined that there is market potential,evaluate the economics and process feasibility associated with utilization of these hydrocarbon residuals as feedstock in the IGCC plant. e Coal Drying and Sales:Assuming coal is dried as a part of the IGCC process, identify the optimal drying process and the amount of moisture reduction that would be economically achievable.Note:Reduction to 6 %moisture in the coal as proposed in the original Beluga study may not be technically or commercially feasible.Evaluate the market potential for exporting this dried coal to Asia.Also evaluate application of the drying process on Beluga coal in consideration of risks associated with plant operations,size distribution, resistance to reabsorbtion and spontaneous combustion,and ability of the process to achieve the final moisture level.If it is determined that there is market potential and these technical risks can be reasonably mitigated, evaluate the economics and process feasibility associated with scaling up the size of the drying facilities so that a marketable quantity of dried coal can be made available for export.Evaluate the Beluga port facility expansion and mine infrastructure necessary to support export of coal products. e Excess Energy Production and Sales:Investigate expanded IGCC sizing requirements with Railbelt utilities.Review constraints associated with construction of a 200MW or larger generation plant related to transmission, reliability,and voltage stability on the existing railbelt energy "grid.” Consider multiple parallel units with reasonable size increments and units that can operate on syn-gas or natural gas in parallel with existing Chugach generation at Beluga.Evaluate the economics and process feasibility of scaling up the size of the IGCC plant to supply power to 2 proposed mines at Donlin Creek and Pebble. e Clean Fuels,Chemicals,Nitrogen,or Hydrogen Production and Sales:Evaluate the market potential for Clean Fuels,Chemicals,or Hydrogen sales in Alaska as well as in ports in proximity to Alaska on the West Coast and in Asia.If it is determined that there is market potential,evaluate the economics and process feasibility associated with supplying the clean fuels,chemicals,or hydrogen to these markets.Evaluate the Beluga port facility expansion necessary to support export of fuels,chemicals,nitrogen,or hydrogen products or whether products could be piped to ports on the East side of Cook Inlet. www,OilandGasReporter.com :An Alaska Journal of Commerce Publication January 12,2002 [Ub BREAKING "-Second test well isnowplannedoffAnchorPoint.By the Oil and Gas Reporter: ConocoPhillips Alaska,Inc.is planning to drill'asecondexplorationwellthisyearattheCosmopolitan prospect offAnchor Pointin Cook Inlet.Preparationsfordrillingaretobegininthesecondquarteroftheyear,according to sources in state agencies and theKenaiPeninsulaBorough.ConocoPhillips holds state and federal leases overtheprospectinpartnershipwithForestOilCorp.:Cosmopolitan was reported to be a discovery.However,the initial exploration well drilled direction-ally iinto the prospect from a drill rig located onshoreisreportedtohaveencounteredwellproblemsbefore a flow-test could be done,The second wellis intend-od to fly test the prospect according t0 the souressinstategovernment.»be _The U.S.Minerals Management:Serviceis 'pro-ceeding with plans for new lease salesin lower Cook Inletin 2004 and 2006.Public hearings are set on theEnvironmentalImpact.Statement for the lower inlet the MMS said.=e 0 :'The agency°will offer'2.2 million tto2,5 'nllionacresof.submerged lands for explorationin 2004.Themid-range estimate by MMSis that 500,000 barrels of recoverable oil and 1 trillion cubic feet of natural gas could be discovered and Produced 4inthe areabeingofferedin2004.':Me"The estimate for natural gascould be low,oa MMS moves.'ahead with oplansforlowerinlet.sales Outer Continental Lease sales Jan.21 in Seldovia,Jan |« 23in Homer and Jan."25in Kenai.The EIS docu-.ments now being reviewed will covert bothlease sales, -on coal-to-oil research,was Bill Popp,oil and Bsliaison for the Kenai Peninsula Hopes renewed for coal-to-oilByTimBradner"Alaska Oil and Gas Reporter A Vancouver,B.C.-based gold mining company hopes tourrectastalledprojectinFairbankstodemonstrate commercial feasibility of making a liquid fuel from coal. Silverado Mines,Ltd., and successfullytestedin laboratories at the University of North Dakota,but U.S.Department of Energy funding was cut before commercial feasibility of the technology could be demonstrated in a larger test plant. Because Alaska has large reserves of undeveloped,low- rank coals,the DOE,Alaska Science and Technology Foun- dation and the University which operates gold mines in Alaska,is now propos- ing a lower-cost alternative to complete the project. Finding a way to con- verting coal to oil econom- ically has been a prime goal of government and indus- try scientists over the years. With oil prices now in the $30 per barrel range and increasing concerns about U.S.dependence on for- eign sources of oil supply like Venezuela and the Per- sian Gulf,there's renewed interest. One promising approach that emerged inthe1980s,the last time there were serious efforts a technology to make lig- uid fuel from low-quality, or low-rank,coals like Alaska sub-bituminous coal. Coal-water fuel is created by heating pulverized coal through a hydrothermal process that is much like pressure- cooking.The process creates a liquid mixture of water and fine coal particles held in suspension,which can be burned as a fuel. The low-rank coal water fuel technology was developed iE NORTH SLOPERES of Alaska worked for several years on developing a test plant at the UAF campus in Fairbanks.The project, which was managed by the UAE,stalled when it ran short of money. Silverado thinks it has a way to complete the proj- ect.It hopes to get a $9.7 million Department of Energy grant to modify an ore processing mill Silvera- do owns at Ester,west of 4 Fairbanks,into a test planttomake300tonsperdayof coal-water fuel,according to its president,Gary Ansel- mo.Usibelli Mines,Inc., which operates a coal mine at Healy,south of Fair- banks,would supply coal for the test. The project would cost about $23.9 million in total,which includes the cost of -coal Usibelli would contribute.Silverado would pay $2.5 million itself and could finance up to $5 million if need- ed,the company said. If the technology works as expected it could make a liq- Continued on Page B2 An Alaska test plant for coal-to-oil is planned Continued from Page B1 uid fuel that could complete with crude oil at prices of $16 per bar- rel,according to Warrack Will- son,Silverado's technology direc- tor.Willson is a retired DOE sci- entist who was involved in devel- oping the low-rank coal-water fuel technology in North Dakota. The estimate assumes coal is supplied at $13 per ton,Willson said.Coal-water fuel can be used in boilers,large diesel engines and possibly turbines,he said. Although coal from the Usibelli mine near Healy be used in the demonstration test,a commer- cial-scale coal water fuel plant would probably be most ideally located at the Beluga coal field near Cook Inlet west of Anchor- age,Willson said. _Marketing studies show the fuel might find customers in the Pacific rim,par- ticularly with utilities who would convert aging oil-fired power gen- eration plants to coal-water fuel,or install fuel-switching capabilities so the fuel can be used as a less-costly, less-polluting alternative to fuel oil, Willson said. Anselmo is enthusiastic about the project."The U.S.has the largest share of the world's fossil energy reserves with over 25 per- cent of the proven coal reserves. USS.coal reserves are ample to fuel America's growth for centuries, where the nation's combined oil and gas reserves can provide energy for a few decades at most,”Ansel- mo said. Silverado,which operates an underground gold mine north of Fairbanks and owns other gold properties in the Interior,has formed a subsidiary,Silverado Green Fuel,Inc.to develop and "Low-rank coal water fuel offers important and exciting potential for both Alaska and our nation.” -Mark Hamilton, president UAA market the technology. The university,meanwhile,has pretty much given up completing the project itself,according to Mark Neumayr,UAF's vice chan-cellor for administrative services.The project was taken over in 1994 from a Maryland utility which had a contract with the Department of Energy to do a commercial demonstration of the coal-water fuel technology.The Alaska Science and Technology Foundation was to sup- ply the local match required for the federal grant,along with Usibelli Coal,the university and others. Costs of completing the project at the university turned out to be higher -thanexpected,how- ever.UAF tried to secure other funding,but was unsuccess- ful,according to Neumayr, The universi- ty is now lend- ing support to Silverado's lower-cost approach,according toa letter from university president Mark Hamilton to Ed Armstrong, a Silverado official. "Low-rank coal water fuel offers important and exciting potential for both Alaska and our nation.I would like to express my strong support for your demonstration project,”Hamilton wrote in the letter to Armstrong. Neumayr said the university could work with Silverado on the project if the company is successful in getting the DOE grant.UAF hasgiventhecompanyalistofbusi-ness-related issues to be dealt with if that happens,Neumayr said. Also,additional investments are needed for a large diesel engine in the university power plant to be able to use coal-water fuel,he said. Burning the fuel in the diesel was to be part of the original UAF project. MAST:d@ Coal is not a clean fuel! de ed to oil and p ae D RE:T DENSIV 0 'Coal e 4 CO O é 4 the iynmensinatide1oF-4qAverageCost$/mmBtuHistorical Electric Utility Fuel Prices 7 "US DOE,Energy Information Administration 6 = A US Naturai Gas' AK Gas*[5 US Coal* Alaska Coal | Coal Effect on ElectricityRatesByState 600 -; Some.Emegy serosa! 4 7004 Da uo . Par.)Mwa|ta . =. S100 Mye sPiedOy-P+|o =. 5 so =tusaryeo]ed sco]one *oe e are etm}Re a :. .?tat *wt . 4aars 0%a0 Pry on PLY mon no ar am 080% PercentageCoalGeneration AK Resoures Costin$/mWhrCoal to Combined Cycle Comparison for Load Following [+$12 Naphtha -«-$1.25 Coal +$3.50 Gas -+-$5 Gas | $140$120 ee -- $100 $80$60 Lanne0SSS$40 :+:; 50%60%70%80%90%100% Percent of Full Load WingeinEpaced 2"a PRESS RELEASE For Immediate Release:July 25,2006 Contact:Teresa Imm,Director of Resource Development,ASRC,(907)339-6000 Scott Williams,Project Manager,BHP Billiton,(713)961-8500 ASRC,BHP Billiton agree to coal exploration in the Northwestern Arctic (Anchorage,AK)-In July 2006,Arctic Slope Regional Corporation (ASRC)and BHP Billiton signed a series of agreements providing BHP Billiton an exclusive right to explore and possibly develop the coal bearing land held by ASRC in the Northwestern Alaska.The Western Arctic region in northwestern Alaska includes a number of known low-sulfur bituminous coal bearing areas.ASRC holds land and mineral rights in the region as a result of the Alaska Native Claims Settlement Act (ANCSA)of 1971. BHP Billiton will begin an exploration program on ASRC lands north of the Brooks Range in the Western Arctic,inland from the Inupiat communities of Point Lay and Point Hope later this year. In addition to exploration,BHP Billiton is committing to continuation of ASRC's environmental studies of the area and establishing a community consultation process.Should exploration results prove positive,BHP Billiton will begin project concept studies to determine preliminary feasibility and possible mine development. BHP Billiton brings extensive Arctic exploration and mining experience gained through development of the EXKATI Diamond Mine™in the Northwest Territories of Canada. ASRC is one of the 12 Alaska-based regional corporations established by Congress under the Alaska Native Claims Settlement Act of 1971.It represents eight North Slope villages including Point Hope,Point Lay,Wainwright,Atqasuk,Barrow,Nuiqsut,Kaktovik and Anaktuvuk Pass. ASRC has nearly 9,000 shareholders and has paid nearly $150 million in dividends since its inception.The corporation has investments in energy services,petroleum refining and marketing, technical services and engineering and construction. www.asrc.com www.bhpbilliton.com -###- TO READ REGULARLY UPDATED INFORMATION ABOUT GENERATION TECHNOLOGIES amma GOTO WWW.ENERGYCENTRAL.COM/GT.CFM TXU's Texas-Sized Generation Build THE INSIDE STORY There were the pyramids.There was the Manhattan Project.And then there was the Apollo program. Now TXU is adding a new chapter to the history of out-sized human endeavor, embarking on a plan to add 9,000 megawatts of new coal-fired generation in Texas.As with all bold efforts,TXU's plan has generated a good deal of debate and criticism across the state.To better understand the scope of the building effort,the technologies that will be employed and its potential for influencing other generation construction efforts around the country,EnergyBiz submitted a list of questions to Mike Childers,the chief executive officer of TXU's Generation Development.Childers,45,was recruited to join the company a year ago by C.John Wilder,TXU's CEO.His comments follow. By Martin Rosenberg R TXU has proposed to buildan 858 megawatt coal-fired power plant at Morgan Creek Station in West Texas.recor J pres Pyypoes pyri OF.A .GOMEEE NC HGIEIE MAGACINGEEN enerpybiz:Currently,TXU has 5,837 megawatts of coal generation in Texas.You plan to spend $10 billion to build 11 additional coal-fired plants in the state.How will you sequence the building program?Will you start the plants all at once? CHILDERS:TXU is planning to begin construction on each facility immediately following issuance of the air permits.We expect to have Oak Grove Units 1 and 2 online and generating substantial revenues by April and October 2009,The eight new units,or "reference”units, will be located at existing power plant sites in Fannin,Freestone, McLennan,Mitchell,Rusk and Titus counties.If approved,the new units are expected to be operational by 2010. energybiz:Will all 11 plants have the same design? CHILDERS:The eight reference plants will have essentially the same design:a supercritical coal boiler burning Powder River Basin (PRB)coal with a selective catalytic reduction system for nitrogen oxide and a fabric filter for particulate control. Oak Grove will use two supercritical coal boilers burning locally mined Texas lignite with a selective catalytic reduction system for College -Waco.In addition,representatives from the Texas Educa- tion Agency,Region 6 Education Service Center (ESC),and Region 12 ESC are members of the partnership. energybiz:Construction on this scale is unprecedented in the utility industry.Will you have any new approaches to keep costs from escalating as the projects take off? CHILDERS:Based on examination of other major construction programs,we know scale is necessary to drive down cost and construction time,corresponding directly to customer value.Our objective is to develop and implement a sustainable business model to build power generation facilities for less cost and in less time, and to operate power-generation facilities at superior reliability and cost levels relative to the industry.This will allow TXU to profitably serve customers with the most secure,low-cost and environmen- tally friendly power possible.TXU believes its model will also provide new markets with economic benefits similar to those projected for Texas.Expected benefits in Texas include a reduction in long-term power prices by $1.7 billion annually,approximately 50,000 construc- Lu _nitrogen oxide,a fabric filter for particulate control,and sorbent injec-_tion and other temporary jobs,tens of thousands of permanent jobs,CO|tion for mercury removal.and nearly $18 billion added to the state's gross product.We've been 50 Sandow will use two circulating fluid bed (CFB)boilers burning locally encouraged by early discussions with leaders in other markets andwmminedTexaslignitewithaselectivenon-catalytic reduction system expect to announce progress in expanding outside of Texas by the£(J |fornitrogen oxide and a fabric filter for particulate control.end of the year. -enetgybiz:Where will you get the labor? CHILDERS:Our investment plan is projected to create thousands of Texas jobs and save Texans billions of dollars.With the approval of these projects,the $10 billion investment will create approximately 50,000 construction and other temporary jobs and tens of thousands of perma- nent jobs,and add nearly $18 billion to the state's gross product. To meet the expected demand for skilled workers as a result of its plan,TXU Power has joined with Bechtel and Fluor to evaluate training opportunities and available educational grants in the Central Texas region.We want Texans to fill these roles,and our goal is to ensure that they have the training opportunities necessary to succeed. Through extensive work with Workforce Solutions of Brazos Valley, and the Central Texas,East Texas,and Heart of Texas Workforce Devel- opment Boards,the group will identify the specific labor needs by skill set and find solutions to provide the needed training.In addition,TXU, Bechtel and Fluor will investigate possible state and federal educa- tional grants for participating institutions. The group is partnering with several Central Texas institutions to investigate opportunities for skills training and curriculum,including Blinn College,McLennan Community College,Navarro Commu- nity College,Temple Community College,and Texas State Technical energybiz:What new generation technologies will be used at these plants? CHILDERS:We'll use the best available emissions-control technologies on the proposed units and retrofit existing units to reduce overall key air emissions by 20 percent,actually making the air cleaner in Texas. These will include: *Dry flue gas desulfurization for sulfur dioxide (SO,) *Selective catalytic reduction (SCR)for nitrogen oxides (NOx) *Baghouses for particulate matter (PM) *Sorbent injection for mercury control Like existing TXU power plants,all of the new units will meet or exceed all state and federal environmental standards. energybiz:TXU plans to spend up to $2.5 billion of its investment to retrofit equipment and adjust the fuel mix at existing plants to reduce emissions,and to use the best available environmental control technology at the new plants.What levels of carbon dioxide,sulfur dioxide and mercury emissions levels will exist at your coal fleet after these enhancements?How will those levels compare with emissions levels today -and five years ago? ao CHILDERS:TXU's solution for its customers includes the most significant voluntary emissions-reduction program of its kind in the United States. While we'll more than double capacity,we'll reduce total key emissions by 20 percent from current levels.This means that even after TXU adds 9 gigawatts of new power,its Texas generation fleet will have lower key emissions than today.The emissions intensity of its coal generation will be reduced by almost 70 percent,making TXU the cleanest large-scale coal-generation fleet operator in the nation.We plan to achieve this envi- ronmental progress through retrofitting existing facilities with state-of- the-art emissions controls,increasing the use of more expensive but cleaner coal in existing facilities,and employing the best available control technology on the new facilities.TXU will spend $2.5 billion of its more than $10 billion program on environmental controls that will allow TXU to meet this commitment to lower key emissions below today's levels. TXU has also requested the Texas Commission on Environmental Quality make TXU's environmental commitment legally enforceable.The prin- ciple of more-than-offsetting key emissions would be good public policy for Texas,and we believe all builders should be held to that standard. After the program is complete,the new portfolio will have 20 percent lower total emissions of sulfur dioxide (SO,),nitrogen oxides (NOx),and mercury,and almost 70 percent lower emissions rates. energybiz:Your 5,800-megawatt coal-fired generation fleet is among the best performing in the industry,judged by capacity factors.To what do you attribute that? CHILDERS:Through application of the TXU Operating System,with its program of lean concepts and continuous improvement,the progress TXU's solid-fuel power generation fleet has made to achieve operational excellence is the best in the industry.TXU's 5,800-megawatt coal- fired generation fleet is consistently producing at an industry-leading capacity factor that is almost 10 percent above the top-decile capacity factor for U.S.coal-fired generation plants.TXU's coal-fired power plants are also on a trajectory to achieve top-performing cost management. enerpybiz:TXU Power owns and operates one of the largest lignite surface-mining operations,producing about 23 million tons of lignite a year.Do you have plans to expand your own coal production in line with your expanded coal generation? CHILDERS:TXU plans to open a lignite mine near the town of Kosse to support the planned Oak Grove plants.Sandow5 will be fueled by lignite already being mined at the site,but the rest of the coal will be transported into Texas from Wyoming's Powder River Basin. enerpybiz:Where will you get most of the coal for your new coal- burning units? CHILDERS:Wyoming's Powder River Basin will supply the fuel for the eight reference plants.Oak Grove will burn Texas lignite,as will Sandow Unit 5. eneybiz:Significantly increasing coal imports into Texas can become a logistics nightmare.How will you deal with potential rail problems? CHILDERS:TXU chose the plant sites based on their ready access to rail transportation.We plan to have dual-rail access at all sites.We are managing our risk by diversifying and we're currently in the process of negotiating agreements with Burlington Northern and Union Pacific. energybiz:TXU plans to buy up to 5,000 megawatts of power genera- tion in the Eastern U.S.and plans to file license applications for up to - 6,000 megawatts of nuclear-fueled generation.What is your objective outside Texas? CHILDERS:TXU is reviewing its inventory of sites that were identi- fied for nuclear power development over the last 30 years along with potential new sites in Texas and in other states. enerpybiz:What is the potential of generating power from methane gas created in landfills and biomass facilities?You are exploring the tech- nologies.How important can they become in your mix of generation? CHILDERS:Exploring that as a technology alternative is just one element of our planned $1.5 billion to $2 billion investment in next generation technologies,and will likely be a small,but important element of our future generation mix,just as all renewable power sources are. energybiz:What plans does TXU have to add to its wind and solar generation? CHILDERS:TXU plans to expand its use of renewable energy,including wind power,A new company,TXU Renew,was created to double TXU Wholesale's renewable energy portfolio by 2011 with enough wind energy to power 275,000 homes.This new business unit will focus on the growing renewable energy market by investing in renewable power production,resulting in a portfolio of approximately 1,400 megawatts. De Lor vow Puart geterton [nu inden rfotp Jacc axa aaga. JaPeu *:Ere| 4 able bd He F Hele PlOle[2 Mle fe Of 3 DB Integrate your operations,customer,field,and engineering data with ArcGIS'. Utilities are discovering the benefits a geographic information system (GIS)brings to information management.GIS software organizes corporate information by its location, providing powerful query,analysis,and planning tools while integrating easily with customer information,outage management,and work management systems. With ArcGIS,utilities can,for the first time,take GIS to the enterprise level.Its open architecture allows the use of complementary technologies such as global positioning systems (GPS),wireless communication,voice recognition,and pen-based computing. Enterprise GIS improves operational efficiencies,provides faster and more insightful decision making,streamlines communication,and allows a more intuitive,spatial view of corporate information.Call ESRI today to learn how enterprise GIS can benefit your utility. f "r % HTML *:Java : +Browsers Viewers = aN |., i 7”r *£4 Mobile =Desktop a im,Devices Network GIS , &a ®vee a fopliaeCustomer OperationalSystemsGISServersSystems T poor 4 Geospatial andImagingDatabases »MBROFELAOBENODsc Asset Management Integrated spatial information helps you >Know where your customers are relative to your facilities. >Combine map and operational status into a single view. >Streamline planning and system analysis. >Access asset and maintenance data in an ERP and view it on a map. >Enhance your work management system with a geographic view. >Provide access to data in the field. >Reduce fleet costs by optimizing vehicle routing. ESRI -The GIS Company™ 1-888-333-2938 www.esri.com/electricgas E-mail:info@esri.com Copyright ©2003 ESRI.All rights reserved.The ESRI globe logo,ESRI,ArcGIS,ArcMap,Arcinfo,ArcPad,www.esri.com,and @esn.com are trademarks,registered trademarks,or service marks of ESRI in the United States,the European Community,or certain other jurisdictions.Other companies and productshereinareorregisteredoftheirrespectivetrademarkowners. U.S.DepaRTMENT OF ENERGY FE-20 1000 INDEPENDENCE AVENUE WASHINGTON,DC 20585-1290 PRESORTED STANDARD U.S.POSTAGE PAID MERRIFIELD,VA PERMIT NO.1635 WadecdaDacsbalsDbescoadbesdalDea UD DoanbeveQdobaadatensed Lal MR.DENNIS MCCROHAN ---FE-20 AIDEA 813 W NORTHERN LIGHTS BLVD ANCHORAGE,AK 99503-2407 ha Printed with soy ink on recycled paper Ma69,Winter 2006 News Bytes In addressing participants at the Asia-Pacific Partnership on Clean Development and Climate site visit, on October 30,2006 (see accom- panying article),DOE's Assistant Secretary for Fossil Energy Jeffrey D.Jarrett announced a major new effort under the Carbon Sequestra- tion Regional Partnerships.Over $450 million will be provided for a 10-year effort to carry out large-vol- ume sequestration tests in geologi- cal formations around the country. Large volume tests are crucial to the deployment of the FutureGen plant, which will produce hydrogen and electricity from a coal-fired power plant,while capturing and sequester- ing CO,emissions. University of Kentucky's Center for Applied Energy Research has received the 2006 Coal Combustion Products Partnership's (C'?P')Spe- cial Recognition Award in Innova- tion.The award is for pilot-scale See "News Bytes”on page 5... INSIDE THis Issue FE Participation in Asia-Pacific ......1) Advanced SeparationTechnologiesConsortium esveseneseeeee Mesaba,......essiecsessceee ,vestoresceeeeeeees 6°! International Initiatives seesseseasassesn 8 | Active CCT Demonstrations.....:...-10 | ssa A NewsLetter ABOUT INNOVATIVE.TECHNOLOGIES OR COAL UTILIZATION: Fossit ENERGY PARTICIPATES IN ASIA-PACIFIC PARTNERSHIP The Department of Energy's Office of Fossil Energy (FE)is co-chairing one,and participating in two other,key task forces under the Asia-Pacific Partnership on Clean Development and Climate (APP),a major public-private effort aimed at accelerating deployment of cleaner,more energy-efficient technologies and practices.Six countries comprise the APP (United States, Australia,China,India,Japan,and the Republic of Korea).These countries are responsible for 49 percent of the world's electricity generation and over | 64 percent of the world's coal produc- tion.U.S.membership was announced f[ by the White House in June 2005,and the APP inaugural meeting was held in Sydney,Australia,in January 2006. According to its Vision Statement, APP has its roots in the World Summit on Sustainable Development,which made clear the need for increased ac- cess to affordable,reliable,andcleaner ™in Michael Morris,AEP Chief Executiveenergythroughouttheworld.The Officer,President,and Chairman of thegroupistobuildonexistingbilateralBoard,addressed the opening session of and multilateral initiatives --such as the AEP-hosted site visits the Carbon Sequestration Leadership Forum,and the Asia Pacific Economic Cooperation.It is designed also to be consistent with the United Nations Framework Convention on Climate Change and to complement,but not replace,the Kyoto Protocol.Areas of collaboration are far-ranging,from clean coal and liquefied natural gas,to various renewable sources and energy efficiency methods including building and home construction.The Department of State is the lead federal agency for U.S.participation.A distinctive feature of the APP,however,is private sector participation in order to ensure actual research efforts and projects. APP has been organized into eight task forces.The Power Generation and Transmission (PG&T)Task Force is co-chaired by FE's Jarad Daniels and Guo Wei of China's National Development and Reform Commission.FE also is represented on the Cleaner Fossil Energy,and Coal Mining Task Forces. Other task forces include Renewable Energy and Distributed Generation,Steel, See "APP”on page 2... "he”CLEAN COAL TODAY ic A id aN lad a a aa achat Sal ekSIREtetaTeoegtBoaSEBEATogMCES TS TE re Cer ee Winter 20060 ta oa OE ks bi caciags at"Crean COAL TODAY "Winter 2006 ..."APP”continued Aluminum,Cement,and Buildings and Appliances.Thefirst formal APP activity under the PG&T Task Force (i.e.,site visits held during October 30-November 4,2006)was hosted by American Electric Power with additional support from Southern Company and Tampa Electric Com- pany.AEP,the largest coal burning utility in the Western Hemisphere,is a participant in FutureGen and has committed to building IGCC-based power plants.Over 100 engineers from APP member nations attended the event-which started with a two and-a-half day introductory session at AEP headquarters in Columbus, Ohio.This was followed by site visits and a concluding session back in Columbus,where participants discussed the applicability of what they had learned and suggested next steps for the PG&T Task Force.High- level U.S.government participation included FE Assistant Secretary Jeffrey D.Jarrett,Chairman of the Council on Environmental Quality James L.Connaughton,and Under Secretary of State for Global Affairs PaulaJ.Dobriansky,who announced that APP member countries have endorsed more than 100 individual projects.Michael Morris,AEP's Chairman,President,and CEO, opened the event. EXISTING TECHNOLOGY AND IGCC Tracks AEP fostered a hands-on format where participants learned from one another,shared information,and col- laborated on how best to address the world's need to generate electricity from coal while minimizing environ- mental impacts.Detailed technical discussions were held on techniques for increased efficiency and pollu- 2 tion reduction,such as combustion optimization,and "intelligent”soot blowing.The agenda featured two technology tracks -one focusing on existing coal-fired power genera- tion,specifically efficiency gains and reductions in CO,and air emissions; and the other focusing on advanced power generation,especially inte- grated gasification combined-cycle (IGCC)technologies. L-R:Gary Thompson,energy production supervisor IIT at AEP's Muskingum River Plant,answers questions about control room equipmentforAPP visitors from China (ZHANG Xingying)and Japan (Yoshitaka OKA) Over half the representatives participated in the existing technol- ogy track,which included tours of two older AEP power plants:the 1,425-MW Muskingum River,and 2,600-MW Gavin plants.AEP has implemented heat rate improvements in its older plants,and will install flue gas desulfurization and selective catalytic reduction on all of its large plants over the next five years.Visi- tors interacted with AEP personnel to discuss new technologies and best practices for plant equipment includ- ing boilers,steam turbines,genera- tors,air heaters,and condensers. This site visit was well attended by representatives of India,since India, in work supported by USAID and NETL,has seen the attractive payback from even simple and inexpensive improvements to existing plants. AEP shared detailed information on various plant upgrades,includ- ing hardware modifications and implementation of better operating and maintenance procedures,as well as detailed plant performance data from both before and after each modification and the associated im- pact on economic and environmental factors. Over 40 representatives,many from China,participated in the advanced power generation track, including tours of DOE's Power Systems Development Facility (Wilsonville,Alabama)operated by Southern Company,to learn about KBR's transport reactor gasification technology.This technology will be demonstrated by the Southern Com- pany,the Orlando Utilities Commis- sion,and KBR ata new 285-MW coal gasification facility near Orlando, Florida,with support from DOE's Clean Coal Power Initiative.Later, the group traveled to Polk County, Florida,to visit the Tampa Electric 260-MW IGCC Polk Power Station. That project was co-funded by DOE under the Clean Coal Technology Demonstration Program,and has been in successful commercial opera- tion since 1996.These tours allowed participants to see both air-and oxygen-blownIGCC technologies at large scale.Engineers also met with several IGCC technology providers (General Electric,GTI/Synthesis En- ergy,Shell,and Siemens)in Colum- bus to discuss technical and business issues with AEP's IGCC design team. This design team is working to site AEP's first commercial IGCC plants for which permit applications have been filed in Meigs County,Ohio, and Mason County,West Virginia. The group also heard from Battelle about the latest developments in carbon capture and storage. 'tucky Transportation Pavement Mix Design.In the tests performed using :Kentucky Transportation Cabinet High Performance Mix Design,the ultra-fine ash outperformed the control formulation in strength..Tests were _also performed by varying the ultra- fine ash substitution levels in concrete from 5 percent to 35 percent.These tests showed that,although higher substitution levels (e¢.g.,35 percent)- delay early strength development,the. control strength was surpassed after 28 days.Lower substitution levels (5 percent to 10 percent)provided both __early and long term strength.(Ghent, Carroll County,KY): We Energies -TOXECON™Ret- rofit for Mercury and Multi-PollutantControl.This project is currently in the operations phase.We Energies is addressing balance of plant issues and performing parametric and optimiza-° tion testing.Hot glowing embers were previously found in the baghouse hop- pers.As aresult,We Energies reduced the temperature set point for the hopper heaters and empties the hoppers more _frequently,which appears to have ad- dressed the problem.Laboratory tests confirm spontaneous combustion of the activated carbon follows the Frank- is modifying the materials handling ;.system used to unload the storage silo-containing spent sorbent and fiyash,|because operation of this system results _in dust emissions.Parametric testing of the Norit DARCO-Hg powdered ac-_ tivated carbon has been completed,and testing of the Norti DARCO-Hg-LH -bromindated,powdered activated car-. bon is on going.Optimization testing - to determine the effect of bag cleaning 'cycles on mercury emission control is being performed.The TOXECON™ project has continued to successfully -demonstrate,under full scale power plant conditions,reliable mercury continuous emission monitors (CEM). (Marquette,MI) Western Greenbrier Co-Genera- tion,LLC -Western Greenbrier Co- Production (WGC)Demonstration Project.WGC continues to work to develop key project areas including the waste coal resource plan,coal upgrading processes,and arrange- ments for sale of power to support a public tax-exempt bond sale to fund the project.The preliminary process _design is completed.DOE approved a -modification to the CooperativeA gree- ment to extend Phase 1 by 6 months, (from October 31,2006 to April 30, 2007).The Draft Environmental Im- pact Statement (EIS)was completed, approved,and made available for public review.The EPA and DOE Notices of Availability for the document were published in the Federal Register on December |*and 4",respectively.A 'public hearing will be heldin Rainelle, "WV,on Thursday evening,January 4, 2007.The public comment period for the draft will end on January 18,2007. (Rainelle,WV) Great River Energy (GRE)-Lig- nite Fuel Enhancement.GREhas initi- ated design of a full-scale dryer system in Budget Period 2.In this period, GRE will be constructing two full-scale dryers,which can supply 50 percent of the coal needed for a 546-MW unit. The design activities relating to the the ]_.following areas have been initiated: Kamenetskii model...We Energies -coal handling section,detailed design _andconstruction schedule,crusher area layout drawings,naming conventions, air flowsheets,and water flowsheets. -Since March 2006,GRE has operated the first coal dryer,and processed morethan210,000 tons of lignite coal.Lig- -nite moisture content wasreduced from about 38.5 percent to 29.5 percent,and |-*; the dried coal was supplied to the 546-"- MW Unit 2 at the Coal Creek Station: (Underwood,ND) Pegasus Technologies -Mercury Specie and Multi-Pollutant Control. The cooperative agreement was signed in April 2006.Budget period 1 is-pro-- 'gressing with installation of sensors and other neural-network data acquisition and control software and hardware.The project will demonstrate non-intrusive advanced sensors and neural network- based optimization and control tech- nologies for enhanced mercury and multi-pollutant control on an 890-MW tangentially fired boiler at the project host site in Jewitt,Texas.The Pegasus technology provides plant operators the ability to assess detailed plant operat-..'ing parameters which affect mercury capture efficiency as well as overall heat rate,and particulate removal and flue.gas desulfurization efficiencies.*.The technology,once demonstrated, should have broad application to ex-- _isting coal fired boilers and improve quality of saleable by-products such as fly ash.Performance testing will begin - in October 2008.(J ewett,TX). Southern Company Services,Inc.-Demonstration of a 285-MW Coal- Based Transport Gasifier.Work is con- tinuing on preparing the comprehensive Front End Engineering Design (FEED) package..The Final Environmental Impact Statement (EIS)was scheduled to be issued in late 2006 or early 2007. (Orlando,FL)7 eo soe eBoo OM eee aad""Cuean Coat TODAY WinteR 2006 CLEAN COAL TODAY Winter 2006 a Country Comparison:Total Installed C ity by Fuel TActiveCCTDEMONSTRATION,PPI,AND CCPI Project Status -e ee apa oy eeeAustraliaChinaindiaJapanKorea U.S. ..Installed Installed installed Installed Installed Installed ;Capacity (MW)|Capacity MW)|Capacity (MW)|Capacity MW)|Capacity (MW)|Capacity (MW)CCT DEMONSTRATION achieved,the plant has shipped finished State environmental review processes,productto its distributorandthis mate-is expected to be available in early Coal 32,038 17,965 338,538STATUSrialhasbeenacceptedandutilizedby2007.The MPUC is also considering Black coal 24,466 67,790 30,230 16,840 323,419KentuckyPioneerEnergy(KPE),concrete block manufacturers.(King Excelsior's petition for approval of a Brown coal/75721 an fossil fuels 1,125 15,119LLC-Kentucky Pioneer Energy Proj-George,VA)603-M We power purchase agreement lignite 329,483ect.The Cooperative Agreement has CONSOL Energy Inc.-Greenidge Bvne Nowher stares ree er a Oil 359 1,201 39,335 6,091 37,970 expired.The Draft Final Report isin -yyiti-Pollutant Control Project.This 'tChes _ney Toch ee Tojec Gaseous fuel 6,358 11,909 35,295 241,725progress.(Trapp,KY and West Terre project includes a unique "hybrid”th Peni Den Senne se evcloy simple-cycle Haute,IN)selective non-catalytic reduction ©Froject Delinition and'Deve op-Gaseous fuel 2,076 22,838 16,447 193,188 LLC (f ly Arth (SNCR)and in-duct selective cata ment phase runs through April 2008.combined-cycle TIAX ormerly Arthur -- .:D.Li ttle,Ine.)-Clean Coal Diesel _lytic reduction (SCR)system for NO,(Itasca &St.Louis Counties,MN)Nuclear 6,836 2,770 47,122 17,716 105,560 Project.The Cooperative Agreement eduction;a circulating fluidized bed NeuCo,Inc.-Integrated Optimiza-Renewables 8,005 33,543 4,039 118,601 has expired.The Draft Final Report dry scrubberfor SO,,SO,,andacidgas tion Software.The project at Dynegy's Hydroelectric 7,609 105,242 30,942 33,042 3,829 96,955 is in progress.(Fairbanks,AK and reduction;activated carbon injection Baldwin Energy Complex has com-Other 396 3,811 210 21,646 Beloit,WI) PPII Status -Otter Tail Power Company -Dem- onstration ofa Full-Scale Retrofit ofthe Advanced Hybrid Particulate Collector (AHPC)Technology.The project has been completed.The Final Report has been submitted and approved.(Big Stone City,SD) Sunflower Electric Power Corp. Demonstration of a 360-MWe In- tegrated Combustion Optimization System.Due to larger than anticipated costs for installation of new low-NO,burners and overfire air systems,Sun- flower has withdrawn the continuation application to DOE for proceeding to ; Phase [II Budget Period 2 of the project, and DOE has accepted Sunflower's withdrawal position.The project is now in closeout.A final report has been received and approved.(Garden City,KS) Universal Aggregates,LLC-Com- mercial Demonstration ofthe Manufac- turedAggregate Processing Technology Utilizing Spray Dryer Ash.The Co- operative Agreement for this project was scheduled to end on December 31, 2006.Universal Aggregates continues to make equipment modifications to improve throughput capacity and con- tinuous run time of the plant.Although full-capacity operation has not yet been 10 for mercury control;and a baghouse for particulate control.This combina- tion of technologies will demonstrate advanced emissions control at a lower cost than traditional retrofits at a plant of this size and age.Construction of the integrated multi-pollutant control system at the coal-fired,AES Greenidge 107-MW Unit 4 in Dresden,NY,has been completed.System startup and commissioning is under way and was expected to be completed by the end of December 2006.A continuation 'request to move to Budget Period 2 of the project,Operations and Testing,has been received and is being evaluated. (Dresden,NY) CCPI Status MEP-I LLC (Excelsior Energy Inc.)-Mesaba Energy Project.:- Excelsior's application for pre-con- struction permits continues through the state approval process.The ap-.. plication included requests for a large - electric power generating plant site permit and routing permits for a high voltage transmission line and _natu- ral gas pipeline.Also included was Excelsior's request for air and water- related permits.A draft Environmental Impact Statement (EIS),prepared by DOE in cooperation with the Min- nesota Department of Commerce and the MPUC and intended to fulfill the requirements of both the Federal and pleted the planned efforts in Budget Period 1 within budget and on schedule. The Combustion Optimization module achieved the NOx reduction goal of 5 percent along with improvements in cyclone stability.NeuCo has shown that by using their SCR Optimization module,they are reducing ammonia consumption by 18 percent.NeuCohas installed the Sootblowing Optimization module on two separate units,with and without an intelligent sootblowing control system.This dual approach al- lows NeuCo to address a wide range of sootblowing issues.The latest release of CombustionOpt,SCR-Opt,and PerformanceOpt provide a variety of enhancements that were designed to make each of the Optimizers less of a "black box”.All three optimizers now support advanced functionality for real- time analytics.(Baldwin,IL) University of Kentucky Research Foundation-Advanced Multi-Product Coal Utilization By-Product Process- ing Plant.University of Kentucky's Center for Applied Energy Research (CAER)is evaluating ash byproducts separated in pilot scale field tests at the 2,200-MW Ghent Generating Sta- tion.The ultra-fine ash (smaller than 5 pm),when used at 20 percent level in concrete,outperformed typical ash by achieving up to 107 percent of control strength in 28 days.These tests were conducted using a Ken- CONTINUING RELATIONSHIPS Possible future activities include additional site visits,both in the U.S.and abroad,peer review studies, workshops,and capacity building ap- proaches on arange of technologies. In terms of specific country activities, China wants to adjust its power mix and reduce the number of small-scale generators,while improving thermal power plant and end use efficiencies. China Datang Corporation expressed interest in AEP's process optimiza- tion for new IGCC projects,includ- ing selection of air separation and gasifier technology.China Guodian Corporation proposed site visits to show its plasma ignition technol- ogy for pulverized coal (PC)-fired power plants. Like China,India wants to build larger plants to realize economies of scale,in addition to retrofitting older plants.India's need for poweris such that over the next 30 years,capacity will need to be doubled every 10 years.Investment requirements are estimated at $100 billion over the next five years alone.India believes AEP's methodology could improve efficiencies of under-performing Source:APP Power Generation and Transmission Task Force Action Plan,2006 Indian power plants.Asa first step, Indian power plants would need to identify benchmarking parameters against which to measure progress in efficiency,economics,and envi- ronmental controls.India would also like to update existing units with coal washing,increased carbon controls, and NO,controls.Specifically,the Tamil Nadu Electricity Board ex- pressed interest in developing formal long-term cooperation with AEP to improve efficiency and reduce the maintenance costs at its existing PC-fired power plants,and to share information on advanced coal-based power generating technologies. TheAustralian delegation showed interest in learning how to apply IGCC technology to their domestic, high-moisture brown coal,which requires drying before gasification. Australian representatives seek higher performance from existing PC-fired power plants,and invited AEP and other APP power companies to help them establish benchmarks. Japan proposed to lead a Peer Review for the first quarter of 2007. Peer Reviews are recommended throughout the APP action plans as a method of learning "best-of-kind” operation,maintenance,and man- agement practices of similar type coal-fired plants in each APP partner country.Goals would be to build a knowledge base that could be used to increase power generation efficiency, reduce emissions,improve operation and maintenance,and facilitate life extension and retrofits. The Korean delegation noted introduction of competition into Korea's electric generating sector, and expects to benefit by cooperat- ing with other APP nations.Lastly, by sharing their experiences,U.S. utilities can help other APP nations to address environmental concerns common to coal-based utilities,as well as learn from other country's experiences.U.S.involvement in APP is expected to generate global interest in clean coal technologies, and promote the export of clean technologies developed with support of the FE RD&D program. For more information on APP, including task plans and vision state- ment,see: www.asiapacificpartnership.org Crean COAL TODAY '"mae CLEAN Coat TODAY © ADVANCED SEPARATION CONSORTIUM The Center for Advanced Separation Technologies (CAST)was formed in 2001 under the sponsorship of the U.S.Department of Energy to conduct fundamental research in advanced separation and to develop technologies that can be used to produce coal and minerals in an efficient and environmentally acceptable manner.The CAST consortium consists of seven universities -Virginia Tech,West Virginia University,University of Kentucky,Montana Tech,University of Utah,University of Nevada-Reno,and New Mexico Tech. The consortium brings together a broad range of expertise to solve problems facing the U.S.coal industry and the mining sector in general.At present,a total of 60 research projects are under way. INNOVATIVE DEWATERING TECHNOLOGIES One of the most important research activities under way at CAST is the development of new technologies for solid-liquid separation,especially for fine coals.Moisture removal is the most costly aspect of coal preparation. Thermal dryers can effectively reduce moisture,but high capital costs and stringent air quality standards have made that technology impractical for new industrial sites.As a result,coal producers resort to mechanical systems that perform poorly for particles finer than 0.1 mm.Coal fines with high moisture content must be discarded in impoundments,contributing to solid waste disposal problems,possible groundwater contamination,not to men- tion the lost energy value.In the U.S.,approximately 2 billion tons of fine coal have been discarded in abandoned ponds and 500 to 800 million tons in active ponds.U.S.coal producers continue to discard 30 to 40 million tons of fresh coal fines into ponds each year. To address this problem,researchers at CAST have developed novel de- watering aids that can substantially improve the removal of surface moisture from fine coal during vacuum filtration.A commercial demonstration of this innovative dewatering technology is currently underway by Beard Tech- nologies,Inc.Shakedown testing began in November 2006 at the Pinnacle reclaim plant installed next to a large impoundment in Wyoming County, West Virginia.The plant will be one of the few to recover coal from waste impoundments without the benefit of tax credits provided under Section 29 of the Internal Revenue Code.These tax credits were authorized in the Crude Oil Windfall Profit Tax Act of 1980,which was designed to encourage production of synthetic fuels from non-conventional sources.A deep cone thickener has been installed to hold the coal fines and eliminate the need for a waste impoundment.If the project is successful,technology is expected to be replicated in other impoundments. CAST is testing other promising technologies such as a hyperbaric filter centrifuge,whichemploys both gas pressure and centrifugal force to efficiently remove water from fine coal.Tests conducted to date with a small-scale pilot unit demonstrate that the new technology can reduce the moisture content of fine coal by 30-50 percent compared to currently available dewatering methods.Further tests are under way to see how different coal samples re- spond to this new technology.A licensing agreement has been signed with 4 Decanter Machine Inc.,the largest manufacturer of centrifuges in the United States.The company is plan- ning to develop a production-scale prototype that can be tested in the coal industry. Work is also under way at CAST to develop the hyperbaric horizontal beltfilter (HHBF)technology.Con- struction of a pilot-scale test unit at Virginia Tech has been completed, and preliminary tests show that moisture can be reduced to less than 10 percent.In addition,the floccu- lant injection system developed by CAST is already in use by many coal companies to minimize the loss of fine coal associated with screen-bowl centrifuges,a dewatering technology already in use. REMOVAL OF MERCURY AND OTHER IMPURITIES The U.S.EPA issued the Clean Air Mercury Rule (CAMR)on March 15,2005,which created performance standards and established permanent declining caps from the current an- nual 48 tons of mercury emission to 15 tons by 2018 from coal fired power plants.In order to meet this challenge,CAST has developed a metallicfilter thatcan remove over 90 percent of mercury from the gaseous effluents discharged from a power plant.The filters were tested at a coal- fired power plant in eastern Montana. The results showed that the metallic filters removed more than 90 percent of the mercury from the power plant gas stream.The spent filter can be regenerated and reused. Other CAST research projects have focused on improving the removal of unwanted impurities (e.g.,clay,sulfur,mercury,and other toxic elements)from coal, while helping the minerals industry have been reduced as well. Climate (see article,page 1). United States. and equipment represent a major export market for the United States.Funding also has been provided to FE by DOE's Clean Energy Technology Export Program and the Department of State for conducting an economic analysis of coal beneficiation.Coal cleaning has been shown to increase efficiency in burning Indian coals. Washing also reduces bulk,which lowers rail transpor- tation costs.Air emissions and solid waste quantities In 2007,FE in cooperation with Indian counterparts will continue implementing the actions outlined in the work plan,and coordinate these Energy Dialogue activities with related actions being pursued under the In addition,the next /ndian visitors are all from subsidiaries of Coal India Ltd. formal meeting of the CWG will be hosted by the Lto R:Morgan Mosser (FE/NETL),Subir Das,Asok Roy, :.:Six Indian engineers and two FE representatives visitAsia-Pacific Partnership on Clean Development and Twentymile Coal Mine near Steamboat Springs,Colorado. Craig Zamuda (FE),Rajesh Gupta,Anil Rana,A.K.Singh, and S.Chandraseklar ..'Mesaba”continued tor system to produce high-pressure saturated steam in a fire-tube boiler that is much smaller and less costly than traditional power plant steam generators.This high-quality steam is supplied to the Heat Recovery Steam Generator (HRSG).After cooling,the entrained dry particulate removal process -consisting of a cyclone and candle filter -recycles the char back to the first-stage gas- ifier.This consolidates the solids in one stream as a slag exiting the first-stage.This simple dry system, which maximizes carbon conver- sion with 99.9 percent reliability,is significantly more efficient than the wet-scrubbing systems employed by other technologies,removing more particulates and avoiding black-water problems which lead to equipment wear. Next,chlorides,mercury,and sulfur contaminants are removed from the synthesis gas stream in a series of chemical processes.Mer- cury is captured in a carbon bed for disposal in approved sites.Sulfur compounds are recovered and con- verted to elemental sulfur for sale in CieAN Coat TODAY Published quarterly by: The Office of Fossil Energy U.S.Department of Energy ;(FE-24);.agricultural and other markets.Un-Washineton,DC 20585likemosttechnologiesthatventtailoeEditor:gas from the sulfur recovery unit to an incinerator,the E-Gas™process vo recycles all unconverted gases to the Phone:202-586-6099 °°- second-stage gasifier,resulting in 99 Fax:202-586-1188 percent sulfur recovery.E-mail: phoebe.hamill @hq.doe.gov . Web site:oo http://www.netl.doe.gov/. technologies/coalpower/cctc/ newsletter/newsletter.html Phoebe Hamill The desulfurized hydrogen-rich "sweet gas”then is heated,moistur- ized,and piped to the power block as fuel for the combustion turbines. Hot exhaust gas from the combustion turbines is supplied to the HRSG to superheat additional steam which is added to the steam provided by the fire-tube boiler.This is fed to the steam turbine.Spent steam and condensate is returned to the HRSG for superheating.i "Comments are welcome and may be submitted to the Editor. Winter 2006.° '.Crean Coa ToDay Winter 2006 CLEAN COAL Topay -Winter 2006 _ U.S.-INDIA ENerGy DIALOGUE COLLABORATES ON COAL Under auspices of the U.S.-India Energy Dialogue launched by U.S.Secretary of Energy Samuel W. Bodman,and India's Deputy Planning Commissioner,Dr.Montek Singh Ahluwalia in May 2005,the US. DOE Office of Fossil Energy (FE)and the Indian Government have established a Coal Working Group (CWG)and are carrying out a work plan to cooperate in a number of clean coal areas.India is the world's third largest coal producer,and is committed to a significant expansion of coal production and coal-based power generation over the next decade.The CWG is assisting India in deploying coal cleaning technolo- gies and practices that can improve the economics and efficiencies of processing India's high-ash coal.The CWG is chaired by FE's Assistant Secretary Jeffrey D.Jarrett,and co-chaired by Additional Secretary S.P. Seth of India's Ministry of Coal.Areas of proposed collaboration include underground coal gasification, coal cleaning,methane capture from active and abandoned coal mines,sustainable mining practices,and improved mine health and safety. Technical exchanges are an important tactic in the work plan.In October 2006,FE and the National Energy Technology Laboratory led a delegation from Coal India Limited on a tour of several underground and surface coal mines in Colorado,Utah,and Wyoming.The trip focused on observing U.S.methodolo- gies,and consulting with U.S.experts on suitable methods to extract coal from thick,steep,multiple gassy underground seams that are common in India,while attaining high coal yield during the extraction process.Overburden slope stability during surface mining was another topic that was of particular interest.The visitors consulted with mining experts at each site regarding engineering planning and modeling,geological conditions, environmental issues,costing,operation details, and equipment specifications.Several best prac- tices and opportunities for improvement in India were identified. FE Assistant Secretary Jeffrey Jarrett and India's Ministry of Coal former Additional Secretary Pradeep Kumar sign the Energy Dialogue Coal Work Plan The CWG also is sponsoring workshops.The Underground Coal Gasification Workshop,spon- sored jointly by DOE/FE,Lawrence Livermore National Laboratory,and India's Ministry of Coal,was held in Kolkata,India from November 12-15,2006. Underground coal gasification (UCG)is considered a potential technology to economically access energy resources from deep or unmineable coal seams,while producing synthesis gas for power generation,syn- thetic liquid fuels,natural gas,or other chemicals.The combination of UCG with CO,sequestration offers important economic and environmental benefits.Nearly 100 decision makers from government,industry, research institutions,and academia from the United States,India,China,Japan and Australia participated in the workshop. Asajoint activity of CWG and the Asia Pacific Partnership,DOE/FE is planning a "Workshop on Enhancing the Use of Washed Coal in India”to be held in New Delhi,India in Spring 2007.Coal preparation services - remain competitive.A joint Krebs Engineers-CAST project resulted in the development of a novel hydro- cyclone that can efficiently remove clay (slimes)from fine coal.The same technology can also be used for processing other minerals.For example,laboratory experi- ments show that improved de-Ear yh sliming can improve recovery of downstream potash by 4-6 percent.Adoption of these new technologies being developed at | CAST will help the U.S.miner- als industry remain competitive with imported minerals,and in doing so,retain U.S.jobs. OTHER RESEARCH CAST also is carrying out im- portant work in the areas of sol- ids-solids separation,modelin &,CAST research staff conduct tests of anew hyperbaric density tracers are plastic blocks of known densities that are added to a feed stream,collected manually from product streams,and counted to de- termine the efficiency of separation a process that is cumbersome and potentially inaccurate.Therefore, In the area of modeling,CAST members have developed a math- ematical model to describe the flotation process,which is the most versatile solid-solid separation process used in both the coal and minerals industries.The model is based on first principles so that it has predictive and diagnostic capabilities.In another project, a computational fluid dynamic simulation technique has been |]used to design optimal flotation 44 machines.This project is co- fi funded by Dorr-Oliver EIMCO. '4 In addition,surface forces act- ing between two macroscopic surfaces immersed in water have been measured using the atomic force microscope and the surface force apparatus.The results show that an attractive force that is sensors and controls,and chemi-filter centrifuge developed to improve fine coal dewatering Stronger and lon ger-ranged than cal-biological separation.The bulk of the coal being cleaned today is coarse and treated by density-based separation processes.To monitor performance of these separators and maximize the efficiency of cleaning coarse coal,CAST researchers have developed electronic density tracers that make use of recent advances in transponder technology.Typically, a new method has been developed in which the tracer is tagged with a transponder so that the destination of each tracer can be monitored electronically.The new technique has been tested successfully,and Precision Testing Laboratory of Beckley,West Virginia,has com- mercialization plans. the van der Waals force is present between hydrophobic surfaces im- mersed in water.Although its origin is not yet known,the hydrophobic force may play an important role in separating the hydrophobic energy minerals (coal,oil,bitumen,and kerogen)from hydrophilic minerals (including clay and silica). ..."News Bytes”continued field tests and ash by-product evalu- ations at Ghent,Kentucky,under the Clean Coal Power Initiative (CCPI) Advanced Multi-Product Coal Utili- zation By-Product Processing Plant project.The C*P?program is a coop- erative effort ofthe U.S.Environmen- tal ProtectionAgency,American Coal Ash Association,Utility Solid Waste Activities Group,U.S.Department of Energy,and U.S.Federal Highway Administration. On November 30,2006,DOE an- nounced the award of $1 billion in tax credits to nine companies,to bring about rapid deployment of ad- vanced coal-based power generation and gasification technologies.These tax incentives are provided under the Energy Policy Act of 2005.# DOE has published a Notice of Avail- ability for a Draft Environmental Impact Statement for Western Greenbrier Co-Production Dem- onstration Project,a CCPI project. A public hearing is scheduled for early January and written comments must be received,or postmarked, by January 18,2007 (fax 412-285- 4403).A public hearing on a Draft EIS for another CCPI project -the Demonstration of a 285-MW Coal- Base Transport Gasifier-was held in Orlando,Florida,in September 2006.The Final EIS for that project is nearing completion. =©CLEAN COAL TODAY!ectiia bliss TTBereDOUG edaiantiaae -Clean COAL TODAY "Winter 2006” MesaBa Next-GENERATION [GCC PLANT Through a U.S.Department of Energy (DOE)cooperative agreement awarded June 1,2006,MEP-I LLC (a wholly-owned project company of Minnetonka-based Excelsior Energy)plans to demonstrate a next-genera- tion integrated gasification-combined cycle (IGCC)electric power generat- ing plant,the Mesaba Energy Project.The 606-MWe plant (the first of two similarly sized plants envisioned by project sponsors)will feature next-gen- eration ConocoPhillips E-Gas™technology first tested at the DOE-funded Wabash River Coal Gasification Repowering Project.Mesaba will benefit from recommendations of an industry panel applying the Value Improving Practices process to Wabash cost and performance results.The project will be twice the size of Wabash,while demonstrating better efficiency,reliability, and pollutant control.The $2.16 billion project ($36 million federal cost- share)will be located in the Iron Range region north of Duluth,Minnesota. Mesaba is one of four projects selected under Round II of the Clean Coal Power Initiative. 'The overriding Mesaba objective is to develop a standard,replicable de- sign configuration for a large,feedstock-flexible IGCC plant.The design would be based on sound cost data so that potential developers would have the best financial information possible,and would thus be more likely to develop commercial size plants.Technical goals are ambitious:gasifier system operational availability of 90 percent or better;fuel flexibility includ- ing bituminous and sub-bituminous coals,or a petcoke blend;a design heat rate of 8,600 Btu/kWh using bituminous coal;and improved environmental controls extending to mercury and carbon dioxide (CO,).The E-Gas™ process captures approximately 80 percent of the chemical energy in the feedstock.The heat recovery system captures up to an additional 15 percent of the feedstock energy in the form of steam,for a total feedstock conversion to useful energy of up to 95 percent. EARLY PROGRESS The project definition and development phase is moving forward.Concep- tual design and associated optimization studies have been completed.More detailed engineering and design have been initiated,as have discussions with an engineering,procurement,and construction contractor (a consortium of Fluor Enterprises,ConocoPhillips,and Siemens),as preparatory to a turn- key arrangement.The DOE is providing 50 percent cost-share of the $44.5 million pre-construction costs.The construction phase is expected to begin in April 2008.DOE will not cost-share project construction,but will provide $13.8 million (24.5 percent)of the $56.4 million required for operational demonstration,expected to begin in early 2012.DOE also may provide a loan guarantee pursuant to the Energy Policy Act of 2005 to cover a portion of the private sector financing of the project. ) Permitting for the project is also moving forward,and a joint DOE-State of Minnesota draft Environmental Impact Statement is to be issued in early 2007. Public environmental scoping meetings were held by DOE in October 2005, while the state held separate scoping meetings in August 2006.Minnesota 6 requires evaluation of two alternative sites for the project.Itasca County is the site preferred by the sponsors, with St.Louis County as the second- ary site.A request for a long-term Power Purchase Agreement (PPA) was submitted to the Minnesota Pub- lic Utilities Commission (MPUC) in December 2005,and a decision is expected by October 2007.The PPA application includes requests for a large electric power generating plant site permit and routing permits for a high voltage transmission line and natural gas pipeline.Air and water-related permit applications have also been filed. THe E-Gas™Process Mesaba is a logical follow-on to the successful,though smaller scale and less complex,262-MWe(net) Wabash project.Mesaba will deploy substantial technology advancements in gasification,fuel flexibility,and air separation.A key element of the proj- ect is the multiple train gasification island,with an advanced full-slurry quench,oxygen-blown,continuous- slagging two-stage entrained-flow ConocoPhillips E-Gas™gasifier. The gasifier converts carbonaceous feedstock to synthesis gas and a glassy vitrified inert slag resembling coarse sand.This technology is more advanced than that used at the Wabash facility,which incorporated only a single train and partial slurry-quench design.The unique two-stage gasifier increases efficiencies,and provides feedstock mixing. The advanced Air Separation Unit (ASU)configuration is first of its kind in the United States.It provides combustion turbine air integration, extracting turbine bleed air to reduce the parasitic load of the main ASU air compressor,thereby increas- ing net plant output and reducing capital cost.The configuration will also provide for nitrogen dilution by recycling nitrogenextracted from air entering the ASU for combustion turbine injection to reduce formation of nitrogen oxides through reduced combustor flame temperature and time combustion gases remain at elevated temperatures. Process DETAILS The process begins with feed- stock acceptance and storage,and slurry preparation.The feedstock is slurried with water and injected, along with oxygen from ASU,into the first-stage gasifier.The multiple train gasification island contains three gasifier trains (the third is a spare),slag handling,synthesis gas cooling,gas cleanup,and synthesis gas conditioning.In the first-stage gasifier,the feedstock undergoes a partial oxidation reaction to form synthesis gas composed of hydrogen, carbon monoxide,carbon dioxide, and methane.The high temperature and pressure ensure the complete conversion of all feedstock,and traps the inorganic ash and metals as molten slag.The slag -which has various uses in the construction industry -falls through a tap hole in the bottom of the first stage into a water quench. Raw hot syngas from the first-stage then flows upward into the second- Stage gasifier,where it is quenched with more slurry injected without need for additional oxygen.This second slurry stream is volatilized in an endothermic reaction with the synthesis gas to increase the energy content of the gas.The raw synthesis gas exiting the second-stage gasifier is cooled in a unique steam genera- See "Mesaba”on page 9... Steam "FSI'4 urry Plant Gasifier Generator x Syngas ii} |Candle Filter Feed Water a Clean Syngas TeeTSimplified diagram of Mesaba system (does not show multiple trains) |eeeeeeeeee--.LU"...ee ° Climate change is presenting industries and companies with potentially dra- matic risks,as well as significant opportunities.Policies to regulate greenhouse gas emissions are being developed in major markets around the world.Because these newpoliciesbringwiththemcostsaswellasopportunities,investors are factoring climate changeriskintoinvestmentdecisions.Stronger hurricanes,prolonged heat waves and carbon-re- ducing regulations are just a few of the ways climate change is already affecting various busi- ness sectors,from insurance and agriculture,to electric power and tourism. We invite you to join us this October for Financial Research Associates'Investors'SummitonClimateChangeInvestmentOpportunities.The Summit is designed to help investorsexplorenewinvestmentopportunitiesandriskstrategiesrelatedtoclimate-related businesstrends,and identify and evaluate the impact of climate risk on their portfolios.Throughout the Summit,investors will explore investment vehicles and sources of capital that support the reduction of carbon production through private investment. Key topics include: Policy .Examination of key multi-national,national,regional,and state GHG policy initiatives .Analysis of the implications of climate policies on companies in key industries Investment Opportunities .Framing climate change risk in portfolio managementLatestcleanenergyandclimatechangetechnologyinvestment opportunities Comparative economics of power generation technologies Developments in emissions trading markets Opportunities in energy efficiency &building energy performanceInnovativedevelopmentsinclimatechangetransactionsinthecapital markets Second generation biofuel investment opportunities and the role of GHGs And much,much more!o¢-e¢©©@Risk Management Strategies .Risk management hedging strategies °Potential revenue benefits of implementing effective climate change policies Plus!Attend the Pre-Conference Workshop: Financia!Techniques for Assessing the PotentialConsequencesofClimatePoliciesonYourPortfolio =This in-depth workshop provides a careful examination of the financial risks and opportunitiesthattheeffectsofclimatechangeandalow-carbon economy may have on global business. Workshop topics include:-Integrating climate risk and opportunities into investment decisions-Investment research on the impact of climate change on valuation -Impact of activism,risk disclosure &reporting frameworks:what they are,recent developments,and what they mean for your investments-Evaluating investment opportunities in clean stock indices and exchange-traded funds Register today!Call 800-280-8440 or register online at www.frallc.com. Sincerely, Stacey L.Nelson,Conference Director FINANCIAL RESEARCH ASSOCIATES,LLC DS.This event promises to all out -register carky to save your spot! The Conference Sponsor NY.Financial Research Associates provides the financial'/.,community with access to business information and networking opportunities.Offering highly targeted con- ferences,FRA is a preferred resource for executives and managers seeking cutting-edge information on the next wave of business opportunities.Please visit www.frallc.com for more in- formation on upcoming events. Whom Will You Meet? °Institutional investors .Corporate plan sponsors .High net worth investors °Trustees from foundations and endowments .Asset/Money managers .Hedge fund managers .Private equity managers .Venture capital managers °Government representatives .Eco brokers .Climate change lobbyists and activists °Consultants and attorneys working in the field of climate change management Thank You to Our Platinum Sponsor Although a relatively new lega!sector with uniqueMWaissues,climate changeCGUIREOODSalsopresentsmanyofRelationshipsThatDriveResultsthesamekindsofchal-lenges and opportunities that are successfully managed every day by McGuireWoods'lawyers and consultants.Drawing on the experience of lawyers and consultants in our existing practice areas with extensive ex- perience in environmental regulatory programs,energy and other project development,the generation and exchanges of air and water credits and offsets,securities,venture capital,compliance,and legislative and regu- latory development,McGuireWoods provides the multidisciplinary ap- proach that is essential to serving clients facing climate change issues or considering climate change business opportunities.Our integrated cli- mate change team provides clients with representation on a variety of matters that increasingly require a grasp of climate change and green house gas issues,including energy projects,carbon credits and trading, corporate disclosure and governance,corporate self-assessments, mergers and acquisitions,green tech investments,green building devel- opment,government relations and policy,regulatory developments and compliance,and litigation. Sponsorship &Exhibit Opportunities Enhance your marketing efforts through sponsoring a special event or exhibiting your product at this event. We can design custom sponsorship packages tailored to your marketing needs,such as a cocktail reception or a custom-designed networking event. To learn more about sponsorship opportunities,please contact Corinne Smart at 704-889-1287 or csmart@frallc.com. Thank You to Our Media Partners '_ power finance &risk |neoeFUND VCexperts...BIQMASS |Medyp >liannectian)INdail\lquem,SrCheS,NEWS.NOW. ED hedgefundtools Pe.,ee|-e ;Bee ent 4 ep Overviews Publishing,Inc. =m*¢HedgeCo.Net To Register:Call 800-280-8440 or visit us at www.frallc.com ee 7 ''A .og:1|Investors'Summit on Climate Change Investment Opportunities NY Financial Research Associates t October 16-17,2007 *New York Helmsley Hotel ¢Midtown Manhattan 1840 41st Ave Ste 102-132 PRSRT STD | |To Register:Capitola,CA 95010 US.OADIi}cay poozsegdo |YOSNE Cedar Dive BURLINGTON)|i]all:=,-edar Urive ' {8 Online:www4ralle.com Battle Ground,WA 98604 PERMIT NO.21 H i i i .:Yes!Register me:Please bill my:O MasterCard O Visa 0 Amex 0 Discover 1 i Oo Yes!Register me for the Standard rate \ I im Conference and pre-conference workshop:$1995.00 Card Number I 1 ia Conference only:$1695.00 t 1 oO Qualified investor rate (Subject to FRA approval)Exp.Date Name on Card I I Oo Conference and pre-conference workshop:$990.00 \ j O Conference only:$795.00 Signature 1 a Government and academic rate . H Qo Conference and pre-conference workshop:$1190.00 Cl Check enclosed C Please bill me later f ia)Conference only:$995.00 Make checks payable to Financial Research Associates and write B507 and attendees i \Oo Please contact me:I'm interested in a Group Discount Rate for my team name on your check.\ \0 Please contact me:I'm interested in Marketing Opportunities at this event .. I Oo |wish to receive updates on FRA's upcoming events via fax,email and phone.Attention Mailroom:| Signature:If undeliverable,please forward to the t Name Tite managing director. 1 I |company Dont UNobsatatossdatadTossastdonst Latest aastasdaclaalabaaall |Address EO MTT nee mura AADC O68 |I i city State Zip sgt ALASKA,ALASKA ENERGY AUTHORITY ! Telephone:Fax:ANCHORORAGE AK 995BN SHES 8 IEmail |=! ..ae + ! Please Mention This '©shixed S 1 oo Ixed Sources ! i Whee Code FROL39 vm)Fredertreen rom wel managed Conference Code:B507_-!p__WheenRegistering,L___FSC pier cemsmcogy { FRA's Investors'Summit is designed to \bj ..a eyhelpinvestorsexplorenewinvestmentop-NYA Financial Research Associates Proudly Presents Ourportunitiesandriskstrategiesrelatedtof ,.ma climate-change business trends,and iden-Dé ,..:eetifyandevaluatetheimpactofclimaterisk,s.yy)on their uli,--=Topics include: Implications of multi-national, national,and regional policy initiatives on investors Industry analysis of the effect of climate policies on companies in key industriesToolsforassessing investment risk Investment opportunities -Framing climate change risk in portfolio management -Latest clean energy and climate change technology investment opportunities -Where money is being made in emissions markets -Hot spot:opportunities inamenergyefficiency&buildin energy performance -And much more! Risk management and hedging strategies for investors g== PLUS:|Attend thePre-Conference Workshop! Financial Techniques for Assessing the Potential Consequences of Climate Policies |ram (eltialmelatienl(e ade pa Investors'Summit onClimateChandnvestmen |iePrivateinvestmentvaandsourcesofcapital supporting the reduction_.of carbon productionPhereSNA=OE ee a OEE SRE ange \" _a Seounties Lo! October!Olt](200 ARSE NeWaYOrHellnsicy Lote Een VIIGtOWwnTManhattare To Register:Call 800-280-8440 or visit us at www.frallc.com - Jennifer Frame Tunney,Executive Director, Energy Derivatives Group' J.P.MORGAN Steven Schiller,President SCHILLER CONSULTING Vice Chair,CA CLIMATE ACTION REGISTRY Josh Margolis,Co CEO CantorCQ2e,LP Doug Cogan,Director of Climate Change Re- search;Deputy Director,Social Issues Service INSTITUTIONAL SHAREHOLDER SERVICES Peter D.Kinder,President KLD RESEARCH &ANALYTICS,INC. Scott Brown,Managing Director VANTAGEPOINT VENTURE PARTNERS and Chief Executive Officer,NEW ENERGY|CAPITAL CORP. Anita Molino,Principal BOSTONIA PARTNERS LLC Philip J.Deutch,Managing Partner NGP ENERGY TECHNOLOGY PARTNERS John Trbovich,General ParineraMILCOMVENTUREPARTNERS Tim Woodward,Managing Director NTH POWER,LLC Dan Goldman,Vice President of Finance GREATPOINT ENERGY John Rockwell,Managing Director DFJ ELEMENT 3 David Edwards,Partner ,FHINKEQUITY PARTNERS *@ William L.Thomas,Counsel ("|CLIFFORD CHANCE US LLP1%|Fred Wellington,CFA,Senior Financial Analyst,Capital Markets Research WORLD RESOURCES INSTITUTE Bruce M.Kahn,Second Vice President-Wealth-- Management |; CITI SMITH BARNEY Neal J.Cabral,Partner MCGUIREWOODS LLP Lori Bird,Senior Analyst NATIONAL RENEWABLE ENERGY LABORA- TORY (NREL) "|Ed Heslop,Chief Executive Officer ENVIRONMENTAL CREDIT CORP. Timothy H.Brown,Co-Director DELTA INSTITUTE 12”Greg Pool,Sr.Renewable Energy Trader BP ENERGY Doug J.Arent,Ph.D.,MBA,Director,Strategic ©, Analysis NATIONAL RENEWABLE ENERGY LABORA- TORY (NREL)*4 Michael J.Schewel,Partner MCGUIREWOODS LLP Cecil E.Martin Ill,Partner MCGUIREWOODS LLP «|Bill Prindle,Deputy Director AMERICAN COUNCIL FOR AN ENERGY EFFICIENT ECONOMY Fiona Cousins,Principal ARUP Frank Ramirez,CEO ICE ENERGY Jeff Barrie,Producer KILOWATT OURS Thaddeus J.Huetteman,President POWER &ENERGY ANALYTIC RESOURCES (PEAR) ;-&Bill Wason,CEO +=BIOPURE FUELS GaJeffreyFort,Partner and Practice Group Leader,Energy and Environment Practice Group SONNENSCHEIN NATH AND ROSENTHAL,LLP Financial Research Associates Proudly Presents Our -"a 7 .ae ._”, Investors'Summit on-.___.Per aoeClimateChange Investment Opportunities\\ 4 |i ' s \."-"Private investment vehicles and sources of capital supporting thear,po \.|reduction of carbon productionYe ee 'ify AAA )eter 1 oa xife?0)0:74BVEHOCEEIVIIGLOWIRMalillattartcoispany,¥, FRA's Investors'Summit is designed to help investors explore new investment opportunities and risk strategies related to climate-change business trends,and identify and evaluate the impact of climate risk on their portfolios. Topics include: ¢Implications of multi-national,national,and regional policy initiatives on investors ¢Industry analysis of the effect of climate policies on companies in key industries Tools for assessing investment risk Investment opportunities Framing climate change risk in portfolio management Latest clean energy and climate change technology investment opportunities Where money is being made in emissions markets Hot spot:Opportunities in energy efficiency &building energy performance And much more! «Risk management and hedging strategies for investors Thank You to Our Platinum Sponsor PLUS: Attend the Pre-Conference Workshop! Financial Techniques for Assessing the Potential Consequences of Climate Policies on Your Portfolio McGUIREVWOODS Relationships That Drive Results To Register:Call 800-280-8440 or visit us at www.frallc.com Conference Agenda TUESDAY,OCTOBER 16,2007 8:30 -9:00 Workshop registration &continental breakfast 9:00 -11:30 vz |Financial Techniques for%Assessing the Potential Consequences of+|Climate Policies on Your 'C)PortfolioniThisin-depth workshop provides a careful examination of the financial=risks and opportunities that the effects of climate change and a low-car- 4b;|bon economy may have on global business.Workshop topics include:e 1.Integrating Climate Risk and Opportunities into investment =Decisions |-Broker research on climate change risk and opportunityaw-Quantifying and assessing climate and carbon risk in portfolios ay -Description of cap and trade &other emissions control strategieshed2.Investment Research on the Impact of Climate Change onSsValuation i@y |-Exploring the potential for climate change to impact financial risk ressand returns -Responsibilities of fiduciaries in light of potential impact of climate regs Impact of Activism,Risk Disclosure &Reporting Frameworks: What They Are,Recent Developments,and What They Mean for Your Investments -Climate Registries:Voluntary and mandatory reporting requirements and the role of domestic and international climate registries -Shareholder activism -Global Reporting Initiative (GRI) 4.Evaluating investment opportunities in clean stock indices and exchange-traded funds After participating in this half-day session,attendees will be well prepared to take full advantage of the information on complex investment issues and opportunities that will be addressed in the main conference.In addi- tion,workshop attendees will become fluent in the language of climate change. Workshop Leaders: Steven Schiller,President SCHILLER CONSULTING Vice Chair,CA CLIMATE ACTION REGISTRY Doug Cogan,Director of Climate Change Research;Deputy Director, Social Issues Service INSTITUTIONAL SHAREHOLDER SERVICES Peter D.Kinder,President KLD RESEARCH &ANALYTICS,INC. Session will include a break from 10:00 -10.15 12:45-1:45 EXECUTIVE ROUNDTABLE 3:20 -4:10 REGULATORY &POLICY DEVELOPMENTS To Register:Call 800-280-8440 or visit us atwww.frallc.com 9:15-10:15 11:30 -12:30 Registration for main conference and luncheon for workshop attendees Main Conference Begins 12:30 -12:45 Chair's Opening Remarks The Climate Change Investment Landscape Chair: Michael J.Schewel,Partner MCGUIREWOODS LLP Structuring Climate Change Risk in Portfolio Management Experienced investors share their insights into where investments are needed and the technologies and actions that are required to meet environmental goals.Topics include: .Projected California,national,and world climate change impacts and the need for adaptation (in addition to mitigation)-An overview -Important policy changes to facilitate private sector investments -Importance of integrating regional compliance schemes .Magnitude and sources of GHG reductions required for climate change stabilization and implications for public policy and investment -Where project investments are needed to meet CO2 emission reduction targets -What technologies,actions &policies are needed? -Size and scale of solutions needed to address climate change -New developments:Large scale solar projects underway Effective climate change regulatory regimes CO2 trading trends and their potential benefits to clean energy project investment -Integrity of carbon offset projects and standards .tmplementing intelligent climate change policies -Role of registry Executive Roundtable Panelists: Scott Brown,Managing Director VANTAGEPOINT VENTURE PARTNERS and Chief Executive Officer,NEW ENERGY CAPITAL CORP. Steven Schiller,President SCHILLER CONSULTING Vice Chair,CA CLIMATE ACTION REGISTRY Anita Molino,Principal BOSTONIA PARTNERS LLC Doug Cogan,Director of Climate Change Research;Deputy Director, Social Issues Service INSTITUTIONAL SHAREHOLDER SERVICES Jennifer Frame Tunney,Executive Director,Energy Derivatives Group J.P.MORGAN Moderator: Peter D.Kinder,President KLD RESEARCH &ANALYTICS,INC. 1:45 2:10 Refreshment &networking break 2:15 -3:15 HOT OPPORTUNITIES Clean Energy &Climate Change Technology Investment Opportunities .Energy technologies (solar,storage,fuel cells,and more!)that reduce carbon production -Opportunities:The here and now -Opportunities:Waiting for tomorrow -Areas of caution -Is the market over funded or under funded? -Are the opportunities getting better or worse? °Clean coal -Not an oxymoron -Clean coal's contribution to climate change management -Advances in carbon capture and sequestration Speakers: Philip J.Deutch,Managing Partner NGP ENERGY TECHNOLOGY PARTNERS John Trbovich,General Partner MILCOM VENTURE PARTNERS Tim Woodward,Managing Director NTH POWER,LLC Dan Goldman,Vice President of Finance GREATPOINT ENERGY John Rockwell,Managing Director DFJ ELEMENT Moderator: David Edwards,Partner THINKEQUITY PARTNERS Policy Initiatives &the Role of Private Investment .Why getting the policy framework is critical to market success .How to develop proper carbon market design °Why the "cap and trade”framework is not rocket science Speaker: Peter C.Fusaro,Chairman GLOBAL CHANGE ASSOCIATES 4:15-5:15 Implications of Climate Change on Investment Opportunities This session presents a discussion on the implications of climate change,and policies to address it,on companies in both carbon-intensive industries -such as auto,electricity,and oil and gas;as well as lower emitting industries -such as banking and insurance;and what investors need to know to properly evalu- ate their portfolios.Topics include: .Examination of key elements of climate change risk and opportunities for companies .Effects of climate policy and changes to policy on key industries .Potential revenue benefits (to clean energy project investment)of the implementation of smart CC strategies .Investment implications of a changing climate:Physical,regulatory and behavioral Discussion Leader: William L.Thomas,Counsel CLIFFORD CHANCE US LLP Fred Wellington,CFA,Senior Financial Analyst WORLD RESOURCES INSTITUTE Bruce M.Kahn,Second Vice President-Wealth Management CITI SMITH BARNEY Lori Bird,Senior Analyst NATIONAL RENEWABLE ENERGY LABORATORY (NREL) Neal J.Cabral,Partner MCGUIREWOODS LLP 5:00 Cocktail reception sponsored by McGuireWoods McGUIREWOODS Relationships That Drive Results WEDNESDAY,OCTOBER 17,2007 8:30 -9:00 Continental breakfast 9:00 -9:15 Chair's Welcome &Day One Recap Michael J.Schewel,Partner MCGUIREWOODS LLP Rave Reviews from FRA &ACEEE's Energ):Efficiency Finance Forum 2aeeeeeneanneeenens "Great group of speakers /talent /knowledge” "Very current;ground breaking;driving the industry” "Extremely knowledgeable presenters &high-quality, diverse group of attendees” "Dense and rich presentations from quality speakers” "lam relatively new to the space,and this was an excellent opportunity to make very good contacts” "All bases covered by the best minds in the green universe” How New Markets Can Make Money for You- Strategies for Creating and Monetizing Environmental Benefits in Emerging Commodity Markets .How to screw up a market &discourage investment in carbon markets .Building investor confidence in emissions as an asset class -Verifying real reductions -Risk factors with pooled offsets,project offsets &exchange offsets -Financial delivery and physical delivery .Carbon credit programs for business &industry .Building a carbon portfolio °Developments in energy efficiency certificates,white tags,green tags,and REC markets °Low hanging carbon Discussion Leader: Jeffrey Fort,Partner and Practice Group Leader,Energy and Environment Practice Group SONNENSCHEIN NATH AND ROSENTHAL,LLP Ed Heslop,Chief Executive Officer ENVIRONMENTAL CREDIT CORP. Timothy H.Brown,Co-Director DELTA INSTITUTE Josh Margolis,Co CEO CantorCO2e,LP Greg Pool,Sr.Renewable Energy Trader BP ENERGY 10:15-10:40 Refreshment and networking break 10:45 -11:25 Comparative Economics of Power Generation Technologies Designed for Investors:This session provides a practical exploration of the economics of power generation.The scope of the discussion includes: .The full cost structure .Impacts of various policies °Technology development trends Speaker: Doug J.Arent,Ph.D.,MBA,Director,Strategic Analysis NATIONAL RENEWABLE ENERGY LABORATORY (NREL) 11:30-12:15 Opportunities in Energy Efficiency Markets Understanding energy efficiency market characteristics,financing strategies, and investment opportunities.Topics include: °Investment opportunities in building energy performance °Innovative technologies that address the growing peak power demand problem Opportunities for improved HVAC performance... GHGs and combined heat and power (CHP)projects Discussion Leader: Cecil E.Martin Ill,Partner MCGUIREWOODS LLP Bill Prindle,Deputy Director AMERICAN COUNCIL FOR AN ENERGY EFFICIENT ECONOMY Fiona Cousins,Principal ARUP Frank Ramirez,CEO ICE ENERGY 12:15 -1:35 Luncheon 1:40 -2:10 Debut Film Presentation:"Kilowatt Ours: A Plan to Re-Energize America” Marketing Hope-Advancing Solu- tions with Documentary Film Filmmaker Jeff Barrie will share excerpts from his acclaimed documentary "Kilowatt Ours:A Plan to Re-Energize America.”"Kilowatt Ours”is an influen- tial media tool that is changing the way individuals,businesses,institutions and elected officials respond to the climate crisis,by motivating significant reduc- tion in electricity consumption. Presenter: Jeff Barrie,Producer KILOWATT OURS 2:10 2:25 Refreshment break 2:30 -3:30 Risk Management Hedging Strategies PartA:Explore alternative energy technologies and portfolio assessment in the context of managing risk.This session will include an examination of the findings of a new study by NREL.Additional topics include: .Fuel price risk .Portfolio assessment °Hedging strategies Speaker: Doug J.Arent,Ph.D.,MBA,Director,Strategic Analysis NATIONAL RENEWABLE ENERGY LABORATORY (NREL) Part B:Examine the results from a PEAR analysis of hedging strategies for existing generating assets under plausible scenarios for mandatory green- house gas controls in the U.S.,focusing on: .Fitting CO2 into the expanding emissions portfolio °Bridging the technology gap .Opportunities arising from variations in how emission reductions are valued in theory and actually priced in practice Speaker: Thaddeus J.Huetteman,President POWER &ENERGY ANALYTIC RESOURCES (PEAR) 3:35 -4:15 Carbon Sequestration Projects: Viable Technologies,Projects Underway &the Impact on Business Take a look inside a set of projects from BioPure Fuels involving carbon se-questration via tree planting of oil seed trees and via algae production.The projects are designed to produce sustainable feedstock in tropical climates while sequestering carbon during the growth phase of tree production. Explore how these projects lower carbon emissions while providing a sustain- able source of oil for biodiesel production and biomass for biomass-to-liquid technologies.Learn about the environmental benefits and carbon trading op- portunities from these projects,including: °Credits earned from tree planting and/or algae production °Benefit of additional food supply from intercropping between trees °Credits earned from the use of biofuels in conjunction with fuel additives that improve combustion efficiency Speaker: Bill Wason,CEO BIOPURE FUELS 4:15 Conference adjourns Important Information To Register: Fax:704-889-129260=Mail:Financial Research Associates 18705 NE Cedar Drive Battle Ground,WA 98604 2 Call:800-280-8440 "Online:www.frallc.com Investors'Summit on Climate Change Investment Opportunities October 16-17,2007 The New York Helmsley Hotel 212 East 42nd Street New York,New York 10017 Phone:212-490-8900 Note:Should you require overnight accommodations,please contact the hotelatleast30dayspriortotheconferencedate.Advise them that you are at-tending FRA's Climate Change Investment Summit to receive the negoti-ated conference discount rate.Within 30 days of the conference,prevailinghotelratesmaybequoted,as the conference rate is no longer guaranteed.Book early-the hotel will sell-out! Fees and Payments: The fee for attendance at Investors'Summit on Climate Change InvestmentOpportunitiesis: Standard rate Conference and workshop:$1995.00 Conference only:$1695.00 Qualified investor rate* Conference and workshop: Conference only:$795.00 *Subject to FRA approval $990.00 Government and academic rate Conference and workshop:$1190.00 Conference only:$995.00 Please make checks payable to Financial Research Associates,and writecodeB507onyourcheck.You may also pay by Visa,MasterCard,Discover,or American Express.Purchase orders are also accepted.Payments must bereceivednolaterthanOctober9,2007. Team Discounts: °Three people will receive 10%off. .Four people will receive 15%off. .Five people or more will receive 20%off. In order to secure a group discount,all delegates must place their registrationsatthesametime.Group discounts cannot be issued retroactively.For moreinformation,please contact Tracy McLaughlin at tmclaughlin@frallc.com or704-889-1291. Cancellations: if we receive your request to cancel 30 days or more prior to the conferencestartdate,your registration fee will be refunded minus a $175 administrative fee.Cancellations occurring between 29 days and the first day of the confer-ence receive either a 1)$200 refund;or 2)a credit voucher for the amount of the original registration fee,less a $175 administrative fee.No refunds or credits will be granted for cancellations received after a conference begins orforno-shows.Credit vouchers are valid for 12 months from the date of issue and can be used by either the person named on the voucher or a colleaguefromthesamecompany. Please Note:For reasons beyond our control it is occasionally necessary toalterthecontentandtimingoftheprogramortosubstitutespeakers.Thus,thespeakersandagendaaresubjecttochangewithoutnotice.In the event of a speaker cancellation,every effort to find a replacement speaker will be made. y A Future for Fossil Fuel -WSJ.com Page 1 of4 Maka DWALLSTREETJOURNAL ="yiONLINE March 15,2007 COMMENTARY A Future for Fossil Fuel DOW JONES REPRINTS&R:This copy is for your personal, By JOHN DEUTCH and ERNEST MONIZ non-commercial use only.To order March 15,2007;Page Al7 presentation-ready copies for distribution to your colleagues, .ee clients or customers,use the OrderThecostofheatenergyfromcoalis$1-$2 per million BTUs,Reprints tool at the bottom of any compared to $6-$8 for natural gas and $8-$12 for oil.Where it is article or visit.complentifultherefore--as in the United States and China --coal is the "rePrims-com economic fuel of choice for new,electricity-generating power plants :See a sample reprint in PDF':ormat.at today s fuel prices.«Order a reprint of this article now. What about coal as a substitute for imported oil?Coal can be converted into liquid fuel suitable for transportation use;engineering estimates of the cost of deriving this synthetic fuel from coal (or shale oil)vary from $50 to $80 per barrel of oil equivalent.If world oil prices,currently in this price range,persist,this synfuel might become an attractive option. So what is the problem?The environmental impact. Here there is some good news:The so-called "criteria air pollutants"(sulfur oxides,nitrogen oxides and particulate matter)emitted from power plants have been effectively controlled at an affordable incremental cost.More recently,the EPA has placed restrictions on mercury emissions; it is not yet clear how well or how cheaply power plants will be able to meet this new constraint. However,on balance,we've achieved much "cleaner"generation of electricity from coal since the Clean Air Act of 1970. Global warming is another matter.Coal combustion contributes about 40%of the global emissions of carbon dioxide,the major greenhouse gas;and most qualified scientists believe human- generated greenhouse gas emissions are causing global warming.Oil contributes another 40%and coal-derived substitute fuels would roughly double the carbon dioxide emissions per gallon. The scale of the emissions is enormous.About two pounds of COQ2 are emitted for every kilowatt-hour of electricity produced cnagCrowe from coal combustion.A modern 1000 megawatt coal plant emits over 20,000 metric tons of carbon dioxide per day.Thus the urgent need to find practical and economic technologies and policies that permit the continued use of coal without increasing CO2 emissions into the environment.This need motivated "The Future of Coal:Options for a Carbon-Constrained World,"an MIT study released yesterday. http://online.wsj.com/article_print/SB117392535996837689.html 3/15/2007 ,A Future for Fossil Fuel -WSJ.com Page 2 of4 The most effective way to reduce the atmospheric concentration of greenhouse gases is to place a significant charge on the emission of CO2 and other greenhouse gases.The charge can be an emission tax or the price of an emission "allowance"obtained in a cap-and-trade system. The charge will raise the price of energy,and of electricity in particular,and the market will respond in three ways:(1)the demand for electricity will fall from the adoption of more efficient generating and end-use technologies,(2)nuclear power and renewables will become more attractive for investment in new electricity-generating capacity;and (3)new technology to reduce C02 emissions from coal combustion will become economic. The leading technological option for reducing CO2 emissions from coal into the atmosphere is sequestration:This involves capturing the gas produced by coal combustion and burying it in deep geological formations,such as saline aquifers.This can be done in today's coal combustion plants, but it is currently very expensive. In the U.S.,much of industry and many environmental groups believe that the best method for sequestration is IGCC --the acronym for coal gasification integrated in a combined cycle with combustion and steam turbines.Coal is partially burned with oxygen (not air,to avoid wastefully heating up nitrogen)to form a gas that is subsequently "shifted"to a mixture of carbon dioxide and hydrogen by the addition of steam.The CO2 is separated before combustion,compressed and transported to the site for injection into the aquifer;the hydrogen is sent to a combustion turbine to produce electricity.: This IGCC system can remove 90%of the CO2,but as it is a more complex process than conventional coal electricity production,it will add about 50%to the cost.This translates into about a 25%increase of the cost of electricity to the consumer,a substantial but not crippling increase for developed economies.With current technology and with additional experience,this appears to be the lowest cost option. Europe is following a different technology path:oxygen-fired supercritical pulverized coal combustion (as well as a process called fluidized bed combustion,suitable for low-quality coal). The "oxy-fired"plant is,like IGCC,designed for coal combustion in oxygen rather than air,and the CO2 is also captured for sequestration,but after combustion.The advantage of the pulverized coal combustion process is simplicity;the disadvantage is the increased cost,as more oxygen is required to burn all the coal to carbon dioxide. This cost disadvantage could be reversed if a cheaper way is found to separate oxygen from air -- a challenging but entirely plausible technical prospect.And the pulverized coal/fluidized bed technologies more easily accommodate a diversity of coal types. Which technology path is better?We do not have enough engineering knowledge and operating experience to answer that question for a variety of coals and local conditions.Indeed,we need a great deal more technical development to demonstrate the commercial promise of these and other options. But neither government nor industry will make the required level of technology investment --so long as the current administration does not adopt serious carbon reduction policies in a timely fashion.Instead,the absence of administration leadership invites Congress to adopt half-measures insufficient to achieve the needed innovations.For example,the 2005 Energy Act provided significant incentives for new coal plants,but without requiring carbon capture and sequestration - http://online.wsij.com/article print/SB117392535996837689.html 3/15/2007 A Future for Fossil Fuel -WSJ.com Page 3 of4 i -perhaps under the dubious assumption that these plants could be easily retrofitted for CO2 capture in the future. Taxpayer dollars should be focused on stimulating the introduction of technologies that look promising for commercial deployment when a CO2 emissions charge is introduced.Congress should also reduce uncertainty in private-sector decision making by signaling that new plants of any type will not be "grandfathered"from such future pricing.Uncertainty about CO2 emissions is not good news for the coal industry since,absent a strong policy,industry has no clear signal upon which to base investment.But if strong emission constraints are adopted without a successful technology for avoiding these emissions,the future use of coal will fall dramatically. However,the MIT study outlines a scenario where large scale carbon dioxide capture and sequestration (CCS)is developed and demonstrated rigorously and promptly,so that even with a significant emission charge,say $30 per ton of CO2 within the next decade (and growing thereafter),coal use will increase but CO2 emissions at mid-century are no higher than today. The scale is daunting;a 1000 MW coal plant that captures much of the CO2 would sequester over a billion barrels of pressurized gas over a 50-year lifetime;many hundreds of such plants would be needed world-wide to significantly affect global warming.Thus the government should support multiple sequestration efforts,with the instrumentation needed to support regulatory requirements, at the earliest possible date.The coal industry should support large-scale demonstration of CCS, because it offers a practical option for continuing to burn coal competitively in a carbon- constrained world. Today,there is no coal electricity generating plant operating in the U.S.with CO2 capture,let alone one that would demonstrate at commercial scale the integrated operation of the entire clean coal system:electricity generation,CO2 capture,transportation and sequestration.Importantly, neither do we have a proposed regulatory regime that would define the selection of sites for sequestration,the injection operation,and a robust system of measurement and monitoring to verify the integrity of CO2 storage. The Department of Energy has an ambitious project,called FutureGen,designed to implement an integrated clean coal system based on IGCC technology,but it is proceeding slowly and has too many chefs in the kitchen.If the project can be focused on commercial demonstration and freed from government controls,it could be an important step forward.If not,alternative "quasi- governmental”approaches to the needed demonstrations with carbon capture should be explored. But the few CO2 sequestration projects that exist or are planned around the world are insufficiently instrumented and unconnected to building the needed regulatory regime. Without proven technology and a regulatory regime,we may not have the option for large-scale CO2 capture and sequestration when a strong emissions control policy is adopted in the future. But in the meanwhile,one can only marvel at the discussions in Washington that debate hypothetical policy options under the false assumption that today CCS is a demonstrated and available technology for very large scale sequestration. A properly designed DOE demonstration program should immediately be launched for three to five well-instrumented sequestration projects,at a scale of one million tons of carbon dioxide per year for many years.Launching sequestration today at this scale is low risk;failing to do so is high risk for future coal use in a carbon-constrained future. http://online.wsj.com/article_print/SB117392535996837689.html 3/15/2007 A Future for Fossil Fuel -WSJ.com Page 4 of4 Substantial global warming won't be avoided unless all countries reduce greenhouse gas emissions.Yet emerging economies such as China and India are deploying enormous additional coal-fired electricity generation capacity without any carbon emission constraint.Last year,for example,China reportedly put about 80 gigawatts of coal-fired electricity generating capacity on line --the rough equivalent to all the electricity capacity of the United Kingdom.At present there is no indication the emerging economies will accept the higher cost required to accommodate emission constraints because of urgent competing infrastructure needs. The way forward requires more than a call for government leaders to seek consensus,or for a thin menu of demonstration projects and technology exchange agreements.Prudence calls for early action. The U.S.must be prepared to adopt serious carbon emission constraints,and,along with Europe and developed countries in Asia,to offer significant financial incentives to emerging economies to adopt carbon emission constraints,on a step-by-step basis. It is by no means certain that agreement will be reached,so that absent serious reductions in emissions,substantial global warming will occur.At some point,nations would then face accepting the high economic cost and social disruption of adapting to climate change or the more problematic prospect of geo-engineering the climate by active measures.We believe it less risky and ultimately less costly for the U.S.to lead the way for the world to adopt emission constraints today. Messrs.Deutch and Moniz,both former undersecretaries of the Department of Energy,are co- chairs of the MIT study on which this essay is based. URL for this article: http://online.wsj.com/article/SB117392535996837689html Copyright 2007 Dow Jones &Company,Inc.All Rights Reserved This copy is for your personal,non-commercial use only.Distribution and use of this material are governed by ourSubscriberAgreementandbycopyrightlaw.For non-personal use or to order multiple copies,please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com. http://online.wsj.com/article_print/SB117392535996837689.html 3/15/2007 Karl Reiche From:David Lockard Sent:Friday,March 16,2007 2:54 PM _To:.Mark Schimscheimer,;James Strandberg;John Wood;Ron Miller;Karl Reiche Subject:Coal-fired power generation:recent articles and reports You may find the articles below interesting:MIT report on the future of coal and TXU plans for two IGCC coal plants From:Fred Beck [mailto:fbeck@eesi.org] Sent:Friday,March 16,2007 2:12 PM To:David Lockard Subject:EESI Climate Change News -March 16,2007 Climate Change News Brought to you by the Environmental and Energy Study Institute Carol Werner,Executive Director March 16,2007 Winter Has Been World's Warmest On Record This has been the world's warmest winter since record-keeping began more than a century ago.On March 15, the National Oceanic and Atmospheric Administration (NOAA)said the combined global land and ocean surface temperature from December through February was at its highest since records began in 1880 (1.30°F/0.72°C above the 20th century mean)."Contributing factors were the long-term trend toward warmer temperatures,as well as a moderate El Nino in the Pacific,"Jay Lawrimore of NOAA's National Climatic Data Center said in a telephone interview from Asheville,North Carolina.The next-warmest winter on record was in :2004,and the third warmest winter was in 1998,Lawrimore said.The 10 warmest years on record have occurred since 1995. Click on the following links for more information: http://www.kltv.com/Global/story.asp?S=6235802&nav=1TjD http://www.noaanews.noaa.gov/stories2007/s2819.htm Climate Change Catching Attention of US Sportsmen Across the United States,outdoorsmen and conservationists are voicing their concerns about the effects of global warming on environmental balances.Many hunters and anglers around the nation are noticing earlier run-offs and milder seasons -signs of warming temperatures -which are affecting fish and other animal behavioral patterns.Jack Williams,a senior scientist with Trout Unlimited,said,"We are finding a lot of 1 concern among anglers and hunters about climate change.These people value traditions and their family and it will affect their children and their ability to enjoy these kinds of outdoor experience.” This concern is evidenced in a nationwide survey commissioned last year by the National Wildlife Federation. The survey found that 76 percent of licensed hunters and anglers agreed global warming was occurring and an equal percentage said they had observed climatic changes in their respective localities.According to a Reuters report,many groups like Trout Unlimited are now directing political attention to climate change issues and policy. Click on the following link for more information: http://www.planetark.com/dailynewsstory.cfm/newsid/40749/story.him Warming Climate Affecting Permafrost Permafrost,or soil that remains at temperatures below 0°C year-round,lies beneath approximately 25 percent of the land area in the Northern Hemisphere and serves as a stable foundation for much of the Arctic's infrastructure including pipelines,roads,buildings,and bridges.Permafrost also contains vast amounts of frozen organic material,which,if thawed,could decompose and release a significant amount of carbon dioxide into the atmosphere. Among many other scientific studies that have shown a steady warming in permafrost around the globe,a team of scientists recently discovered an active snowmelt flow that is believed to create a network of subterranean fissures that form large underground ice wedges.Small hikes in temperature can make these underground wedges more susceptible to melting and threaten near-surface permafrost that has been in place since about 25,000 years ago. Despite scientific studies showing a collective increase in permafrost temperatures,scientists are still debating whether the permafrost will melt as quickly as it has been warming.This presents an immediate concern because most permafrost melting will occur at shallow depths where it will have the greatest effect on ecosystems and people. Click on the following link for more information: http://www.sciencenews.org/articles/200703 10/bob10.asp New IPCC Draft Report Rife with Warnings A draft of the Second Working Group report of the Intergovernmental Panel on Climate Change's (IPCC) Fourth Assessment Report suggests the world will face dire consequences as a result of global warming.The report is the second in a series of four to be released this year and has been quoted as the "emotional heart”of climate change research.The 79-page technical summary was written and reviewed by more than 1,000 scientists from dozens of countries but still must be edited by government officials until it will be released April 6 in Brussels. The draft report,obtained by the Associated Press,outlines various detrimental results of global warming _ including:severe water shortages in African and Latin American regions;increasing death rates among the world's poor due to warming-related illnesses;animals,such as polar bears,will be pushed to extinction;nearly 100 million people could be flooded by rising seas by 2080;100-600 million people could experience starvation 2 by 2080;Europe's small glaciers could disappear and the continent's large glaciers could shrink dramatically by 2050. The draft report also says scientists are confident that current problems including change is species'habits and habitats,more acidified oceans,loss of wetlands,and bleaching of coral reefs can be blamed on globalwarming.Patricia Romero Lankao,one of the many co-authors of the new report,said global warming soonwill"affect everyone's life....[and]it's the poor sectors that will be most affected.” Click on the following links for more information: http://www.msnbc.msn.com/id/17554963/ http://www.iht.com/articles/ap/2007/03/10/america/NA-GEN-US-Climate-Report.php http://uk.reuters.com/article/worldNews/idUKL14455 110200703 15?pageNumber=2 MIT Releases Report Addressing the Future of Coal On Wednesday,March 14 leading academics from the Massachusetts Institute of Technology (MIT)issued a report examining how the world can continue to use coal,an abundant and inexpensive resource,without worsening carbon dioxide (CO2)emissions contributing to global warming.During the release of the report at a conference held in Washington DC,professors John Deutch and Ernest Moniz of MIT asserted that implementing carbon capture and storage (CCS)technology is critical to significantly reducing CO2 emissions while also using coal to meet the world's rising demand for inexpensive electricity. The report entitled "The Future of Coal Options for a Carbon-Constrained World”states: e«Acharge of approximately $22/ton of CO2 is needed in the near term to increase the economic attractiveness of new technologies that avoid CO2 emissions such as CCS technology. e Large-scale demonstrations of CCS technology need to become a priority in order to assess the technology's credence and to establish positive public rapport for this technology if proven successful. e The US Government should only provide assistance to coal projects that include CO2 capture and should remove any expectation that construction of new coal plants without such technology will be granted allowances in the event of future regulation. e CO2 emissions can be stabilized on a global scale,but China and India are unlikely to adopt carbon constraints unless the United States leads the way in the development of CCS technologies. e The Department of Energy research and development program for coal technologies must provide adequate funding for demonstration of CCS on a large scale,a wider range of carbon capture technologies,and comparative modeling addressing the performance of integrated technology systems. On March 22,the US Senate Committee on Energy and Natural Resources will have a full committee hearing on the findings and recommendations of this study. Click on the following links for more information: http://www.allamericanpatriots.com/m-newstarticle+storyid-21315.html http://www.technologynewsdaily.com/node/6333 http://www.web.mit.edu/coal TXU Announces Plans to Build Two Clean Coal Plants On March 9,TXU Corp.announced it will issue a request for proposals to build two coal-fired power plants using integrated gasification combined cycle (IGCC)technology combined with carbon capture systems.The plants will act as research and development projects aimed at improving the efficiency,cost,and environmental performance of the technologies and are expected to be operational within six years. Although IGCC technology turns coal into a cleaner-burning gas to reduce emissions,Tim Greef,campaign manager for the Natural Resource Defense Council's Climate Center (NRDC),said,"We're glad that they are going to include carbon capture,because IGCC is not enough.”TXU has also said its new Sustainable Energy Advisory Board,which includes representatives from NRDC and Environmental Defense,will review the new plant proposals. Click on the following links for more information: http://www.planetark.com/dailynewsstory.cfm/newsid/40788/story.htm http://www.chron.com/disp/story.mp|/business/energy/4617972.html Plans for Beijing Emissions Exchange Retracted In a February report earlier this year,United Nation (UN)and other government officials announced Beijing would be launching a pilot carbon emissions trading exchange.However,China's Office of the National Coordination Committee on Climate Change recently released a statement saying,"Currently Chinese government has no plan to establish a so-called 'Climate Exchange'.”However,an unnamed UN official still contends,"The vision of having some kind of pilot activities commence by the middle or end of the year is still here.” Click on the following link for more information: http://www.planetark.com/dailynewsstory.cfm/newsid/40780/story.htm Washington State Senate Passes Climate Legislation On March 10,Washington state senators voted 35-15 on a measure that would set state goals to reduce greenhouse gas emissions,set standards for electric utilities,create tax credits for consumer-owned utilities that invest in energy efficiency,and create an office of state climatologist.The bill would also promote the reduction of petroleum purchases,support the use of plug-in electric hybrid cars,and address how the state will join other western states in a cap-and-trade system. This measure comes on the heels of an announcement made by the governors of California,Arizona,New Mexico,Oregon,and Washington that the states would create a western regional carbon trading market to reduce greenhouse gases.Specific to her state,Governor Chris Gregoiore wants Washington to reduce greenhouse emissions to 1990 levels by 2020,25 percent below 1990 levels by 2035,and 50 percent below 1990 levels by 2050. Click on the following links for more information: http://seattlepi.nwsource.com/local/6420ap wa xgr climate change.htm! http://seattletimes.nwsource.com/html!/localnews/2003612330 warming11.html?syndication=rss Auto Executives Attend Hearing Addressing Climate Change On March 14,corporate leaders of General Motors,Ford,Toyota and Chrysler,along with the head of the United Auto Workers Union,made a rare joint appearance before the House Energy and Commerce Subcommittee on Energy and Air Quality.The hearing was meant to discuss new ways in which members of the transportation sector can help address global warming.Increasing Corporate Average Fuel Economy (CAFE)standards -which would require automobiles to get a certain level of miles per gallon (mpg)-was discussed as an option,but panel members stressed that these measures could be unnecessarily expensive and have not been very successful to reduce reliance on foreign oil imports in the past. Rep.Edward Markey (D-MA),who supports an annual 4 percent increase in CAFE standards,refuted that previous CAFE standards did not reduce the nation's independence on foreign oil because Congress did not continue to push industry for higher standards.As of now the CAFE standard for passenger cars is 27.5 mpg (since 1990)while light trucks will be raised to 24 mpg from 22.2 mpg within the next four years. The executives were also quick to express the efforts they have taken to produce "flex-fuel”vehicles that can run on biofuels,particularly ethanol.All executives were also willing to support "'a system which regulates the emissions of carbon dioxide”from vehicles when specifically asked by Rep.John Dingell (D-MI).However, while they supported some form of a cap and trade system,the panelists could only articulate few details of how to implement such as system and emphasized that their industry could not bear the burden alone. Click on the following link for more information: http://www .marketwatch.com/news/story/us-auto-chiefs-cool-tougher/story aspx?guid=%7B7617F8B0-E100- 4685-A925-4FA19E3BOD0F%7D&dist= EESI Briefings Copies of DVD's are available of EESI's recent climate briefings:"Agriculture and Climate Change:Threats and Opportunities,"May 24,2005;"What Does Climate Change Mean for the Arctic?How is Alaska Being Affected?,"March 15,2005;"Perspectives on Climate Change:Business Initiatives to Reduce Greenhouse Gas Emissions,"November 18,2004;"State and Local Government Climate Change Efforts,”September 28,2004; "Climate Change Post 2100,”September 21,2004;"Abrupt Climate Change,”September 15,2004;and "Discussing Climate Change:A Multi-faceted View of the Climate Stewardship Act,”June 3,2004.The discs are $20 ea.(incl.shipping/handling)plus tax 5.75%(DC residents only).Click on the following link to order a DVD:http://www.eesi.org/support/6.3.04%20DVD%20advertisement.htm Events March 20,2007 Climate Hearing On Tuesday,March 20 the Energy and Commerce Subcommittee on Energy and Air Quality will hold a hearing entitled,"Climate Change:Perspectives of Utility CEOs"at 10:00 a.m.in room 2123 Rayburn House Office Building,Washington DC. http://energycommerce.house.gov/membios/schedule.shtml March 20,2007 Climate Action Day As part of Climate Crisis Action Day in Washington D.C.on March 20 thousands of concerned citizens will gather at the United States Capitol to tell Congress it's time to tackle global warming head-on,with responsible energy decisions and protections for special places like the Arctic Wildlife Refuge.Visit www.ClimateCrisisAction.org for more information. March 21,2007 Climate Hearing with Al Gore (I) On Wednesday,March 21,the Senate Environment and Public Works Committee will hold a hearing entitled "Vice President Al Gore's Perspective on Global Warming"at 02:30 PM in room SD-106 Dirksen Senate Office Building,Washington DC http://epw.senate.gov/public/index.cfm?FuseAction=Hearings.Hearing&Hearing id=51628af6-802a-23ad- 4588-be4a4a94607a March 21,2007 Climate Hearing with Al Gore (II) On Wednesday March 21 there will be a Joint Hearing of the Energy and Commerce Subcommittee on Energy and Air Quality and the Science and Technology Subcommittee on Energy and Environment at a time to be determined in Room 2123 Rayburn House Office Building,Washington DC.Former Vice President Al Gore will be the only witness. http://energycommerce.house.gov/membios/schedule.shtml March 21,2007 Converging New Finance Techniques:Renewables, Efficiency,and Demand Reduction The American Council On Renewable Energy in collaboration with the American Bar Association's (ABA) Renewable Energy Resources Committee will host a teleconference with a panel of experts who will discuss what is and can be done,from public and private perspectives,to encourage both efficiency and renewables with similar policy vehicles.It will highlight their similarities and potential relationships from the standpoint of private sector markets.The event takes place on Wednesday,March 21 from 12:00-1:30 pm EDT.There is a $20 charge for this event.Click on the following link for more information:ABA http://www.abanet.org/environ/committees/renewableenergy/ March 22,2007 Energy Hearing:Coal and Carbon Constraints The Senate Energy and Natural Resources Committee will hold a hearing entitled "Future of Coal"on Thursday,March 22 at 02:30 PM in the Energy Committee Hearing Room -SD-366 -Senate Dirksen Office Building,Washington DC.The purpose of the hearing is to receive testimony on the "Future of Coal:Options for a Carbon Constrained World”report recently published by the Massachusetts Institute of Technology. http://energy.senate.gov/public/index.cfm?Fuseaction=Hearings.Hearing&Hearing ID=1617 6 Quick Links... e SUBSCRIBE to our newsletters and other products http://visitor.constantcontact.com/email.jsp?m=1 101500533487 e ARCHIVE:Past issues of the newsletter are posted on our website under "publications" http://www.eesi.org/publications/Newsletters/CCNews/ccnews.htm e SUPPORT EESI:This newsletter and EESI's other valuable work in energy,climate change,agriculture, transportation and smart growth are made possible through financial support from people like you. Please donate now. http://www.eesi.org/support/support.htm Fredric Beck e-mail:fbeck at eesi.org web:www.eesi.org phone:202-662-1892 LOO Lt Ol DDDa This EESI publication is a free,weekly electronic newsletter intended to inform interested parties,particularly the policymaker community,of the latest climate change-related news.Permission for reproduction of this newsletter is granted provided that EESI is properly acknowledged as the source. The Environmental and Energy Study Institute is a non-profit organization established in 1984 by a bipartisan, bicameral group ofmembers ofCongress to provide timely information on energy and environmental policy issues to policymakers and stakeholders and develop innovative policy solutions that set us on a cleaner,more secure and sustainable energy path. Forward email &SafeUnsubscribe®Powered by This email was sent to dlockard@aidea.org,by fbeck@eesi.org Lee od,Update Profile/Email Address |Instant removal with 2.* SafeUnsubscribe™|Privacy Policy.Constant Contact TRY IT FREE Environmental and Energy Study Institute |122 C Street NW,Suite 630 |Washington |DC [20001 INIEIVWYZS)March 26,2007 GLOBAL WARMING Carbon Capture Shines In Powerplants'Future Demonstration projects moving toward full commercialization at big coal-fired units release of a Massachusetts Institute of Technology study,is pushing the topic to the forefront of the energy industry. Power sources are excited by the poten- tial for progress,but caution that retro- fitting plants with the technology may not be cost-effective. Given the U.S.electricity industry's heavy dependence on fossil fuels,rapid replacement by renewable energy is not possible,and many experts consider car- bon capture and sequestration (CSS)the critical path to the industry's near-term future (ENR 2/12 p.36).The MIT study declares CCS "the critical enabling tech- nology to help reduce CO,emissions sig- nificantly while also allowing coal to meet the world's pressing energy needs.” The study prompted New Mexico Sen. Jeff Bingaman (D)to call for a March 22 hearing of the Energy and Natural Re- sources Committee about the findings. "This landmark report comes at a very op- portune time,”Bingaman says."Its rec- ommendations will carry a lot of weight here in Congress.” American Electric Power Co.,Co- 10 ©ENR ®March 26,2007 enr.com f_......§ast-growing public concern over global warming has electricity generators focused on developing ways to capture and store carbon dioxide from coal-fired pow- erplants.A flurry of recent announcements of carbon- capture demonstration projects,combined witha March 14 U.S.Energy Association conference and ee lumbus,Ohio, plans to install carbon capture on two of its coal- fired powerplants and claims it will be the first com- mercial use of the technology at an existing plant.By 2008,AEP will in- stall a carbon-capture system using a chilled ammonia process to capture car- bon from the flue gas of a 30-MW por- tion of its 1,300-MW Mountaineer Plant in New Haven,W.Va, Bottled Up The technology,from Alstom Power Inc.,Windsor,Conn.,chills flue gases, recovering large quantities of water for recycling,and deploys a CO,absorber similar to those used in sulfur-dioxide scrubber systems.Alstom is installing a 5- MW pilot demonstration of the technol- ogy at We Energies'1,224-MW Pleasant Prairie,Wis.,powerplant. .#Yih: Chilled.Alstrom technolo-. gy will be used on part of AEP's Mountaineer plant. CO,captured at the Mountaineer project will be injected into deep saline aquifers 9,000 ft below grade at the site for storage.The validation project,cost- ing an estimated $50 million to $80 mil- lion,could capture up to 100,000 tonnes of CO,annually. Following the Mountaineer project, AEP plans a commercial-scale retrofit using the Alstom technology on one 450- MW coal-fired unit at its Northeastern Station,Oologah,Okla.,selling the CO, for enhanced oil recovery.That system is expected to cost between $250 million and $300 million and could be operational by2011,company officials say.PHOTOCOURTESYOFAMERICANELECTRICPOWERCO. PHOTOCOURTESYOFCORPSOFENGINEERS-.fter boming close to passing a :big water resources bill last year, Congress is trying again.At stake are authorizations for bil-lions of dollars for hundreds of Army Corps of Engineers projects. In the House,a $12-billion-plus Wa-ter Resources Development Act sailed through the Transportation and Infra- structure Committee on March 15,A floor vote may come by the Easter recess.Inthe Senate,the Environment and Pub- lic Works Committee expects to vote on its still-unveiled bill by the end of March. "I think the prospects for congres- sional passage are pretty high,”says an in- dustry source."I have much greater doubts about what will happen when that bill gets submitted downtown”to the White House.The Bush administration has raised concerns about the costs of earlier WRDA bills and the new one promises to be no smaller.'The House panel's version totals $12 billion to $13 billion,says Chairman James Oberstar (D-Minn.).But there has not been a WRDA signed into law in more than six years."This is pent- up demand,”..he says."This is urgent need.”, A Expansion.Peoria,Illl.,lock is on the list.) Oberstar says the bill his panel cleared is about the same as the one the House passed in 2005.To speed the new one along,he says he excluded projects that were not in the 2005 bill or earlier ones that did not make it to enactment.One addition to the 2005 measure is a provi- sion to shut the Mississippi River Gulf Outlet,which critics contend funnelled Hurricane Katrina's storm surge at the New Orleans area. Still,"we were dismayed that the...com- mittee chose to simply ignore the lessons in the wake of Katrina and has moved forward essentially the same bill that [for- mer]Chairman Don Young had passed” before the hurricane,says David Conrad, National Wildlife Federation senior wa- ter resources specialist. House Bill's Projects Include: ($Mil.) PROJECT FEDERAL FUNDS UPPER MISSISSIPPI/ILLINOIS WATERWAY: -7 new,1,200-ft locks 1,795 -Ecosystem restoration 1,580 -Moorings,switchboats,etc.235 EVERGLADES: -Indian River Lagoon 683 -Picayune Strand 188 -Hillsboro/Okeechobee Aquifer 43 -Site 1 Impoundment 40 MORGANZA,LA.-GULF (storm protection)576 LOUISIANA COASTAL RESTORATION: -Miss.River Gulf Outlet enviro.restoration105 -Hope Canal diversion 69 -Barataria basin barrier shoreline 243 -Myrtle Grove medium diversion 278 -Demonstration projects 100 -Chenier Plain (5 projects)185 -Beneficial use of dredged material 100 SOURCE:HOUSE TRANSPORTATION AND INFRASTRUCTURE COMMITTEE In all,the bill contains about $2.4 bil- lion for Louisiana and for Florida."That's where the needs are,”Oberstar says.The upper Mississippi River and Illinois Wa- terway do even better,receiving $3.4 bil- lion for seven 1,200-ft-long locks,envi- ronmental restoration projects and other items.= By Tom Ichniowski >Airports:FAA Foresees Busier Skies and Airports As Congress begins to debate the shape of this year's aviation reau- thorization bill,the Federal AviationAdministrationpredictsthatU.S. passenger volume will rise to 1.2 billion in 2020,from 741 million last year,an average annual gain of 3.5%.Last year,mainline carriers' enplanements dipped 0.5%,whileregionalcarriers'traffic rose 4%. In its latest set of aerospace fore- casts,released March 15,FAA says aircraft .operations-takeoffs and landings-declined 3%in 2006, to 61.1,million.One factor was a cut in commercial airlines'ca- pacity. Operations,a good indicator of the load put on airport runways and taxiways,will increase an aver- age of 2%annually over the next 14 years,reaching 81.1 million in 2020,FAA says. >Spending:House Iraq Bill Also Funds Louisiana Levee Work A House vote was expected by March 23 on a $124-billion spend- ing bill that focuses mostly on funds for the Iraq war but also has large sums for construction.But President Bush said on March 19 that he wants Congress to approve "a clean bill that does not use funding for our troops as feverage to get special interest spending for [legis- lators'}districts.” Besides $99.5 billion for war- related Defense Dept.spending,the bill has $1.8 billion for military con- struction and $3.1 billion for the 'base closure program.The mea- sure bars using funds to close the Army's Walter Reed hospital. The bill also includes $1.3 billion for continued Corps of Engineers work on levees and other flood pro- tection around New Orleans and $283 million for Veterans Affairs Dept.con- "struction. >»Corps:Senate Panel Clears Van Antwerp To Be New Chief Lt.Gen.Robert L.Van Antwerp Jr.'s nomination to be chief of the Army Corps of Engineers has advanced in the Senate,with the Armed Ser- vices Committee's approval on March 15.The next step would be action by the full Senate.Since November 2004,Van Antwerp has been head of the Army's Accessions Com- mand,which is responsible for re- cruits through initial training.If con- firmed,he would succeed Lt.Gen. Carl A.Strock as Chief of Engi- neers.# Compiled by Tom Ichniowskti enr.com March 26,2007 =ENR =9 PHOTOBOTTOMCOURTESYOFWEENERGIESyee ¥Pilot Plant Schematic»Pieasant Prairie Powerplant . '<1%flue gas from one boiler unit ntinuous 4 emission4monitoring k_System 90 7 0) ao.Twoerstep... :carbon capture pilot SOURCE:ALSTOM POWER INC. Chiller os Flue gas enters afteretadaselSydesulfurization Chilled Ammonia Process Flue gasout }4 Regenerator Ne sagt 23»CO,absorber Induced-draft fan SOURCE:ALSTOM POWER INC. A Demonstration.A 5-MW test of the chilled amonia process is being done in Wisconsin. AEPis trying other carbon-capture approaches as well.Bechtel and GE Energy in joint venture have contracts to engineer,procure and construct two 600- MW plants using integrated gasification combined-cycle technology in West Vir- ginia and Ohio.In December 2006,AEP said construction would be delayed at least six months because initial cost esti- mates were higher than expected (ENR 1/1-8 p.7). Under a memorandum of understand- ing,AEP and Babcock &Wilcox Co., Barberton,Ohio,plan to develop the first commercial validation of oxy-coal combustion technology at B&W's 30- MW (thermal)Clean Environment Development Facility in Alliance,Ohio, starting with a pilot demonstration this summer.The oxy-coal process that will be used at the clean-air test facility uses pure oxygen for combustion of coal, eliminating nitrogen and creating a pure stream of CO,for post-combustion cap- ture. The recent surge of interest in carbon capture and sequestration has not been lost on industry observers.A March 13 briefing on carbon sequestration held by the U.S.Energy Associationin Washing- ton,D.C.,drew nearly four times the average turnout of past meetings on the subject,USEA officials say. Still,the MIT study says that present government and private sector programs to develop large-scale demonstrations of the technology are inadequate.The study suggests that three U.S.and about 10 worldwide at-scale projects would be needed "to cover the range of likely accessible geologies for large-scale stor- age.”The study calls for more govern- ment support for future demonstration projects as well as research and develop- ment programs. Cost Concerns The MIT group and the Electric Power Research Institute both tout the oppor- tunities to install such technologies at new powerplants,but neither sees the likelihood of widespread retrofitting. "You could conceivably retrofit exist- ing plants but we don't see that as a cost- effective option,”says John Novak,exec- utive director for federal and industry affairs at EPRI."It's not as simple as bolt- ing a piece of equipment on the back 'a 'a .warot otos end of the plant.You have to redesign the whole plant.” Even with a new plant design,carbon reduction could be tough to pencil out. EPRI estimates that such technologies could add between 50 and 80%to the cost of electricity compared to the cost of electricity at plants without capture sys- tems. But Bob Hilton,Alstom business development director,says his company remains committed to the opportunities. "The technology is completely retro- fittable,”he says."We have 350,000 MW of coal plants in the U.S.alone and to reach a reasonable goal in CO,reduc- tion,you have to reduce the existing fleet.” The industry also continues to face unanswered regulatory and legal con- cerns about carbon once it is injected into geological formations.Julio Friedman, leader of the carbon management pro- gram at the Lawrence Livermore Na- tional Laboratory,Livermore,Calif.,says several hurdles are impeding progress. "One front-burner issue is,'Who owns it?'”he says "Is it treated like a mineral lease or is it like water rights?Another question is,'How do you close a project?' If you start a project and do everything you were supposed to do for 50 years, how do you close and decommission a site and walk away?They're all open questions.”= By Bruce Buckley enr.com March 26,2007 =ENR =11 1 1 i INVESTIGATIONS'Deficiencies'Cited at BP Site In Final Report on Fatal Blast he U.S.Chemical Safety Board blamed costcutting and budget pressures at BP for the explosion two years ago that killed 15 con- tractor workers and injured 180 people at the firm's Texas City,'Texas,refinery. The agency's final report,issued March 20,also tagged the Occupational Safety and Health Administration for lax oversight of the plant and for focusing on lost-time injury rates rather than less fre- quent,but more deadly,process safety rates.The full board was set to vote on the report after ENR press time. The March 2005 explosion occurred as workers were restarting an isomeriza- tion unit,which boosts the octane level in gasoline.The equivalent of a tanker trail- er of gasoline vented through a blow- down drum,which was ignited by a diesel truck idling nearby.Fourteen of the casu- alties were in or near construction trail- ers that were as close as 121 ft from the explosion.Of those,11 worked either for Jacobs Engineering Group,Pasadena, Calif,or its subsidiary JE Merit Con- structors,which were site contractors. 12 =ENR =March 26,2007 enr.com Fallout.Accident killed 15 contractor workers;safety board seeks more corporate safety focus. t t One underlying factor leading to the accident was the inadequacy of BP's methods to measure safety conditions, the board said.It asked the firm to appoint a new board member with exper- tise in refinery operations and process safety and to improve its incident report- Three of the dead worked for Fluor Corp.,Irving,Texas,which has had an ongoing maintenance contract at the plant since 2001. The agency concluded that the explosion's root .cause was in- effective oversight of BP Group's safety culture by its board of directors.Focus on safety to protect workers'lives deserves the same level of investment and scrutiny as firms dedicate to financial controls,said safety board Chairman Carolyn Merritt."The boards of directors of oil and chemical compa- nies should examine every detail of their process safety programs to ensure that no other terrible tragedy like the one at BP occurs,”she said. The report said targeting mistakes of BP's operators and supervisors misses the accident's underlying cultural and organi- zational causes.Costcutting in the 1990s left the refinery vulnerable to a catastro- phe.Suil,BP cut the budget 25%in 1999 and again in 2005,even though the site's infrastructure and process equipment were in disrepair,the board concluded. oy :--at f. hoe, HOLMSTROM ing program. Merritt and Don Holmstrom, board supervisory investigator, .said companies and OSHA must develop a method using leading and lagging indicators to mea- sure process risk,Items to look at include safety action items and equipment testing,Merritt said.OSHA should use indicators to identify plants at greatest risk of a catastrophic accident and conduct thorough inspections.From 1995 to 2005,on average,only one in 500 plants in high-hazard industries was inspected,Holmstrom said. The board also recommended that OSHA amend its process safety manage- ment standard to review how major orga- nizational changes at companies,such as mergers and acquisitions or budget cut- ting,could affect safety.Merritt said the board wants BP to work with the United Steelworkers International Union to pro- mote reporting incidents and near miss- es "without the fear of reprisals.” BP disagreed with some of the report. Still,it said it would give full and careful consideration to board recommendations. BP created an independent panel led by former Secretary of State James Baker to assess its process safety management cul- ture."OSHA is also implementing a Na- tional Emphasis Program to ensure that every refinery under its jurisdiction is inspected,”said OSHA Chief Edwin G. Foulke Jr. The panel recommended that BP give process safety the same priority it gives personal safety and environmental per- formance.It said the firm's board should have an independent monitor report back on progress in improving its safety cul- ture for at least five years."We're confi- dent BP will be a very different company a result of this incident,”Merritt said.= By Mary Buckner Powers PHOTOSCOURTESYOFTHEU.S.CHEMICALSAFETYBOARD by Kun >. Karl Reiche From:Richard Holden [raholden@earthlink.net]Sent:Friday,March 30,2007 11:34 AM To:Karl Reiche Subject:Fwd:Alaska Project -Wescorp/PLASMA Attachments:Alaska CO2 Cogen Concept 2-19-07f.ppt;ATT10366.htm Good day,Karl Here's the thought that S.Cowper and i presented to Agrium,Tesoro,Mayor John Williams,et al,last month. Subject for next Friday's chat. Richard Holden Begin forwarded message: From:plasmatek <plasmatek @in-tch.com> Date:March 30,2007 10:58:11 AM MST To:Don Cott <don.cott@ak.net>,Don Rudberg <drudberg @aol.com>,Jim Enge <jenge @sbeglobal.net>,Richard Holden <raholden@earthlink.net>,Jack Lindsey<sunbeltinc @comcast.net>,Mark Fryer <markfryer@alaska.com> Subject:Alaska Project -Wescorp/PLASMA Reply-To:plasmatek @in-tch.com Hi All. Here is the presentation given in Alaska,see attachment... This could be used as a basis for tommorrow conference call! Rich Cr> "PLASMA COz Capture Cogen Technology &CO2 Sequestration in Cook Inlet <= Alaska COz Capture Cogen Concept x Inc. February 19,2007 <> PLASMA Technology and Applications «PLASMA COz Capture Technology: >ine High sulfur recovery from solid &heavy liquid sulfurousuels. »Captures high quality CO from existing power plant and new power piants. »Heavy liquid fuels such as available from Tesoro Kenai refinery. Asphalt fuel for Cogen with PLASMA COz Capture Technology. Cogen with CQ2 Capture &Cogen Project Configuration...no gas =PLASMA System approach for Cook Iniet for EOR olf production. Cook Iniet CO2 sequestration for Enhanced Oil Recovery (EOR) Potential Markets.We Summary [PLASMA 'Technology | PLASMA TechnologyCED *PLASMA's Technology is a spin-off of an $850 MM DOE Program. a Ulta high Sulfur removal on a once through basis superior to other techniques@99.9%sutfur removal. High NOx removal 70 to 85%. Sulfur&NOx removal has over 5,000 hours of operating experience at 25&50MVvtscale.«Air-fired amissive Technology:>Emissions equal or lower than coal Gasification.""P»Emissions equal or jower than gas fired GTCC.== «a Oxy-fired non-emissive (CO2 Capture)Technology: >Oxy-firing operating experience at 40%to 50%O:for over 5,000 hours.»Captures high quality CO.from existing power plants and new powerplants, >Innew power plants...Has a CAPX advantage due to substantially smallerfluegasvolumewithCO;Capture ark O2/COz Firing. 4 [PLASMA CO2 Capture Technology Description | Solid fuels (coke or coal)orygen-fired with CO:recycle &potassium carbonate (K:COs}injectionforsulfurrecovery CCx capture and sulfur recovery accompésned upon fuel combuston,with no downstream ofconcentrationstep. ©99.9%sulfur recovered as potassium sulfate (K:50«)-use as a fertilize.4 [Coal/Coke,S,N2 +02/CO2 +K2COs >COz +H20 +K2S0+KNOs | CO:Recycle CO:Captured Coal or Ho No StackgeeCokeFuel+|+>Steam to EOR©PC Boiler : us >98%Or Solids(K2S04&KNOs8Ash) [Captered CO;uitrs low SOx <10 ppm &very low NOx |5 PLASMA CO2 Capture Cogen Technology and CO2 Sequestration via EOR_ for Alaska Cook Inlet Oil Reservoirs 7 TPLASMACO:Capture women *Cogen 300 MWe asphalt-fired power piant in the Cook Ipiet +any «Asphalt potential cogen fuel from Tesoro Kenai Refinery. «COz Sequestration for EOR in Cook Inlet oil reservoirs. «PLASMA COz Capture Technology: »Ultra high Sulfur Recovery. >O2/COz recycle combustion with K2CO3 injection. »Electric drivers for compressors. AaghoR Pood9,3108/D Gross 310 Mw17,675 Btw /#O26 %Sulfur So MW Nireses||17,3007/0400HNect/D Racevered: 1804 PLASMA's COz Capture Cogen Concept 0:Recycle Net Produced C0;7,520 T/D No COa 'Compressor Or Oxidant,an.0:5,910 T/0 3s10T/0 Povrer Flow 276 MW 131 04 eet /D O18 CO NrsepeirrationPLASMAUnit(ASU) \with GT Drivers PLASMA CO:Capture Cogen Concept Capacities « 310 MWe Net power capacity assuming asphalt fuel. «Assume 9,310 Bbls/Day of asphait feed (17,675 Btu/#at 2.6% Sulfur), @ 131 MMscf/d or 7,690 stons/d Captured COz for EOR. «226 MWe Net power production. =18,850 8/D steam or 275,000 #'s/hour assumed...what quantity needed for refinery? «5,910 stons/d O2 Air Separation Unit (ASU). «480 MMscf/d or 17,300 stons/d Nz for oil field pressure maintenance.»High quality CO2z -98%plus purity and SOx &NOx in 10's Sel?Net ewppmsuitableforEORapplications.coe BS 10 226 =50 MWe needed for electric drivers for ASU compressor. ee »Cogen Steam for refinery.,18,8508/0 :=NoCCO2 or N2 Compression included.5 |DOE ALASKA Study for CO2 for EOR |[Cook Inlet COz EOR Potential |<a wrenCoomi wend'Tate£,Ast 29 ResemrestitReserva.COz Anchor Fieids careertgpot py ge Figure 2.Aleta Of Refineries and Large OF Fakta reaeevciessoenatfeetTableTh,Met or |- mgt ns Seve Serervein|.Oxten Get Pelee Phe)___Site ota Ce me aa mses 'Tals1A.Sete of Cauh tale "Ante”Finttelnarevin,It[A Dae C4 RaperHexSlope n 22 ms ag Chichatoun eaten Comsative |Prewest |RaseaninyCoat4uyaadeyihtawein|peseaon|mses |Pen»3.ne ay,.pieiaite;|pesennn |canctenyPegafot|sin ma.m2 -t[resatts onal n ms1|Semece Ft Perecch Ri 4 mt 'Swarce:DOE Henin Oriented Stretagion for O02 BOM:ALASKA March 2005 Cook Iniet 'Market Potential 'Takde &.Potential Oy Sepgty Reqetrrments to AtrabeReanarebi("Aenpte Supgtios of OO4") Reprint Oo,my Maat |Recover |)PesehanedCe Doct Se,'D3 aw aySoreriatA_=7 G3 4 we aM cry Qweneen Mover 'Freding fy.. chet |.We Meant teeny §"sy. ., Noreen 7Aeransaabfa"Couk fades 7 Map Legend Koay Kaige Teter é Source:DOE Satin Oriembad Strategies for COx FOR:ALASKA March 2005 'Trawe Wo "anchor”masreeie.ranging trum het Over 290 ts marty 210 man tome 'Yalue 19,anarvate Properen and buyroved Of Reomery hati,"hackedGbMobinitmaresiy om Achar 'Sept |Geortr |acum eertonoxCoei|ay yppctesteeceGarCoamermara OFvdSteve]2a ||tetascoePoweTyreeresSwateprobingTaneyretrymTCe vt C02 Capture Retrofit Concept could have attractive Economic Incentives aap: Capture COQz in the range of $0.65 to $0.95/Mscf. «Power in the $55 to $85/MW range. =Possible Nz market potential for focal pressure maintenance. «CQ2 Trading value in the range of $20 to $30/metric tonne as traded on London PointCarbon Exchange. =Capital Cost in the $35Q.to $400 million range. PLASMA CO2 Capture Cogen &CO2 Sequestration Development Effort Determine a COz market for Enhanced Oil Recovery for adjacent or nearby Cook Inlet oll production -600 Billion scf potential, Determine a possible N2 market for local pressure maintenance for gas production. Determine suitable site for power plant for COz Capture Cogen. Determine Steam vs.Power ratio for cogen host. Evaluate usage possible ownership options, Establish Liquid Fuels Testing -Heavy Asphaitic Oils testing facilities: 2 Heavy O11/02/CO02/K2COs combustion equipment will need to be specified and designed at REI or other suitable location. e Heavy Gil fonation and storage needstobebuilt. Summary PLASMA technology has broad application and can be used for enhance oil recovery (EOR)for Cook Inlet application. Refinery and Ammonia plants have the ability to use the steam and power requirements. Cook Inlet oil/gas reservoirs can use CO:for EOR,Nz pressureMaintenance&Power for field requirements. Substantial Carbon (CO2)Credits for Non-Emissive Plants -2.2 Million Tonnes/year at assumed concept capacity. Scarce gas not needed as fuel with COz Capture non-emissive cogen facilities . Large CQz sequestration Potential in Cook Intet for enhanced oil recovery (EOR)for 30 to 39 API oil reservoirs. |Commercial technology demonstration project will be first. PLASMA Technology Development for active Non-SMissive technology 6