BY ALBUQUERQUE JOURNAL EDITORIAL BOARD
Wednesday, December 18th, 2019 at 12:02am
If Enchant Energy Corp. can retrofit the aging, carbon-belching San Juan Generating Station with state-of-the-art carbon-capture technology, it plays out like a classic Hollywood ending for Farmington and the Four Corners: Save the jobs, save the town, save the world.
But there are a lot of challenges in this script, according to recent stories by Journal reporter Kevin Robinson-Avila.
Under the state’s controversial Energy Transition Act, Public Service Company of New Mexico and its co-owners will abandon the circa 1970s coal-fired electric plant in favor of cleaner and cheaper energy sources.
But that move will eliminate between 450 and 500 local jobs and deal a heavy blow in lost tax revenue to the region. Enchant Energy, a private, out-of-state firm, plans to acquire the plant for free from Farmington and turn it into the largest carbon-capture and sequestration plant in the country.
Carbon capture contains carbon emissions from burning coal that would otherwise spew into the air. SJGS now puts out 2,200 pounds of carbon emissions per megawatt-hour of electricity, and by law it must cut that in half by 2023. Enchant plans to put out only 249 pounds per MWh while capturing 90% of emissions – 6 million tons annually.
But that’s not all. Enchant plans to not only reuse that carbon by selling it to Permian Basin drilling operations, but for that transaction to ultimately sequester it in the ground. And while it needs to raise $1.3 billion up front to retrofit the plant – all on the promise of doubling that investment via federal tax credits when the plant is up and running – Enchant says much is in its favor, including:
• The plant is already built, and it’s free.
• The coal mine is next door, providing an efficient, cheaper mine-to-mouth operation.
• There’s an adjacent pipeline for the C02 that requires just a 20-mile stretch to tie in.
• There’s a built-in customer base for C02 as the Permian Basin oil boom is projected to last a decade or more.
• Enchant has partnered with Farmington as well as some industry heavy hitters via memoranda of understanding. That includes the designers, engineers and builders of the nation’s only successful carbon-capture and sequestration facility, which is operated by Houston-based Petra Nova. Mitsubishi Heavy Industries America will provide its carbon-capture technology, and Kiewit Power Constructors Co. and Sargent & Lundy will collaborate on the engineering, procurement and construction.
However, there’s a long way to go from memoranda of understanding to contract, including a $3.5 million front-end engineering and design study. Challenges include getting a plant built in the 1970s and 1980s, which runs at 75% capacity at best, to run at 85% and capture 90% of all emissions to get those tax credits.
There’s the issue also keeping construction costs at the projected $1.3 billion budgeted: Petra Nova’s facility cost around $1 billion, and it’s a third the size of SJGS. Some are putting the conversion in the Four Corners at two to three times over budget.
And SJGS needs those tax credits to pay its investors back and get them their profit – and that depends on Congress writing, approving and then keeping those tax credits and guidelines in place.
But chief operating officer Peter Mandelstam says, “We’re not seeking nor contemplating a nickel of state money, and we’re not looking for tax breaks.” If Enchant can deliver a knockout performance, hundreds of jobs would be saved, economies would avoid a hard hit, and a technology that can deliver cleaner power around the world would be replicated on a grander scale.
New Mexico has nothing to lose on this show, and the world has everything to gain – if Enchant can get its project to opening night.
This editorial first appeared in the Albuquerque Journal. It was written by members of the editorial board and is unsigned as it represents the opinion of the newspaper rather than the writers.