Under Oil and Gas Price Pressure, It’s Back to the Future
...gas to improve market economics," he adds. "It will act as a shock absorber. This is a very big issue."
Bay Gas Storage Co., Mobile, Ala., is about to nearly double its salt-cavern storage capacity in the McIntosh Salt dome near Mobile. The company now is documenting results from market research. "In the next 60 days or so, we will be adding another storage cavern," says Greg Welch, president and COO. At a cost of about $50 million, Bay Gas will add 5 billion cu ft of storage to its current 6 billion. The solution-mining project should take 18 to 24 months, he estimates.
Solid Comeback
"I think you're going to see North America driven to fuels other than natural gas," says Mike Childers, senior vice president of marketing and business development for the Shaw Group, Baton Rouge. "The vast majority of preliminary work today is in solid fuels," he says. This includes pulverized coal (PC), circulating-fluidized-bed (CFB) combustion and mixed fuels–PC, PC-petroleum coke and pure petcoke.
Cleco Power LLC, Pineville, La., is considering adding petcoke to its fuel mix by converting several of its older gas-fired powerplants and possibly building two new units to burn the solid fuel. Company officials say they know that the days of $2 natural gas are gone, and they have decided to do what they can to reduce their dependence on the fuel. The utility will make a final decision after it receives fuel-supply proposals due Jan. 28, a company spokeswoman says.
There have been a lot of studies in recent years on construction of PC powerplants, but "they're not studying it any more– they’re making it happen," says Doug Riedel, vice president of energy marketing at Burns & McDonnell, Kansas City. "There’s a trend going from the study stage to design and construction."
Riedel noticed the trend about six months ago, as did Tom Sarkus. The director of advanced energy systems at the National Energy Technology Laboratory, Pittsburgh, says he was besieged by questioners at a coal-power conference last June and was surprised a month later when a DOE roundtable on coal power drew six times as many attendees as expected.
Supercritical coal-fired boilers now are more competitive against gas-turbine powerplants, says Bechtel’s Laspa. And Bechtel has formed an alliance with GE to develop a standard integrated-gasification-combined-cycle (IGCC) powerplant. "We think this is a big, big play, because if we can make coal clean, it will address the environmental issues a lot of people have," Laspa says.
"CFB is a more mature technology, but IGCC has the lowest emission profile of any clean coal," says NETL’s Sarkus. Its biggest drawback is capital cost, which can be "up to 20% higher than for a conventional coal-based powerplant." Even so, DOE is considering a proposal by Atlanta-based Southern Co. and Orlando Electric Commission to build a 285-MW, $557-million IGCC plant in Orlando, using a $235-million grant from DOE. The project now is in early design. Excelsior Energy Inc., Wayzata, Minn., also has proposed a 531-MW IGCC in Minnesota costing $1.18 billion, including $36 million of DOE funds.
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Platform-Based Wind Farm May Also Pump Up Oil Industry A Louisiana alternative energy developer has big plans for new offshore wind power farms in the heart of Big Oil country. But the projects may actually give struggling oil and gas producers there an added boost. Wind Energy Systems Technologies LLC (WEST), New Iberia, this year plans to start producing 50 MW of power from wind turbines mounted on existing offshore oil platforms in the Gulf of Mexico. Scientists have clocked windspeeds there at close to 25 mph at a height of 50 meters above sea level. "That is the highest wind in the nation," says WEST Presi-dent Herman J. Schellstede. The firm hopes to sell into existing power grids in coastal states. WEST expects to have state permits for the $80-million project this month. It would require 17 offshore platforms in all, but at least five or six would be old structures that are renovated. "We’ve got the money," says Schellstede. "Now we need contracts." At least one now being negotiated would involve powering an offshore liquefied-natural-gas storage well. Eventually, WEST plans to build ten 50-MW farms along the coast. "Power is an issue in the low-lying areas of Louisiana. It’s a good market," says Schellstede, who also is president of a New Iberia engineering firm that designs offshore rigs and platforms. WEST also is negotiating with oil and gas producers to provide wind power for offshore drilling platforms. He expects to announce a contract in March or April. He says the company can supply electricity to rigs for 6 to 7¢ per kWh. That is higher than the cost of wind farm power delivered on shore but much less than the 50¢ per kWh it costs to produce generator power on the platforms. Each platform would have three turbines producing a total of 10.5 MW. While offshore turbines have a relatively high 50% to 70% efficiency, the power supplied would be intermittent and used only for such services as heating offshore pipelines, says Schellstede. There are 5,200 oil and gas platforms in the Gulf along the Louisiana coast. "We have the infrastructure of workers, marine vessels and everything to build wind farms here," Schellstede says. Many existing offshore platforms serve nearly depleted oil and gas reserves. Federal rules require a platform to be torn down within a year after production ends, and that can cost up to $12 million each. "We can purchase the platform and the liability for very little money," Schellstede says. Wind energy also could rejuvenate wells that still have oil and gas reserves but have lost pressure, he says. While WEST is preparing three renewable power proposals, including one for the U.S. Air Force, the Louisiana Public Service Commission is watching to see how economically viable wind power is in the state, says Bill Robertson, executive assistant to Commissioner Foster Campbell. The agency expects to have rules ready by spring that could require state utilities to buy renewable energy. "We hope to be the first state in the country to have an offshore wind energy industry," Robertson says. On a separate track, the Louisiana Dept. of Natural Resources is drafting legislation that will set up a regulatory framework for wind power that will include leases and royalties. "We see this as an emerging industry and we want to clear the way,’’ says Bryan Crouch, an energy engineer in the agency’s alternative fuels section. |