Australia’s largest single coal fired unit, the long-awaited Kogan Creek Power Project, is now 90 per cent complete. PEi was invited to Queensland to view the project first hand and saw a significant industrial undertaking working in harmony with local interests.

Nigel Blackaby

The sign at the airport reads, “Welcome to Chinchilla – a Vital Friendly Town”. Apart from the sign, there is nothing much else there; no shops, no restaurant, no control tower, no one at all as a matter of fact – just a few brightly-coloured crop dusting planes and a few promotional leaflets advertising nights out at the Chinchilla RSL Memorial Club. The overall impression is that not much changes in this small tranquil town in the Australian outback. But big changes have been occurring here, ever since the town was chosen to play host to Australia’s largest single power generating unit – C S Energy’s 750 MW Kogan Creek Power Project.

The most significant change has been the rapid increase in population that has seen a jump of around 25 per cent from 3800 to around 4800 in the space of two years. The influx of workers involved in the construction of the coal fired power plant and adjacent Kogan coal mine has brought a lot more prosperity to Chinchilla. Residents of the town, that lies 280 km east of Brisbane in the southwest of the Australian State of Queensland, have seen unprecedented infrastructure improvements and investments being made in a wide variety of community activities.

CS Energy and their EPC contractors Siemens and Hitachi have put considerable emphasis on community relations, liaising with local representatives at every step in the project and keeping residents fully informed of activities at or around the construction site that might impact residents. “We spent a lot of time understanding and addressing the community’s needs and establishing relationships,” said Thomas Scherer, Siemens project manager for Kogan Creek. As a result of this effort and the jobs that the project has created, the project has won the support of the local community.

Meeting needs

When completed in September 2007 the Kogan Creek A power station will be capable of supplying around 700 MW of electricity to the Queensland power grid. CS Energy plans to operate the plant as a baseload generator, operating 24 hours a day, seven days a week. The power station will meet the growing demands of National Electricity Market consumers. Much of the power will be directed to the growing population of Brisbane and its nearby coastal areas such as the Gold Coast and Sunshine Coast.

Queensland is enjoying unprecedented popularity with over 1500 people choosing to move to the state each week. Forecasts produced by the National Electricity Market Management Company (Nemmco) in 2003 pointed to a growth in summer demand of almost 3500 MW between 2002/3 and 2007/08 for Queensland and New South Wales – a forecast that did not take into account major industrial projects proposed for each state. With this growth comes additional commercial and industrial activity and the resultant increase in power demand was one of the key factors that persuaded CS Energy to go ahead with a project at Kogan Creek, which had been contemplated for a number of years.

Chimney, boilerhouse and turbine hall under construction at CS Energy’s Kogan Creek power plant in Queensland
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Another driver for the project was the opportunity to sell electricity to the neighbouring State of New South Wales (NSW) through the Braemar switching station on the Queensland-New South Wales interconnector, some 28 km from Kogan Creek. Power generating companies in Queensland are already supplying ten per cent of New South Wales peak electricity demand and Nemmco expectations were that by 2007/08 any spare capacity in NSW would have been consumed, leaving no excess to support Queensland consumers. “The Nemmco forecasts persuaded us to go ahead with the project despite some having reservations about adding a 750 MW, which represented ten per cent of Queensland’s entire installed capacity,” said John Hartson CS Energy’s project manager for Kogan Creek.

Technology choice

The choice to build a single large 750 MW unit, with a sent out capability of approximately 700 MW, was made after detailed whole-of-life comparisons were made of competitive tenders in 1999 for this arrangement as well as an alternative of having two, smaller units of around 400 MW unit size. The single unit alternative was judged to have both lower capital and operating costs, along with a higher efficiency and improved environmental performance. The original project owners Mirant undertook this competitive bidding process – so the choice of technology was not that of CS Energy. “Despite the changes in ownership, some of the individuals involved in the decision making remained the same. CS Energy had to go through a thorough evaluation process when acquiring the plant,” explains Hartson.

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Kogan Creek is being designed to operate as a merchant power plant. It will have no agreed long-term power purchase contract to fall back upon and will be selling its output into the wholesale electricity market. “We will only get paid when our plant is running,” explains Mark Chatfield, chief executive of Brisbane-based CS Energy. “We are facing the national electricity market where recent prices have been around $A28-30 ($21-23) per MWh and Kogan Creek needs to be competitive at those prices,” said Chatfield. He admits that there is an element of a punt involved in this project as its success will be determined by the level of wholesale power prices but believes that risk is tempered by the project’s choice of tried and tested technology. “CS Energy couldn’t afford to spend between $A1.1 and $A1.2 billion to develop a plant and mine and use untried technology. We have sought to achieve the highest level of efficiency without getting too far out on the leading edge of technology.” Any perception that government-owned entities had a special right of entry to introduce new projects was wrong, insisted Chatfield. “The board takes a very hard-nosed view of any new project.”

Delayed start

The plan to build a black coal based power plant located near the Surat coal basin, yet only 28 km from the main 275 kV power transmission line, was developed by Consolidated Electric Power Asia, a subsidiary of US power company Mirant as part of its generating interests in Australia. Mirant’s interests were sold to CS Energy in the year 2000, the largest power generator in Queensland, which was formed out of the break-up of the state monopoly power utility. CS Energy then awarded the EPC contract for the project to a consortium led by Germany’s Siemens and Babcock Borsig in August 2004. However, inadequate wholesale power prices squeezed the available margins and forced CS Energy to defer implementation of the project. By early 2004 market conditions had improved and Siemens, along with Babcock Hitachi Kure (replacement partners for the by then failed Babcock Borsig), were given the ‘Notice to Proceed’ for the turnkey construction of Kogan Creek under a lump sum contract. The project is set to run for 39 months with handover of the finished plant to the customer planned for late August 2007, followed by a one-year warranty period.

An aeriel view of the Kogan Creek construction site showing the large air cooled condensers
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Parallel to the construction of the power plant is the establishment of an adjacent coal mine to supply fuel to Kogan Creek. The mine is being developed by Golding Contractors with the coal being extracted in open cut mining. It has a capacity of 2.8 million tonnes of low cost, good quality steaming coal a year and is located just 4 km from the site of the power plant. The coal requirement for the power station is 85 million tonnes over the station life of 30 years. Total identified coal deposits at Kogan Creek are in excess of 389 million tonnes. The ready supply and low cost of fuel will make Kogan Creek one of the lowest cost power producers in the National Electricity Market and extremely competitive compared with the marginal operating cost of the best Victorian brown coal baseload generators. The scope of supply for the power plant includes the coal handling system that conveys coal from the mine to the plant, with coal crushing and storage as well as an ash handling system. In the first three years the ash will be stored in a landfill adjacent to the plant. After which future ash will be disposed of in exploited areas of the mine.

With improved wholesale power prices and an abundant and cost-effective supply of coal, the case for proceeding with Kogan Creek was strong however the decision by the Queensland state government to approve the plant was not welcomed by some environmental groups. In objecting to the plant development WWF said, “The five million additional tonnes of annual greenhouse gas pollution will add to global warming that is bleaching the Great Barrier Reef and sucking moisture from drought-stricken Queensland farms. Building coal fired power stations in a warming world is like trying to put out a fire with petrol.” Queensland is committed to a Cleaner Energy Strategy however the decision to approve Kogan Creek pre-dates the introduction of this policy.

Water supply

Kogan Creek is being built at the top of a ridge close to the eponymous feeder creek to the Condamine River. The wider region is primarily agricultural but the area immediately surrounding the mine and plant construction site is poor quality land, with sparse vegetation. For most of the year the climate is extremely dry although the risk of flash flooding had to be managed, as was the need to prevent run-off from the plant contaminating the creek and river.

Water is of course a vital element of coal fired power generation. The Kogan Creek power plant and mine require approximately 1500 million litres/year, so the absence of an ample or reliable water supply had to be accommodated in the project design. The solution was to pipe in water to supply the steam system so as to place minimal water requirements on the Condamine River System. This is being derived from three groundwater bores, which tap the Great Artesian Basin, one fairly nearby the plant and the others around 25 km distance. The supercritical steam technology and air-cooled condenser used at Kogan Creek means that it will use 90 per cent less water than conventional wet cooling power stations and will also result in reduced greenhouse gas emissions. Turbine exhaust steam will be cooled by one of the world’s largest air cooling systems, which is being constructed by Global Engineering Alliance (GEA). The surface area is equivalent to the playing area of Brisbane’s giant Suncorp sports stadium. In this system, the exhaust steam is passed to heat exchangers through which air is forced by large fans.

The Siemens generator supplied to Kogan Creek was lifted into position in July 2006.
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The visit to Kogan Creek coincided with an important milestone for the project with some 90 per cent of the construction work having been completed. The 37 members of staff who will be operating the power plant had just finished a period of office-based training and were being deployed to the power station. These people have been specially recruited from all around the world for their skills. The plant is making the maximum use of control technology and will have the minimum number of operators.

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After a false start, Kogan Creek is turning out to be in many ways a model power project. “The project and its location has thrown up challenges such as the need to provide for an extended infrastructure, the scarcity of skilled labour, and the difficulties of placing orders for many large items of equipment,” said Siemens’ Scherer. “The use of a standardized design was a benefit as was working with an understanding partner,” he added. “Best of all was our relationship with our customer CS Energy, who were always flexible and open to changes and new ideas.” Scherer said he was confident that they would deliver the contract on time. Handover of the finished plant is planned for late August 2007, some 39 months after notice to proceed.

Future plans

Meanwhile, back in Chinchilla the residents might well be wondering what will become of their town after the construction of Kogan Creek is complete and the majority of the 900 or so workers drawn in from different parts of Australia and around the world head home.

The prospect of life after construction may be further in the future than some imagine as detailed consideration is already being given to a second unit at Kogan Creek. As part of the construction of the first unit, Siemens has cleared and laid a base for Kogan Creek B and CS Energy says it is considering even higher steam conditions for any second unit. “We still think there is scope for the use of low cost local coal in power generation,” said CS Energy chief executive Mark Chatfield.

At the peak of construction some 920 workers were employed at the Kogan Creek site.
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The coal supplies would certainly support another unit and CS Energy is planning to expand the use of local low cost coal resources both by building new plants and by retrofitting existing coal plants with oxyfuel firing technology, which would involve the separation and storage of carbon dioxide. If Queensland continues to see demand increasing by 250-300 MW a year and National Electricity Market pricing holds up, then Chinchilla’s Memorial Club nights may remain busy for a few more years to come.