Update on Gordon Butte Pumped Storage Project

What made it possible to move the 400-MW Gordon Butte Pumped Storage project through the Federal Energy Regulatory Commission licensing process? Absaroka Energy points to several factors, including careful site selection and attention to stakeholder relations.

By Carl E. Borgquist, Rhett Hurless and Steve Padula

Gordon Butte rises more than 1,000 ft, with a distinct northern rim, and slopes off to the south. For closed-loop pumped storage hydropower development, the geographical location is ideal, but the path from ideal concept to licensing is one that involves the commitment and dedication of all involved.

The 400-MW Gordon Butte pumped storage project will be located on a 50,000-acre, single-owner ranch in Meagher County, Mt., about 3 miles west of the town of Martinsdale. The project is designed to take advantage of the unique geological features of Gordon Butte on its northern side to create a new closed-loop pumped storage hydro facility.

The project was conceived in 2008; originally envisioned as a part of a larger wind and transmission enterprise, which comprised 3,000 MW of northern plains wind, with collection lines feeding into the Gordon Butte facility. Once collected, a firm 1,000 MW of wind energy would then be transmitted via proposed DC transmission lines from Central Montana to Southern California. Since the heady days of wind development of the late 2000s, a decline in available renewable energy funding sources has resulted in the proposal of a smaller stand-alone energy project, and the pursuit of the Gordon Butte facility has proceeded.

Site selection

Early site evaluation by Stanley Consultants, Absaroka’s engineering consultant, resulted in a project design that included an elevation difference of 1,000 ft and a horizontal distance between reservoirs of 3,000 ft. The project will also be closed-loop, a design that will eliminate impacts to important local streams and watersheds.

After design optimization, Absaroka Energy settled on a design that will use two equally-sized reservoirs to hold 4,000 acre-feet of water. The head between the two reservoirs is 1,025 ft. The powerhouse will be equipped with three 133-MW ternary pumps/turbines supplied by GE Renewable Energy (formerly Alstom). These units will be configured in a hydraulic short circuit, which will allow for estimated annual energy generation of 1,300 GWh. The facility will be able to run for 8.6 hours at maximum continuous output. The ramp rate in either generation or pumping is 20 MW per second. The ability to move quickly and change modes seamlessly is the hydraulic short circuit configuration. The result will be an extremely robust and flexible generation, capacity and storage platform for the Northwest Region.

The fact that the construction of all access roads, the transmission line, the upper and lower reservoirs and the powerhouse will be on private land are all important factors in the design and implementation of an efficient FERC licensing process. Additionally, a twin 500-kV transmission line crosses the ranch about 6 miles from the powerhouse. The point at which the project interconnects, the transmission lines are jointly owned by Puget Sound Energy, Portland General Electric, Avista, PacifiCorps and NorthWestern Energy.

The water source is Cottonwood Creek, which drains the north end of the Crazy Mountains and is a tributary of South Fork Musselshell River. The landowner currently operates an existing diversion structure and irrigation ditch to irrigate hayfields on the ranch; this irrigation ditch system will terminate at the proposed location of the lower reservoir of the project. Using the existing system for water delivery minimizes potential impacts on riparian habitat, as well as eliminating potential conflicts with more senior water rights.

Local stakeholder involvement

The Federal Energy Regulatory Commission (FERC) licensing process is by design a public one that involves much coordination and consultation with a wide spectrum of federal, state, tribal and local stakeholders, all of whom influence licensing outcomes. To meet this challenge, Absaroka Energy adopted an early and often approach to its pre-filing license application outreach and consultation process.

After the filing of the Preliminary Application Document (PAD) and the Notice of Intent (NOI) to proceed in June 2013, Absaroka Energy identified many of the potential stakeholders for this project. These included federal and state regulators, government officials at the state and local level, environmental groups, tribal governments, water user associations and local landowners.

Through early and often consultation and collaboration, stakeholders were introduced to the Gordon Butte project. This included explaining the licensing process, building relationships and soliciting input from the stakeholders’ perspective in an effort to address their concerns early in the process. Some of the specific concerns and issues addressed included designing a fish screen behind the landowner’s head gate on the irrigation ditch and making the project’s environmental study available for comment and input at each stage of the study and reporting process.

Dealing with licensing

In the case of the Gordon Butte project, the initial strategic analysis performed by Absaroka Energy and Steve Padula of McMillen Jacobs Associates, concluded that the prescriptive nature of the integrated licensing process (ILP) would act as a detriment to success. Given the initial assessment of the limited potential for project effects, the lack of federal land involvement, and the apparent lack of any endangered species habitat (the project site is sited on ranchland currently used for cattle grazing), it was clear agency involvement was likely to be limited primarily to state agencies and the U.S. Fish & Wildlife Service.

Absaroka Energy determined the TLP was the most appropriate process for the project, as this process provided appropriate consultation opportunities without unnecessary structure, steps or deadlines. Implementing its philosophy of face-to-face engagement whenever possible, Absaroka Energy was able to garner the necessary support from the agencies for the TLP, prepared its request to FERC to utilize the TLP and received FERC approval.

Once FERC approved the TLP, Absaroka Energy sought FERC agreement to conduct early NEPA scoping. This was important, as it would ensure FERC staff were informed about the site, the proposed development concept and the apparent lack of resource concerns. Additionally, Absaroka Energy would obtain FERC endorsement of the scope of analysis that would be required to support the license application.

During the spring of 2014, Absaroka Energy prepared a draft SD1 to provide a starting point for FERC’s official SD1. Absaroka Energy was able to gain full agency support for the request to FERC to conduct early NEPA scoping, and FERC was able to issue its SD1 within a matter of months.

The result of this early and often consulting was that by the time FERC issued its Scoping Document 1 in May 2014, agency staff were familiar with the project, had time to really think about and communicate what they saw as their issues and concerns with regard to potential impacts, and had helped to design (and in some cases, participate in) the environmental study regime.

Then, Absaroka Energy was able to address all of the issues FERC raised in its Scoping Document 2 (August 2014), drafted following the public National Environmental Policy Act (NEPA) scoping meetings, as well as the environmental reporting requirements of the license application with the information generated in a single season of fieldwork.

During this same time period, in early 2014, FERC issued a notice seeking candidate closed-loop pumped storage projects for a two-year pilot licensing process as required by the Hydropower Regulatory Efficiency Act of 2013.

Absaroka Energy had already selected the traditional licensing process (TLP), had requested FERC consideration of early NEPA scoping, was developing a draft Scoping Document 1 for FERC’s consideration, and was well into study planning. In other words, a number of innovative steps had already been taken to help expedite the licensing process. Absaroka Energy remained with its TLP methodology because there was concern with the potential loss of positive momentum that would result from stopping current efforts to formally initiate a pilot process versus maintaining the positive pace that had already been established.

The next regulatory step was the draft license application (DLA). FERC’s regulations provide the opportunity to seek waivers from conducting specific regulatory steps that individual agencies deem unnecessary (e.g., 18 CFR 4.38(e) Waiver of Compliance with Consultation Requirements).

Absaroka Energy confirmed with FERC staff that with the agreement of all the relevant agencies, the DLA step could be waived. As important was FERC staff’s commitment that if Absaroka Energy could get full agency support, FERC would not require a DLA of its own volition. The strategy Absaroka Energy used to gain agency support was to use an applicant-prepared environmental assessment (EA) style for Exhibit E and share it with stakeholders. With this continued investment in informal consultation, the agencies felt confident that all of the relevant concerns had been adequately studied and analyzed and that a formal DLA step would not add sufficient value for the additional commitment of staff resources in formal review and preparation of comments. Thus, Absaroka Energy was able to eliminate the formal DLA review/comment step and save substantial time in the pre-filing process.

A final license application filed with FERC in mid-2016 contained vetted proposed mitigation measures and management plans. FERC staff conducted an expeditious review of the application, resulting in minimal additional information requests. Because of the early NEPA scoping, during which FERC staff indicated their intent to prepare an EA, and not an environmental impact statement (EIS) unless some unexpected resource concern emerged during comments received on the license application.

All of these efforts came to a head last year when FERC released the project’s Final EA, which was issued with a Finding of No Significant Impact. This document paved the way for the Gordon Butte Pumped Storage Hydro Project’s Original Hydropower License, which was issued on Dec. 14, 2016, authorizing the construction and operation of the facility for a 50-year period.

It has taken about six years from issuance of the first preliminary permit, in 2010, to the release of the EA and license. From filing of the NOI and PAD in April 2013 to the release of the EA and license in late 2016, time elapsed has been just a bit over three years.

Absaroka Energy was able to file its license application at FERC with no negative comments on its docket, buy-in on the application from regulators, support from the local community and a fully-developed list of pre-negotiated PME measures and license restrictions. From filing of the NOI and PAD in April 2013 to receipt of the FERC license in December 2016 – in less than three years – confirms this strategy works.

Water-related restrictive laws

Montana has developed restrictive laws based on the concept of prior use, encapsulated in the 1973 Montana Water Use Act, and most all the water in the state has already been appropriated. The challenge for the Gordon Butte project was obtaining water for the initial fill of the reservoir and then annual makeup water to account for evaporation and seepage without running afoul of more senior water rights.

The landowner irrigates about 1,400 acres on the ranch and has good standing water rights. First thoughts were to lease the water from the landowner for the initial fill. The state regulatory agency said it could not be done. The next alternative was obtaining water from the local state-owned storage reservoir managed by the local irrigation district. During normal water years, the irrigation district, has excess stored water. The state regulatory agency said it could not approve this approach.

The next alternative was to obtain a water right through purchase or permitting a new water right. Purchase was not an option. Therefore, the riskiest alternative of obtaining a new water right became the default option.

Obtaining a new permitted water right could take multiple years and court action and have a significant adverse effect on the progress of project development. Multiple meetings were held with state regulators, state and federal agencies that hold water rights in the area, irrigation district leadership, local water users, and neighbors. This work allowed Absaroka Energy to develop a strategic approach to obtaining a new water right.

All conditions and restrictions were negotiated with all the involved stakeholders in advance of submitting the application for the water right permit. The water right was issued 85 days after the application was submitted. This entire process took place during the spring and summer of 2014.

The Clean Water Act Section 401 certification mandates the state regulatory agency, in this case the Montana Department of Environmental Quality (MTDEQ), must provide for the applicant a federal license for an activity that may result in a discharge to waters of the U.S. During its consultations with MTDEQ, Absaroka Energy was able to demonstrate that, due to its closed-loop design, the project will not discharge any water from its reservoirs into adjacent waterways. Careful negotiations with agency staff led to a reasonable long-term water-monitoring requirement to ensure the non-degradation of water quality in the project’s reservoirs.

Working with the landowner’s owned and operated facilities, additional baseline aquatic studies were completed during the summer of 2014 by Montana-based consultants, Hydro Solutions Inc. Agreements were reached with state agencies to allow the landowner to install a fish screen to exclude fish from the existing irrigation system and return them to Cottonwood Creek. This work will take place prior to any withdrawal of water for the project.

Lessons learned

This project has enjoyed a less difficult path through the regulatory process than many others experience thanks to the ability to work with one landowner, having no state or federal land involved, having no critical habitat or endangered species affected, and strong community support. Not having to redo studies or start new studies has been essential to keeping the licensing process on a tight timetable.

Several lessons were learned during this process that would be valuable for others seeking to develop a facility.

First, local support for the project is vital. The process is pretty simple: Tell folks what you are going to do, keep them informed as you are doing it, make them a part of the process, and share success with them to keep them engaged and positive about the project and the process.

Second, keep in mind the workload of the agency staff during your development process. Determine how to ease their load by providing the project materials in a format that allows them to easily edit information to speed the process, and follow up via frequent contact to help agency personnel overcome small hurdles.

Third, using local technical consulting firms was a deliberate choice and, by taking advantage of their local knowledge and relationships, helped the process move forward. In doing so, Absaroka Energy representatives participated at every meeting and retained detailed control on the scope and quality of the sub-contracted work.

Finally, being proactive to address and develop solutions to problems, perceived or real, as they arise is critical.

The project is fully-involved and at the same time, we are in discussions with interested parties on off-taker agreements and co-owner relationships. Project construction could begin in 2018 and the plant become operational in early 2022.

Carl E. Borgquist is president and Rhett Hurless is senior vice president of Absaroka Energy LLC. Steve Padula is licensing and regulatory practice lead at McMillen Jacobs Associates.

Reference

Borquist, C., Hurless, R., and Padula, S., “Absaroka Energy LLC — Gordon Butte Closed Loop Pumped Storage Hydro — Site Selection and Consultation Process for Expediting Project Approval,” Proceedings of HydroVision International 2016, PennWell Corp., Tulsa, Okla., 2016.