Project Aims to Prove Coal Can Clean Up Its Act

Project Aims to Prove Coal Can Clean Up Its Act:

If Japanese Facility Succeeds, Texas Could Add Gasification Plants

May 27 - The Dallas Morning News

The new, shiny power plant in this seaside village could change everything for coal plants in Texas.

When the coal gasification demonstration plant fires up in September, the designer, Mitsubishi, expects to prove it's possible to burn the types of coal available in Texas without polluting.

And proving this technology, known as integrated gasification combined cycle, or IGCC, should give Mitsubishi's U.S. client, NRG Energy, the momentum to jump all the other hurdles to build a whole fleet of the clean plants, including some in Texas.

The project promises to solve the problem of the ages for power plants: how to produce cheap, clean, reliable electricity. No existing technology can do all three perfectly.

Problem is, IGCC isn't there yet. It costs about 20 percent more than traditional plants. And even though it's easier to collect the resulting carbon dioxide from an IGCC plant than a traditional plant, there's no proven way to get rid of the greenhouse gas.

NRG executives think solving the IGCC riddle is worth the trouble because they expect the U.S. will soon limit the amount of carbon dioxide that power generators may emit.

"With the additional cost of IGCC, to just voluntarily build something that's 20 percent more expensive, that's commercial suicide," NRG chief executive David Crane said.

Plus, after Texans protested plans by NRG's rival, TXU Corp., to build more coal plants, Mr. Crane senses public sentiment is changing. Texans may have an appetite for only a few more traditional coal plants. He wants to build one, then move on to IGCC technology.

NRG's quest has taken executives to the halls of the Texas Capitol, the oil fields of East Texas, Mitsubishi's executive offices near Tokyo and a demonstration plant in this town on the Pacific.

Nakoso plant

Japan has precious little natural fuel resources. Nearly everything -- coal, oil, natural gas -- must be imported. It's forced the Japanese to use fuel as efficiently as possible.

On top of that, the Japanese government limits greenhouse gas emissions, pushing engineers to design cleaner power plants. So, in 2001, Japan's nine regional power utilities turned to IGCC, considered one of the cleanest and most efficient ways of using coal.

The utilities banded together to build the small, 250-megawatt demonstration plant in Nakoso, just north of Tokyo. It's not the only gasification plant in the world. But it's the first to use Mitsubishi's technology, designed to work on a wide range of coals, including the kinds used in Texas, and to minimize maintenance downtime.

The Japanese utilities invested $800 million in the plant, which sits on just 6 acres of land next to the sea. (Coal plant sites in Texas often have hundreds of acres.)

Workers buzz around each level of the plant, stacked 60 meters high. They've gone 2 million hours without injury thanks to their distinctly Japanese devotion to safety.

Each month the workers line up for a safety meeting carrying flags that represent the contractor that employs them. Each group presents a haiku about safety, written by one of the workers. The bosses award prizes to the best poems.

A safety shrine hangs in the control room, beside a large control screen. Each week, workers gather to pray to the shrine, a wooden box containing signs with Japanese letters and two vases with greenery.

Managers brag about the safety record and the haikus, and everything else at the plant. Dr. Shozo Kaneko, executive vice president for Clean Coal Power R&D, which runs the plant, has obviously given a lot of tours to outsiders.

As the demonstration plant tests various types of coal, Mitsubishi can market the results to potential customers. And plenty of people seem interested.

"We could put a cafe out here to entertain guests," Dr. Kaneko joked, as he led yet another group of English-speaking foreigners across the sunny roof of a building and into the plant control room. The other plant managers on the tour chuckled. They've hosted groups from all over the world -- Asia, Australia, even Finland. And now, Texas.

Company's pursuit

About two years ago, the NRG chief executive, Mr. Crane, sent his top engineers to find some technology that would eliminate carbon dioxide and produce power profitably.

But when the engineers came back with a proposal for IGCC, Mr. Crane groaned. He's been in the business of power plant investing for years, and he's seen IGCC projects fall apart because of unreliable technology.

"I said, 'Oh man, do we have to go down this path?' " said Mr. Crane, who took the reins of the New Jersey power company in late 2003 as NRG emerged from bankruptcy.

But the engineers convinced Mr. Crane that Mitsubishi and some of its rivals had improved the technology -- a different cooling system that wouldn't break down as often, a different way of burning the coal and an offer to guarantee that the technology works reliably.

Mr. Crane wants to build one more traditional coal plant in Texas. He thinks the Texans will accept about five or six more traditional plants, then it's time to shift to IGCC for good. Plus, when the first IGCC plant goes up, that could set a new bar for emissions control that state environmental regulators may require every subsequent coal plant to achieve.

Lee Davis, who's in charge of NRG's New York assets, is one of the NRG engineers that support IGCC. "I think [Mr. Crane] sees a group of investors out there that are more prone to invest in this type of company," Mr. Davis said.

So when the state of New York called last year for proposals to build a clean coal plant, NRG submitted an offer, which was accepted. The state chose the company's offer to build an IGCC plant at an existing NRG coal facility in Tonawanda, N.Y., near Buffalo. The plant would be a full-size commercial plant, 600 megawatts, and would use Mitsubishi technology.

But New York officials want NRG to cut the cost of the plant.

And there's another hurdle. Since the announcement last year that NRG won the bid, New Yorkers elected Eliot Spitzer as their new governor. A spokesman for Mr. Spitzer said he's only interested in new power plants that eliminate greenhouse gas emissions, and he isn't certain IGCC is the answer.

"At least with this administration, there's a cringe factor when people talk about clean coal. It's a bit of an oxymoron," said Marc Violette, a spokesman for Mr. Spitzer.

He quickly added: "I don't want you to walk away from this conversation thinking we slammed the door in NRG's face. That's not the case at all."

Experts say it's much easier to collect carbon dioxide from an IGCC plant than a traditional plant because the carbon can be captured when the coal becomes a gas, before that gas is burned.

But what to do with the greenhouse gas?

In New York, Mr. Davis plans to hire an oil rig operator to drill a shaft to pump the carbon dioxide underground, into salt water formations. Researchers have tested the process with good results, but no one is using it on a large, commercial scale.

"This technology isn't any different than drilling for a gas well," Mr. Davis said.

There's no guarantee the carbon will remain underground forever. That doesn't mean the technology is unsafe, because the company would have otherwise vented the carbon into the air. It's an issue of spending money on a process that might not work as planned.

In Texas, NRG has another option. Thad Hill, president of the Texas operations, has contacted some oil and gas companies that might buy carbon dioxide for enhanced oil recovery. Injecting carbon into an aging oil well can boost production.

NRG would have to install a network of carbon dioxide pipelines to transport the gas to customers. And that's a whole other project.

First, Mr. Hill wants to get started on the IGCC plant itself.

"There's an interesting question of whether you do IGCC before you get the carbon sorted out or not," Mr. Hill said. "My bias would be to go ahead and build IGCC. I wouldn't want to hold up the power plant to wait for the carbon."

NRG's biggest rival in Texas, TXU, spent the first six months of 2006 studying General Electric's IGCC technology, and concluded it just wouldn't work. GE's gasifier doesn't yet work on the types of coal available in Texas -- Wyoming coal and native lignite -- and GE wasn't prepared to help support the project with investments or guarantees.

Without some sort of guarantee or support from the equipment maker, power plant investors won't risk buying new technology.

Investors especially won't build such plants in Texas, where deregulation means that the state no longer ensures that customers will pay for new power plants. Instead, power companies must build plants on their own nickel and hope to recoup the investment by selling power on the open market.

TXU chief executive John Wilder, at the company's annual meeting last May, said he'd like to build IGCC, but the technology is "a gleam in somebody's eye."

"Gasification doesn't work, pure and simple," he said, "not with the coal we use."

Instead, TXU decided to build traditional coal plants and prompted a Texas-size protest of the pollution the plants would emit. So, when a group of investment companies offered to buy TXU, those investors promised to scale back their coal plans, and to reconsider IGCC, to quell the outrage.

"We obviously have been very interested in reducing the carbon imprint," said William Reilly, a former Environmental Protection Agency administrator and a member of the buyout board. "Our best understanding is that IGCC is technology that deserves to be analyzed, tested and developed, and, when ready, brought on."

Still, TXU engineers have doubts.

"Nothing really has changed in our thinking other than, quite frankly, the introduction of the sponsor group has allowed us to take a longer-term focus," said Mike Childers, head of generation development for TXU. "IGCC has great promise, but for the near term, it just simply cannot meet requirements."

Feeling confident

NRG executives think Mitsubishi has addressed the problems that TXU had with the GE offering.

Mitsubishi Heavy Industries, the unit of the industrial conglomerate that makes power plants, designed its gasifier to work with a range of coal, especially the Wyoming coal that is used in Texas.

And because Mitsubishi makes power plant equipment, including turbines, the company can offer a full equipment package to a customer and can ensure that the gasifier and the power plant work well together.

That gives Mitsubishi executives the confidence to offer binding financial guarantees that their IGCC plants will work reliably.

Mr. Davis, of NRG, has been shuttling between Tokyo and New Jersey to negotiate the guarantee and the price.

Mr. Davis thinks he'll have a contract by the end of the year that meets New York's budget. And once the New York plant is built, NRG expects subsequent plants to be cheaper and easier to build.

Like any new technology, the first coal gasification power plants to roll out of the factory will be more expensive than later plants -- about 15 percent to 20 percent more than a traditional coal plant.

"The first plant tends to cost more than planned. That's sometimes called Death Mountain," said Dr. Kaneko, at the Japanese demonstration plant.

NRG executives expect the cost to decline after six or seven plants are built in the U.S. But other industry experts think it will take about a dozen plants for the price to be competitive with traditional coal plants.

Back in Texas, where NRG has the majority of its power plants, the company says it needs some financial help from state or local governments to build IGCC now. The company has already picked out three potential sites near Houston or in East Texas, but executives can't say when they might break ground.

NRG, the second-largest power company in the state behind TXU, has lobbied state lawmakers for support. Legislators have passed a bill that would provide financial help to clean coal research projects.

"We want the industry to know that the state of Texas is vitally concerned that these new types of technology get online. The sooner we get them online and prove that they're commercially viable, the sooner we get a standard," said Sen. Kip Averitt, R-Waco, who sponsored some of the legislation to support IGCC and other clean fossil-fuel plants.

(Waco was the center of the protest against TXU's plan to build traditional coal plants, because the plan called for three plants near Waco.)

While NRG is lobbying Austin and New York for help, the company continues negotiating with Mitsubishi in Tokyo for a firm price. Mitsubishi's lead negotiator seems to appreciate that the fortunes of his own company may hinge on NRG's success in lobbying.

Takaya Watanabe, deputy general manager of Mitsubishi's power systems department, speaks English without an accent and has a no-nonsense charm that puts the NRG guys at ease.

"It's good for a company to say we want to be green, but in my opinion, unless someone is willing to pay, it's a dream. It won't keep your family eating rice," he said.

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Distributed by McClatchy-Tribune Information Services.