NB Power is considering a plan to convert the Coleson Cove Generating Station to burn natural gas in an effort to slash greenhouse gas emissions and the cost of operating the province's largest power plant, CBC News has learned.

The company is proposing to burn natural gas in one boiler and mix it with the current fuel in a second boiler, according to a letter obtained by CBC News.

The letter states Enbridge Gas New Brunswick would fuel the 972-megawatt power plant through a potential pipeline.

The power utility's proposal to convert the province's largest thermal generating station to natural gas has not previously been made public.

'If there is an opportunity we have to fully explore it, determine if there is a business case, understand what the regulatory requirements are.' — Keith Cronkhite, NB Power

Keith Cronkhite, the manager of business development at NB Power, said the proposal is still in its preliminary stage.

However, Cronkhite said a decision on moving to the next step of the project may be made in late summer or early fall.

"Our job for the province of New Brunswick is to provide energy, safely and reliable and at the lowest possible cost. This type of activity with Coleson Cove falls right in line with that," Cronkhite said.

"If there is an opportunity we have to fully explore it, determine if there is a business case, understand what the regulatory requirements are … and bring those projects forward to our executive and board of directors."

NB Power is not divulging how much a possible conversion would cost, citing that information as commercially sensitive.

Attractive pricing

The proposed conversion would allow Coleson Cove to return to more active service. The province's largest power plant often sits idle because it is too expensive to burn fuel oil.

Cronkhite said natural gas could allow Coleson Cove to be used more often and that would save NB Power money when servicing its in-province requirements.

But he said the utility could also start entertaining new export opportunities if it is cheaper to generate electricity at Coleson Cove.

"We would then look to the market place, to our neighbours and to the U.S. market for opportunities to sell additional energy as situations would arise to further benefit from that conversion," Cronkhite said.

Natural gas is now feasible as the commodity price has dropped significantly in recent years, while the cost of oil has remained high.

NB Power has also tried burning petroleum coke at Coleson Cove as a way to cut back on its fuel costs.

No environmental review

If the proposal moves forward, the Department of Environment has already indicated NB Power will not have to spend time or money on an environmental impact assessment for the natural gas conversion.

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The Department of Environment has indicated NB Power can move forward with converting Coleson Cove to natural gas without an environmental impact assessment. ((CBC))

David Maguire, the manager of the department's environmental assessment section, wrote on Jan. 14 that as long as the project does not change, registration for an EIA "is not required."

While the environment department has exempted NB Power from an EIA, it noted the power company may still need other permits or approvals from other bodies, such as the Energy and Utilities Board.

As well, a switch to natural gas would require a change to the station's approval to operate and the construction of a natural gas pipeline "will likely require approval by the EUB" and that part of the project "could also trigger an environmental impact assessment."

The department's letter said NB Power sent a proposal to the provincial government in a letter on Dec. 6, as well as had subsequent discussions with government officials.

Jennifer Graham, a spokesperson for the Department of Environment, said NB Power came to the provincial government to seek clarification about whether the project could be subject to an environmental review.

Graham said EIAs are triggered when a new power plant is built or when "significant modifications" are made to an existing station. She said NB Power's proposal does not meet either of those thresholds.

For an EIA to be triggered, there would have had to been an increase in the size of the facility, an increase in the plant's output or an increase in harmful emissions.

According to the utility, switching Coleson Cove to natural gas would dramatically reduce its greenhouse gas emissions.

Cronkhite said coal-fired facilities emit 800 tonnes per gigawatt hour of greenhouse gases and oil is around 750 tonnes per gigawatt hour.

The NB Power official said the natural gas plan would reduce emissions to between 400 to 500 tonnes per gigawatt hour.

"You are looking at a 20 to 30 per cent reduction," he said.

Coleson Cove, which is west of Saint John, has been operating since 1976.

When the former Liberal government planned to sell NB Power and most of its assets to Hydro-Québec, it planned to keep the Dalhousie and Coleson Cove generating stations.

David Alward's Progressive Conservative government is waiting for a 10-year energy strategy to be released.

Alward criticized the former Liberal government for moving ahead with major changes to the province's energy future without proper public consultation.

Earlier conversion plans

This is not the first time NB Power has sought to convert Coleson Cove to an alternative fuel source in the last decade.

NB Power spent $747-million to convert Coleson Cove to burn Orimulsion, which was to be supplied by Petroleos de Venezuela, S.A. (PDVSA), the South American country's state-owned oil company.

However, the project became engulfed in controversy because PDVSA decided there was no contract and refused to supply the cheap water-and-bitumen mixed fuel.

That controversy forced the Progressive Conservative government of Bernard Lord to haul several NB Power executives in front of a legislative committee to explain what happened with the failed fuel deal. The Lord government also named a new NB Power president to take over after the controversy erupted.

NB Power ended up winning a partial victory when it struck a legal settlement with PDVSA.

In the intervening years, NB Power has been forced to burn more expensive fuel at Coleson Cove, along with the petroleum coke experiment.

The high cost of using Coleson Cove has meant the generating station is rarely used. It is often cheaper for NB Power to purchase electricity from the United States and import the power into the province.

PUB review in 2002

When the Public Utilities Board, the predecessor to the Energy and Utilities Board, examined the proposal to switch Coleson Cove to Orimulsion in 2002, it also compared the costs to convert the plant to other fuel types.

When assessing the capital costs needed to upgrade the plant, the fuel and future interest rates, the PUB calculated the Orimulsion conversion would cost $5.3 billion compared to $5.8 billion for a blend of oil and natural gas.

During the hearing, NB Power suggested that a sole source supply of natural gas from the Sable Island gas field "was no different than the supply of Orimulsion."

"As well, [NB Power] stated it has had many years of successful uninterrupted fuel supply from Venezuela," the PUB document said.

NB Power went through a full EIA process when it planned to convert the plant to burn Orimulsion.