As San Juan Mine braces for layoffs, assistance is uncertain and carbon capture hopes fade

AZTEC — More than half of San Juan Mine's approximately 200 workers will lose their jobs this summer. These layoffs come as funding from the Energy Transition Act remains in litigation and hopes are beginning to fade for some about a carbon capture project at the generating station it serves. 

The San Juan Mine has one customer, the San Juan Generating Station. The power plant's majority owner — Public Service Company of New Mexico — intends to switch to using stockpiled coal this summer as it prepares to end power production at the facility in 2022.

Meanwhile, the City of Farmington and its partner Enchant Energy are pushing forward with an effort to take ownership of the full power plant and retrofit it with carbon capture technology. This would allow it to remain operating into the future, thus saving jobs at both the mine and the power plant.

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The carbon capture technology would transform the power plant into a low-emissions source of baseload power, but Enchant Energy is behind in its timeline to secure key permits and agreements. That development is not lost on the mine's manager, who had hoped Enchant's project would help to avert any layoffs.

Mine manager says layoffs planned long ago

None of this comes as a surprise, Steve Pierro, general manager of San Juan Mine, said. He said it has always been the plan that a year before the power plant stopped operating the mine would end its mining operations and switch to just delivering stockpiled coal and reclaiming the land.

"We'll be done mining sometime late June, early July," he said. "All the coal will be on the ground that the power plant needs for the next 12 months."

At that time, Pierro said the mine will lay off at least 115 people, which is a little bit more than half of the workforce. The workers are all aware of these pending layoffs. He said about two months ago the workers were given the tentative date of June 31 for the layoffs.

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"We've been transparent through this whole process with people," he said.

By giving months of notice, Pierro expressed hope that these mine workers will have time to prepare. 

After PNM ends its operations at San Juan Generating Station, hauling of coal from the mine to the power plant and hauling coal ash back to the mine will cease. After that, only reclamation work will occur at the mine. That means another layoff in summer 2022 at the same time that the power plant workers will be laid off.

New Mexico plans for closure, but some efforts derailed

New Mexico leaders have been planning for the impact of the pending closure for years. The Energy Transition Act was signed into law in 2019. One of the key provisions of that law was providing Public Service Company of New Mexico with the opportunity to refinance past investments into the power plant using low-interest bonds known as securitization. Some of these bond proceeds were supposed to go to train displaced workers and to provide extra severance benefits. 

PNM, recognizing the mine workers would be laid off prior to the power plant workers, intended to pre-fund severance and worker training. Then a lawsuit filed by New Energy Economy with the New Mexico Supreme Court derailed that process. With the bonds being challenged, PNM has not pre-funded these benefits for the mine workers, some of whom were laid off in November as the mine switched to only longwall mining.

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"The Energy Transition Act was created to guarantee that as New Mexico takes bold strides to ensure a cleaner and healthier environment for future generations, communities impacted by closures would receive financial and economic support," said Nora Meyers Sackett, a spokesperson for the governor's office, in an email. "The governor stands by this promise, and the infrastructure to ensure that workers and neighbors affected by such closures remains in place — this litigation is explicitly causing harm to the communities who most need support, preventing funds from being distributed to workers and going back into the community as the ETA was designed to do."

Pierro said until the lawsuit is finalized San Juan Mine will not get any of the money for training or severance.

The 45 employees laid off in November were able to receive the severance package from Westmoreland, but are still waiting on the additional severance that was intended to be available through the sale of the bonds.

"It is very discouraging for (the workers)," Pierro said.

He said workers ask him about the status of the Energy Transition Act funds about twice a week.

New Energy Economy says PNM should not get 100% recovery

New Energy Economy opposes the securitization aspect because it gives PNM the opportunity to recover all of its past investments into the coal-fired power plant and pass those expenses on to ratepayers. 

New Energy Economy Executive Director Mariel Nanasi said her organization has never challenged the right for workers to receive compensation, including training and additional severance pay. She highlighted that the New Energy Economy Just Transition staff campaigned for adding funding for the Indian Affairs Department to the Energy Transition Act.

"We believe that not only retraining and adequate severance pay is important, but health care for life is necessary," she said in an email.

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She said what New Energy Economy is challenging is the constitutionality of PNM getting 100% recovery regardless of the facts. Nanasi has argued that PNM has made imprudent investments into coal-fired power plants and should not be able to recover those investments through securitization. When two of the units at the San Juan Generating Station were shuttered in 2016, PNM did not receive full recovery for investments into those units. However, PNM maintains that the investments into San Juan Generating Station were prudent and the 100% recovery is within the scope of the Energy Transition Act.

"We have never challenged and have actually championed the righteousness of 100% clean up to protect local residents adversely impacted by PNM's environmental contamination and pollution; we support shareholder responsibility for and investment in worker retraining and remediation of the land; we encourage and support local solar and storage ownership; we support bio-remediation of that poisoned land and reparations for the local community, with Native communities at the center," she said.

Hope fades for carbon capture project

While the workers face layoffs, there are still people optimistic that mining will not cease forever. 

"Now, of course, we were hoping that carbon capture would be together by now," Pierro said.

Pierro remains hopeful that some of the workers could be rehired if Enchant Energy and the City of Farmington are successful with the retrofit of the San Juan Generating Station. Farmington is a partial owner of the San Juan Generating Station and has the right to acquire the full plant because none of the other owners want to see it continue operating. It plans to transfer the majority ownership to Enchant Energy, which will retrofit the facility with carbon capture technology. 

However, Enchant Energy is behind the schedule they initially laid out. Enchant Energy had been saying they wanted to begin the retrofit before PNM left operations and hoped to prevent any layoffs.

The finalized Front End Engineering and Design study has not yet been released. Permitting has not yet begun on the pipeline that would take the carbon dioxide from the San Juan Generating Station to the Cortez pipeline run by Kinder Morgan. Nor has Enchant Energy secured a variance that would allow them to operate the San Juan Generating Station prior to the carbon capture retrofit following the new emissions caps that go into place at the start of 2023.

"There's lots of what ifs, and why fors and how comes, but there's nothing, no signatures on paper," Pierro said. 

He said San Juan Mine had hoped that everything would come together for Enchant Energy and Westmoreland, the mine owner, would not have to lay off any workers.  

"We are still very hopeful that maybe the mine goes idle for a year and a half and maybe we're able to fire back up with Enchant and (City of Farmington)," he said. 

Pierro said a decision could be made this spring regarding the San Juan Mine. Westmoreland could choose to seal the entrance, which would essentially mean that no one would ever enter the underground coal mine again. Reclamation would continue on the surface. Or the company could retain about a dozen employees to perform weekly inspections in care and maintenance mode in hopes that the San Juan Generating Station can be retrofitted and will once again need coal delivered from the neighboring mine.

Enchant Energy pushes forward with carbon capture project

Cindy Crane, CEO of Enchant Energy, said in an email that the company plans to start construction on the carbon capture island at San Juan Generating Station in mid-2022 and the first two carbon capture trains should be completed by late 2024. By mid-2025, Crane said the entire carbon capture island should be completed and fully operational.

She said the FEED study should be completed by mid-2022 and the pipeline permitting should also be completed around the same time. Crane said construction of the pipeline is scheduled to be completed by mid to late 2024.

If successful, the carbon capture retrofit will be the largest carbon capture project in the world and one of only three utility scale coal-fired power plant carbon capture projects. Of the two that have already been completed, only one remains operational. Petra Nova, located in Texas, shuttered last year amid a crash in oil prices. Boundary Dam Power Plant, which is located in Canada and utilizes carbon capture, remains operational.

Power the Future launches video campaign featuring miners

The pro-fossil fuel energy group Power the Future has launched a video campaign featuring mine workers from the San Juan Mine. These videos decry the calls from environmental groups to transition away from fossil fuels. 

In one video, a miner identified by the nickname Sheriff says that there won't be a just transition and instead there will be an abrupt transition into poverty.

Power the Future Western States Director Larry Behrens said a just transition is not possible and described the Energy Transition Act as a broken promise.

"The idea of a just transition is the height of arrogance really. I mean, imagine the career that you worked in two years, five years, decades, and someone comes along and says 'I'm going to make you transition to something completely different that's not going to be guaranteed to be there and I'll use a few tax dollars to send your way' to, I guess, assuage their guilt," he said.

While the San Juan Mine is preparing for layoffs, the region has been hit hard by the COVID-19 pandemic, and a current moratorium on new oil and gas leases and permitting on federal lands has led some companies to move planned operations to Texas.

Behrens said New Mexico is in the top 10 states for unemployment even before the moratorium on oil and gas. 

"It is a one-two punch of despair that this community is going to really have to struggle with," Behrens said.

Energy Transition Act successes

While the bonds are tied up in litigation, the Energy Transition Act has brought investment to the Four Corners region. Thanks to the new law, PNM is replacing the power it currently gets from the San Juan Generating Station with 100% renewable energy. The law required that at least some of that replacement generation be located within the Central Consolidated School District.

Two solar developers are building arrays in the CCSD boundaries and have contracts with PNM.

Camilla Feibelman, director of Sierra Club Rio Grande Chapter, described this as a win for the Energy Transition Act.

"Thanks to the ETA, there's a $1.1 billion investment in new energy in the Four Corners area," she said. "That is part of the outcomes that we had hoped to see from the Energy Transition Act. PNM had said that they were going to be leaving the San Juan Generating Station and we wanted to be sure that there were going to be benefits to the community that supplied energy to PNM customers for all these years." 

These solar projects within CCSD will help offset the loss of property tax to the school district if the power plant closes and will provide at least temporary jobs in the region during construction.

Feibelman said the lawsuit has presented an obstacle to getting funds to workers and the community and she hopes that the state Supreme Court will rule in favor of providing the funds for a just transition. 

Hannah Grover covers government for The Daily Times. She can be reached at 505-564-4652 or via email at hgrover@daily-times.com.

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