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Technology Assessment Division

Coal and Lignite in Louisiana

 

 

By

 

 

Alan A. Troy, P.E.
Senior Energy Engineer
Technology Assessment Division

 

 

T. Michael French, P.E.
Director
LOUISIANA DEPARTMENT OF NATURAL RESOURCES

 

 

John F. Ales
Secretary of Natural Resources
Baton Rouge

 

 

May 14,1993

 

 

TABLE OF CONTENTS
DISCUSSION
Overview

Evolution of Coal and Lignite Use in Louisiana

Types of Coal Used in Louisiana

Louisiana's Coal and Lignite-Fired Electric Generating Plants

Lignite Mining in Louisiana

Coal Export Handling

Environmental Considerations

Clean Coal Technologies

Non-Utility Uses of Coal and Lignite

Future Prospects

References

TABLES AND GRAPHS
Coal Consumption by Louisiana and U.S. Electric Utilities 1980-1991

Louisiana Electric Utilities Net Generation by Fuel Type 1973-1992

Louisiana Electric Utilities Net Generation by Fuel Type 1960-1992

Louisiana Coal-Fired Electric Generating Plants

Louisiana Lignite Production 1985-1992

Louisiana Non-Utility Industrial Plants Coal Consumption 1983-1991

 

 

DISCUSSION
Overview
Interest in developing new projects involving coal and lignite as boiler fuel in Louisiana has waned since the shortages and high prices of oil and gas in the 1970's disappeared. Consumption of coal and lignite in Louisiana and the nation has barely increased over the past several years. See Table & Graph. Used almost exclusively for the electricity in Louisiana, this consumption trend is expected to continue generation of electricity into the next century as electricity demand is expected to increase only modestly.

 

There is little incentive to promote coal and lignite as boiler fuel as the near term supply of natural gas at relatively low prices seems assured. However, it should be noted that a similar situation prevailed in the early 1970's. Then, in 1973, the first oil embargo was imposed by the Organization of Petroleum Exporting Countries (OPEC), and the price of oil and gas skyrocketed never to return again to pre-embargo levels. Given the political instability in the world today, a similar event could occur without warning and make a mockery of present assumptions.

 

The federal Clean Air Act Amendments of 1990 (CAAA) are a major influence on the choice of fuels for Louisiana electric generating plants. Air pollutant emissions of existing coal and lignite-fired plants are below the limits prescribed by the CAAA. However, the limits for new plants are more stringent and will affect the choice of fuels when new plants are needed. New clean coal technologies are being introduced and continually improved to reduce emissions so coal and lignite can meet the CAAA standards. Coal gasification and circulating fluidized bed combustion generating plants with emissions that are well below the CAAA limits are already in operation in Louisiana.

 

The bulk of coal consumed in Louisiana by non-utilities is for cogeneration of electricity and process steam. The amount of coal consumed for cogeneration in 1991 was 559,000 tons*. 1,2
*1 ton = 2,000 pounds

 

In August of 1992 Atlanta-based Royal Oak Enterprises announced the company would open a mine and build a plant in Red River parish to make charcoal from lignite.3 This will be the first use of lignite other than boiler fuel in the state.

 

The New Orleans Customs District was second in the nation in handling coal exports in 1991. Louisiana ports handled 14% of the nation's total coal exports. The coal came from mines in seven midwestern and eastern states.4

 

Evolution of Coal and Lignite Use in Louisiana
Before the energy shortages of the 1970's natural gas was the fuel of choice for Louisiana electric utilities and industrial plants. Coal use was nil. At the time, it was feared that our domestic supply of oil and gas would run out in a few years leaving the nation at the mercy of politically unstable foreign suppliers. This concern resulted in the enactment of the Powerplant and Industrial Fuel Use Act of 1978.

 

The Act sought to conserve oil and gas by restricting their use for power generation and large scale industrial boilers in favor of nuclear power and domestically abundant coal for new plants. Although the Act was eventually repealed, by 1981 oil and gas began to be displaced by coal and then by lignite and nuclear in 1985 in new Louisiana electric generating units See Graph.. Since 1981, when the first Louisiana coal-fired generating plant went on-line, coal (including lignite) increased its share of net electricity generation from about 3.5% to over 35% of the total generated by all utilities in 1992. See Table. In 1991 Louisiana was 27th among the 50 states in coal consumption.5

 

Ironically, gas is again the fuel of choice, and its use is now being promoted by government at all levels as more friendly to the environment than the other fossil fuels. In addition, it is an abundant domestic resource, and its price is very competitive with other fuels used for electricity generation.

 

In Louisiana increased use of gas is also seen as a way to stimulate the creation of new jobs in the state's ailing oil and gas industry. This sentiment is so strong that the Louisiana Public Service Commission (LPSC) was called upon by the Legislature in Senate Concurrent Resolution 81 of the Regular Session of 1992 to study and prepare a report on the feasibility of requiring any new power plant to use natural gas, and requiring the conversion of existing plants to natural gas. A hearing was held on August 6, 1992, at which the state's electric utilities presented their cost estimates. The minimum conversion cost was in the neighborhood of four billion dollars. The cancellation of existing long term fuel contracts alone made up well over half the cost of conversion.

 

In an August 7, 1992, memorandum the LPSC concluded that both proposals would result in higher electricity costs for the utilities' customers and recommended that the choice of fuel should be based on life-cycle costs that would result in the lowest electricity rates for customers. Given the prohibitive cost of conversion to gas, it is likely the existing coal, lignite, and nuclear power plants will be generating electricity well into the next century until their life cycles are complete.6

 

Types of Coal Used in Louisiana 7,8
Coals are classified by rank. The two ranks of coal used by Louisiana electric utilities are subbituminous and lignite. They are both "low rank" coals, which means they are classified based on heat content. The subbituminous coal used in Louisiana is low sulfur and has a heat content that ranges from 8,300 to 11,500 Btu/lb. Lignite "A" ranges from 6,300 to 8,300 Btu/lb. and lignite "B" less than 6,300 Btu/lb. The subbituminous coal comes from mines in Wyoming's Powder River Basin and the lignite from two mines in DeSoto and Red River Parishes. Louisiana lignites are classified as "A", having a heat content of about 7,000 Btu/lb. The sulfur content averages 0.64 %, ash 16.1 %, and moisture 30.0%.

 

Louisianans Coal and Lignite-Fired Electric Generating Plants9
Louisiana's coal and lignite-fired electric generating plants provide slightly more than 20% of the state's total utility summer generating capability. Coal's share is about 16.2% and lignite 3.9%. Six coal-fired electric generating units are presently operating. Three of them are located at the Cajun Electric Cooperative, Inc. (Cajun) plant near New Roads. The following table identifies them as wen as the initial year of operation and summer capability as of December 31, 1991.

 

Louisiana Coal-Fired Electric Generating Plants
Company
Plant (Parish)
Unit
No.
Summer
Capability
(Megawatts)
Year of
Initial
Operation
Cajun Electric Power Coop. Inc.
Big Cajun 2 (Point Coupee)
1
2
3
540
540
540
1981
1981
1983
Central Louisiana Electric Co., Inc.
Rosemacher (Rapides)
2* 523 1982
Gulf States Utilities Co.
R.S. Nelson (calcasieu)
6* 550 1982
Total Summer Capability 2693
*Big Cajun 2, #3 is 58% owned by Cajun and 42% owned by Gulf States Utilities Co.
Rodemacher #2 is 30% owned by CLECO, 50% by the Lafayette Public Power
Authority, and 20% by the Louisiana Energy & Power Authority.
R.S. Nelson #6 is 70% owned by GSU, 10% by Sam Rayburn G&T Inc.,
and 20% by Sam Rayburn Municipal Power Authority.

 

 

The Dolet Hills Unit #1 in Desoto Parish is the only lignite-fired electric generating plant in the state. It is operated by Central Louisiana Electric Co. (CLECO). CLECO owns 50%, Southwestern Electric Power Co. (SWEPCO) about 40%, and the rest is owned by the Northeast Texas Electric Cooperative and the Oklahoma Municipal Power Authority. It has a summer generating capability of 650 Megawatts (MW) and began commercial operation in April of 1986. According to CLECO, Louisiana lignite is the company's least expensive fuel source. The company utilizes natural gas, coal, and lignite in its generating plants.

 

Lignite Mining in Louisiana7,10,11,12,13,14,15
The first commercial mining of lignite in Louisiana began in September 1985, at Dolet Hills in Desoto Parish near Mansfield in the northwestern part of the state. In October of 1989 another mine, the Oxbow mine, in Red River Parish began production. The entire output of both mines is dedicated to CLECO's Dolet Hills Unit #1 electric generating plant located near the Dolet Hills mine-mouth. In 1992 the two mines produced over three million tons of lignite placing Louisiana 20th in the nation in coal production. See Table & Graph.

 

Lignite deposits were first realized in Louisiana as early as 1812. Interest in lignite as a source of electric energy began in the 1950's with exploratory drilling to locate lignite reserves in the northwestern parishes of the state. CLECO began lignite exploration in the area of the present Dolet Hills mine in the summer of 1955. A reconnaissance drilling program was conducted over a two parish area. Additional drilling, lignite quality analyses, and Geotechnical studies were performed by CLECO during the late 1950's and early 1960's. Economic analyses in the early 1960's indicated that the lignite could not be mined as a boiler fuel at a cost that would be competitive with natural gas. Work was discontinued on the project. However, CLECO continued to gain control of the resources by purchases of land in the area.

 

SWEPCO began exploration drilling in the area in 1973. The results of this drilling prompted leasing in the area in an effort to gain control of the resource. SWEPCO began a grid drilling and coring program in 1975. This drilling was completed in 1978.

 

In the 1970's the price of gas escalated rapidly and federal legislation enacted in 1978 limited the use of natural gas as a boiler fuel. This sparked renewed interest in lignite as an economically viable and secure boiler fuel.

 

CLECO revived its interest in the area in 1976 and started lignite leasing. CLECO and SWEPCO engaged in stiff competition with each other to acquire leases. This competition continued until the fall of 1978 when the two utilities entered into a joint agreement to pool their lignite resources and gain additional control in the area for the purpose of providing fuel to a jointly-owned lignite-fired generating plant.

 

After several years of studies and analyses, CLECO and SWEPCO announced plans to build a 640 MW generating plant at Dolet Hills. Shortly after announcing plans to build the plant, the Dolet Hills Mining Venture, jointly owned by The Costain Group PLC of England and Jones Group, Inc. of North Carolina, was contracted to mine and deliver lignite to the plant. The agreement terminates 25 years after initial operation of the unit but may be extended for up to an additional 20 years at the option of CLECO and SWEPCO. Construction began in 1982, and the unit began commercial operation in April 1986. The plant is very cost efficient due largely to the closeness of the mine to the plant.

 

The lignite is recovered by surface mining using a giant electrically-powered dragline constructed at the mine site to remove 20 to 140 feet of dirt and expose the lignite below. The dragline is as tall as a 20-story building, weighs 8 million pounds, and has a 77 cubic yard bucket. The bucket holds enough dirt to fill a one car garage. The dragline moves from one location to another by "walking" on its huge mechanical feet.

 

The lignite is then loaded into trucks capable of carrying 85 tons of lignite and taken to a central collection site where it begins a seven-mile ride on a conveyor belt to the power plant. The lignite burned at the plant provides the energy equivalent of 6 million barrels of crude oil each year. In 1992 the mine produced 2,653,455 tons. The mine has a recoverable reserve of 130-150 million tons.

 

The Oxbow mine was originally intended to supply lignite to a power plant to be built by Cajun in the mid-1980's. Phillips Coal Company (Phillips) had been active in obtaining land and leases in Red River and DeSoto Parishes in anticipation of providing the lignite to the plant. By 1982 Phillips had obtained approved permits for construction and operation of Oxbow. Due to the economic downturn in the early 1980's, Cajun cancelled the project.

 

In 1986 CLECO decided it would need supplemental lignite for the Dolet Hills Unit but was unable to negotiate an acceptable revision to their contract with the Dolet Hills Mining Venture. Ibis led CLECO to solicit proposals from outside contractors.' In 1988 CLECO entered into a contract with Phillips for the purchase of approximately 3.5 million tons of lignite over the life of the contract. The contract expires on January 19 2005. The contract was amended in 1988 and assigned by Phillips to Red River Mining Company, a joint venture of Phillips and The North American Coal Corporation. The contract was amended again in 1989 to increase the maximum amount to be delivered during the life of the contract to 3.7 million tons and to increase the maximum amount to be delivered during any year to 430,000 tons.

 

Construction began in August of 1988 and initial deliveries were made in October of 1989. The mining technique is similar to that of Dolet Hills. Crushed lignite is hauled 19 miles to the plant in specially designed tractor trailers with a 30 ton capacity. Stripping and coal handling systems are sufficiently sized to support up to 750,000 tons per year. In 1992 the mine produced 553,950 tons, a 35% increase over the previous year. The entire Oxbow mining preserve has a recoverable reserve of 180 million tons.

 

Coal Export Handling4,16,17
Coal exported through the New Orleans Custom District's ports in 1991 totalled 15,494,166 tons, second only to Norfolk, Virginia at 56,867,995 tons. Coal exports through Louisiana's Mississippi River ports were over 14% of the nation's total. The coal came from mines in Missouri, Illinois, Indiana, Ohio, Kentucky, West Virginia, and Pennsylvania.

 

The Louisiana ports that handled the coal were the ports of Greater Baton Rouge, South Louisiana (Burnside), New Orleans, and Plaquemines (Parish). The Baton Rouge port's coal loading/monitoring facility is among the most modem in the nation. At midstream the facility can transfer, blend, sample, and cool export coal at a rate of 1,800 tons per hour.

 

Environmental Considerations14,18,19
State and federal environmental regulations greatly affect the operations of industrial plants in Louisiana. The State of Louisiana regulates emissions from industrial plants through regulations issued by the Air Quality Division of the Louisiana Department of Environmental Quality (DEQ). In addition, the Division implements certain federal programs initially established by the Environmental Protection Agency. Permits are required by the Division for coal and lignite-fired electric generating units.

 

The federal Clean Air Act Amendments of 1990 (CAAA) have significant implications for the utility and industrial coal markets. The two provisions that account for most of the coal impact are air toxins (Title III) and acid rain (Title M. Phase I of Title IV becomes effective in 1995 and sets stringent sulfur dioxide and nitrogen oxides emission limits for 110 of the nation's solid fuel generating plants. None are in Louisiana. Phase II begins in the year 2000 and further reduces emissions from Phase I plants and sets additional restrictions for 800 smaller plants. Phase II is not expected to affect existing Louisiana plants but could make the construction of a new coal or lignite-fueled plant more costly by imposing more stringent emission requirements for new plants.

 

The interpretation and implementation of the complex CAAA regulations are still evolving. For the next few years Louisiana utilities will be installing emission monitoring equipment and making some small capital investments in anticipation of a further tightening of the emission standards of Title IV. Beyond that, compliance strategy appears to be to wait and see where the legislation goes from here.

 

Title III of the CAAA addresses the effects of hazardous air pollutants. Under this provision, a three-year study of utility air emissions will be undertaken. If the results of the study indicate that utility emissions should be regulated as hazardous emissions, the EPATechnologies20 will be authorized to regulate them. If such regulations were to be effected, a significant impact on the use of coal and lignite in the state could result.

 

Clean Coal Technologies20,21,22,23,24
Coal Gasification is a viable clean coal technology which allows utilities to continue using available coal or lignite supplies and still comply with the CAAA regulations. The largest operating integrated coal gasification/combined cycle (IGCC) power plant in the world is the Dow Syngas Project at Dow's chemical complex at Plaquemine, Louisiana. The plant is owned and operated by Louisiana Gasification Technology, Inc., a subsidiary of Destec Energy, Inc. Commercial operation began in April of 1987. Low-sulfur subbituminous coal from the Powder River Basin in Wyoming is used to make synthetic gas (syngas). Lignite has also been used.

 

The plant has a generating capacity of 160 MW and uses about 2,400 tons per day of coal. The final sweetened syngas has a heating value of 240-260 Btu scf. Environmental monitoring indicates that sulfur dioxide and nitrogen oxides emissions are very small, usually a fraction of the CAAA standards. The slag and hydrogen sulfide by-products are processed further and sold as a construction material and elemental sulfur, respectively.

 

The capital costs of IGCC plants are competitive with the costs of conventional coal fired steam plants and IGCC plants based on competing coal technologies. Because of the current attractive price and availability of natural gas, IGCC may not be competitive with natural gas-fueled projects for a number of years. However, it is anticipated that simple cycle turbines and combined cycles fueled with natural gas can be converted to coal-derived syngas in a phased construction approach. In Louisiana, this would probably begin early in the 21st century, when new electric generating capacity is expected to be needed again.

 

Another new commercially successful clean coal technology that could be applied in Louisiana is the Circulating Fluidized Bed combustion process. A variety of fuels can be used including coal, lignite, petroleum coke, wood waste, shredded tires, and other waste fuels. The process allows more efficient combustion with reduced emissions.

 

In Louisiana circulating fluidized bed technology is being used commercially at the Nelson Industrial Steam Company (NISCO) cogeneration facility at Lake Charles. The fuel is petroleum coke, a by-product of the oil refining process. The plant consists of two 100 MW units that can each produce 825,000 lb./hr superheated steam and 727,300 lb./hr. reheat steam at maximum continuous rating. The facility utilizes the world's largest circulating fluidized bed boilers constructed to date.

 

In Texas the circulating fluidized bed process is being used by Texas-New Mexico Power Company's (TNP) two-unit 300 MW generating station in Robertson County, Texas. The plant is fueled by Texas lignite supplied by Phillips from a mine three miles from the plant. Unit I has been operating commercially since September 1990 and Unit 2 since October of 1991. The lignite is burned with crushed limestone, which captures the sulfur dioxide emitted. Nitrogen oxides emissions are reduced by low combustion temperatures.

 

Overall, environmental emissions from both the NISCO and TNP plants are significantly less than those allowed by the CAAA. And it is likely that these standards will become even more stringent in the future.

 

Non-Utility Uses of Coal and Lignitel,2,25,26,27
Since 1983 coal consumption by Louisiana non-utilities increased 78% from 314,000 tons to 559,000 tons in 1991. See Table Graph. The bulk of this coal is used by two industrial plants to cogenerate electricity and steam to power their facilities. The Dow coal gasification facility described above is one of the facilities and uses over 90% of the coal consumed for cogeneration in the state. The other plant is the International Paper Company's paper mill in Mansfield. Their primary fuel is bark, but if it is too wet, coal or gas is substituted. Which fuel is used depends on the price. The facility uses bituminous coal from Kentucky.

 

In August of 1992 Royal Oak Enterprises, Inc. of Atlanta announced the company would build a charcoal briquette manufacturing plant and open a lignite mine in Red River Parish. At maximum capacity the plant will use about 240,000 tons/year of lignite to manufacture 80,000 tons of briquettes a year. According to Bob Gossett, vice-president of operations, the company's environmental permit application will be complete by August 1, 1993, and construction could begin by the latter part of 1994. He said the Louisiana site was chosen because it is located closer to its major charcoal markets and the cost of mining the lignite is less because the deposits are relatively shallow at 40 to 60 feet below the surface.

 

Future Prospects
The use of coal and lignite in Louisiana increased sharply from 1981 to 1988, but since then consumption has been flat. This is true on a national level as well. See Graph. As mentioned earlier, coal consumption tracks electricity demand, and electricity demand has been flat for several years. Overall, it is not expected to increase significantly through the end of the century.

 

In those parts of the country where new capacity is needed, the investor-owned utilities, stung by regulatory agencies' disallowances in their rate base of the costs of new generating facilities brought on-line in the 1980's, are unwilling to risk new capital for additional capacity and are choosing to contract for it with unregulated independent power producers (IPPs). The IPPs use a variety of fuels, including coal, but combined cycle gas turbines are being selected more than any other type of prime mover at the present time.

 

The new Energy Policy Act of 1992 encourages competition in energy markets and makes it easier for IPPs to own and invest in power projects. The utilities, which use vast amounts of coal, can no longer rely on their status as regulated monopolies to guarantee that any new facility will be built by them. They win have to compete with the IPPs for new generating capacity. New near term demand is now being met by smaller, shorter life peaking generating plants that are built as they are needed instead of the large, baseload generating plants with a thirty to forty-year life cycle that were traditionally built by utilities in the past. These large plants are the ones most likely to use coal. As they are retired from service, coal demand could suffer if they are replaced by combined cycle gas turbine plants to the extent that gas is able to penetrate the market at that time. If the two main objections to gas - security of supply and price stability - are resolved by long term contracts, gas would be difficult for coal to compete against, based on current pricing trends.

 

Cited References
1.DOE/EIA-01 18, Coal Production, Energy Information Administration, 1986-1991 editions.

 

2.DOE/EIA-0348, Electric Power Annual 1991, Energy Information Administration, February 1993.

 

3.New Orleans Times-Picayune August 13, 1992.

 

4.DOE/EIA-0121(91/4Q), Quarterly Coal Report, October-December 1991 Energy Information Administration, May 1992.

 

5.DOE/EIA-0348, Electric Power Annual, Energy Information Administration, 1983-1991 editions.

 

6.Roy F. Edwards, LPSC hearing examiner, Memorandum of August 7, 1992, to Marshall B. Brinkley, Secretary, on results of hearing docket #U-19881.

 

7.See Reference #1, 1991 edition, Tables B2 and C1, October 1992.

 

8.John E. Johnston HI, Acting State Geologist, 1990 Louisiana Lignite Summary, Louisiana Geological Survey.

 

9.DOE/EIA-0095(91), Inventory of Power Plants in the United States 1991, Energy Information Administration, October 1992.

 

10.Dolet Hills, brochure on Dolet Hills lignite mine and power plant provided by CLECO.

 

11. David Ray Williamson, Project Manager, Dolet Hills Lignite Project, technical paper presented at Gulf Coast Lignite Conference, November, 1982.

 

12. Michael Arne, Operations Manager, Phillips Coal Company, personal communication, April 1993.

 

13. Fact Sheet, Oxbow Mine Red River Mining Company, 1993, provided by Phillips Coal Company.

 

14. CLECO SEC Form 10-K for fiscal year ending December 31, 1992.

 

15. Syed M. Haque, Geologist, Louisiana Geological Survey, personal communication, April 1993.

 

16. Roy Walsh, Statistical Assistant, U.S. Corps of Engineers, Waterborne Commerce Statistics Center, New Orleans Customs District, personal communication, April 1993.

 

17. Baton Rouge Business Report, The Port of Greater Baton Rouge, April 20-May 3, 1993 issue.

 

18. Tom Henson, It's a Whole New Ball Game, Coal Voice, January/February 1991.

 

19. Kevin P. Sweeney, Coordinator Mobil Sources, Air Quality Division of Louisiana Dept. of Environmental Quality, personal communication, April 1993.

 

20. Technical Brief #RP2773-12, Dow Entrained-Flow Gasification Process, Electric Power Research Institute, 1989.

 

21. Douglas Strickland and Richard J. Payonk, The Destec Coal Gasification Process, technical paper presented at Power Gen '92, Orlando, Florida, November 1992.

 

22. Destec Energy, Clean Energy News, Volume 1, 1992.

 

23. Dan Bollner Vice-President Business Development, Phillips Coal Company, The Future of Lignite in Texas, technical paper presented at Gulf Coast Cogeneration Association Conference, March 1993.

 

24. Kenneth W. Richardson and Frank D. Taibi, Louisiana Joint Venture Starts Up Coke-Fueled Cogeneration Plant, Oil & Gas Journal, April 5, 1993.

 

25. Rolf Maurer, Market Development Engineer, Coal Gasification Department, Destec Energy, personal communication, April 1993.

 

26. Bill Lindsey, Purchasing Manager, International Paper Co., Mansfield, La., personal communication, April 1993.

 

27. James Allen, Executive Vice-President, Royal Oak Enterprises, personal communication, April 1993.

This report, Coal and Lignite in Louisiana, was originally funded 100% ($188.61) with Petroleum Violation Escrow funds as part of the State Energy Conservation Program as approved by the U.S. Department of Energy and Department of Natural Resources.

This public document was originally published at a total cost of $188.61. 200 copies of this public document were published in this first printing at a total cost of $188.61 The total cost of all printings of this document, including reprints, is $188.61 This document was published by the Department of Natural Resources, P.O. Box 94396, Baton Rouge, LA 70804-9396, to promulgate the State Energy Conservation Plan developed under authority of P.L. 94-163. This material was printed in accordance with the standards for printing by State agencies established pursuant to R. S. 43:3 1.