Retrofit of Colstrip power plant priced at $1.2B

Retrofitting Montana's largest coal-fired power plant to reduce greenhouse gas emissions would cost at least $1.2 billion, but selling captured carbon dioxide for use in oil fields could help offset the cost, federal officials said Wednesday.

Senior U.S. Department of Energy representatives presented the agency's analysis of reducing emissions from the Colstrip plant at the request of Gov. Steve Bullock.

Colstrip is the state's main human-caused source of carbon dioxide emissions, a major contributor to climate change, the Associated Press reported.

The plant in 2014 emitted about 16.5 million tons of carbon dioxide — two-thirds of the state's reported total, according to the Environmental Protection Agency.

Two of Colstrip's four electricity-generating units will close by 2022 under a legal settlement reached last month between the plant's owners and environmentalists.

Retrofits on the remaining two units could reduce emissions between 30 percent and 47 percent, at a cost of $1.2 billion to $1.4 billion, said Angelos Kokkinos, the Energy Department's director of advanced energy systems.

The agency did not account for the ongoing cost to run carbon-capturing equipment. A previous Department of Energy study suggested those expenses could roughly double the price tag.

Putting the captured carbon dioxide to use by pumping the gas into underground crude oil reserves to boost production could bring in revenues of $3 billion to $4.4 billion over 25 years, Kokkinos said.

But the revenue figures are based on projected demand for carbon dioxide with oil selling for $106 a barrel. That's more than double the current price.

There are no definitive plans to capture carbon from Colstrip and neither the plant's owners nor government officials have offered to pay for it.

Bullock said he was interested in establishing a work group of interested parties to refine the idea and come up with more specific details on costs, said Bullock spokeswoman Ronja Abel.

Colin Marshall, president of Cloud Peak Energy, which operates Montana's largest coal mine, said he was encouraged that federal energy officials had identified technology to reduce emissions while retaining jobs.

Bullock hosted U.S. Department of Energy (DOE) officials as they provided the preliminary findings of their analysis on Carbon Capture and Enhanced Oil Recovery options for Colstrip Unit 3 Wednesday.   

Joining the governor were several CEOs from the energy and coal industry who are interested in learning more about the technology and its applicability to generation units in Colstrip. 

The meeting highlighted the governor’s ongoing efforts to support the workers and community of Colstrip.

"We need to be saying, what can we do to find solutions?" Bullock said at the meeting. "Those discussions only become more urgent given recent developments at Colstrip."

Bullock, a Democrat, is up for re-election in November. He's faced a barrage of Republican criticism for not doing enough to protect the aging plant, as a shift toward other fuels and more stringent pollution regulations batter the coal industry.

Earlier this year, Bullock released his Energy Blueprint for Montana which recognized that Montana will need both carbon-based and renewable sources of energy in the coming decades.  It prepares Montana for an energy future in a world economy that’s unpredictable and changing.

 “We will leave no stone unturned as we continue to find ways to support the workers and community of Colstrip,” said Bullock. “Today’s meeting provided our state a look into new technology that could keep hard working Montanans in control of our own energy future.”

Senator Duane Ankey and Colstrip Mayor John Williams joined CEOs and company representatives from Northwest Energy, PacifiCorp, Cloud Peak Energy, Westmoreland Coal, Puget Sound Energy, Talen Montana, Southeastern Montana Development, Portland General and Avista at the meeting.

Also on hand was Jim Atchison, Executive Director of the SouthEastern Montana Development Corporation. Atchison said he was encouraged by the meeting, but there is still a long road ahead.

Atchison said, “We had an excellent presentation by the Department of Energy people. There’s a couple of things that came out of that. They basically reiterated what we’ve known for years, which is coal is here to stay, and will be for many, many decades. The Department of Energy would just like to work with both the private and public sector here in Montana to make things happen.”

Atchison went on to say there are a lot of cooks in the kitchen right now, but the tone of the meeting was a positive one overall, one that will hopefully lead to positive steps moving forward. 

“This meeting was mostly on opportunities to commercialize CO2 in the Colstrip plant, and that involves everything from fertilizer to pipelines and beyond. It’s obviously the first step in a long journey, but I think we’re heading up the right flight of stairs.”

Atchison also said Bullock seemed receptive to what he was hearing during the meeting, another step in a positive direction.

“I think the governor was pleased with the direction of the meeting,” Atchison said. “I think his administration is probably going to take the next step, possibly forming a working group to look at options.”

In coordination with The Department of Energy briefing, DOE also released a white paper that makes it clear that the use of coal will be a major part of global energy consumption for decades to come, and without further commitment to carbon capture research and policy support, the world will not meet its climate change goals.  Additionally, DOE presented information on their loan programs highlighting the available resource for projects employing these technologies. 

The Department of Energy also analyzed potential emission reductions at Colstrip through improved plant efficiency and using natural gas or biomass as supplementary fuels.

Using natural gas would yield greater benefits, reducing emissions by 13 percent, Kokkinos said. But that would require building a new pipeline to Colstrip.

Improving plant efficiencies or using biomass fuels would result in at most a 3 percent drop in emissions, he said.

(The Associated Press contributed to this story.)