San Juan and Mine

An aerial view of the San Juan Generating Station and its associated San Juan Mine in 2012. 

A New Mexico university will receive millions of dollars from the U.S. Department of Energy to study the potential for long-term carbon sequestration in underground saline aquifers near the San Juan Generating Station.

DOE's cooperative funding agreement awards $17.5 million to the New Mexico Institute of Mining and Technology in Socorro for San Juan Basin CarbonSAFE Phase III, to be overseen by Robert Balch of New Mexico Tech's Petroleum Recovery Research Center.

The funds, which extend DOE's Office of Fossil Energy's Funding Opportunity Announcement 2058, will be used to explore the suitability of the area's subsurface geology for constructing a U.S. Environmental Protection Agency-certified Class VI well that would provide safe and secure carbon dioxide storage for 990 years. Past work and analysis performed by the university contributed to the application's success and "allowed the project to start at Phase III," Balch said in an April 27 news release. The project is one of five carbon capture, utilization and sequestration projects across the nation selected for funds as part of DOE's extension of FOA 2058.

Enchant Energy of Farmington, New Mexico, the company planning to retrofit the 847-MW coal-fired plant with CCUS technology after its current operator, Public Service Company of New Mexico, ceases operations there in 2022, will provide more than $1 million in in-kind and monetary support to the project. New Mexico Tech and Schlumberger, an international oil-field services company with operations in New Mexico's San Juan and Permian basins, will also provide more than $1 million toward project support, Balch said in a telephone interview. Numerous other participants are providing smaller sums, he said. The funds will be used to research a potential carbon reservoir in a saline aquifer located near the plant. Both Los Alamos and Sandia national laboratories will provide their expertise to the project.

The goal of the project is to determine whether permanent geologic sequestration of CO2 gas in saline aquifers near the plant is feasible, Peter Mandelstam, chief operating officer for Enchant, said in a telephone interview. The aquifers under consideration contain water with such a high saline content that it is not useful for other purposes, Balch explained on the same call. Aquifers with a measure less than 10,000 total dissolved solids must be protected as potential drinking-water sources, Balch said, but the average TDS of saline aquifers in the San Juan Basin is 30,000. The high saline content in the water will also serve to dissolve the injected CO2 gas, Balch explained.

Research and analysis on a test well planned for April 2021 will determine whether the permeability of the rock, the absorbability of the saline water, and the impermeability of the capstone indicate potential for Class VI certification of a commercial well. The data and analyses from CarbonSAFE III will be used to prepare and submit a permit application to EPA to construct a CO2-injection well that would allow for geologic sequestration of 50 million metric tons of CO2 from the plant. Mandelstam and Balch said successful results would lead to the construction of wells sufficient to hold all the CO2 captured from a retrofitted San Juan plant during the 12-year period of federal 45Q tax credits, the foundation of Enchant's business plan (see CEM No. 1585).

Mandelstam said Enchant retains its "Plan A" to deliver captured CO2 via an existing pipeline to the Permian Basin in southeastern New Mexico for enhanced oil recovery, but access to permanent carbon sequestration adjacent to the plant would give the company more flexibility. Permanent sequestration is also cleaner than using CO2 for EOR, Mandelstam said, which makes the option more attractive.

Each sequestered ton of CO2 is worth $50 in 45Q tax credits, while CO2 used for EOR is worth $35 per ton in credits but would have additional economic benefits from selling the CO2. The company's interest in permanent CO2 sequestration predates the oil-price crash that resulted from the price war between Russia and Saudi Arabia and fallout from the effects of the COVID-19 pandemic, Mandelstam said.

Enchant on April 24 also received the results of a transmission study conducted by the consultancy Navigant, now known as Guidehouse. Mandelstam said the company is pleased with the study's results and highly confident that a retrofitted San Juan plant would be able to deliver power to wholesale customers in Southern California. Enchant will explore a range of products including power-purchase agreements, energy imbalance markets and various wholesale options, Mandelstam said.

Sales to California entities are likely the highest-value prospect for Enchant on the wholesale market, Mandelstam said. He added that power from a retrofitted San Juan plant, at 250 pounds of CO2 per net megawatt, would meet California's emissions standard for dispatchable baseload. San Juan's former participant owners include five members of the Southern California Public Power Authority and the City of Anaheim. These participants and others exited San Juan when Units 2 and 3 were retired in 2017.

Mandelstam and Balch said they hope the San Juan CCS project will serve as a demonstration for future developers in the U.S. and elsewhere. China, India and other industrializing nations are likely to burn coal far into the future, and many places lack access to natural gas resources, Balch said, adding that the lessons from CarbonSAFE III can also be applied to CCS for natural gas plants.

Mike Eisenfeld, energy and climate program manager for San Juan Citizens Alliance in Farmington, is skeptical of the CCS project and says it would not be competitive if not for the DOE funding it has received thus far. "The idea of burning coal just to dump it back underground is a joke," Eisenfeld said in a telephone interview. He also sees the dramatic downturn in Permian oil production as having a negative impact on the feasibility of EOR into the future.

Mandelstam and Balch agree that getting away from hydrocarbons completely is essential, but believe people will demand a low-carbon generation source that can provide dispatchable power until that day comes.

"We're open to options and will balance economics and environment to do the greenest thing possible while also returning value to shareholders," Mandelstam said.