July 31, 2020 -- Churning out Electrons

Lignite-fired generating plants like Coal Creek Station deliver essential baseload electricity to the grid, keeping air conditioners running on hot, humid days when the wind isn't blowing.

Erickson Pushes Fight for Coal Creek

Urges Business Leaders to Get Engaged

Members of the Garrison Chamber's Governmental Affairs Committee were urged this week to get involved in the fight to save Coal Creek Station.

Great River Energy, the owner of the 1,100 megawatt coal-fired power plant near Underwood, announced plans in May (see May 8 newsletter) to shut it down by the end of 2022 and replace the plant's lost generating capacity with power from wind farms.

McLean County State's Attorney Ladd Erickson provided an in-depth overview of the issue to about 20 members of Garrison's business community on Monday. Erickson said it is important that civic leaders in the coal counties understand the issue and the likely outcome if they don't get engaged. He said wind energy companies are working hard to secure land leases in the counties, which he suggested may not actually be intended for wind development, but could block mining of lignite reserves under the land.

Erickson said he concluded in February that GRE had already made its decision to close the coal plant and replace it by building wind farms in western North Dakota. He said the company intended to use the plant's 436-mile DC transmission line to carry the wind power to its customers in Minnesota. But to give the county leverage in talks with GRE, Erickson put up a roadblock, persuading the county to enact zoning changes that prohibit the construction of electric transmission lines near the Missouri River, which means power can't cross the river to get to the "golden goose" DC line.

"The power line is everything, and the line going to Minnesota opens up all of western North Dakota to wind development that's currently clogged up," Erickson said. "So the county has got a block on this end, and Mercer County's got a moratorium on further wind consideration (on the other side of the river)."

Erickson said he believes the plant has value for a potential buyer because both electric grids serving North Dakota are in need of baseload generation. The Midwest Independent System Operator, or MISO, covers eastern North Dakota, while the Southwest Power Pool (SPP) disptaches power into western parts of the state.

"We're right between the two grids and both of them need baseload, and we have told everyone if we can get black electrons going out of Coal Creek to the west, you will get through our ordinances," Erickson said. "The buyer will get a guarantee from the county that we will get electricity to the SPP, and the Bakken (oil play) cannot develop further without more baseload power."

Erickson said he sees potential for the formation of a partnership that could assume ownership of the plant, which he said would include North American Coal, operator of the adjacent Falkirk Mine which provides lignite to Coal Creek.

"There is a cash-flowing possibility here with continuing Coal Creek, but with the risk of fossil fuels and coal in particular, you're going to have to spread that risk out between companies," he said. "Nobody's going to absorb all that risk so they're looking at some sort of conglomerate."

Erickson said he's frustrated by a "disconnect" with energy officials at the state level, who he suggested either don't appreciate the enormous importance of Coal Creek Station to the state, or incorrectly assume that a massive buildout of unpopular wind farms will somehow make up for the economic loss.

"There's assumptions made in Bismarck that we're just going to welcome wind energy full bore, and I just don't feel it from the public to this scale," he said. "We're talking about industrializing this whole area."

Erickson encouraged the Garrison Chamber members to keep close tabs on the issue and understand the impact to their community and the region if the plant is allowed to close.

"We've got to start talking to people, because other people are deciding our future," Erickson said. "And I'm going to represent until I feel otherwise that if we lose Coal Creek, we don't need that DC line."

Click here to read coverage of the meeting in the McLean County Independent. Click here to read an article from E&E News about the possible plant closure and the future of the DC line.

Lignite Gets a Seat at the Table

FERC Gives Coal a Voice in MISO 

The Midcontinent Independent System Operator's (MISO) Board of Directors received approval from the Federal Energy Regulatory Commission this week to add an 11th stakeholder sector so that the Lignite Energy Council and other members of the coal sector can have a role on the MISO Advisory Committee.

For the past couple of years, the LEC has sought to become a member of the advisory committee. MISO is not only the primary electric market in the Upper Midwest where most of North Dakota's lignite-based plants sell their power, but it also dispatches those generating facilities, deciding what power sources go on the grid and and in what order.

"The importance of coal-based electricity to the regional power market can't be over-stated," said LEC President and CEO Jason Bohrer. "On any given day of the year, especially in the cold winter or hot summer months, coal-based electricity accounts for approximately 40 to 50 percent of the generation fuel mix on the MISO grid."

The Lignite Energy Council is a regional trade association representing North Dakota lignite producers, electric utilities and more than 250 businesses providing goods and services to the mines and plants. The lignite industry generates approximately $5.7 billion in gross business volume within the state.

Senators Call for End to Wind Subsidy

North Dakota Senators John Hoeven and Kevin Cramer, along with seven other colleagues, sent a letter last week to the Chairman of the Senate Finance Committee calling for an end once-and-for-all to the production tax credit (PTC) for wind.

The wind subsidy, first enacted in 1992 as a means to jump start the fledgling industry, has been renewed 12 times since then. The PTC was supposed to have been phased out at the end of 2019, but yet another extension was passed last year to continue taxpayer support of the industry. Once again, the subsidy is scheduled to be gone at the end of this year, and the letter from Senators Hoeven and Cramer urged Finance Committee Chairman Charles Grassley to let the PTC die.

"It (the PTC) was supposed to be temporary in order to level the playing field with other power generators," the letter reads. "However, over time, the reverse has occurred. This tax provision has become a competitive advantage to wind generators."

The letter cites statistics from the Energy Information Administration that show the per kilowatt costs for wind electricity generation have declined 43 percent over the last decade. It also points out the American Wind Energy Association’s website acknowledges wind is competitive without renewed subsidies.

The Senators wrote that they agreed with Grassley's decision to phase out the wind credit in 2019 and were disappointed when eligibility was extended for another year. Continuing it, they said, "would only exacerbate the distortive effect of wind on electricity markets."

Click here to read the letter.

Plant Delays Generate Flaring Questions

With the sharp downturn in oil production and the natural gas that is associated with it, several midstream companies have temporarily postponed construction work on expansion projects that will create additional gas processing capacity. The delays are causing state officials to wonder if there will be adequate capacity to meet North Dakota's gas capture targets when industry production rebounds.

The Department of Mineral Resources presented its quarterly report at this week's meeting of the state Industrial Commission, officially informing NDIC members that crude oil production fell to just 858,000 barrels per day in the month of May. DMR Director Lynn Helms noted that because natural gas production also saw a significant drop, work has been suspended on at least three gas plant expansion projects. That prompted Gov. Doug Burgum to question whether producers will be able to meet the capture target which will increase to 91 percent in November.

"Do we anticipate we might run into a situation with our gas capture goals where people would actually have to be shutting in production when we're operating at a half million barrels below where we were before?" Burgum asked.

Helms said he didn't expect a problem because the state's existing gas plants are running well below their processing capacity.

Click here to listen to Helms' comments.

Gov. Burgum also asked Helms if the scheduled ramp-up of the gas capture target was still appropriate, given the demand destruction that occurred due to the coronavirus. Burgum noted that the gas plant postponements amounted to $1 billion in capital investment that is not happening.

"Wouldn't we be prudent to be thinking about moving some of our goals back to match more in line with the reality of capital because these goals were created at a time before we knew COVID was coming?" Burgum asked.

Helms said the timing of the capture goals is still under consideration, and advised Burgum that DMR would reassess the industry's status and discuss the issue again at NDIC's meeting in September.

Click here to listen to Helms' comments.

Click here to read coverage of the discussion in the Bismarck Tribune.

Supreme Court Upholds Lakebed Law

The North Dakota Supreme Court has upheld a law aimed at clarifying ownership of minerals submerged by the waters of Lake Sakakawea.

In its ruling issued yesterday, the court upheld a law passed by the 2017 Legislature that defined the "Historical Missouri riverbed channel." The legislation ( SB 2134) said it refers to "the Missouri riverbed channel as it existed upon the closure of the Pick-Sloan Missouri basin project dams."

Language in the bill declared that state ownership of riverbed minerals "extends only to the historical Missouri riverbed channel up to the ordinary high water mark," and that "The state holds no claim or title to any minerals above the ordinary high water mark ... except for original grant lands acquired by the state under federal law and any minerals acquired by the state through purchase, foreclosure, or other written conveyance."

The law was challenged by former gubernatorial candidate Paul Sorum and Democratic Rep. Marvin Nelson, who contended the law would give away the state's claim to up to $2 billion in oil and gas mineral rights over the life of the state's oil play. It is currently estimated that the state has already collected nearly $187 million from lakebed mineral royalty payments, and must return the money to individuals who owned land along the river that was inundated when the Garrison Dam was completed.

Governor Doug Burgum, who signed the legislation into law, praised the court's ruling.

“The state collected revenue from oil and gas leases where it later recognized it held no rights to the minerals," Burgum said. "The remedy provided under SB 2134, affirmed by the Supreme Court, allows the state to right this wrong by returning funds to thousands of mineral owners that it never should have collected in the first place, and to do so without violating the anti-gift clause in the ND Constitution."

Cities and Counties May Get CARES Funds

North Dakota's Emergency Commission is scheduled to meet Monday to consider how the state will spend more than $350 million from the federal coronavirus relief fund.

Included among the recommendations from Gov. Doug Burgum is just over $59 million that would be distributed by the state treasurer to cities and counties in North Dakota. The funding would be applied to the jurisdictions' law enforcement and first responder payroll costs for the first seven months of the pandemic (March thru September).

If the allocation is approved by the Emergency Commission and later by the legislature's Budget Section, cities and counties would be expected to submit their payroll costs for sworn officers for March through July for reimbursement, and submit August and September payroll figures once those costs are known. The possible release of funds to local governments is the result of an effort by the ND Association of Counties and the ND League of Cities, with support from the Governor's Office, OMB and legislative leadership, according to NDACo Executive Director Terry Traynor.

"We are extremely grateful to them for their understanding and dedicated effort on behalf of local government," Traynor said. "I would also like to thank all of our county auditors, their payroll and HR staff, and law enforcement leaders that have helped provide the data necessary to make this case."

Click here to see the Emergency Commission agenda.

Four More Wise Roads Stations Online

The Wise Roads network grew a little larger this week with the installation of four new weather stations, three on the north end of the Bakken, and one on the south end.

Wise Roads (Weather Information System to Effectively Reduce Oilfield Delays and Disruption) is a project of the Western Dakota Energy Association, in partnership with the ND Ag Weather Network, to place weather stations on high-traffic gravel roads in western North Dakota. The aim of the project is to provide accurate weather information, especially precipitation data, to help county road superintendents better manage oilpatch roads during inclement weather events.

Stations installed this week include Portal 1SE, very near the Canadian border; Palermo 8N, which is northeast of Stanley; Battleview, which is north of Powers Lake in Burke County, and New Hradec 8NW, located on 24th St SW in southern Dunn County. The four are among the first to installed in Phase III of the project that will ultimately see 50 additional weather stations spread throughout the oil-producing counties. Installation of the first 25 stations was completed in early May.

The stations have developed something of a reputation for bringing rain when they're installed, according to WDEA meteorologist Jonathan Rosencrans. He noted that the first 10 stations installed last summer all got a hefty dose of rain in their first few days of operation, and he said the landowner on which the New Hradec station was installed yesterday predicted it would also bring rain.

"Sure enough, thunderstorms rolled through the area last evening," Rosencrans said. "The New Hradec station recorded 0.66 inches of rain just a few hours after installation was completed."

Click here to see NDAWN images from weather stations. To access current data from a station, type the station name followed by ndawn.org, such as newhradec.ndawn.org.

Well Plugging & Reclamation  

DMR Three-Part Education Series

The North Dakota Department of Mineral Resources is launching separate programs to plug and later reclaim current abandoned well sites in the state. The $66 million cost of the project is coming from CARES Act funding authorized earlier this year by the state legislature's Budget Section. The programs will create numerous job, while addressing one of the biggest challenges facing the oil industry.

The work is now being bid and well plugging is expected to sustain more than 600 oil and gas service sector jobs, with 300 to 500 additional jobs managing reclamation of the sites. The projects will keep skilled workforce in the state and others who invested in oilfield service companies. When fully and properly reclaimed, the wells and sites that have already been confiscated as a part of the process will return over 2,000 acres of land to farming, grazing or personal use for North Dakota surface owners.

Educational Series Outline:

The education series will be posted online here and participants can subscribe to receive it directly via email by visiting the Contact Us page to sign in.

Johnson Named Western Transportation Liaison 

NDLTAP Position Will Help City, County Road Planning

Bottineau native Matt Johnson has been named to a new western liaison position, and will work with western cities and counties in a multi-jurisdictional transportation planning and operations effort.

The North Dakota Department of Transportation created the new position in partnership with the Upper Great Plains Transportation Institute. NDDOT will support its funding for five years, while Johnson works under the direction of UGPTI through its Local Technical Assistance Program (LTAP). 

Johnson was raised in Bottineau and received a degree in Civil Engineering from the University of North Dakota. He spent time working in Iowa and Minnesota before returning to North Dakota, where he's been working the past 19 years as a consultant in Bottineau. Johnson begins his new job next week, and will be based out of the NDDOT Williston District.  

The transportation liaison program will serve many purposes, according to LTAP Director Dale Heglund.

"We want to work closely with western counties to coordinate road construction planning and scheduling, promote uniform level-of-service concepts for local road networks, and be able to identify potential problems before they become a serious issue," Heglund said. "Matt will key in on the four major oil-producing counties, and work closely with the MHA Nation as well."

Johnson will also help to identify training and technology needs for local governments, and coordinate delivery with the appropriate state or university provider. The program will also include a half-time position intended to assist with coordinating planning and communication efforts.

Click here to see the scope of work for the liaison position.

Online Appointment Scheduling Expanded at Branch Offices

The North Dakota Department of Transportation is now offering online appointment scheduling for motor vehicle services at branch offices across the state.

Part of the NDDOT Smart Restart included providing in-person services by appointment only. To make an appointment visit the NDDOT website or call 1-855-633-6835.

“We are always looking for new ways to innovate our services and better serve our citizens,” said Robin Rehborg, NDDOT Deputy Director for Driver Safety. “This is the next step to help streamline our appointment system and provide consistent service throughout North Dakota.”

Local Motor Vehicle branch offices throughout the state are offering a variety of services. For a complete list of motor vehicle branch offices and services available, visit the NDDOT website.

Motor vehicle services such as license plates and titling can also be done by mailing in paperwork. Vehicle renewals can be done online, at a self-service kiosk, drop box or by mail.

WDEA Offering Energy Scholarships

The Western Dakota Energy Association will award five $1,000 scholarships this fall to students in an energy-related field at a North Dakota college, university or technical school.

WDEA President Shannon Holter said the association is offering the scholarships to help the industry and western communities meet the workforce challenges historically experienced with oil industry growth.

“We recognize that North Dakota will see benefits from the oil industry only if it is able to attract the workforce it needs,” said Holter. “We want to do everything we can to encourage young people to explore the many opportunities for a rewarding career in the energy sector.”

Funding for the scholarship program is generated by sponsorships of WDEA’s annual meeting, as well as royalties from advertising in Basin Bits magazine.

Click  here to learn more about the selection criteria and how to apply.

Click  here to view or download an application form.

The application deadline is September 18, 2020. Scholarship winners will be announced at WDEA's annual meeting October 7-8 in Williston.

Quick Connect

Factoid of the Week

After 30 years of political debate that resulted in legal and regulatory changes, carbon-based energy still dominates over highly subsidized or mandated forms of alternative energy. Overall, fossil fuels fell from an 88% market share in 1988 to 85% in 2017. Not a huge drop. We still live in a fossil-fuel powered world. 

Source: Institute for Energy Research

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