Alaska News

CIRI plans coal-to-gas electricity plant

An Anchorage Native corporation said Friday it aims to build a new electric power plant on the west side of Cook Inlet -- using coal instead of the region's dwindling natural gas supply.

The project would rely on an emerging but proven technology to tap the energy content of coal without mining it. Hundreds of feet underground, the coal would be transformed into gas, according to officials from Cook Inlet Region Inc., which owns several hundred thousand acres in the vast Beluga coal fields.

The entire development, about 20 miles north of Tyonek, could cost $280 million, using the company's rough estimates. CIRI plans to build it with private financing.

As described by CIRI, the project would be a massive win-win -- its dormant coal fields would be tapped for energy without the environmental consequences of traditional coal mining, the region would get a new source of electricity, the pressure on local natural gas supplies would be eased and more oil might even be squeezed from Cook Inlet's aging oil fields.

CIRI's project would involve drilling wells into buried coal seams, then injecting compressed air into the wells, causing the coal to combust and create gas. CIRI would then convert the gas into electricity at its new 100-megawatt power plant and sell the power to buyers in the region, such as utilities. In the future, the CIRI project or similar projects in other coal fields could be used to produce additional gas for heating or export outside of Alaska, CIRI said.

If the project is feasible and obtains regulatory approval, CIRI hopes to start producing gas in 2014. If the company can meet that aggressive timeline, CIRI's would be the first "underground coal gasification" (UCG) plant in the country, said Ethan Schutt, the company's senior vice president for land and energy development.

UCG plants have been built in Australia, South Africa and Eastern Europe. In North America, UCG projects are also planned in Wyoming and Canada.

ADVERTISEMENT

CIRI said it is working with some organizations that have spearheaded the worldwide projects: its technology adviser is the federal Lawrence Livermore National Laboratory, which has been involved in UCG since the 1970s; its tentative business partner is Laurus Energy, a Canadian firm involved in UCG projects in Alberta and Nova Scotia.

VAST COAL

Alaska's coal is largely undeveloped but its quantities are vast: the state contains about one-sixth of the world's coal resource, state officials say.

CIRI began weighing the possibility of producing gas from its Beluga coal property a year ago, after some developers approached the company to discuss UCG technology, Schutt said.

In the past few weeks, CIRI said it has pitched its project to national and local environmental groups, touting its prospects for developing coal without generating mining waste or releasing large quantities of greenhouse gas emissions, which are linked to climate change.

On Friday morning, CIRI made its first public announcement about the project to state legislators at a committee hearing in Anchorage. The general reaction at that meeting was jubilation.

Senate Committee on Energy co-chair Lesil McGuire said she was excited to learn that there might be a "light at the end of the tunnel" for Alaskans worried about future Cook Inlet gas supply shortages that could lead to regional brownouts.

State Sen. Hollis French, D-Anchorage, said that at one point during the hearing he thought everyone should take a break and "get up and do the happy dance."

Some environmental advocates say they are willing to give UCG projects a chance. A national non-profit that promotes greenhouse gas reduction, the Boston-based Clean Air Task Force, said in a recent report that UCG is a promising technology.

The project deserves "serious consideration" if it can sidestep the pollution that typically escapes from coal and natural gas production, said Bob Shavelson, executive director of Cook Inletkeeper.

At the same time, CIRI is planning for another local-energy project: developing a wind farm on Fire Island, near Anchorage's main airport.

CIRI is looking at a mix of energy projects -- renewable and non-renewable -- because right now, natural gas is the only game in town. Local consumers are "virtually dependant" on natural gas to heat their homes or turn on their lights, according to CIRI chief executive Margie Brown.

"We think we need a mix of things here," said Brown.

WHAT'S THE COST?

The consumer cost of electricity produced by the CIRI plant would be roughly equivalent to current electricity prices in Southcentral, Schutt said. But it wouldn't face the threat of rising future prices attributable to the region's declining natural gas production, he said.

The company's proposed plant would be about a quarter of the size of Southcentral's biggest electrical power plant, Chugach Electric Association's 385-megawatt plant also at Beluga, but it easily could be expanded, he said.

The new plant could offset about 9 billion cubic feet of annual natural gas production, according to Schutt. That's about 25 percent of the total amount Cook Inlet gas consumed annually for electricity and nearly 5 percent of the total Cook Inlet gas consumption, including exports, in 2006, the last year for which state data is available.

ADVERTISEMENT

Schutt said CIRI's power plant would differ from coal-burning plants in that it would not produce large quantities of solid waste or air emissions linked to climate change. The project, as CIRI envisions it, would require a new pipeline that would take the carbon dioxide produced by burning coal underground to Cook Inlet's declining oil fields for injection there.

That's could be a coup for Cook Inlet oil producers -- they could use the carbon dioxide to get more oil from many wells that now lack the pressure needed to bring some oil to the surface, CIRI said.

The pipeline would be a significant expense, possibly costing more than $100 million, according to the company. Given its potential boost to Cook Inlet oil production, "We hope that's someone else's project," Schutt said.

CIRI's estimated cost for exploration drilling is $10 million. Developing the field would cost roughly $20 million. The power plant could cost about $150 million.

CIRI has filed for state permits to begin exploration drilling on its Beluga land in December.

CIRI'S BIG STEP

If CIRI does build its coal-to-gas project, it would be a history-making investment for the company. In recent years the company has invested in Lower 48 resorts, Kenai Fjords tour boats, Alaska hotels and the big new Tikahtnu Commons mall in Northeast Anchorage, among other projects.

"I see this as being another platform for CIRI's growth. It could be transformational for us," said Brown, CIRI's chief executive.

ADVERTISEMENT

If the coal project is successful, CIRI would become an independent power producer that could sell energy to a variety of customers.

Brown noted that 50 percent of U.S. electricity production comes from coal, and many of those coal plants face an uncertain, expensive future due to efforts to rein in their greenhouse gas emissions.

"Having a way to use the energy from coal without the environmental side effects (from greenhouse gas emissions) is a realistic approach," she said.

Because it is one of the nation's cheapest and most abundant fuel resources, "We can't just ignore coal," she said.

Find Elizabeth Bluemink online at adn.com/contact/ebluemink or call 257-4317.

By ELIZABETH BLUEMINK

ebluemink@adn.com

ADVERTISEMENT