Energy think tank blasts carbon capture proposal for San Juan coal plant

An energy market think tank has dubbed the carbon capture proposal for the San Juan Generating Station, the Northwestern New Mexico coal-fired power plant which is closing soon, a “false hope.” The Institute for Energy Economics and Financial Analysis (IEEFA), an Ohio-based energy think tank, recently published a scathingly critical report about Enchant Energy’s proposal […]

Energy think tank blasts carbon capture proposal for San Juan coal plant

An energy market think tank has dubbed the carbon capture proposal for the San Juan Generating Station, the Northwestern New Mexico coal-fired power plant which is closing soon, a “false hope.”

The Institute for Energy Economics and Financial Analysis (IEEFA), an Ohio-based energy think tank, recently published a scathingly critical report about Enchant Energy’s proposal to use carbon capture technology to keep the coal-fired power plant open and operating.

PNM, the majority stakeholder in the San Juan plant, plans to shutter the facility by 2022 as part of the utility’s wider goal of ending all coal-fired power generation in its portfolio by 2031. That strategy aligns with Governor Michelle Lujan Grisham’s Energy Transition Act (ETA) law, which would see the state generate 50 percent of its electricity from renewable energy sources by 2030.

The City of Farmington announced in February that it reached an agreement with Enchant Energy to keep the plant open. The company is an unknown firm in the energy sector and a newcomer to the state. Enchant Energy is seeking to acquire a 95 percent stake in the plant to take over operations after 2022. It has proposed retrofitting the station with carbon capture and sequestration technology in what would be the largest project of its kind in the country. Carbon capture systems capture, utilize or store carbon dioxide from large industrial sources to reduce carbon emissions, though the technology.

The news came as a surprise to PNM, who claimed the city had reached the agreement with Enchanted Energy without informing PNM.

Karl Cates, research editor at IEEFA and co-author of the report, told NM Political Report Enchant Energy’s proposal is riddled with problems.

“There’s a lot of flim-flam in it, I think,” Cates said in an interview.

Enchant Energy is owned by Acme Equities, a hedge fund based in New York City. Enchant Energy filed its LLC in New Mexico in April, about a month after the City of Farmington announced its agreement with the company. Jason Selch, who is co-founder of Acme Equities, is also the CEO of Enchant Energy.

“One thing we’re fairly confident about is that they have no experience in electricity generation,” Cates said.

The IEEFA report outlines several criticisms of Enchant Energy’s proposal and identifies key market barriers to the project’s success. Those barriers include the declining price and increasing market share of renewables, which has eaten away at the competitiveness of coal generation; and advancements in natural gas technology in providing low-cost electricity.

Enchant Energy, which did not respond to multiple requests for comment on this story, has proposed transporting and selling carbon dioxide to oil producers in the Permian Basin for operations such as enhanced oil recovery, a process that uses carbon dioxide to extract any remaining oil from old wells.

Selch, who did not respond to a request for comment, said the location of the San Juan power plant and its proximity to the Cortez Pipeline made it an ideal location for carbon capture, in an interview with Farmington Daily Times.

But the IEEFA report questioned whether a large enough customer base for carbon dioxide exists in the Permian Basin to support the project, and whether the plant’s location—20 miles from the Cortez pipeline and 400 miles from the Permian Basin—is problematic to the proposal’s goals.

“It’s not clear if it’s economically viable to ship carbon dioxide that far,” Cates said. “Is there a market there that can support these shipment costs? The Cortez pipeline would be the conduit, is there capacity on that pipeline? And the other big stumbling block is that [the San Juan Generating Station] is 20 miles from the pipeline. You’d have to build a 20-mile pipeline, and that raises all sorts of economic feasibility issues—to say nothing of the regulatory hurdles.”

Under the company’s proposal, the City of Farmington would contribute $10,000 to the project “in the form of in-kind personnel support,” according to a letter issued by the Farmington Mayor’s office. The city would also maintain its 5 percent stake in the power plant.

Another red flag in Enchant Energy’s proposal, according to IEEFA, is that it doesn’t address the long-term liability of owning a coal generation plant. Cates said that leaves Farmington vulnerable to future costs associated with the project.

Overall, the authors of the report conclude Enchant Energy’s business model is “unworkable.”

“It worries us a little bit, when you have a small town like Farmington being pitched by some slick people from Wall Street who we don’t think have a viable proposition, and that are potentially leaving the town on the hook for liabilities that are inevitable in a project like this in terms of reclamation, rehabilitation, clean up and so on,” Cates said. “We’re just saying be careful here.”

In a statement to NM Political Report, a spokesperson said the City of Farmington is “working on an agreement with Enchant Energy that will allow the project to advance while also protecting the City’s multiple interests and responsibilities.”

“This agreement will protect the City by limiting financial liability, providing predictable electricity costs which are among the lowest in the State, and protecting the City’s operational, financial and environmental interests. Significantly, our agreement will ensure that the City is only responsible for the remediation expenses that are already a part of its current operating agreements, which are approximately 5% of the plant’s total.”

Pointing to a “pre-feasibility study” released last week that was commissioned by Enchant Energy, and conducted by Chicago-based engineering firm Sargent & Lundy, the city spokesperson said “the conclusions made in the study are suggesting high potential for operational and economic success for the reconfigured [San Juan Generating Station]. This is a positive and important milestone towards implementing a project that works for the State of New Mexico, the City of Farmington, the hundreds of workers at the power plant and coal mine and for Enchant Energy.”

Enchant Energy and the City of Farmington have applied for $5.8 million grant from the U.S. Department of Energy to study the feasibility of carbon capture at the site.

We're ad free

That means that we rely on support from readers like you. Help us keep reporting on the most important New Mexico Stories by donating today.

Related

Lujan Grisham pocket vetoes two bills

Lujan Grisham pocket vetoes two bills

Gov. Michelle Lujan Grisham pocket vetoed two bills the legislature passed this legislative session: one changing the Cybersecurity Act and the other concerning law…
Gov signs bills with some vetoes 

Gov signs bills with some vetoes 

Gov. Michelle Lujan Grisham signed 69 bills that the legislature passed during the 2024 legislative session. These included the General Appropriations Act which contains…
Guv signs state budget

Guv signs state budget

Gov. Michelle Lujan Grisham signed the budget bill for Fiscal Year 2025 and the Capital Outlay spending bill. The FY25 state budget bill passed…
Advocates travel to D.C. to push for additional protections for the Gila River

Advocates travel to D.C. to push for additional protections for the Gila River

New Mexico advocates seeking to have the Gila River designated as a Wild and Scenic River will travel to Washington D.C. this week to…

NM Supreme Court annuls $10,000 penalty in PNM/Avangrid merger case

The New Mexico Supreme Court ruled on Monday that a penalty the New Mexico Public Regulation Commission levied against the state’s largest utility was…
State fines oil company more than $2 million after spill

State fines oil company more than $2 million after spill

The Energy, Minerals and Natural Resources Department fined an oil and gas company operating in the Permian Basin more than $2 million over produced…
Amid new graduation requirements, what do high schoolers want to learn?

Amid new graduation requirements, what do high schoolers want to learn?

By Margaret O’Hara, The Santa Fe New Mexican The main things that bring Brayan Chavez to school every day: Seeing, talking to and engaging with…
Special ed teachers hope lawmakers OK pay raises, admin changes

Special ed teachers hope lawmakers OK pay raises, admin changes

By Margaret O’Hara, The Santa Fe New Mexican Brittany Behenna Griffith has a laundry list of adjectives to describe the ideal special education teacher:…
Lawmakers must find consensus on competing education spending plans

Lawmakers must find consensus on competing education spending plans

By Margaret O’Hara, The Santa Fe New Mexican A challenging task awaits New Mexico lawmakers in the next 30 days: Reconciling three very different…
Lujan Grisham, Biden admin announce $10 million in federal funds for tribes, pueblos

Lujan Grisham, Biden admin announce $10 million in federal funds for tribes, pueblos

Gov. Michelle Lujan Grisham announced Friday $10 million in funding from the federal American Rescue Plan Act was awarded to six tribal nations and…
Proposal to curb executive powers moves to House Judiciary

Proposal to curb executive powers moves to House Judiciary

The House Government, Elections and Indian Affairs Committee discussed a potential constitutional amendment that seeks to limit the governor’s executive powers. The committee approved…
Supreme Court censures attorney over conduct in anti-COVID policy suits

Supreme Court censures attorney over conduct in anti-COVID policy suits

The New Mexico State Supreme Court censured a New Mexico attorney because of her “misconduct” in two unsuccessful cases pushing back on COVID-19 regulations…
Supreme Court to hear two abortion cases this spring

Supreme Court to hear two abortion cases this spring

Later this month, the U.S. Supreme Court will hear oral arguments on the case against the abortion medication mifepristone. It will hear a second…
How Biden, others highlighted reproductive rights at the State of the Union

How Biden, others highlighted reproductive rights at the State of the Union

President Joe Biden highlighted reproductive rights issues as part of his State of the Union speech Thursday. Biden delivered his 2024 State of the…
Stansbury invites OB-GYN doctor as her state of the union guest 

Stansbury invites OB-GYN doctor as her state of the union guest 

U.S. House of Rep. Melanie Stansbury has invited an OB-GYN doctor from Roswell as her guest for President Joe Biden’s State of the Union…
Supreme Court to hear two abortion cases this spring

Supreme Court to hear two abortion cases this spring

Later this month, the U.S. Supreme Court will hear oral arguments on the case against the abortion medication mifepristone. It will hear a second…
How Biden, others highlighted reproductive rights at the State of the Union

How Biden, others highlighted reproductive rights at the State of the Union

President Joe Biden highlighted reproductive rights issues as part of his State of the Union speech Thursday. Biden delivered his 2024 State of the…
Stansbury invites OB-GYN doctor as her state of the union guest 

Stansbury invites OB-GYN doctor as her state of the union guest 

U.S. House of Rep. Melanie Stansbury has invited an OB-GYN doctor from Roswell as her guest for President Joe Biden’s State of the Union…
See who’s going to be on your primary ballot in June

See who’s going to be on your primary ballot in June

Tuesday marked the official beginning of the 2024 New Mexico primary season for the legislature, with candidates officially filing for candidacy. This is the…

Bill to require disclosure of use of AI in campaign materials goes to governor

The Senate approved a bill aiming to require the disclosure of the use of artificial intelligence or other changes made by computers to campaign…
House amends, passes bill banning firearms near polling places

House amends, passes bill banning firearms near polling places

The House narrowly approved a bill that would ban firearms near polling places. The House voted 35-34 to pass the bill following an extensive…
Advocates travel to D.C. to push for additional protections for the Gila River

Advocates travel to D.C. to push for additional protections for the Gila River

New Mexico advocates seeking to have the Gila River designated as a Wild and Scenic River will travel to Washington D.C. this week to…
U.S. Supreme Court lets ban on Couy Griffin from holding office stand

U.S. Supreme Court lets ban on Couy Griffin from holding office stand

The U.S. Supreme Court declined to hear an appeal of a Republican official who was barred from holding office after being convicted for a…
Politics Newsletter: legislative leaders not running for reelection

Politics Newsletter: legislative leaders not running for reelection

Hello fellow political junkies! Candidate filing day has come and gone, and members of House and Senate leadership opted to either not seek reelection…

GET INVOLVED

© 2023 New Mexico Political Report