News
2 big firms make plans for Miles City coal-fired generating plants
The largest private owner of coal in the United States and one of the largest coal miners in the country announced Tuesday a decision to proceed with the permitting and construction of coal-fired generating plants at Miles City and Dickinson, N.D.
By JIM GRANSBERY
Of The Gazette Staff
The plants would include adjacent coal mines and wind-power facilities.
The projects are estimated to cost $900 million each and will provide 175 direct jobs and an estimated 1,200 spinoff service jobs. Construction is estimated to be complete and the electrical power on line by 2008.
The projects were announced Tuesday by Jerry Vaninetti, president of Great Northern Power Development of Denver and Kiewit Mining Group of Omaha. They intend to proceed with construction of plants originally announced in November 2001. The 500-megawatt coal and wind project near Miles City, Vaninetti said, is identical to a project planned for just outside Dickinson.
"They are for two separate markets," Vaninetti told The Gazette. "One is for Midwestern customers. The Miles City project will serve Montana and the Pacific Northwest."
Vaninetti said three sites are being considered near Miles City — one at Kinsey, a small town northeast near the Yellowstone River and sites north and south of Miles City.
The Kinsey site would be easiest to get permits for, he said.
The coal involved belongs to Great Northern Properties, which has 40 different coal properties in Eastern Montana. GNP in 1992 bought the lignite coal reserves from Burlington Resources, the umbrella group that owns the Burlington Northern Santa Fe Railway. The coal mineral rights were part of the federal land grant to the Northern Pacific Railway.
Vaninetti said the project is not associated with the state’s coal in the Otter Creek Tracts near Ashland, where GNP also owns many sections of coal reserves.
He said the Miles City project would use lignite from an adjacent mine developed to exclusively serve the plant.
Since the projects were initially announced on Nov. 12, 2001, GNP Development and KMG have confirmed the project’s technical, environmental, and financial feasibility, setting the stage for its development, with permit applications to be filed later this year, Vaninetti said.
The Montana project would take advantage of legislation passed to encourage the development of in-state power projects. The 2001 Montana Legislature removed power plants from the Major Facilities Siting Act, which allows for an accelerated permitting process, reduced the coal severance tax from 15 percent to 5 percent on coal used to produce power for in-state use and eliminated property taxes for 10 years for new power plants for instate use.
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Proposal facts
– Owners/operators: Great Northern Power Development, Kiewit Mining Group, participating utilities.
– Location: Miles City — three possible sites.
– Power: One, 500-megawatt plant fired by lignite coal from new mine with auxiliary wind generator.
– Cost: $900 million financed by current participants, utilities, and financial institutions.
– Construction jobs: undetermined.
– Power plant jobs: 75.
– Jobs at mine: 75.
– Jobs at wind generator: 25.
– Water source: Yellowstone River.
– State permits needed: air, water, solid waste, construction.
– Time line: As early as 2008.
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Vaninetti said the project would generate $6 million a year in state and local tax revenues for the 40-year life of the project.
He said GNP Development’s efforts have been encouraged by Montana Gov. Judy Martz and a new grassroots organization for regional economic development — Montanans for Responsible Energy Development, chaired by former state Sen. Mack Cole, R-Hysham.
Vaninetti said linking coal and wind provides unique advantages to the project. The coal can support the necessary upgrades to the transmission grid that would otherwise be difficult for wind to justify, while wind can improve the environmental performance of the project.
He said the linkage of coal and wind would position the project to offer environmentally responsible, low-cost, stable-priced power that would successfully compete with existing and proposed power projects within the region. The project is expected to use circulating fluidized bed technology — an advanced clean coal technology that is in wide use in Europe and has been successfully operated in many states, including California, where environmental restrictions are unusually strict.
It is expected to be operating in as few as five years, depending on transmission upgrades, customer commitments, and permitting — all of which are well under way.
A key element of the project is linking the Western Area Power Administration and Northwestern Energy transmission systems and the upgrading of two existing transmission paths, enhancing the reliability and stability of the region’s transmission grid.
Vaninetti said the WAPA transmission study completed last August "provided a framework for us to follow up. They did a nice job, and we found that the existing power lines could be upgraded to accommodate the 500 megawatts."
There is one catch, he said. "It will require new (power line) construction from Miles City, to Fort Peck and Colstrip."
GNP Development is the privately held power project development affiliate of Great Northern Properties, the nation’s largest private coal landowner with 20 billion tons in reserve, Natural Resource Partners, a public company formed of select assets of GNP and other natural resource companies. Great Northern maintains offices in Miles City; Bismarck, N.D.; and Denver, Colo.
The Kiewit Mining Group is a wholly owned subsidiary of Peter Kiewit Sons’ Inc., based in Omaha, Neb. KMG is one of the nation’s largest coal mining companies and owns and operates several coal and lignite mines, including the Decker Mine in southeastern Montana.
Copyright © The Billings Gazette, a division of Lee Enterprises.
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