$600 Million Project Puts City of NM at Center of Hydrogen Debate

The retired coal handling and transportation area at the Escalante Power Station in Prewitt.
IMAGE COURTESY OF NEWPOINT GAS

Copyright © 2022 Albuquerque Journal

A parade of state officials, including Governor Michelle Lujan Grisham, have visited the Escalante coal-fired power plant near Grants since last summer to learn about industry plans to convert the installation in a hydrogen power plant.

The $600 million effort could make Escalante the nation’s first successful coal-to-hydrogen project, elevating New Mexico — and the small town of Prewitt where the plant is located — to a leader in the development of hydrogen in the United States and beyond.

Texas-based Newpoint Gas LLC and gas pipeline operator Tallgrass Energy plan to buy Escalante this year from the Tri-State Generation and Transmission Association, which closed the plant in 2020. The project is well funded by the Blackstone Group, a global investment. company with $731 billion in assets under management.

Blackstone owns Tallgrass Energy, and it is now looking to invest in hydrogen projects to gain a dominant role in the burgeoning “clean hydrogen” industry, which the United States and other countries are pursuing. aggressively to help decarbonize the global economy, said the CEO of Newpoint Gas. Wiley Rhodes.

“Blackstone has tremendous resources to devote to hydrogen development, including Escalante, and they have big plans for New Mexico,” Rhodes said. “…This is a great opportunity for Prewitt and the State of New Mexico to be first at something entirely new.”

That, in turn, has generated enthusiastic support from Lujan Grisham and his cabinet, which is promoting a slate of new tax incentives during the legislative session which begins on Tuesday to help kick-start the development of the economy. ‘hydrogen.

Rep. Patricia Lundstrom, a Gallup Democrat who chairs the Legislative Finance Committee, is also pursuing new legislation to create “hydrogen hubs” in strategic areas around New Mexico that can provide well-paying jobs, especially in communities impacted by the transition from fossil fuels. to clean energy, such as McKinley and Cibola counties.

Hydrogen development can help “turn things around” in those places, Lundstrom said.

“I come from a region that has been deeply affected by the clean energy transition,” Lundstrom said. “My role is to help build the economy here, and it seems like this (Escalante) is a perfect fit.”

The project would create jobs

More than 100 factory workers lost their jobs during the Escalante shutdown, along with about 50 others at a nearby coal mine. In total, Escalante operations have supported approximately 226 direct and indirect jobs, with an annual economic impact of nearly $100 million on local communities, according to Tri-State.

If successful, the conversion project – dubbed Escalante H2 Power or eH2Power – would create some 500 construction jobs, plus 110 permanent positions when the new facility opens in 2025, Rhodes said.

Concerns Raised

But hydrogen development in Escalante and elsewhere is facing significant opposition from environmental groups, who say hydrogen production is not clean, at least not with current technology, which extracts the molecules hydrogen from methane using natural gas as a feedstock, emitting substantial amounts of carbon in the process. .

Escalante will build a carbon capture system to sequester the CO2, then direct it to deep underground geological formations for permanent storage. But this technology has yet to prove its effectiveness on a commercial scale. And with natural gas from the San Juan Basin fueling the system, environmentalists fear that significant amounts of methane will continue to escape into the atmosphere as more natural gas is extracted, processed and transported to the plant. ‘Escalante.

Tom Solomon of the environmental group 350 New Mexico called it “misleading” to label hydrogen gas as a “clean” process, even with carbon capture.

“They tell an incomplete story about hydrogen production,” Solomon said. “You have to count all the upstream emissions.”

plant details

Newpoint is working with government officials to establish adequate CO2 standards and measurement systems to effectively demonstrate emission reductions, Rhodes said.

“We believe we can produce hydrogen with huge reductions in carbon intensity to address environmental concerns while pursuing a huge opportunity to create jobs,” Rhodes said. “Balancing it all is the challenge, and we’re all working on it.”

The benefits go beyond hydrogen-based electricity generation, including the ability to set up on-site “green” cement production and sell hydrogen to natural gas utilities and long-haul trucks to reduce carbon emissions in transportation and in residential and commercial energy consumption, Rhodes said. .

Hydrogen-based generation remains the primary focus, however, providing 24/7 backup power to utilities to replace coal and natural gas-fired electricity. eH2Power will install a Steam Methane Reforming, or SMR, system to extract hydrogen from methane, an air purification system to provide purified oxygen for the SMR process, and carbon capture technology to sequester CO2.

SMR and carbon capture are big investments. But converting the boiler system from coal to hydrogen is quite simple.

“Little modification is actually needed,” Rhodes said. “The conversion itself will only represent about 10% of the investments.”

The modified plant will use waste heat from operations to help run any newly installed subsystems, reducing the “parasitic drain” on the plant’s electrical output that would otherwise be used to run these systems. This will increase the electricity available for sale – potentially up to the plant’s rated capacity of 270 megawatts, Rhodes said.

The eH2Power partners had initially estimated the complete modification of the plant at approximately $400 million. But the price has jumped to $600 million, partly because they now plan to do more things there, including producing low-carbon cement.

This means installing a hydrogen furnace and upgrading the facility’s coal pulverizer to crush alternative materials. In fact, they will add an environmental touch by recycling retired wind turbine blades, pulverizing them for cement production, Rhodes said.

“We have found that the aggregate from the blades is a great raw material, so we will bring them in by train or truck and turn them into cement,” he said. “Even though we can’t sell it in New Mexico, there is a market for it in California.”

Escalante’s proximity to the Southern Transcontinental Railroad and Interstate-40 will facilitate material shipments to the plant and distribution of hydrogen-based products to market.

eEH2Power will not innovate until it receives an air permit from the state Department of Environment, which will take at least a year, Rhodes said. It must also acquire a Class VI permit from the United States Environmental Protection Agency to allow it to store captured carbon underground.

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