An ambitious plan to transform the coal-fired San Juan Generating Station near Farmington into the largest carbon-capture facility in the world received mixed reviews from New Mexico lawmakers Tuesday.
While some Democratic legislators expressed skepticism about the $1.5 billion project — which is behind schedule and still doesn’t have all of its financing in place — Republican members voiced support for the proposal and the jobs it is expected to create in a region bracing for the looming closure of the power plant next year.
The power plant is a major employer in northwestern New Mexico, and local officials have warned shutting it down completely would lead to the loss of more than 1,500 jobs and $53 million in annual state and local tax revenues.
Farmington Mayor Nate Duckett told members of the Legislature’s Water and Natural Resources Committee his city isn’t ready to throw in the towel, “just like everybody else would like us to do.” The city is partnering with Enchant Energy on a plan to transform the San Juan plant into a carbon capture, utilization and storage facility and wholesale power generator.
While Duckett would like to see the project further along than it is now, he said it presents an opportunity to keep people who work at the power plant, as well as an adjacent coal mine, employed.
“Yeah, we would like to see some of those milestones hit and the dates that were set originally, but this is a big, hairy, audacious goal,” he said.
“You’re trying to take a currently operating coal plant and [retrofit] it, transitioning ownership, adding new infrastructure in there, putting in new technologies that have been tried and utilized successfully in other places but now working with a scale that’s never been seen before,” Duckett said.
“This is huge,” he added, “but it takes people with vision, takes people with audacity and tenacity and all those things to go out there and actually try and get these things done.”
Under Enchant Energy’s plan, the company says 90 percent of the carbon dioxide could be stripped from emissions, with some sold to the oil and gas industry to use in the recovery process and some injected into the ground as part of a research project.
But multiple hurdles and lingering questions remain.
Peter Mandelstam, Enchant Energy’s chief operating officer, said legislation is needed in New Mexico to allow carbon dioxide to be injected into the ground.
“All we want is regulatory certainty,” he said. “With some very modest legislation that doesn’t harm oil and gas, we can move forward with a new business in New Mexico.”
Mandelstam also said Enchant is proposing to transfer long-term liability to the state government.
“No private entity could bear the burden,” he said. “There’s a concern that the long-term liability is just not supportable by the private insurance industry.”
Rep. Tara Lujan, D-Santa Fe, said the project comes with “a lot of unknowns.”
“We’re not going into this lightly, obviously,” she said.
Rep. Matthew McQueen, D-Galisteo, raised the most questions, including what caused the June 30 collapse of a cooling tower at the power plant and how it affected operations.
Matthew Jaramillo, who works in government affairs for Public Service Company of New Mexico, which owns the largest stake in the power plant and plans to close it, said the matter was still under investigation and the state Public Regulation Commission would receive a briefing Wednesday.
“We are currently preparing that briefing,” he added.
While he thanked Enchant Energy officials and others for their presentation, McQueen said he wasn’t sold on the project.
“This isn’t the first time you’ve been in front of us. This isn’t the first time I’ve heard you present,” he said. “I remain skeptical.”
Cindy Crane, Enchant Energy’s CEO, said the company’s co-founders continue to invest the capital necessary to advance the project.
“We are in late-stage, due-diligence discussions with a handful of investors for both near-term and long-term investment in the project,” she said, adding a firm the company hired in January “confirmed the economic viability” of the project and its financing ability.
In addition to private investors, the company also is seeking funding from the federal Department of Energy for its long-term debt financing.
Crane told lawmakers Enchant and the city of Farmington’s objective is to avoid layoffs at the power plant and mine when they take ownership of the plant in July 2022.
Rep. James Strickler, R-Farmington, said he has “dear friends” who work at the power plant and coal mine.
“I think this is an exciting project,” he said. “We’re trying to save not only 1,500 jobs; they’re also adding 1,500 construction jobs.”
On its website, Enchant Energy said the project will further New Mexico’s goal of substantially reducing its statewide carbon dioxide emissions and support the state’s economy “by employing hundreds of people in San Juan County and on the Navajo Nation by providing reliable, low-cost wholesale electricity.”
“It’s a rare opportunity to support such an environmentally friendly policy while simultaneously preserving hundreds of well-paid jobs that are simply not otherwise available to the residents of San Juan County and the Navajo Nation,” the website states. “A true win-win.”
The Associated Press contributed to this report.
Follow Daniel J. Chacón on Twitter @danieljchacon.