Enchant Energy, the company that plans to turn the San Juan Generating Station near Farmington into the world’s largest carbon capture system, responded to criticisms made in a recent report, blasting the proposal.
NM Political Report spoke with the Institute for Energy Economics and Financial Analysis (IEEFA) report author Karl Cates about his concerns for the proposal last month.
Enchant Energy addressed a number of issues raised by the IEEFA report in a document posted to the company’s website in late July. The company reiterated its belief that the proposed carbon capture system offers a cost-effective, low-emission solution to keep the coal-fired San Juan Generating Station open.
“Contrary to the IEEFA assertion, Enchant Energy is not making hard and fast ‘presumptions,’” the company said, pointing to a pre-feasibility study the company commissioned earlier this summer from global engineering firm Sargent & Lundry. “Should the [San Juan Generating Station carbon capture utilization and storage] project be deemed by investors anything but ‘cost-effective,’ Enchant Energy will not move forward with the project. However, the preliminary Sargent & Lundy feasibility report suggests the project is worthy of additional detailed study.”
Enchant Energy has proposed transporting and selling carbon dioxide generated from the plant to oil producers in the Permian Basin in southeastern New Mexico and west Texas for operations such as enhanced oil recovery, a process that uses carbon dioxide to extract any remaining oil from old wells.
One of the main criticisms of the proposal laid out by IEEFA researcher Cates was 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.
Enchant Energy said it “has received strong expressions of interest from multiple [carbon dioxide] buyers in the Permian Basin.”
“These buyers have been using [carbon dioxide] for decades in enhanced oil recovery (EOR) operations,” the company said. “The assertion advanced by the IEEFA about the ‘unlikelihood’ of making such sales in the ‘distant’ market demonstrates its complete failure to investigate the [carbon dioxide] markets or, worse, IEEFA’s desire to distort marketplace realities and opportunities in an effort to undermine the project in the public’s eye.”
In an email to NM Political Report, Cates said he stands by the IEEFA report.
Enchant Energy is hoping to conduct a second more in-depth study, called a front-end engineering design (FEED) study, to more precisely gauge the feasibility of installing carbon capture utilization and sequestration technology at the San Juan Generating Station. Jason Selch, CEO of Enchant Energy, said the company has applied for a grant from the U.S. Department of Energy to fund the FEED study.
“Enchant expects a response from the U.S. Department of Energy in the next few months,” Selch told NM Political Report. “If we are successful with our grant request, the FEED study will commence this fall and will include an extensive evaluation of the different providers of proven carbon capture technology.”
But first, the company will need to conclude its agreement with the City of Farmington for acquiring 95 percent of the plant.
PNM is the majority shareholder of the plant and plans to shutter it by 2022 as the company moves away from coal generation. Senior vice president for public policy Ron Darnell, speaking at a recent stakeholder meeting in Farmington, said the company and other shareholders of the plant commissioned their own study by Sargent & Lundy in 2010 to determine whether a carbon capture system was feasible. Darnell said the results of that study caused PNM to stop pursuing carbon capture for the plant, according to Farmington Daily Times.