Deem: Gas could help Century

August 7, 2012
By JODY MURPHY , Shale Play

PARKERSBURG, W.Va. - As Century Aluminum continues to look for cheaper electricity for its closed Ravenswood plant, a local gas and oil businessman thinks the answer could lie in natural gas.

Frank Deem, a longtime oil and gas man and former state lawmaker, commissioned a study in 2010 from West Virginia University to consider the generation of electricity from natural gas. The study was led by Ken Means along with a group of students from WVU's Department of Mechanical and Aerospace Engineering.

"The price of natural gas is so low they should consider generating their own electricity," Deem said.

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Natural gas is in plentiful supply and its abundance has caused prices to plummet, he said.

"There is so much out there and likely plenty more," Deem said.

Deem said in the last 12 years, natural gas prices have fluctuated between $13 and $2. Natural gas is selling at $2.90 per decatherm (1,000 btus per 1,000 feet of gas), according to Deem. He said that's a low-enough price companies should at least consider generating electricity by natural gas.

"Utica and Marcellus Shale have put so much gas out there for the foreseeable future, I don't think it will get past $4," Deem said of natural gas prices. "It's not going any place because there is too much gas out there."

Means' team priced out equipment and costs for studies to connect to the power grid. The study concluded large natural gas generators, 40-feet long and about 20-feet wide, would require about 100,000 cubic feet of natural gas a day to run a 1 megawatt engine.

Means said there would be initial setup costs of close to a half-million dollars. He noted it wouldn't be an easy process to hook into the power grid.

"You can generate power, you can't just plug in without approval. It takes money and time to do that," he said.

Citing environmental and feasibility studies and permits, Means said it would be expensive.

"If you have a bunch of these side-by-side you need a permit to make sure the emissions are allowable. That's something we didn't check into."

Natural gas emissions are not as bad as those from a coal-burning power plant, Means said.

"It's a lot cleaner output compared to coal," he said.

Lindsey Berryhill, a spokeswoman for Century Aluminum, said at full capacity, the Ravenswood operation's four potlines need 325 megawatts an hour to heat raw alumina to more than 1,800 degrees Fahrenheit.

"That's equivalent to the amount of power used by about 325,000 homes," she said.

Means said Century's power requirements exceed the parameters of the study. He said a large gas turbine plant would be more economical. According to Means, there are companies that make natural gas turbines to generate electricity.

Berryhill was asked if company officials have explored the possibility of alternative sources for electricity. Or if that was something company officials would consider.

She said company officials can't comment.

WVU's 2010 study is a good starting point to do additional studies, Means said.

State officials are looking at expanding the range of natural gas.

Earlier this month Gov. Earl Ray Tomblin announced a natural gas vehicle task force. Its mission: To evaluate whether the state's vehicles can run on natural gas as a fuel source.

Deem said he's had at least a passing discussion with Tomblin about the possibility of using natural gas to generate electricity.

Keith Burdette, state secretary of commerce, said the idea has not come up in state officials' discussion with Century.

"They have not asked and we have not proposed it," he said.

"We think those are corporate decisions that have to be made on a case-by-case basis. We don't try to second guess a company's business plan."

Partnerships can be developed with the power company, Deem said.

"If it is feasible to generate this cheap gas and sell it to Century you wouldn't shut out the power company," Deem said. "You would do it in concert with AEP. It would be a combination with the power company and whatever is generated by natural gas."