Natural Gas - The Solution - Not the Threat

CBS Money Watch

(AP)  SHAMOKIN DAM, Pa. — A northcentral Pennsylvania coal-fired power plant that is one of the nation's oldest could be burning natural gas by 2015, part of a wider shift happening across the United States.

Ed Griegel, vice president of operations for the Sunbury power plant, said the move is being driven by toughening federal pollution standards and the high cost of burning coal, the Daily Item of Sunbury reported Wednesday. Similar moves are expected from other owners of power plants that feed the wider mid-Atlantic power grid.

The plant's owners, Sunbury Generation LP, plan to close five of its six coal-fired generators and replace them with two natural gas-fired turbines.

"We'd like the new plant to be online in 2015," Griegel told the Daily Item.

The plant, which is in Shamokin Dam across the Susquehanna River from Sunbury, began operating in 1949 and can produce about 430 megawatts.

The project still needs financing and a gas pipeline will need to be built to connect to a larger interstate pipeline in the Williamsport area, Griegel said.

As of last week, the federal Environmental Protection Agency will begin forcing coal-fired plants to control mercury and other toxic pollutants for the first time, leaving a choice of installing modern pollution control equipment, shutting down or converting to natural gas. In addition, the agency issued a regulation in July that requires power plants in 27 states to reduce smokestack pollution crossing state lines.

However, coal prices remain stubbornly high with demand strong from China and other developing nations, while statistics from the U.S. Energy Information Administration show natural gas futures contracts and spot prices are cheaper this winter than in any other winter in a decade.

Jennifer Kocher, a spokeswoman for the Pennsylvania Public Utility Commission, said natural gas prices are low because the sluggish economy has hurt demand and supply is surging from exploration into shale formations, including the Marcellus Shale formation below Pennsylvania.

In November, Energy Information Administration reported that power generated from coal in Pennsylvania had slid by 10 percent since 2001, while power generated from natural gas in Pennsylvania had risen eight-fold.

As of the first half of 2011, coal made up about 46% of total power generation in Pennsylvania, while natural gas generation accounted for 17 percent.

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