May 12, 2021

Some energy transition funding project proposals include fossil fuels

Hannah Grover

The San Juan Generating Station is pictured Monday, April 19, 2021, in Waterflow.

As the northwest corner of New Mexico prepares for the closure of the San Juan Generating Station, at least one proposed project to help displaced workers could lead to increased natural gas extraction.

Last year, the Energy Transition Act committee sent out a request for information on projects that could be funded through the portions of bonds that could be set aside for economic diversification, workforce training and assisting the Navajo Nation.

This resulted in more than two dozen proposals, however the funding is not yet available due to a lawsuit that has postponed the sale of low-interest bonds. 

The lawsuit in the New Mexico Supreme Court argues that shareholders should bear more of the costs of closing the power plant instead of ratepayers, who currently will pay for the bonds through a non-bypassable charge on their bills.

The bonds will be sold by Public Service Company of New Mexico, the primary owner of the San Juan Generating Station, and will use $360 million of bonds to refinance past investments into the power plant and about $20 million of that money will be used to assist the communities impacted by the closure. 

Jason Sandel, a convener for the ETA committee, said there will be a meeting this summer to discuss the proposed projects.

A full list of projects submitted for funding consideration and details about each of the projects can be found at dws.nm.state.us/ETA.

ESG Fuels Certification program proposed for San Juan College

One of these projects is the Western States and Tribal Nations Natural Gas Initiative’s (WSTN) proposal to create an Environmental, Social and Governance (ESG) fuels certification program at San Juan College. Sandel also serves as chairman of the WSTN board of directors.

Bryson Hull, a spokesperson for WSTN, did not give much information about the project and said the organization does not want to prejudice the process and did not address the concerns about continued reliance on fossil fuels. However, he said the project will help reduce emissions.

“WSTN is excited at the prospect of developing a program to train and certify workers impacted by coal plant closures, particularly those from the Navajo Nation and other tribal communities, to help them compete for high-paying jobs that will support companies in reducing their emissions and New Mexico’s ambitious carbon reduction targets,” he said.

WSTN has proposed establishing San Juan College’s School of Energy as a “Center of Excellence” for developing ESG standards for oil and natural gas produced in the region. It would also create an ESG fuels certification program at the college.

In the information it submitted, WSTN said this would focus on environmentally-friendly extraction and liquified natural gas (LNG) could be exported to Asia, which it claims would lead to a reduction in global greenhouse gas emissions.

It would also provide high-paying jobs in an area with abundant natural gas. The submitted project proposal states that the program could lead to increased production of natural gas in the San Juan Basin. This would come through opening new markets for the sale of the commodity.

But opponents say it would extend the reliance on fossil fuels and is contrary to the Energy Transition Act, which provides a roadmap to a carbon-free energy future in New Mexico.

Itai Vardi, a research and communications specialist at the Energy and Policy Institute, said that studies have shown that LNG does not actually reduce emissions. Vardi highlighted a Natural Resources Defense Council study from December and another from the Environmental Integrity Project that was released in the fall.

Vardi said the Environmental Integrity Project study indicates that if all the proposed LNG facilities in the United States are approved, it would be equivalent to about ten new coal-fired power plants. He said there is an enormous amount of emissions throughout the process of extracting natural gas, exporting it abroad and then burning it in Asia.

The NRDC study states that if LNG grows as projected it will be nearly impossible to keep global temperatures from increasing above the 1.5 degrees Celsius point that scientists warn could lead to catastrophic climate impacts.

“At the end of the day, we are locking ourselves into decades of more fossil fuel infrastructure,” Vardi said.

Hull declined to comment on whether the project would move forward if it is not granted ETA funding or how President Joe Biden’s moratorium on new oil and gas leases on federal land could influence the viability of the project.

Hydrogen projects amid the proposals

WSTN is not alone in proposing projects that would use natural gas and the program could complement proposed hydrogen projects in the San Juan Basin. Two of the projects presented for economic development funds involve separating hydrogen from natural gas and using the hydrogen to generate electricity. 

Big Navajo Energy proposes eliminating emissions from flaring at the Navajo National Oil and Gas Company’s Farmington Refinery by converting methane to hydrogen in partnership with companies like BayoTech and PESCO, Inc. Its proposal states that it will reroute the methane through a steam methane reformer produced by BayoTech. Half of the hydrogen produced will be generated from water and the other half will come from the natural gas.

The hydrogen would be used in hydrogen fuel cell vehicles and for electricity. Meanwhile, the carbon dioxide byproducts would be used by a nearby greenhouse for local fruit and vegetable production.

Libertad Power Project has asked for funding to develop a hydrogen economy in San Juan County. Much of this funding will go toward studies. Unlike Big Navajo Energy, Libertad proposes sequestering the carbon separated from the methane underground and states that the geology in the area is favorable for carbon sequestration.

Hydrogen power has seen increased interest in recent years. Proponents highlight that hydrogen power would have zero emissions and could provide the baseload electricity needed to balance the grid.

However, natural gas production has emissions associated with it through leaks, venting and flaring. The San Juan Basin already has high levels of methane, which studies have found is largely due to fossil fuel extraction although natural sources also contribute.

The Libertad Power Project’s proposal also discusses the use of green hydrogen, which does not use fossil fuels.

Company would turn coal ash into building materials

Natural gas is not the only fossil fuel included in the project proposals. SonoAsh, which has previously received support from San Juan County as it sought to use the county-owned industrial park, would take ash from coal combustion and turn it into building materials. 

Currently ash from the San Juan Generating Station and the nearby Four Corners Power Plant is placed back into the power plants’ respective mines—San Juan Mine and Navajo Mine—during reclamation.

SonoAsh, a Canadian-based company, has been looking at locating a facility in San Juan County for years and the proposal was first made public in early 2019 when the county was seeking tenants for the industrial park following PESCO, Inc.’s relocation.

In the application for funding, SonoAsh states that state Sen. Steve Neville, a Farmington-area Republican, was the company’s initial recruiter to the San Juan County area. The application included a letter of support from Neville as well as one from the San Juan County Commission and another from Navajo Transitional Energy Company, which owns Navajo Mine.