October 2, 2020 -- Golf with a View

The CEO of Great River Energy said this week the company is meeting with parties interested in purchasing Coal Creek Station, which GRE announced earlier this year it intends to shut down in the second half of 2022.

In a presentation to the virtual fall conference of the Lignite Energy Council, David Saggau explained in detail the financial issues with operating the 1,151 megawatt coal plant. Saggau said five years ago he would have thought it "inconceivable" that the plant would be shut down, but he said its financial losses have increased in recent years. He said last year the plant generated 8.2 million megawatt hours of electricity at a cost of $41/Mwhr, but due to the emergence of regional electric markets and a steep decline in the price of power, the company received an average of just $20.43/Mwhr for the electricity.

Click here to listen to Saggau's comments.

Saggau said while other utilities may have a difficult time shutting down such a valuable facility, he said Coal Creek's "book value" is low, meaning that GRE has paid off most of the debt associated with it.

Click here to listen to Saggau's comments.

Saggau said while it may seem like a big challenge to replace the loss of 1,151 megawatts of capacity, he said the company is currently "500 megawatts long," and will be able to make up for the loss through a combination of power purchases and modifications to its fleet of natural gas peaking plants.

Click here to listen to Saggau's comments.

As to attracting a buyer for Coal Creek Station, Saggau said he couldn't say much about the private negotiations that are taking place. He said the company is essentially prepared to give it away, selling it for a dollar, but cautioned that market dynamics will remain a challenge for the prospective owner.

Click here to listen to Saggau's comments.

Saggau said the decision to close Coal Creek was difficult for GRE management, and the company is trying to soften the blow to its employees. He said all were given a 20 percent pay increase following the announcement, severance packages have been beefed up, and GRE is offering tuition reimbursement for its employees enrolled in college classes in pursuit of a new career. The company has also agreed to pay McLean County $15 million after the closing in lieu of property taxes the county would have received.

Click here to read Amy Sisk's article about Saggau's remarks in the Bismarck Tribune. Click here to see a Facebook video of David Saggau discussing GRE's renewable goals.

Expanding on the idea behind the "Faces of North Dakota Coal" Facebook group, the Lignite Energy Council has put together a series of videos that tell the story of the people behind the state's lignite industry.

Luke Hellier with the Coalition for a Secure Energy Future said individuals featured in the videos cover all aspects of the industry. Hellier, who was interviewed this week on the radio program Energy Matters, said it's a way for the thousands of people employed in the industry to communicate to the public the human impact the industry has in the state.

Click here to listen to Hellier's comments.

The lignite industry has an estimated $5.7 billion impact on the economy of North Dakota, and will pay an estimated $75.7 million in coal severance and coal conversion taxes in the current biennium. But Hellier said beyond the numbers, the videos explain that the biggest reason to fight to preserve the coal industry is the men, women and children who live in Coal Country.

Click here to listen to Hellier's comments.

The need for baseload generation that coal delivers is not well understood by many people. Hellier said the videos provide that lesson, and convey the message that it will be needed for generations to come.

Click here to listen to Hellier's comments.

Click here to see the "I Am Lignite" web site. Click here and advance to the 16:22 mark to listen to the full Energy Matters interview with Hellier.

No where is the decline in oilfield activity in western North Dakota more evident than on Highway 85 between Belfield and Watford City. Heavy truck traffic up and down the major Bakken transportation corridor, while still plenty busy, is down significantly from a year ago.

As a result of the industry slowdown, city, county and school district leaders have experienced a significant loss of revenue, forcing them to adapt even more quickly than their response to rapid growth a few years ago. Several told their story to a gathering of western legislators in Watford City this week.

Mayor Phil Riely said Watford City and other communities have been forced to eliminate most public improvement projects from their budgets this year. Riely said he spoke with officials in other cities including Ray, Stanley, Tioga and Killdeer, who've taken similar steps, putting off all but essential infrastructure repair and replacement projects. He said the cities have instituted a hiring freeze and most have taken away any planned cost of living increases. Cuts in the four cities added up to $25 million.

Riely said with the steep drop in tax revenue, money is tight everywhere, and the cities are leery about possible legislative changes to the distribution of oil tax dollars. He said some cities have modest reserve accounts, but would like to establish budget stabilization funds like the state to help even out the volatility associated with western communities' heavy dependence on oil tax revenue.

Counties have also imposed steep budget cuts. Legislators heard a summary of data compiled by Dunn County Commissioner Daryl Dukart. The numbers show oil-producing counties made steep reductions in their transportation budgets, with Divide County cutting its road construction spending by 92 percent. McKenzie County's spending was cut from a planned $76 million on roads and bridges down to just $15 million. Altogether, the figures Dukart gathered showed spending in the five counties (Divide, Dunn, McKenzie, Mountrail and Williams) was down $179 million, of which $122 million was intended for roads and bridges. He said counties are also interested in establishing a reserve fund to allow them to better manage steep losses of revenue when oil prices decline.

Schools are also having to cope with the loss of revenue. McKenzie County Superintendent Steve Holen said changes made in the last legislative session that allow districts to keep oil tax revenue devoted to construction projects have helped. Districts that use gross production tax (GPT) revenue in a sinking and interest fund are allowed to keep all of the GPT dollars, while an amount equal to 75% of remaining GPT revenue is deducted from the districts' state aid payment.

Holen said the industry downturn has had an impact on the district's enrollment figures. He said student numbers are down slightly this fall, "the first time in a long time that we saw a decrease from spring to fall enrollment." Holen said the district will still have about 180 new students, with the new arrivals offset by out-migration, but he said in recent years the district could expect 350-to-400 new students. One positive virus-related development Holen observed is that some oil industry workers brought their children into the state because they believed there was a better chance for in-school education.

"Parents want their kids in the classroom," Holen said, "but we've also seen a shift to homeschool which is understandable, and some parents held their kids back from kindergarten for obvious reasons."

Having just opened a new elementary school this fall, Holen said the Watford City school system is not in construction mode at the moment. But he said the district is still in a growth pattern, so will need access to construction dollars in the near future. Holen said he would like to see more state support for schools that are forced to add classroom space due to rapid enrollment increases, and said he also looks for more funding for the establishment of career academies. He said the academies are the most viable method for communities to provide adult education and re-training for displaced employees.

A cloud of thick black smoke engulfed north Bismarck this week, originating from the site of a commercial landfill that disposes, among other things, used tires and the worn out blades from wind turbines.

The fire broke out at DB Waste Landfill in north Bismarck around 6:00 p.m. on Wednesday. The cloud of smoke could be seen from 20 plus miles away, and prompted the Burleigh County Sheriff's Department to close 34th Street Northwest to keep the public safe. 

According to a story from KUSB 103.3 FM Radio, the DB Waste Landfill buries a lot of wind turbine blades and tires. The report indicates that resin used in the manufacture of wind turbine blades is extremely flammable when melted down. The blaze reportedly forced some homeowners from their homes because of the air quality. However, no structures were reported damaged. 

The cause of the fire is unknown at this time. Click here to read more from KUSB-FM Radio.

During this week’s Lignite Energy Council Fall Conference, service awards were presented to a number of deserving individuals and organizations. 

 

MDU Resources Group received the Community Service of the Year Award for its sponsorship of the Teen of the Week program. Click here to listen to MDU Resources President and CEO Dave Goodin describe this unique program. 

Research and Development Program 

 

Distinguished Safety Awards 

WDEA members still have time to register to hear several informative presentations and actively participate in next week's annual meeting of the Western Dakota Energy Association. WDEA will host the virtual meeting on the Zoom platform.

The association business meeting will include the nomination of two new WDEA board members. Current member Doug Nordby is not seeking re-election to the McKenzie County Commission, and board member Gary Wilz has retired as superintendent of the Killdeer School District. WDEA members will be asked on the registration form to designate whether they wish to participate in the city, county or education committee breakout sessions that will be part of the meeting, and indicate whether they will be a voting delegate for their jurisdiction.

Click here to register for the Thursday, Oct. 8 session. Click here to register for the Oct. 9 discussion.

The meeting agenda will focus primarily on the financial condition of state and local government, as well as the outlook for the 2021 North Dakota Legislature. Meeting participants will hear an update on tax collections and the state's revenue outlook from Tax Commissioner Ryan Rauschenberger. Education funding will also be a major topic at the meeting, with local perspectives from McKenzie County Supt. Steve Holen, and the legislative outlook from Senate Education Chairman Don Schaible from Mott.

Senate Majority Leader Rich Wardner will also participate in the virtual meeting, offering his expectations for the 2021 legislative session. John Weeda, director of the ND Transmission Authority, will offer remarks on the future of the lignite industry. The Day One program will conclude with DMR Director Lynn Helms' traditional county-by-county rundown of oil production, and his outlook for the coming year.

Day Two of the meeting will be devoted to topics related to transportation. Participants will hear updates on LoadPass enhancements and expansion plans, the Wise Roads project, and presentations from the Upper Great Plains Transportation Institute related to research, education and community outreach.

Click here to see the agenda.

The ND Legislature's interim Energy Development and Transmission Committee will hold its final meeting next week with an agenda that includes many of the energy-related topics likely to be considered by the 2021 Legislature.

The committee, chaired by Senate Majority Leader Rich Wardner, will meet October 6 at 8:30 at the Capitol. The meeting can also be viewed live via legislative video.

The meeting will include a presentation by McLean County State's Attorney Ladd Erickson, regarding energy policy issues from the county perspective. Erickson has been actively engaged and played a leading role in the effort to find a new owner for Coal Creek Station.

The meeting will also feature a presentation by James Leiman, Director of Economic Development and Finance for the Commerce Department, who will present a report from the EmPower ND Commission and its energy policy recommendations. ND Transmission Authority Director John Weeda will also update committee members on electric transmission limitations and options to overcome the limitations. The committee will also hear from Lynn Helms, director of the Department of Mineral Resources, regarding the abandoned oil & gas well plugging and site reclamation and a brine pond remediation study update.

Click here to see the committee agenda.

Some might call it "doubling down on stupid," the practice of making one bad decision and instead of fixing the problem, making it worse with another bad policy decision.

That's basically the assessment of David Kruetzer, senior economist for the Institute for Energy Research, regarding an executive order by California Gov. Gavin Newsom to ban new gasoline-powered cars by 2035 to force automakers to focus on electric vehicles. The action was taken in the wake of massive wildfires in California, which Newsom blames on climate change. But Kreutzer, who was interviewed on the radio program Energy Matters, points out in other similar climates where logging and forestry management are practiced, the incidence of wildfires has gone down.

Kruetzer said that even though the governor expects to reduce carbon dioxide emissions by banning gasoline vehicles, he said the decision could actually increase CO2 emissions because the electricity used to run them is likely generated using fossil fuels.

Click here to listen to Kruetzer's comments.

Kreutzer said he's amused by people who claim to believe in science, but will put a "zero emission" bumper sticker on an electric car because they don't know there are emissions from power generation. He joked that the decision to ban new gasoline vehicles will make California "a used car mecca."

Click here to listen to Kruetzer's comments.

Kruetzer said electric cars generally cost much more than vehicles that run on gasoline. He said it is "unconscionable" to force those higher costs on working families that likely can't afford a new car. But what concerns him most, he said, is that green politics is driving California policy makers to make bad decisions, and they seem incapable of correcting them.

Click here to listen to Kruetzer's comments.

Because the United States emits less than 15 percent of global carbon dioxide emissions, Kruetzer said the California policy will have no impact on global warming. In fact, he said banning all hydrocarbon-powered cars throughout the country would no effect on global temperatures.

Electrification is a miguided approach to tackle climate change. Click here to read a study on the topic.

Click here and advance to the 00:48 mark to listen to the full Energy Matters interview with Kreutzer.

The North Dakota Motor Carriers Association will be offering a webinar later this month to explain compliance requirements for new Hours of Service regulations that took effect Sept. 29.

The new rules provide drivers with greater flexibility while maintaining safety on roads. Participants will be provided information to understand the changes including how the rules allow drivers to split their off-duty time. The seminar will also cover the federal Drug and Alcohol Clearinghouse, and what motor carriers are required to do to comply. The clearinghouse is an online database that contains real-time access to information on drug and alcohol program violations committed by drivers required to comply with the federal regulations. Participants will learn about querying the clearinghouse and reporting violations.

Registrants who provide their WSI Policy number at registration will receive up to two free registrations.

The webinar is scheduled October 20 from 8:30 a.m. to 12 noon (CDT). Click here to register.

The 2020 Annual Meeting of the North Dakota Petroleum Council is scheduled for Wednesday, October 7, from 10 a.m. to 12 p.m. The meeting will be a virtual event and is free to all ND Petroleum Council members, member companies and their employees.

The meeting will be hosted via Zoom. To review the meeting agenda click here. Participants must complete the RSVP by completing the form found here.

Rights of way on North Dakota highways must be cleared of hay bales by November 1. If any remain after that date, they will be removed as directed by the NDDOT District Engineer.

According to the ND Department of Transportation, bales need to be removed for snow management and safety reasons.

State law prohibits hay from being placed in the right of way except on the outer edge. Large round bales must not be placed on in-slopes or within 60 feet from the edge of the driving lane.

Source: What's Wrong with Wind and Solar -- PragerU

ND Petroleum Council Annual Meeting