By Timothy Puko
A $750 million power plant project in Lawrence County has taken a big step toward reality with the approval of its state air permit by the Department of Environmental Protection.
Industry officials cheered the decision disclosed by the DEP over the weekend as possibly the biggest hurdle New Jersey-based LS Power had to clear to build the Hickory Run Energy Station.
“We viewed the air permit as kind of the keystone permit for the project,” project manager Casey Carroll said. “When we feel like the market conditions are right, then we will be able to go ahead and complete the project.”
The company is still studying funding and applying for “minor” construction, storm water and erosion and sediment permits with the goal of starting construction in North Beaver by 2014, Carroll said.
While experts agreed that the permit is an important step for the project, they were split on the larger ramifications. It is one of nine projects trying to capitalize on a bounty of cheap shale gas in the region, a crowded competition for space on the electric grid to replace a wave of retiring coal-fired generators.
But if this plant, at a 900-megawatt capacity, can get a permit, it might be a good sign for all of them, said Gregory Reed, director of the Power & Energy Initiative at the University of Pittsburgh. Eight of them, including a proposed Westmoreland County project, are between 650 and 1064 megawatts, reversing a recent trend of building small plants producing 25 to 50 megawatts, he said.
“It’s great to see us now starting to become a part of the major infrastructure of energy development, rather than just a location for resource potential,” Reed said. “I think there’s a lot of economic development that will come with a generating station like this.”
Company officials have projected about 500 workers during a two-year construction, followed by about 25 permanent employees to operate the plant. The plant will be built on land vacant since the 1960s, a former American Cyanamid Co. explosives manufacturing plant just east of state Route 551.
A DEP spokesman said the plant needed the permit by May to take part in regional utility auctions that started on Monday, though Carroll said he couldn’t comment on financial details. If it’s in those auctions, its performance there could be critical to its success, said Jake Smeltz, president of the Electric Power Generation Association.
The auctions bid out future capacity years in advance, which helps finance plant construction for the companies that use it. And while natural gas prices are theoretically low enough for it to be a star, other factors have limited it to winning only about a third of the future capacity that’s been auctioned in past years, Smeltz said. Several plants that have pursued long-term purchase contracts outside of that wholesale market are still looking, he added.
“The markets right now are very difficult,” he said. “Natural gas should be thriving, yet the current conditions in the marketplace are frustrating gas developers. I think those gas developers who have been successful will have to have been ahead of the curve.“