SD17 - Report of the Virginia Coal and Energy Commission


Executive Summary:
I. INTRODUCTION

The Virginia Coal and Energy Commission was established as a permanent agency of the Commonwealth in 1979. Since that time, it has sought in a number of ways to carry out its charge to ". . .study all aspects of coal as an energy resource and., to stimulate, encourage, promote, and assist in the development of renewable energy resources . . ." (§ 9-145.1 of the Code of Virginia). This document is submitted as the Commission's report on its 1985 activities.

The Commission met twice during the year. It received testimony regarding the following issues: high- and low-level radioactive waste, the status of the coal industry in Virginia, and new liquid coal technologies. This report also discusses the deliberations of the Commission's subcommittees.

II. COMMISSION DELIBERATIONS

A. HIGH- AND LOW-LEVEL RADIOACTIVE WASTE

The Commission received a briefing from staff of the Department of Energy's Chicago operations office on the Civilian Radioactive Waste Management Program and the Crystalline Repository Project. Dr. Paul Kearns of the Department of Energy (DOE), reported that the Project is evaluating potential sites for the storage of high-level nuclear waste. The Crystalline Repository Project is in response to the Nuclear Policy Act of 1982 which mandated that a schedule be established for siting, construction, and operation of repositories, with the first repository to be operational in 1998. Dr. Kearns explained that a very comprehensive screening procedure was being conducted to determine possible sites for the first waste repository. The first repository will likely be located in one of the western states. He pointed out that the crystalline rock regions in Virginia are included as possible sites for the second repository. It is anticipated that this repository will be in operation by the year 2000. Dr. Kearns went on to describe the factors which could disqualify a site from consideration (protected lands, population distribution and density, deep mines and quarries). A timetable was presented for action on the project and the Commission was informed that DOE would recommend three sites for the second repository to the President by 1991.

The Department of Energy briefing was followed by a presentation on low-level radioactive waste by Barbara Wrenn, Executive Director of the Solid Waste Commission. She explained that this type of waste consisted mainly of trash, tools, and protective clothing which had been exposed to high levels of radiation. Most of Virginia's low-level waste is being transported to a disposal site at Barnwell, South Carolina. Since this site is scheduled to be closed in 1992, Virginia has joined seven states to form the Southeast Compact. The objective of the Compact is to select a regional disposal site to replace the Barnwell site. Ms. Wrenn noted that the Compact was facing political difficulties in achieving ratification by Congress. Failure to ratify could result in each state having to develop its own disposal site. In light of this, the Commission unanimously approved a motion to draft a resolution (Appendix A) in support of the Southeast Compact and urging Congress to pass the appropriate authorizing legislation. At the time this report was written, Congress had ratified the Southeast Compact, but the bill had not yet been signed by the President.

Representatives of Virginia Power described their radioactive waste management program. According to company officials, storage of spent fuel was nearing capacity at the Surry Plant and the North Anna plant was approximately at one-half capacity. Virginia Power considered several options for additional storage space and selected a re-racking arrangement (doubling upon the current racks of spent fuel) at North Anna and a dry cask program at Surry. The casks are large metal structures that hold seventeen tons of spent fuel rods when full and are located above ground on concrete pads. Five of these casks have been ordered for the Surry operation.

In addition to managing the high-level spent fuel, Virginia Power has begun to control the amount of low-level wastes it produces. Clothing and equipment which are exposed to radiation are compacted and stored in drums or boxes for shipment. A company spokesman noted that 80% of Virginia Power's low-level waste is shipped to the Barnwell site, with approximately 170 of these shipments being made each year.

B. COAL LIQUID FUEL TECHNOLOGIES

The focus of the Commission's September 26, 1985, meeting was a briefing on the latest developments in the field of coal liquid fuel technology. Dr. Richard Wolfe, Vice President for Research and Development at United Coal Company and a member of the Commission, discussed recent developments in the field of coal liquid applications. He explained that the liquid form of coal can be a viable alternative to the use of oil. In liquid form, coal is cleaner and cheaper than regular heating oil, and can be transported at less cost than bulk coal. Dr. Wolfe noted that United Coal Company is involved in some innovative applications of coal liquids and coal-water mixtures. In addition, some of their research indicated that these processes are resulting in significant reductions in the amount of ash.

As part of the tour of the Company's research facilities, Commission members saw demonstrations of the use of coal liquids in the operation of a diesel engine, a home furnace boiler, and in gas turbines. Dr. Wolfe foresees increased commercial use of coal liquids. He also explained a new "coal dryer" machine which could eventually de-water coal from a slurry pipeline. Dr. Wolfe concluded by predicting the development of coal refineries which would process and ship coal liquids in vast quantities.

Mr. Peter Hepp, Director of Commercialization for Atlantic Research Corporation, described his company's work in the area of coal-water mixtures. The mixture (ARC-COAL) is 70% coal, 29% water and 1% additive and is being produced at a rate of 600 barrels per day. It is presently being tested in industrial boilers in several countries. While the commercialization of this product is difficult at this time due to the declining price of oil, the market incentives should exist in the future for coal-water uses. Mr. Hepp suggested that the Commission give consideration to a 10% investment tax credit for research and development of coal. Such an incentive might further assist in the development of coal liquid technologies. West Virginia has, in fact, passed such an investment tax credit.

Delegate Ford C. Quillen, chairman of the Commission's coal subcommittee, emphasized the importance of these new technologies. He recommended that the Commission pass resolutions which would set forth the following:

1. VPI should conduct a pilot project using coal liquids in place of oil in existing boilers (Appendix C).

2. A special study should be undertaken to assess the feasibility of using Virginia coal in all state facilities (Appendix B).

Delegate Quillen, in discussing Resolution No. 1, suggested that United Coal Company could provide the coal liquids VPI-SU would need to carry out the project. If this project is successful, it will serve as an example for all state facilities to convert their current oil burning systems to accommodate coal liquids.

C. COAL MARKET STUDY

Dr. Walter Hibbard and Mr. Ray Chisolm of the Virginia Center for Coal and Energy Research have completed a federally funded study of the Virginia coal market. Their findings suggest that the decline in the Virginia coal market in recent years is attributable to a number of factors.

1. The significant decline in the steel market has resulted in reduced demand for Virginia's high quality metallurgical coal.

2. Virginia steam coal has a higher price at the mine than Kentucky's or West Virginia's due in part to the significant number of deep mining operations in Virginia which increases production costs.

3. Railroad transportation costs are higher in Virginia than in Kentucky and West Virginia.

In providing a status report of the Virginia coal market, Mr. Chisolm informed the Commission that the production of Virginia coal was up approximately 22% for the first three quarters compared to the same period last year. West Virginia coal production is down 11% and Kentucky is down 14% over the same period. This significant increase over a year ago was at first thought to be a result of the selling of coal which had been stockpiled. However, additional research suggests that it may be due to the increase in coal "longwall" operations.

The study concludes "that since coal quality from all states is similar, then the delivered cost is the key to steam coal sales to Virginia's electric utilities." "Coal from eastern Kentucky and West Virginia was provided at a lower cost than coal from Virginia." (Final Technical Report, Investigation of the Virginia Coal Industry, Executive Summary. Virginia Center for Coal and Energy Research, July 15, 1985.) It suggests that future growth will require that Norfolk Southern meet C3X's transportation costs if Virginia coal is to compete on the basis of delivered costs with West Virginia and eastern Kentucky.