Aspen Skiing Co.: Power from mine no ethical issue
October 3, 2012
ASPEN – On Tuesday, Aspen Skiing Co. officials rationalized working with a coal mine to produce power as a solid decision that dovetails with their goals of being a sustainable company that leads efforts to reduce greenhouse gases.
In an annual meeting Tuesday with the Pitkin County commissioners, Skico Vice President and Chief Financial Officer Matt Jones said a new plant that produces electricity by capturing methane released from the Elk Creek coal mine in Somerset will start operating at partial capacity in about two weeks. One engine that produces 1 megawatt of power will go online this month. Two others will be added later this year, producing a total of 3 megawatts of power, Jones said.
Commissioner Rachel Richards said the coal industry is known as a particularly prolific producer of gases that contribute to global warming. In a nonthreatening and nonaccusatory way, Richards asked Jones, Skico President and CEO Mike Kaplan and Skico Senior Vice President of Mountain Operations David Perry if the company faces an “ethical question” by working with a coal mine instead of an alternative energy source.
“I’m sure you’ve had this question from others, so I’ll throw it out there,” Richards said.
The Skico brass was unfazed. Jones explained that coal mines produce methane regardless of whether they are operating.
“Methane is a big problem with coal mines,” he said. “It’s toxic and tends to explode.”
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Operators must vent it from working mines for the safety of workers, and the gas still escapes from closed mines.
“Even if you closed all the mines, it’s something you could harvest and should harvest,” he said.
The U.S. Environmental Protection Agency holds an annual conference to try to spur interest in capturing methane for power production, according to Jones. Harnessing methane is already a common practice in Germany, the United Kingdom and Asia, he added.
The Elk Creek mine is located about 10 miles northeast of Paonia. It’s operated by Oxbow Corp., a company owned by William Koch. Skico invested nearly $5.4 million to pay 90 percent of the construction cost of the plant. A partner in the project is Vessels Coal Gas Inc., of Denver, which came up with the technology to capture the gas and convert it to power.
Jones said the methane vented from the mine is an equivalent amount needed to fill 140 hot-air balloons every day. The internal-combustion engines at Skico’s plant will burn methane to drive pistons that turn a generator and produce electricity. The power will be fed to Holy Cross Energy’s grid, and Skico will get credit for that production.
The plant will produce 25 million kilowatt-hours of electricity per year. Unlike solar, wind and often hydropower, it will produce electricity 24 hours per day, seven days per week, 365 days per year.
“To give you a sense of that, that is the same amount of electricity we use in an entire year – four mountains, snowmaking, the hotels, the Snowmass Club, 3,600 employees,” Jones said. “But that’s not the big win here. The big win is we’re destroying methane.”
Methane is considerably more potent than carbon dioxide as a greenhouse gas. Carbondale power expert Randy Udall labeled methane “carbon on steroids” in a previous interview.
By burning the methane rather than simply releasing it into the atmosphere, Skico will offset its total annual use of electricity, natural gas, gasoline and diesel fuel by a factor of three, Jones said.
In addition, the plant will account for 8 percent of Holy Cross Energy’s entire portfolio.
“And there’s more where this came from,” Jones said of methane. “So our goal is to tout this to the world. Others can do this, and everybody wins.”
Jones said Skico’s rate of return is 12 percent. Earlier he said the company will likely recoup its investment in 10 to 15 years, depending on the cost of maintaining the plant and the price of electricity.
Skico officials are so high on burning methane for power that they are looking into investing in another plant that captures methane from a closed coal mine in Illinois. They expect the idea to catch on in the U.S. as more investors are exposed to the idea.
“If this is a business we wanted to own, we’d be quiet about it, right? We’re announcing this to the world – ‘You should do this,'” Jones said.
Later Tuesday afternoon, Skico representatives gave a similar presentation to the Aspen City Council and discussed many of the same issues.
However, Skico President and CEO Mike Kaplan brought up a topic that’s near and dear to some council members and Mayor Mike Ireland: the development of more medium-size downtown hotels.
In recent years, city officials and some sectors of the business community have lamented the net loss of Aspen lodging units, including those that were rated as affordable by local standards, and studied the demand for more “hot beds,” the common term for publicly accessible lodging rooms.
“I guess one thing that I’m going to throw out there for you to consider and think about is … what are we going to reach for and aspire for over the long term?” Kaplan said. “We’ve been talking about hot beds and the continued erosion of the hot-bed base, especially in Aspen, especially in the (downtown) core.
“Today I’m going to throw out to you and challenge you to think about, what if we decided we want to build three 100-room hotels in the core of Aspen?” Kaplan said. “One hundred rooms is sort of a number I’m making up. Three is sort of a number I’m making up.”
He pointed out that an existing Skico property, The Limelight Hotel, is working out well for the company, running at an average occupancy of 70 percent. The limited-service hotel, which Skico purchased from its longtime owners in 2010, has 126 rooms.
“If we want to be vital and sustainable going forward, I think we should set the bar somewhere like (the Limelight) and say, ‘What would that look like? Where would we put them?'” Kaplan said of the potential projects.