Coal Creek Sold, Next Chapter Begins

Congressman Kelly Armstrong (R-ND) contacted The Crude Life regarding the Rainbow Energy Center, LLC’s (Rainbow Energy Center) announcement that they have reached an agreement to purchase and operate Coal Creek Station near Underwood, North Dakota.

“Rainbow Energy Center’s announcement is welcome news and great relief not only for the hundreds of workers employed at Coal Creek Station, but for everyone who calls coal country home,” said Congressman Armstrong. “Their commitment to using carbon capture and storage is in line with our state’s leadership on this technology, which is critical to the future success of reliable baseload power. North Dakota is known as a powerhouse of the nation, and I am proud to be a voice for our energy workers fueling the world.”

Rainbow Energy Center has reached an agreement to purchase Coal Creek Station from Great River Energy and operate the 1,151-megawatt (MW) power plant using current plant employees they hire.

Nexus Line Inc, LLC (Nexus Line) has reached an agreement to purchase the high voltage direct current (HVDC) transmission system that extends between central North Dakota and Minnesota from Great River Energy.

Rainbow Energy Center and Nexus Line are affiliates of Rainbow Energy Marketing Corporation of Bismarck, North Dakota.

The purchase of Coal Creek Station and the HVDC system is expected to close later this year, after required approvals are obtained.

Senator John Hoeven, a member of the Senate Energy and Natural Resources Committee, contacted The Crude Life and outlined the important role of carbon capture, utilization and storage (CCUS) technologies to the future of Coal Creek Station, which was approved for purchase by Rainbow Energy today ensuring its operation beyond 2022. Hoeven has been working with Great River Energy, Rainbow Energy and North American Coal to find a solution to keep the plant and adjacent Falkirk Mine in operation. A vital component to the purchase is Hoeven’s work to crack the code on CCUS technologies that will enable Rainbow Energy to deploy a CCUS project at Coal Creek Station, including providing:

A direct revenue stream from the 45Q tax credit.
Loan guarantees from the Department of Energy and U.S. Department of Agriculture.

“We worked hard with the companies and our state’s leadership to find a solution to keep Coal Creek Station in operation, and key to this effort is leveraging the opportunity to crack the code on carbon capture technology,” said Hoeven. “Rainbow Energy’s commitment to purchase Coal Creek and deploy a carbon capture project presents yet another opportunity for North Dakota to lead the way with the latest, greatest technology, allowing us to continue utilizing our abundant coal resources while reducing emissions. That’s why we’ve worked on a bipartisan basis to put in place the 45Q tax credit for carbon capture, which provides a new revenue stream to accelerate the deployment of CCUS for our coal-fired generation facilities.”

“Coal Creek Station is one of the most efficient and critical baseload power plants in our region, and the employees at both the plant and the Falkirk Mine do a tremendous job providing affordable, reliable energy. Now, under Rainbow Energy, they will also be on the forefront in advancing CCUS efforts for our state and nation.”

Cracking the Code on CCUS

Hoeven has been working for more than a decade to crack the code on CCUS technologies to help continue to produce cost-effective energy from coal-fired electric with improved environmental stewardship. That includes:

Getting the 45Q tax credit implemented in a way that makes CCUS projects more commercially-viable. The 45Q tax credit provides an important new revenue stream for CCUS projects of up to $50 per ton for CO2 permanently stored, or up to $35 per ton for CO2 stored and used for enhanced oil recovery. To this end, Hoeven:
Helped secure the final 45Q regulations. The senator worked closely with the Trump administration to move the final regulations forward.
Passed legislation providing a two-year extension on the construction deadline for the 45Q tax credit.
Securing funding in the Fiscal Year 2021 appropriations legislation for critical loan guarantee programs at both the Department of Energy and the Department of Agriculture’s Rural Utility Service to help CCUS project developers secure up-front financing and leverage revenue from the 45Q tax credit.
This aligns with bipartisan, bicameral legislation Hoeven recently helped introduce to provide flexible, low-interest loans and grants to support construction of the infrastructure needed to implement CCUS technologies, like pipelines to transport CO2.
Prioritizing enhancements for the 45Q and 48A Advanced Coal tax credits in order to further support coal producers and CCUS development.
This includes the senator’s Carbon Capture Modernization Act, bipartisan legislation to modernize the 48A tax credit for clean coal facilities to better support CO2 capture retrofit projects.
Hoeven also helped introduce bipartisan legislation provide a direct payment option for the 45Q and 48A CCUS tax incentives, ensuring all CCUS projects, including projects developed by not-for-profit electric cooperatives, are able to utilize the full value of the credit.
Bolstering the Department of Energy’s partnership with the University of North Dakota’s Energy & Environmental Research Center (EERC) in support of their efforts to develop and commercialize new energy technologies, including CCUS at Project Tundra.
Hoeven has helped secure $43 million in federal funding for Project Tundra to date.

Securing State Primacy over Class VI Wells

Hoeven has worked since his time as governor to secure the state’s role as the primary regulator of Class VI wells, which provides greater certainty to CCUS project developers. His efforts include:

Establishing the North Dakota CO2 Storage Workgroup in 2008, during his time as governor.
Helping advance a bill through the state legislature to create a regulatory framework for carbon storage under the North Dakota Industrial Commission.
As U.S. Senator, moving the state’s application for regulatory primacy forward at the EPA and successfully pressing for its approval.

Gov. Doug Burgum and Lt. Gov. Brent Sanford applauded the sale of Coal Creek Station to Rainbow Energy Center LLC as a landmark moment for the future of energy production in North Dakota and the culmination of more than a year of determined efforts by the administration and others to save the state’s largest power plant, preserving critical baseload power and hundreds of jobs.

Great River Energy (GRE) announced in May 2020 its plans to retire Coal Creek Station, a 1,151-megwatt generating plant in Underwood, during the second half of 2022. At the time, the Governor’s Office had already been actively engaged in conversations with GRE to transfer or sell Coal Creek Station to third party operators. Burgum announced on March 25, 2021, that GRE was in exclusive negotiations to sell Coal Creek Station and GRE’s high-voltage, direct current transmission system that extends between central North Dakota and Minnesota.

Today, Rainbow Energy Center announced it has reached an agreement to purchase Coal Creek Station from GRE, while Nexus Line LLC is buying the transmission system. Rainbow Energy Center and Nexus Line are both affiliates of Bismarck-based Rainbow Energy Marketing Corp. The sale is expected to close later this year, after required approvals are obtained, Rainbow said.

“This is a great day for North Dakota, a big win for U.S. energy security and reliability, and a huge sigh of relief for the residents of McLean County, Underwood and surrounding communities in coal country who depend on the jobs and economic activity generated by Coal Creek and the nearby Falkirk Mine,” Burgum said. “It’s also great news for the regional power grid and consumers who depend on the reliable, affordable electricity that coal provides.”

“When GRE announced its plans to close the plant in 2022, Lt. Gov. Sanford and I pledged to find a path forward for Coal Creek that preserves high-paying jobs and keeps North Dakota’s most efficient and updated coal-fired plant on the grid to ensure baseload power capacity for our state and the region,” Burgum added. “Today that goal was realized, and we couldn’t be happier for the approximately 260 employees of Coal Creek Station and the 400-plus workers at North American Coal’s Falkirk Mine, which supplies lignite coal to the power plant. We thank Rainbow Energy Center for investing and believing in the future of Coal Creek, which is primed for innovation and synergies with oil, ethanol and carbon capture that will keep it viable and successful in a carbon-constrained future. I’m also deeply grateful to Lt. Gov. Sanford, GRE, the North Dakota Legislature, our state’s congressional delegation and everyone involved in creating a viable path forward for Coal Creek Station and our lignite industry.”

“It seems fitting that as the dark cloud of uncertainty over Coal Creek is lifted today, a Rainbow has appeared to take its place,” Lt. Gov. Brent Sanford said. “This sale is the tremendously positive outcome of months of negotiations and tireless efforts to find a solution that benefits consumers, coal country workers and the entire state of North Dakota. We’ve worked hard to create a tax and regulatory environment that makes our state an attractive place for responsible energy development, and we’re excited for that to continue thanks to this investment by Rainbow Energy Center and GRE’s willingness to work toward a collaborative solution.”

GRE, a not-for-profit wholesale electric power cooperative providing power in Minnesota and Wisconsin, plans to add 900 megawatts of wind energy before the end of 2023 and modify the 99-megawatt coal and natural gas-based Spiritwood Station power plant in Spiritwood, N.D., to be fueled primarily by natural gas, according to an announcement from Rainbow Energy Center.

Burgum signed several bills during this year’s legislative session that will support the lignite industry as it continues to innovate for the future and supply reliable, low-cost electricity for residents and businesses in North Dakota and beyond. Those bills included:

House Bill 1412, which exempts coal plants from the state’s coal conversion facility tax for the next five years. The bill is expected to save the industry over $20 million per year, freeing up funds to invest in innovative projects such as carbon capture and sequestration that will curb emissions and improve the industry’s long-term viability.
Senate Bill 2152, which provides a sales tax exemption for carbon dioxide used for secure geologic storage.
SB 2206, which allows utilities to recover costs for carbon capture.

Burgum and Sanford have promoted an all-of-the-above energy approach based on “innovation, not regulation” to advance energy development with environmental stewardship. Under the Burgum-Sanford administration, in 2018 North Dakota became the first state in the nation to receive approval from the U.S. Environmental Protection Agency (EPA) to regulate geologic storage of carbon dioxide, which presents a huge economic opportunity for both the lignite industry and the oil industry through enhanced oil recovery.

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