As Plant Faces Closure, New Mexico City Weighs Bet on Clean Coal Technology
By Danielle Nguyen | Bill Lane Center for the West
Tuesday, July 9, 2019
FARMINGTON, N.M. – Nestled in the heart of San Juan County, Farmington has a population of about 45,000, making it a bustling hub in rural northwestern New Mexico. It is the largest city for hundreds of miles, and its major highway is a two-lane road. Bordering the Navajo Nation, Farmington is also home to abundant natural beauty, cultural diversity and an economy that has stably rested on two major coal-based employers.
That once-solid economic base is shakier all the time. San Juan County houses two predominantly coal-fired power plants, the San Juan Generating Station (SJGS) and the Four Corners Generating Station. While the oil and gas industry has undergone cyclical booms and busts in the region, coal has been the steady economic foundation for decades.
Then, on March 22, 2019, New Mexico’s governor, the Democrat Michelle Lujan Grisham, signed the Energy Transition Act into law. It requires the state’s utilities to be 100 percent carbon-free by 2045. To meet the new standard, the Public Service Company of New Mexico (PNM), the majority owner of the San Juan Generating Station, plans to shut down the plant as it moves away from coal.
According to the utility, the San Juan station will likely close its doors in three years’ time. The loss of the station will be mean much more to the community than the 497 megawatts of electricity it generates: the plant provides jobs directly and indirectly to about 1,600 workers, some 27 percent of them from the Navajo Nation.
The announcement about the pending closure of the plant — and the dramatic loss of work in the nearby mine that supplies its coal — is a clear sign of the trend away from coal in the greater Four Corners region. Arizona’s Navajo Generating Station is slated to retire in 2019, the Four Corners plant in 2031, the Magna, Utah plant in 2025, and the Nucla, Colorado plant in 2022.
The backdrop of this trend is the upside-down economics of coal plants, which were once cheaper than most rival energy sources. But that advantage has been largely nullified by the rise of natural gas, now plentiful since the advent of fracking, and the more recent price decreases spurring the rise of renewables like solar and wind power. The economics are powerful, but so is the specter of climate change, which is exacerbated by the tons of carbon dioxide emitted by power plants burning coal.
San Juan station is the largest source of air pollution in the state, releasing over 13 million tons of carbon dioxide a year. It is also expensive to maintain and can no longer produce energy at competitive prices.
Farmington’s leadership is pushing for the adoption of carbon-capture technology at the plant in hopes to keep it running by giving it something else to sell. If that does not work and the plant closes, a drastic change is looming for San Juan County’s way of life. It will, disproportionately affect tribal members.
A PNM representative said, “these power plants are an important part of their local communities. That is why the Energy Transition Act provides for not only a transition plan for the workers but also $20 million for the local community.” These funds will be used for workforce retraining, economic development, and will support the department focused on Indian affairs.
A Tear in the Fabric of Farmington’s Life
“It’s become part of the fabric and the culture of not only Farmington but also the Navajo reservation,” Timothy Kienitz, principal of Farmington High School, said of the plant. Bordering the reservation to the West, Navajos make up 41 percent of the high school’s student body. “There are generations of families who have worked at the plant and they see that as a source of pride. If that goes away, then all of a sudden you take away that self-sufficiency,” Kienitz said.
A foreshadowing of how plant closures could affect the city came when two of SJGS’s four coal-fired generators were retired in 2017. “We did see a higher number of free and reduced lunches.” Kienitz said. Now, 52 percent of his students receive free or reduced-price lunch.
The San Juan Mine is the sole provider of coal for SJGS, so each enterprise is the lifeblood of the other. Bob Green, a supervisor at the mine for more than 17 years, was one of its first hires when it opened in 2000. “The mine provided the coal to the power plant for two million customers and 80 percent of the electricity that PNM supplied. We needed to mine about 6.5 to 7 million tons a year to supply the power plant. When all four units were running it burned about 9,500 tons per day,” Green said.
Green added that working at the mine created a sense of camaraderie, a closely-bound community that would be unrooted if employees had to find a job far away. “Mining is inherently difficult, with changing conditions and changing weather,” Green said. “You pull together and you take pride in that. You become family as important as your own family at home.”
“We’re all like brothers and sisters here,” said Kenny Benally, a member of the Navajo Nation and a heavy equipment operator at the mine. “It’s been 10 hours out of the day with one another so we all get along.”
According to PNM, about 27 percent of its employees at the generating station are Navajo. On the Navajo Nation, 43 percent of residents live below the poverty line. “The Navajo Nation has an unemployment rate of almost 50 percent, and we are going to add to that,” said Mike Stark, San Juan’s county manager.
“It’s really going to take a hit on the Navajo Nation,” said Kenny Benally. “It’s going to be hard for everybody on and off the reservation.”
Frank Maisano, a senior principal at Bracewell, said, “It would be a ding on the Four Corners region, but it would really hurt the Navajo people. These are skilled labor union jobs that pay well and if they go away it will hurt people that can least afford it.”
In many households on the reservation, multiple generations live together. “In many cases it may be one person who works at that power plant or in that mine who is not just taking care of their family but also taking care of extended family,” said Farmington Mayor Nate Duckett. “If saving the world means that we have to kill humans to do it, then I don’t know if I want to save the world.”
Employees would not be the only ones affected by the closure of the plant and mine. The whole city of Farmington would face a wrenching adjustment. A study commissioned by Four Corners Economic Development last year estimated that closing the plant would lead to more than $105 million in lost wages. As Bob Green explained, “A lot of these highly-paid people have brought in things to the community that we wouldn’t normally have.” Green’s wife works at the medical facility in Farmington.
“The mine and power plant workers go to Farmington and buy a lot,” Kenny Benally added.
If the plant closes, many of the county’s longtime residents may be forced to move away, finding it harder to support their families. “Most of the people that work at the mine are high school graduates. Those people can make really good money. A starting person could make upwards of $65,000 a year,” Green said. “This game is political, legislative, public sentiment and economic. Things out of their control. And time is running out.”
Jerry Benally, another heavy equipment operator at the mine and a member of the Navajo Nation, is already looking for jobs. Without a college degree, it is difficult to find one that pays as well as the mine. Only seven percent of Navajo Nation members have a college degree. “There are jobs out there, but they are minimum wage, up to maybe $20 an hour if you’re lucky,” he said. “I already told my wife to plan on it shutting down in 2022.”
New Futures Without the Generating Station — or Maybe With It
One possible future sees Farmington as a depopulated ghost town. But depending on changes in circumstances and the adaptability of residents, other futures may await.
Moving forward, northwest New Mexico has potential for renewable energy development as well as outdoor recreation. A new water park, Brookside Bay, is already under construction.
Another possibility for the town is supported by Farmington’s leaders: keeping the San Juan Generating Station open by capturing and storing its abundant carbon emissions underground.
“A lot of those in the legislature say we are pro-coal, anti-renewable,” said County Manager Mike Stark. “The reality is that we want to hang on to those good-paying jobs and tax revenues as long as we can.”
Supporters say this technology, called carbon capture and sequestration, can offset 90 percent of the plant’s carbon dioxide emissions. As proof of the seriousness of this effort, city leaders have announced an agreement for the San Juan plant to be purchased by Enchant Energy, a subsidiary of the venture capital firm Acme Equities.
Enchant plans to operate the coal plant while installing the carbon capture technology. Once collected, the company says, the carbon dioxide can then be used for enhanced oil recovery, a process where compressed carbon is piped into older wells to dislodge oil. Industrial plants in the United States capture 65 million tons of carbon each year, 60 million of which is used for enhanced oil recovery. Companies that store carbon by injecting it into the earth can also receive up to $50 per ton in tax credits.
Jason Selch, co-founder of Acme Equities, said, “The plant emits about 6.6 million tons, and we are going to reduce emissions by 6 million tons by putting in CCS. All the cars in New Mexico emit 3 million tons total. It is taking something that is a bad thing and changing it into a good thing.”
Nathan Welch, a postdoctoral researcher at Los Alamos National Labs, said that CCS is actively being researched by numerous groups at Los Alamos National Lab. “My group alone has many projects running from exploring better engineering of CO2 injection wellbores, the pipes used to deliver CO2 to the subsurface, along with studies on rock behavior, all the way to advancing acoustic monitoring of wells to better detect if a system is leaking,” said Welch.
“This will be the largest scale that it’s ever been attempted on, but there seems to be great support at the federal level to infuse money into this project and see it be successful,” said Mike Stark, county manager. The carbon capture technology will find a use for the excess carbon dioxide, and will help to keep the jobs in the county.
With the trend towards decarbonization, Justin Ong, Program Director at the market-oriented clean energy nonprofit ClearPath, believes that CCS carbon capture technology can “extend the useful life of plants” and “continue the production of coal in an environmentally friendly way.” According to Ong, “17 million metric tons of CO2 have been injected at multiple sites total.”
Critics of the partnership between Enchant Energy and the city of Farmington are skeptical of carbon capture, which has yet to achieve widespread commercial adoption in the United States. Attempts to implement CCS technology have been unsuccessful; at the Kemper project in Mississippi, delays tripled the original cost estimate of $2.2 billion. Environmentalists describe CCS as only a band-aid to save the coal industry instead of a long-term clean solution. Storing carbon underground may also contaminate groundwater and cause earthquakes.
Enchant Energy has contracted with the engineering firm Sargent and Lundy on a feasibility study of installing carbon capture technology at San Juan station.
The dream of carbon capture in San Juan County is not a new one. A study conducted a decade ago by the same firm concluded that converting the plant’s remaining two units for CCS could cost $2 billion. Meanwhile, the Navajo Nation poured millions of dollars into planning for the Desert Rock project, which never reached fruition. This was to be a power plant with carbon capture technology that would sit directly on tribal land.
Economic and Energy Diversification
Farmington has recently installed road signs that highlight the natural assets of the region, under the motto, “Jolt Your Journey.”
“We’ve tried to put a new face on Farmington. We are not just coal and oil and gas,” said Farmington’s Mayor Nate Duckett. “We are also hiking trails and off-road trails and rivers and lakes and camping and fishing.” He says he hopes to “build a new mindset that we are a community where active families and outdoor lovers can thrive.”
Much like the state of New Mexico as a whole, Farmington also has the potential to be a national power in renewable energy, with an abundance of wind and more than 300 days of sunshine annually. Massive wind and solar projects are being built in southern New Mexico, like the 522 megawatt Sagamore Wind Project, which will be the largest wind farm in the state’s history. The SunZia and Western Spirit transmission line projects will enable power to be exported to major markets.
“We are in a real need now for economic diversification,” said Mike Eisenfeld, Energy and Climate Program Manager at San Juan Citizens Alliance, an environmental advocacy group. “There are more sustainable ways of creating electricity that need to be fully vetted. We need to help with the transition, but we also need to think about diversifying our economy here.”
It is not clear what the coming changes in Farmington will mean for the mine and power plant workers now on edge. “I’m just going to ride it out till the end, until the last day,” said Kenny Benally, maintaining his optimism. “That’s all you can do, hope for the best.”