Saturday Morning -- May 17, 2014

Cottonwood oil field has been updated.

It's a busy day for me today with swimming and a soccer tournament for the granddaughters, so I posted the top stories for the week earlier (scroll down).

Updates

This story is now tracked here. 

Later, 5:57 p.m. central time: The Washington Post has a better update regarding the snags that the Southern Co Kemper County clean coal facility has hit (the article hit the internet one hour ago -- a big "thank you" to the reader):

Last November, Energy Secretary Ernest Moniz rode an elevator to the top of the 11-story scaffolding surrounding Southern Co.’s new coal-fired power plant here and gazed out over the Mississippi flatlands. Below him lay a new lignite coal mine, new storage facilities and a glimmering maze of steel.

The beauty of it all was this: Sixty-five percent of the plant’s carbon dioxide, a greenhouse gas released by all coal-fired power plants, would be captured, carried through a 62-mile-long pipeline and injected into old oil reservoirs to boost output of precious crude. The carbon dioxide would remain buried in the ground, where it would not contribute to climate change. That would make this the first U.S. power plant designed to include commercial carbon-capture technology.

Six months later, the future has been postponed. Southern’s advanced coal plant, already running over budget and behind schedule when Moniz visited, has suffered new setbacks. On April 30, Southern said the Kemper plant would not open until May 31, 2015 — a year behind the original target. And while Moniz says that “we’re going to need not 10, maybe 100 more of these plants across the country,” it might be a triumph to finish just one.

The only thing the Kemper power plant is burning now is money. The plant has suffered almost every kind of cost overrun, beset by bad weather, labor costs, shortages and “inconsistent” quality of equipment and materials, and contractor and supplier delays. Southern said in April that it was raising the projected cost of the plant by $235 million, to a total of $5.5 billion, more than double the original estimate.

Every month of additional delay will cost about $25 million, Wall Street analysts estimate. So far, the company has eaten about $1.6 billion in losses because of cost overruns. “It’s been a bitter pill to swallow,” Fanning said in an interview during Moniz’s visit.

The weather? In Mississippi? This is interesting: "...  suffered almost every kind of cost overrun, beset by bad weather, labor costs, shortages and “inconsistent” quality of equipment and materials, and contractor and supplier delays ..." These seem like very mundane problems. Sounds like the project manager needs to be held accountable; nothing insurmountable here, and yet, the Bloomsberg article below suggests it was "technical problems" that cause the delay. These are simply mundane, everyday problems that a good project "manager" should be able to "manage."

Original Post

BloombergBusinessweek

The Bloomberg weekly has a short little article on the "true cost of clean coal." It is interesting that when Bloomberg realizes how expensive "clean energy" is, the editor writes:

Costs matter, too. Should [local] ratepayers bear so much of the cost of developing a new technology, when it's the country and the world that benefits?

I'm not exactly sure "who" benefits and why, but the editor is finally getting close to the real question: what good does it do if the US cuts back on CO2 emissions unilaterally?

The short article is quite interesting; quite helpful with some data points.

In an earlier post, back on March 24, 2014, I noted the current cost to build new energy plants:

• Solar: $3 million / MW
• Wind: $2.5 million / MW
• Natural gas: $865,000 / MW

It's nice to see Bloomberg confirm these numbers in a general sense (again, numbers rounded):

• Southern Company, Kemper County, MS, clean coal: $7 million / MW 
• nuclear energy: $5,500 million / MW
• new modern natural gas plant: $1 million / MW

Bloomberg notes that Kemper's ratepayers will see a 22 percent increase in their utility bills. Mississippi is not exactly where people are most able to afford higher utility bills. Just think: the Mississippi folks are doing this to make Florida retirees and Connecticut millionaires feel better thinking they are doing something for global warming.

Other trivia from the article: Southern recently delayed by a year the date it expects to become operational, due to technical problems (it will be interesting to see if that date is again delayed); the project's initial (2006) price tag of $1.8 billion has "risen" to $5.2 billion. It wouldn't surprise me one bit to see this thing mothballed before it ever becomes operational. If it's $5.2 billion now, and it's delayed another year, one wonders the final "real" cost. It's hard for me to believe that those championing the project are eager to give us the real estimated cost.

By the way, there was a lot of talk at one time that China would be using "clean coal technology." Does anyone really believe that China will be using "clean coal technology" if it costs that much.

Interestingly, and telling, Bloomberg does not mention the cost of solar and wind, maybe not as expensive as "clean coal," but certainly much more expensive than natural gas or "conventional coal." If "costs matter," as the editor suggests in the article, then solar and wind energy certainly belong in the discussion.

It's interesting that nuclear is mentioned; except for a couple of recent announcements regarding nuclear plants in the US, one can consider nuclear energy an unlikely option in the US in the foreseeable future.

The Wall Street Journal   Government Motors to pay maximum penalty for killing at least 13 people because of faulty ignition switches: $35 million. This year GM posted a pre-tax profit of $466 million, down from $1.8 billion a year ago.

And that was all I found interesting in the Journal today. I don't review the op-ed page or the non-business sections of the Journal on the blog, as a general rule. I read those sections later, at my leisure, though I doubt I will have much time for leisure today.

The Los Angeles Times

California's income will be about $2.5 billion higher than Gov. Jerry Brown predicted in his latest budget, according to the Legislature's top financial advisor — surprise cash that Democratic lawmakers will almost certainly use to challenge the governor's call for continued austerity.
The healthier stock market and increasing property values will bring in the higher tax revenue, nonpartisan Legislative Analyst Mac Taylor said in his own projection Friday.

The Dickinson Press

Top "trending" story: man cited for marijuana possession.  And that tells me things aren't so bad in the oil patch.

Bakken crude not the problem, industry-commissioned study finds. The problem: trains leaving the tracks. Well, duh, what did you expect?

The Financial Times

The Department of Veterans Affairs (VA) is facing mounting evidence that some of the hospitals it runs have been keeping two sets of books to make it look as if they were reducing waiting times to see a doctor.

More damning, the department is investigating the claims of a whistleblower doctor in Arizona that dozens of patients at one hospital died while they were languishing on a hidden waiting list without ever being given an appointment.