SALEM, Mass. – Peter Furniss, the fair-haired chief executive of Footprint Power, gives a tour of the aging coal and oil plant that towers over sailboats in this historic harbor.
The Ivy League-educated lawyer, clad in unsoiled work boots and a pinstripe jacket, circles a mound of coal and walks inside a rusting oil storage tank. He gingerly steps into a tunnel where a conveyer belt carries coal into the plant’s furnaces.
Inside the plant, Furniss points out the Roman arches and graceful columns in the turbine room and the half-century-old control panel, an antique compared with the computers that run equipment now. From the roof, he surveys the scenic coastline, which fades into the autumn fog.
For years, this coal plant — known as one of the state’s “filthy five” — has flirted with closure and avoided a costly overhaul that would bring its toxic emissions in line with modern pollution standards. In 2003, Gov. Mitt Romney, R, stood in front of the plant and declared: “I will not create jobs that kill people. That plant kills people.”
Nine years later, two of Salem Harbor power plant’s generating units are still operating and the other two, including an oil-fired unit, closed last December.
Now, however, the prospect of long-lasting cheap natural gas supplies has sealed the fate of the plant. In August, Footprint Power, run by a group of former utility executives, bought the roughly 60-year-old plant from Dominion Resources and announced they would tear it down in 2014 and replace it with a cleaner, more economical natural-gas-fired unit.
“When we were first looking at the overall project, it really was a toss-up as to whether it would be more the environmental rules or the gas price that was going to drive coal plants to shut down,” said Furniss, 45. “It now is very clearly the gas price.”
Salem Harbor is a case study of how the shale gas revolution is overthrowing assumptions about energy by undercutting coal prices and usurping it as the nation’s fuel of choice for electric power generation.
Across the country, utilities are switching from coal to cheap natural gas. In April, for the first time, natural gas pulled even with coal as a fuel source for power plants. Through August, the use of coal to generate electric power had tumbled 17 percent while the use of natural gas jumped 27 percent, according to the Energy Information Administration.
As of July, companies had announced plans to close down 30 gigawatts of coal-fired plants, or about 10 percent of the nation’s total coal plant capacity, by 2016, according to a study by the Brattle Group, a consulting firm. These aren’t models of efficiency; the EIA says that the average coal-fired generator to be retired this year is 56 years old.
Overall, this transition might cause the loss of jobs in some coal mines, but it is also creating jobs in areas rich in shale gas. Moreover, the gas glut is cutting utility bills for households and businesses, giving a much-needed boost to the lackluster economy.
In Ohio, for example, households and businesses in 2011 saved about $1.85 billion, or about 20 percent of gas and electricity fuel costs compared with the average from 2007 through 2009, according to Richard Smead, a director of the eco nomic advisory firm Navigant Consulting. The average household saved $232.
Natural gas emits about half as much carbon dioxide as coal does in a power plant. In the first quarter of 2012, carbon dioxide emissions from coal burning fell to the lowest level for any quarter since 1986, according to the EIA.
Overall, U.S. greenhouse emissions fell to their lowest level in 20 years, though warm weather last winter and lower gasoline consumption also played roles. Still, the United States is roughly on track to meet the reduction in greenhouse gases that President Barack Obama has pledged to hit by 2020.
As Salem Harbor shows, the coal industry is primed for upheaval.
The plant opened in 1951. The original GE turbine still anchors the operation. Outside, emission stacks soar as high as 491 feet. Mounds of coal, delivered by barges, sit beside the wooden dock. Automated sprinklers dampen the piles so they don’t blow away.
Another throwback: The plant was grandfathered under EPA regulations so that it never had to meet the same environmental standards as new plants. And a 2000 Harvard School of Public Health study estimated that the power plant’s emissions could be linked to 53 premature deaths, 16 heart attacks, 14,400 asthma attacks and 570 emergency room visits.
The new owners, Footprint Power, know full well the plant’s limitations. To meet environmental standards now, Furniss said, the plant imports low-sulfur coal from Colombia.
The plant runs only when the regional grid managers call on it — which they do based on the weather and the prices at which competing power plants are offering electric power.
Firing up the plant is time-consuming. It takes 10 or 12 hours to get the pulverizers going and the boiler temperatures up. On Oct. 4, the plant was fired up for just the second time since August. It has run 15 more times since then, mostly to provide reliability for the regional grid system.
Compare that with the $800 million natural gas plant Footprint Power hopes to build along with its partner, Toyota Tsusho, part of the Toyota group.
The highest exhaust stack on the natural gas plant will be 230 feet, less than half the tallest of the coal plant stacks. The new plant would be cooled primarily by air and would use 100,000 gallons of water a day; the coal plant cools itself with 100 million gallons of water a day from the harbor, Furniss said. And, with a new generation of gas turbines GE unveiled in September, the plant could ramp up in as little as 15 minutes, not 10 hours. (In Colorado, utility Xcel has already bought GE’s turbines for a new natural gas plant that will replace a handful of closed coal plants.)
The Salem natural gas would probably be drawn from Spectra Energy’s Algonquin pipeline, which passes just a couple of miles away. The volume of gas flowing through the Algonquin has surged thanks to supplies from the vast Marcellus shale gas play that stretches across Pennsylvania into adjacent states. The coal mounds would disappear.
“Obviously gas is pretty cheap, and one of the things keeping it pretty cheap is the Marcellus,” Furniss said. “We assume that prices will rise as the market becomes more mature.” While prices today are about $3.80 per thousand cubic feet, Furniss said that Footprint Power assumes prices will not exceed $6 “at the upper end in the foreseeable future.”