Eastern Railroad Discussion > Clean Coal? put a fork in it...

Bloomberg news has an article on the sinkhole at Southern Company known as the clean coal project. A project in Mississippi to produce electricity from coal and sequester the CO2 has been mired in construction over runs, legislative and regulatory push back on rate increases, and other problems.

The plant is now years behind schedule, and now 3x the original cost. State regulators capped the amount of cost which could be passed on to rate payers, so the share owners are eating the excess. Based on the mess, it is unlikely any similar clean coal projects will be undertaken by any other utility or power generator.

The idea is commendable. The coal is heated, the gas extracted, and the coal burned for electricity. The gas, in turn, is used to dilute crude oil to facilitate pumping and shipment. The project is especially important to eastern coal operators and to Norfolk Southern and CSX, all of which have seen coal shipments plummet in recent years.

>>Southern Co. (SO) said its first-of-a-kind clean coal power plant in Mississippi will cost almost three times more and take three years longer than originally proposed.

The estimated cost of the Kemper County project is now $6.1 billion and it’s expected to be in service in the first half of 2016, Atlanta-based Southern said today in a filing. The company initially said the project would cost $2.2 billion and begin generating power four years after it was proposed in 2009.
(snip)

The plant would be the first designed to capture carbon dioxide by turning coal into a gas, with technology that Southern plans to sell to others as countries from the U.S. to China seek to cut greenhouse-gas emissions. Kemper will heat the coal to high temperatures to turn it into a gas and then separate carbon dioxide that can be piped to oil fields to improve output. <<



http://www.bloomberg.com/news/2014-10-28/southern-clean-coal-project-cost-almost-triple-on-delays.html

Lackawanna484 Wrote:
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> The plant is now years behind schedule, and now 3x
> the original cost. State regulators capped the
> amount of cost which could be passed on to rate
> payers, so the share owners are eating the excess.
> Based on the mess, it is unlikely any similar
> clean coal projects will be undertaken by any
> other utility or power generator.

I'd think just the opposite. There is a lot of technology and new construction involved with this. Assuming the plant performs reliably and operats within the expected cost range, this could be a major victory for clean coal. Yes huge over runs are unfortunate, but this is one of the first clean coal attempts. If it can be made to work economically and reliably it proves it is possible. It also means, at the end of construction, there is a group of contractors that now know what to expect and how to make it work. Early projects have teething issues, problems can be flushed out and future projects streamlined and made more efficient.

The big question will be the operation, will it be economic, reliable and clean?

Excellent points, but construction of this magnitude requires huge investments. Regulators will be (even) less likely to approve rates which include investments in this kind of project down the road.

At those costs, it makes $14 Billion for a pair of AP1000 reactors a bargain.

Show me ANY new technology that didn't cost three times the original estimate the first time it was tried.

But you know, perhaps this is more R&D (Research & Development). Many industries spend boat loads of money on R&D before they get the technology (or drug, for example) perfected. Many inventions didn't seem economically feasible before they were finally perfected.

Lackawanna484 Wrote:
-------------------------------------------------------
> Bloomberg news has an article on the sinkhole at
> Southern Company known as the clean coal project.
> A project in Mississippi to produce electricity
> from coal and sequester the CO2 has been mired in
> construction over runs, legislative and regulatory
> push back on rate increases, and other problems.
>
> The plant is now years behind schedule, and now 3x
> the original cost. State regulators capped the
> amount of cost which could be passed on to rate
> payers, so the share owners are eating the excess.
> Based on the mess, it is unlikely any similar
> clean coal projects will be undertaken by any
> other utility or power generator.
>
> The idea is commendable. The coal is heated, the
> gas extracted, and the coal burned for
> electricity. The gas, in turn, is used to dilute
> crude oil to facilitate pumping and shipment. The
> project is especially important to eastern coal
> operators and to Norfolk Southern and CSX, all of
> which have seen coal shipments plummet in recent
> years.
>
> >>Southern Co. (SO) said its first-of-a-kind clean
> coal power plant in Mississippi will cost almost
> three times more and take three years longer than
> originally proposed.
>
> The estimated cost of the Kemper County project is
> now $6.1 billion and it’s expected to be in
> service in the first half of 2016, Atlanta-based
> Southern said today in a filing. The company
> initially said the project would cost $2.2 billion
> and begin generating power four years after it was
> proposed in 2009.
> (snip)
>
> The plant would be the first designed to capture
> carbon dioxide by turning coal into a gas, with
> technology that Southern plans to sell to others
> as countries from the U.S. to China seek to cut
> greenhouse-gas emissions. Kemper will heat the
> coal to high temperatures to turn it into a gas
> and then separate carbon dioxide that can be piped
> to oil fields to improve output. <<
>
>
>
>
We all know the name Bloomberg is associated with tree huggers. Michael Bloomberg gave $50 million to it. Where did he get the money!

Posted from Android

Construction overruns won't be the issue. As has already been pointed out, everything that's being done the first time costs more than the original estimates.

Operating costs are where the problems will be. Anything this plant does will have to compete with natural gas, whose price is likely to decline even further. And any carbon sequestration technology that works with coal will work (probably work better) with natural gas, simply because the gas combustion process is so much simpler.

My personal feeling is that coal--especially eastern steam coal--is doomed.

I for one still don't believe natural gas will stay cheap. As soon as they sucker everybody in where they don't have an alternative, the price will creep back up, if for no other reason than they will stop drilling it. Just like oil, no mater how big the supply the is, they are only going to let the price go so low before they they cap the wells.

Here in Canada we already have a clean coal plant in operation in Saskatchewan at Estevan using carbon capture and either storing it under ground or in the oil field to help recover more oil

junctiontower Wrote:
-------------------------------------------------------
> I for one still don't believe natural gas will
> stay cheap. As soon as they sucker everybody in
> where they don't have an alternative, the price
> will creep back up, if for no other reason than
> they will stop drilling it. Just like oil, no
> mater how big the supply the is, they are only
> going to let the price go so low before they they
> cap the wells.

This is doubly true in Maine. The Maine PUC has approved sizeable (around 50%) increases in the power supply portion of bills starting in March, with small commercial accounts going up before that. This is the culmination of a couple issues around NG. Maine relies largely on hydro and NG for power generation. The state has also approved large NG distribution construction projects. "Summit" is building in the Augusta region, Waterville, and Portland/Falmouth areas. They've signed over many customers (who found out just HOW cheap NG is last winter when prices doubled over night...). The problem is, New England and especially Northern New England lacks capacity. Our distribution capacity is much greater than the transmission capacity. Leads to major shortfalls every winter. Obviously, home heating gets priority over electricity generation. So in the winter NG plants either stop, or run at minimum capacity. Up goes the electric rates. Winter here in central Maine was especially harsh last year, and everyone paid. NG prices for the consumer skyrocketed, and electric generators were left in the dark. We'll all pay this year when the cold sets in, the gas dwindles, and the rates on both electricity and gas spike. And its going to be worse this year as more distribution grid went in the ground and more people signed up with no new capacity coming into the state.

I realize this is a local problem, but it shows on the regional scale that there are some serious downsides to NG and that gas prices are not always "unbelievably low." We are not only subject to supply and demand laws on the world wide gas market, we are also subject to significant gas shortages because of a poorly executed energy policy.

This all opens the door to other types of energy production. There are a few coal plants in operation or idled but operable in the region. Transmission pipelines that would meet the needed capacity are YEARS away. Is the cost to convert idled coal plants to "clean coal" justified? We'll see.

Regarding the plant in Estevan great rebuttal...it does work.

Posted from Android



Edited 1 time(s). Last edit at 10/29/14 10:52 by Forever-Railfan-45.

Forever-Railfan-45 Wrote:
-------------------------------------------------------
> Regarding the plant in Estevan great rebuttal...it
> does work.
>
> Posted from Android

Estevan is brand new (began operations in June of 2014, I believe) so the jury is still out on whether it works, and at what cost. SaskPower is now the operator.

The Financial Post of Canada has a good back ground on how the plant was abandoned in the face of escalating costs, then downsized to a much smaller plant. Several other Canadian plants have already been abandoned, mostly for cost reasons. The article notes that Canada has made a commitment of federal funds as the largest share. That hasn't been the case in the US, where clean coal has been developed mostly on the shoulders of rate payers and share owners of private utilities.

http://business.financialpost.com/2014/02/14/saskpower-to-roll-out-worlds-first-ccs-embedded-power-plant/?__lsa=0e69-d671

GTWMISteve Wrote:
-------------------------------------------------------

> >
> >
> >
> >
> We all know the name Bloomberg is associated with
> tree huggers. Michael Bloomberg gave $50 million
> to it. Where did he get the money!
>
> Posted from Android

have you ever read Bloomberg news? Or do you get your opinions from talk radio. They provide probably the best financial analysis reporting in the US right now, on a par with WSJ.

It was going to work before natural gas fell.

I believe there is a coal gasification plant on line in
North Dakota that sequesters carbon dioxide and pipes
it to oil wells in ND and Sask.

The gas is used for power generation.