Dave Johnston Power Plant

This June 1973 photo from the U.S. National Archives shows the Dave Johnston Power Plant near Glenrock. Commissioned in 1958, the plant is named for W.D. “Dave” Johnston, the former company vice president who accepted the suggestion of Glenrock town leaders to consider locating the plant there to prompt a rebound for the economically depressed community. The life of the plant is again uncertain, as PacifiCorp considers options for its economic feasibility. Courtesy

As carbon capture technologies become more accessible, the federal government has expanded a tax credit to make the process an economically feasible option in Wyoming’s energy sector.

In its 2018 budget bill, Congress expanded and reformed a key tax credit called 45Q, which applies to the deployment of carbon capture and storage projects in the United States.

“In general, there have been incentives in place for carbon capture under a section of federal code called 45Q,” said Ben Cook, senior economist and visiting assistant professor at the University of Wyoming’s Enhanced Oil Recovery Institute.

Historically, though, the dollar value was not significant enough to make carbon capture worthwhile for the express purpose of gaining the tax credit, sitting at $10 per ton if the CO2 was used for enhanced oil recovery, and $20 per ton if used for permanent sequestration.

“There was a cap on how much you could claim, and, basically, all of that got claimed and the incentive effect of that policy was wearing off,” Cook explained.

However, because of efforts by people, including Wyoming’s senators and representatives, the tax code was updated and significantly improved so there are higher incentives for people to engage in carbon capture.

“The reason that matters for enhanced oil recovery is that in Wyoming, we are pushing very hard to get carbon capture facilities at at least one, if not two, coal-fired power plants,” Cook explained.

Carbon capture, use and storage technologies can capture more than 90 percent of carbon dioxide emissions from power plants and industrial facilities, according to the Center for Climate and Energy Solutions. Captured carbon dioxide can be put to productive use in enhanced oil recovery, and the manufacture of fuels, building materials and more, or be stored in underground geologic formations. Almost two dozen commercial-scale carbon capture projects are operating around the world, with 22 more in development.

Further, carbon capture can achieve 14 percent of the global greenhouse gas emissions reductions needed by 2050, and is viewed as the only practical way to achieve deep decarbonization in the industrial sector, according to the Center for Climate and Energy Solutions.

The changes to 45Q tax credits are included in the FUTURE Act, which stands for “Furthering carbon capture, Utilization, Technology, Underground storage and Reduced Emissions.”

FUTURE allows certain new industrial or direct air capture facilities to qualify for the credit, if construction begins before Jan. 1, 2024. Qualified projects will be able to claim the credit for 12 years.

“Because Wyoming already produces about 10 percent of our oil from CO2 enhanced oil recovery, we have experience doing this in the state,” Cook said.

The incentive increase is a big one, at $35 per ton for enhanced oil recovery and $50 per ton for permanent storage.

“These numbers are significant, and what they do is they create an opportunity for people to do projects and use these tax credits as a way to finance those projects,” Cook said. “These are much bigger deals that what you would finance a wind farm or a solar with a tax credit. These are orders of magnitude bigger … but it is something that has a short clock on it.”

Rocky Mountain Power/PacifiCorp, which runs the Dave Johnston Plant near Glenrock, issued a formal request for expressions of interest in carbon capture proposals for the plant last September, according to David Eskelsen of Rocky Mountain Power.

For the better part of the last decade, the Dave Johnston Plan has burned as much as 4 million tons of subbituminous coal per year, according to PacifiCorp. Previously, that coal came from the neighboring Dave Johnston Mine, and today it is supplied via rail by other Wyoming mines.

The coal is burned by a boiler 20 stories tall to produce steam that is 2,400 pounds of pressure per square inch at nearly 1,000 degrees Fahrenheit, according to PacifiCorp. Pipes carry that steam to the turbine to turn its blades to engage the generator to produce electricity.

The request for expressions of interest in carbon capture proposals sought “parties that can demonstrate timely and viable technical, commercial and financially backstopped proposals to explore the feasibility of the capture of carbon dioxide from the Dave Johnston coal-fueled power plant, with the potential for use in enhanced oil recovery in northeast Wyoming,” according to Eskelsen.

It’s too early, though, to gauge the impact the 45Q tax credits may have, particularly with regard to potential impact on the Dave Johnston Plant, he said.

“The company’s continuing economic analysis of the useful lives of its coal units is a significant part of the current edition of Integrated Resource Plan, which is updated every other year,” Eskelsen said.

That plan should be completed by about August.

Nonetheless, Rocky Mountain Power received five responses to the request, and selected three candidates to prepare feasibility studies. As of Wyoming Business Report press time, the studies were still out, due within weeks.

“The company will need to review those studies in detail before deciding how to proceed,” Eskelsen said.

According to Cook, there’s a short clock on planning these projects, as the construction deadline is 2024.

“There’s a lot of effort underway by a lot of people trying to do these projects,” he said, adding that the Dave Johnston Plant is tentatively scheduled to shut down in 2026 or 2027.

“If they can modify that equipment and get this carbon capture facility in place, and capture some CO2, it could potentially extend the life of those assets,” Cook said.

Bruce Roumell, Glenrock mayor, said an extended life for the Dave Johnston Plant could be crucial for his community’s economic viability.

“We have heard from Rocky Mountain Power that this may be a viable thing out there, but we don’t know that for sure yet,” Roumell said. “If they shut part of that power plant down, or all of it down, it’s going to have an effect on the economy here in Glenrock quite a bit.”

The plant draws employees from Casper, Glenrock and Douglas, Roumell said. Retired plant employees on pensions and fixed incomes live in the area, and if the plant were to close, the ripple effects would be felt statewide.

“It’s in our interest that this plant stays on out there, and that carbon capture gets built there. It is in our interest that we do the carbon capture and storage in the area. It is an expensive process, but it would be something that might help us,” Roumell said.

The expansion of the 45Q tax credits, then, could have a positive effect on the coal power sector and on Wyoming’s energy-dependent communities, Cook said.

“It is great for the coal power sector in terms of keeping those jobs in rural communities in Wyoming, but it could also be really good for enhanced oil recovery in the state of Wyoming, because right now we have a shortage of CO2,” Cook said. “There are projects that would probably be looking at enhanced oil recovery if there was CO2 available, but there are significant constraints on volumes right now.”

Cook said he anticipates continued interest in Wyoming’s carbon capture potential, and work behind the scenes on enhanced oil recovery.

“There are a lot of people working very hard to get Wyoming to be the second in the country to have industrial-scale carbon capture,” he said. “The first one was Petranova in Texas, and we’d like to see No. 2 of that facility in Wyoming.”

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