Crow Indian Tribe - 1995 Project

Project Overview
Tribe/Awardee: Crow Indian Tribe
Location: Crow Agency, MT
Project Title: Feasibility Study - Coal-Fired Cogeneration Plant
Type of Application: Feasibility
DOE Grant Number: DE-FG48-94R810510 and DE-FG48-95R810597
Project Amounts:
DOE: $799,115
Awardee: $299,115
Total: $1,098,230
Project Status: Complete  More
Project Period
of Performance:
Start: September 1995
End: December 1999

Project Description

Introduction

The purpose of this feasibility study is to set forth the basis for the economic, technical, environmental, and legal feasibility of a 260 mW coal-fired cogeneration facility on the Crow Reservation in Montana. This study is the first stage in the development of the Crow Energy Project, and its goal is to identify any factors that could prevent or obstruct development of the facility. No final decision has been made regarding the type of industrial steam host facility.

This report:

  • Provides an economic analysis supporting the construction and operation of a coal-fired cogeneration facility;

  • identifies and evaluates potential plant and attendant facilities sites;

  • Identifies and evaluates the type of coal generation facility;

  • Identifies and evaluates reasonable steam host facilities;

  • Identifies potential environmental issues and areas for further study;

  • Identifies potential permit requirements;

  • Summarizes the processes involved in obtaining permits and tribal permitting authority;

  • Describes potential project development schedules;

  • Describes a comprehensive public outreach program for siting of the facility; and

  • Describes future steps.

This study does not make a final site selection, assess the potential environmental impacts, or decide whether a coal-fired or any other power generation facility should be built on Crow Lands. That decision is in the hands of the Crow Tribal Administration and the members of the Crow Tribe of Montana. The draft feasibility report only provides input for that decision.

The photo shows the sign for the Little Big Horn Casino superimposed on a background photo of a view of the Crow Reservation.

The Crow's Little Big Horn Casino is one source of tribal income. A potentially much larger resource is the coal that underlies the reservation. Under their Title XXVI project and a follow-on grant, the tribe investigated the technical and economic feasibility of a coal-fired co-generation plant, and also the potential for coal-bed methane extraction.

Goals and Objectives

For more than two decades, the Crow Tribe has been setting mechanisms in place that will enable it to exercise greater control over its natural resources. Tribal authorities have sought to develop well integrated, self-sustaining, energy-related enterprises that will help the tribe achieve energy self-sufficiency and enhance members' technical capabilities and environmental protection.

Beginning in the early 1980s, the Crow Tribe of Montana has explored ways of developing electricity-generating capacity by using fossil fuel (coal). A series of studies, beginning with the DOE-funded Council of Energy Resource Tribes (CERT) report released in 1981, have been commissioned. Other studies were undertaken throughout the 1980s and 1990s.

Project Actions and Resultant Data

Tribal Management Entity: The Crow Energy Corporation (CEC)

In July 1993, the Crow Tribe passed resolution 93-38, which established the Crow Energy Corporation (CEC), as a 100% tribally owned corporation. The CEC was charged with the responsibility of developing a coal-fired electricity-generating facility on Crow lands, as well as fully exploiting any benefits that could arise out of such a project. The CEC is organized as the Crow Tribe's business arm in tribal energy development for purposes, which include the development, operation, maintenance, and ownership of an economically and environmentally efficient coal-fired power plant. Since the Crow Tribe owns CEC, tribal law provides that no shares of the company be issued. Pursuant to its charter, the four elected government officials of the Crow Tribe (the chairman, vice-chairman, secretary and vice-secretary) have been delegated the duties of shareholders on behalf of the members of the Crow Tribe.

The Crow Tribe will be the responsible organization for financial control and audit of funds recommended for disbursement by CEC. The Crow Tribe will have oversight on how the funds are expended. All of CEC's net revenue from the project, which are not retained as capital reserves, must be deposited into the Crow Tribe's general fund and will be used to provide governmental services, defraying the costs of tribal government, and for such other purposes as are authorized by tribal law. The Tribal Contract Officer will manage the grant funds. The Crow Tribe will also utilize the services of its on-site accounting firm to assist in the management of the grant money.

Definition of Feasibility

For the purposes of the feasibility study, "feasibility" meant that:

  • the project is compatible with the current and future economic, environmental, and cultural goals of the Crow Tribe;
  • the proposed project is economically competitive;
  • the project can be financed using private capital, appropriate tax incentives, and public financing;
  • no unacceptable environmental impacts are identified and there is a reasonable expectation of receiving approval for all required permits; and
  • a reasonable schedule for construction and operation can be established, including obtaining power purchase agreements.

Methodology

CEC had proposed a series of reports and steps toward a consensus on feasibility. CEC determined early on in the process that modifications to the methodology would be necessary as information was developed. For example, after two potential sites were identified, it was necessary to direct resources toward finding means to finance potentially large infrastructure costs or identify additional potential sites. Another redirection of resources was made to address the guidance of the Tribal Administration to investigate a competitive fuel source (i.e., natural gas) as an alternative to coal.

In addition, based on the initial siting investigations, it became apparent that resources had to be redirected from the host facility tasks to siting and infrastructure issues. While the feasibility report addresses reasonable host facilities, the report does not contain the detail that was originally anticipated. There were no foreseeable problems that would preclude a host facility designed in conjunction with this project.

CEC prepared a generic environmental evaluation that identified as best as possible potential environmental issues and required permits. The evaluation relied on available knowledge and pre-existing information to the extent possible, as well as experience in permitting similar projects.

The CEC co-developer had the task of examining the complex financial, pricing, and need for power issues. As expected, this was the critical element of the feasibility study. Based on prior studies, CEC was confident that most environmental issues, including Class I air quality issues, could be resolved. However, the assessment of the need for power, including access to transmission lines and the ability to assess the economic competitiveness of the proposed project proved to be the critical lynch pin of the feasibility study.

Meetings

CEC held several strategic meetings to ensure progress of the study. By reviewing submitted status reports and discussing various project-related issues, CEC kept abreast of all major developments. Over the course of this study, several meetings were held in Billings, Mont., Washington, D.C., and Charlotte, N.C. Two of these meetings were aimed at enabling coordination of site investigations. At other meetings, contacts were made with tribal officials and federal officials at the Bureau of Reclamation.

Organization of Report

This feasibility report is organized to present an orderly portrayal of the process used to assess the feasibility of a 260 mW coal-fired cogeneration facility. The report contained a brief executive summary of the salient findings contained in the study; a discussion of the siting process; a discussion of the potential design parameters; a discussion of economic and financial considerations; a description of environmental and socioeconomic factors as currently known; an examination of the unique legal issues relevant to this project; conclusions on the power plant's economic and environmental feasibility; and lastly, a discussion of a potential host facility.

Economic Feasibility

The proposed 260 mW coal-fired facility would produce electricity in the year 2002 for an average Busbar cost of 32.49 mills/kWh. This price puts it between the current short-term average spot market prices of 20-25 mills/kWh and the average utility tariff rates in the region of 40-50 mills/kWh. By the year 2002, it should be extremely competitive with the region's market prices.

Conservative assumptions have been used in defining many of the inputs to the financial model. It is believed by the development team that some of the costs of key factors such as coal price escalators and the bank financing interest rates may be lowered further as the overall project develops. This will result in lowering the price of the output of the plant further, thereby enhancing the economics of the project.

It should be noted that a 100 mW coal-fired design was thoroughly evaluated during this process. This design, however, did not lend itself to the economies of scale that could be obtained by a larger facility. Because the average Busbar cost of the 100 mW plant was in excess of 50 mills/kWh, this design was dropped to focus on the 260 mW design.

It should also be noted that both a pulverized coal (PC) and a circulating fluidized bed (CFB) coal fired design were considered, and both appear to be equally feasible. For purposes of clarity, this study focuses on the PC design; however it is recognized that both designs will be considered prior to a final decision.

A 240 mW gas-fired facility was evaluated but the partnership decided to pursue coal as the primary fuel. This decision was based upon the Crow Tribe's desire to promote vertical integration of energy resources, economic diversification, increased employment opportunities, energy self-sufficiency, and the tribe's ability to control fuel costs in the project.

Environmental and Socioeconomic Feasibility

The coal-fired cogeneration facility is environmentally feasible because the potential environmental impacts of the plant and host facility appear to be acceptable and should not present a barrier to acquiring the numerous legally required permits. Air emissions from the coal-fired power plant can be a potentially significant environmental impact. However, preliminary modeling and prior modeling indicate that a 260 mW coal-fired facility is potentially feasible from an air emissions perspective. Nevertheless, Clean Air Act (CAA) PSD and operating permits will require significant time and attention. Air quality permits need to be on the facility's critical path.

The facility is not expected to generate substantial quantities of hazardous waste or any unusual hazardous waste. The project will comply with RCRA and state solid and hazardous waste regulations. State regulation of ash disposal should be examined and may require a permit. An NPDES permit for the discharge of process water will be needed, but should not pose a barrier and will take significantly less time than the air permits. The state, however, may have special concerns about the impacts of thermal discharges on river biota and recreational use which it may want addressed in the permit and plant design. A wetlands assessment should also be performed for the potential sites.

Although a bald eagle nest was found in the area of a dry creek site, there does not appear to be any other threatened or endangered species at the potential candidate sites. The presence of threatened or endangered species has the potential to severely limit the development and use of any site. Further site area surveys are needed to determine if the bald eagle nest is active and to confirm that no other important species are present.

Similar site surveys as well as discussions with tribe members should be carried out to confirm the absence of significant cultural and historical resources at the sites as well. The sites ultimately selected should be large enough to allow construction of the plant to avoid any such resources, although archeological and historic preservation laws will still need to be complied with.

It is likely that the federal National Environmental Policy Act (NEPA) will be triggered by the proposed project, requiring preparation of an environmental assessment (EA) as a minimum, and potentially a full environmental impact statement (EIS). Although this process will add time constraints to the project, there are no environmental fatal flaws identified which would preclude development of the project.

The potential employment opportunities that the facility can provide for tribe members should bring greater income, accompanying economic prosperity, and a higher standard of living. An analysis to determine the facility's potential impact upon the economy and government services on the reservation will be performed during future stages.

In summary, acquiring the necessary environmental permits and complying with the relevant laws will require planning for the appropriate time frames for data gathering, permitting, and design and construction of the plant. Potential economic benefits appear to be favorable, but it is the tribe's prerogative to determine the full social and cultural effects.

Results, Conclusions, Findings, and Recommendations

In conclusion, there are no economic, environmental, socioeconomic, or other fatal flaws associated with the project that have been identified. Therefore, it is recommended to continue with project development efforts.

The conclusion at this time is that it appears that a 260 mW coal-fired plant would produce competitively priced power and would result in a positive net return to the developing partnership. Therefore, it is recommended that the partnership continue to pursue the development of a coal-fired cogeneration facility in the Crow Indian Reservation. This is consistent with the Crow Tribe's goals of pursuing vertically integrated energy projects on the reservation, promoting economic development activities on the reservation, energy self sufficiency, and maximizing employment opportunities for Tribal members.

Project Status

For project status or additional information, contact the project contact.

Project Contact

Minerals Office
Crow Tribe of Indians
POB 159
Crow Agency, MT 59022
Telephone: (406) 638-3984