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Executive Summary: The economy of southwestern Virginia's coal-mining region suffers from lack of industrial development, and a corresponding lack of employment opportunities. This study was conducted to assess the potential of southwestern Virginia's coal mining region to support an electric power generation industry. Information was gathered via a survey of major land and enrgy resource owners, other business interests, and economic development agencies, and from auxilliary sources. The Virginia coalfield consists of three southwestern counties (Buchanan, Dickenson, and Wise) where the majority of the state's coal mines are located, and adjoining portions of four neightboring counties (Lee, Scott, Russell, and Tazewell). Of surveyed firms and agencies, only one had conducted a thorough study of the suitability of a specific site for an electric power generation venture greater than 100 MW in size: Coastal Corporation has advanced a wll-publicized proposal to establish an integrated gasification combined cycle (IGCC) "clean coal technology" facility at Toms Creek in Wise County, in partnership will Tampella Power Co. None of the other parties reported having conducted serious power development investigations. Lack of marketing opportunities, complicated by present transmission constraints, was the major factor identified which has prevented other firms from investing the resources required to conduct such investigations. The region's major advantage as a potential locus for electric power production is local availability of fuel. It appears that locally produced coal and gas, and non-traditional fuel resources such as waste heat, coal refuse, and low-Btu coalbed methane, could be made available to power-generation facilities. The nature of the region's fuel resources, and its location relative to potential markets, are better suited to baseload power than peaking power production. Conventional Coal-Fired Generation: Limitations of surface-water resources place a serious constraint on the potential for conventional coal-fired power development. Economies of scale dictate that these plants attain minimum sizes of at least a few hundred megawatts in order to prroduce power at competitive prices. These minimum competitive sizes are close to the maximum sizees that the best coalfield locations appear capable of supporting. Environmental restrictions in some southwestern Virginia rivers also limit power plant siting opportunities. Abandoned coal mines may harbor substantial volumes of water, but no information on quantites or legal constraints is available. Water-conserving heat rejection systems are commercially available, but are more costly to install and operate than conventional cooling systems. The coalfield region's capacity to support conventional coal-fired generation is estimated at 400 to 600 MW, based on the results of an Apco-Virginia Power study (Sargent and Lundy, 1991) which considered a variety of economic and environmental factors, including surface water availability. Gas-Fired Generation: The region's gas resources coule provide power development options, should marketing opportunities improve. Producers report that the region's gas resources are not being fully utilized due to pipeline and market capacity limitations. Some producers reported being forced to sell on spot markets despite a preference for long term contracts. Producers reported that marketing difficulties and restrictions are slowing gas resource development. In many areas of the country, gas-fired combined cycle units are producting baseload power in unit sizes which are smaller than many conventional coal-fired plants. Gas-fired combined cycle facilities require only 1/3 to 1/4 of the water per MW of capacity, compared to conventional steam units. Survey participants report that available gas resources (i.e. currently developed or under active development, and non-contracted) could support approximately 600 MW of combined-cycle generation, if competitvely priced power markets were available and accessible. This is a lower-bound estimate, as one major gas producer did not participate in the study. Participating gas producers reported that, if local markets were available at prices near current market levels, sufficient quantities of coalbed methande could be developed in a short time period to at least double the above estimate. Gas producers would look favorable at opportunities to serve local electric power generation markets paying competitive prices, because such markets would require gas on a year-round basis, and because service to such markets would not be dependent on long-distance pipeline transport. Gas-fired power generation, however, would bring fewer economic benefits to host locations than would coal-fired plants using locally mined coal. Gas-fired combined cycle units established at locations with access to coal would have the option of converting to coal in the future, if IGCC technology costs decline to commericially viable levels. Some IGCC technologies can reduce per-MW water consumption by one-half or more, compared to conventional steam units. IGCC scale economies are consistent with those of gas-fired combined cycle power production. Continued development of water-conserving IGCC technologies, such as the Tampella process proposed for Toms Creek in Wise County, will be necessary if Virginia producers are to employ IGCC on a commercial scale. Non-traditional Fuels: Non-traditional fuels (low-Btu coalbed methane, waste heat, coal processing fines, coal refuse) could also be made available, although they are not as abundant as traditional fuels. Currently, the non-traditional fules are not being used for economically valued purposes; the most easily developed non-traditional fuel resource appears to be waste heat. Approximately 40 to 60 MW of electric power generation could be developed from this resource, in the short term, if reasonably-priced markets for this power were available. One coal producer reported an opportunity to burn the fine-particle stream from a coal processing facility to produce 15 to 40 MW of electric power. Table ES-1. Coalfield Region Generating Capacity Estimates
Notes: Estimates are not comprehensive, do not include proposed TAMCO facility (Wise County), other potential sites for coal-fired plants which may exist in the coal field region, or potential sites for coal-fired plants identified by Apco-VP study (Sargent and Lundy, 1991) located outside the coalfield. Gas availability estimates are based on company reports. Results of Capability Assessment: Thus, a lower-bound estimate of the coalfield region's capability to support electric power generation facilities at this time is 1055 MW (Table ES-1). This estimate is preliminary and approximate, and is based on a review of available information; it is not based on site-specific study. Major factos limiting the accuracy of this estimate include imperfect information on mine-cavity water, gas availability, and coal-fired plant siting oppportunities. Additional southwestern Virginia sites suitable for conventional coal-fired generation may be present outside of the coalfield area. An Apco-Virginia Power study (Sargent and Lundy, 1991) identified,a nd recommended for further evaluation, potential 400 MW sites in Scott, Smyth, and Washington Counties, and a potential 800 MW site in Wythe County. These potential sites are not included in the above-cited 1055 MW lower-bound estimate. Future Prospects: Short-run prospects for establishing power generation facilities in the coalfields are not bright at present, primarily due to lack of power market opportunities. However, economic and societal changes over the next ten years could change the situation. As water resource utilization and air emissions restrictions imposed on U.S. society become more stringent, as economic growth increases regional baseload power demands, and as IGCC technology becomes commercialized, the competitivve position of coalfields as a power generation location may improve. However, improvements to the electric power transmission system, both locally and regionally -- allowing power generated within the Virginia coalfield to be marketted in faster growing areas -- will be required if southwestern Virginia is to take advantage of future opportunities. |
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