Montana governor announces coal-liquids plant

Gov. Brian Schweitzer on Monday announced Montana will have one of the nation’s first coal-to-liquid fuel facilities, a $1.3 billion project that several companies have agreed to build in the state’s midsection.

DKRW Advanced Fuels, Arch Minerals and Bull Mountain Cos. plan to develop the project at the Bull Mountain mine 14 miles south of Roundup, in central Montana, Schweitzer said. The governor said that although he announced the project, the state is not a partner nor did the developers request tax breaks or other incentives.

“This is a private deal between private companies,” Schweitzer said, adding the state worked to help draw the companies together.

DKRW and Arch Minerals are principal developers of the previously announced Medicine Bow coal-to-liquid facility in Wyoming. DKRW has developed wind and natural gas projects worldwide. Arch Minerals is a leading U.S. coal company.

DKRW is in the planning stages of building a coal-to-liquids plant near Medicine Bow in Carbon County. Company officials could not be reached to find out whether its project in Montana would delay its plans in Wyoming.

In March, DKRW signed a license agreement to use General Electric’s coal gasification technology for the Medicine Bow Fuel & Power plant. DKRW has already purchased property in Carbon County for the plant, and it is also working closely with Arch Coal Inc., which has signed tentative agreements to supply coal to the project from its existing mine properties in the area.

In August, the companies announced that Arch acquired 25 percent interest in DKRW Advanced Fuels, LLC, investing $25 million in the company. Arch also agreed to secure coal supplies for two additional coal-to-liquids projects “outside of the Carbon basin,” according to an August press release.

The Montana project would use what is called integrated gas combined cycle technology to gasify coal, rather than ignite it. The project calls for converting a portion of the synthetic gas into a daily 22,000 barrels of diesel fuel, using the rest of the gas to generate about 300 megawatts of electricity.

“I’m excited about this one,” Schweitzer said at a news conference.

The Northern Plains Resource Council, an environmental group, was skeptical.

The technology has not been proven thoroughly and the project’s imprint on the environment stands to be significant, said Mark Fix, the council’s chairman and a rancher in the Miles City area. Expansion of Montana’s wind power generation and projects to produce biofuels from oilseed crops are better alternatives, Fix said.

“We’re trying to protect … the lifestyle that we all love in Montana,” he said in a telephone interview. Schweitzer said he expects “one of the cleanest plants on the planet.”

Calls seeking comment Monday from Arch and DKRW were not returned immediately.

The project moved forward “because there are good basics at the plant site,” Bull Mountain Cos. said in a news release. “The site in the Bull Mountains has distribution capabilities and high-quality coal. In addition, there is a good climate for such projects, in a big way thanks to Gov. Brian Schweitzer.”

Schweitzer said the project will capitalize on Montana’s coal resources and strengthen the economy in a struggling area of the state.

An economic analysis prepared by a researcher at Montana State University-Billings projects the equivalent of 1,764 full-time jobs from operation of the plant and related work such as mining and rail transportation of coal. Annual wages and benefits for those jobs are projected at $194 million.

General Electric will provide the technology to convert the coal into synthetic gas, and technology from another company, Rentech, will be used to convert the synthetic gas into a liquid.

Schweitzer said the plant will be equipped to capture carbon dioxide for storage underground. The coal’s mercury, sulfur and particulate matter will be removed, he said. Fix said the handling of carbon dioxide is of particular concern because of the potential for releases to heighten global climate change.

It could be seven years before the first gas flows, Schweitzer said. Securing permits may take one to two years and construction will take several, he said.

“We’re going to work as fast as we can (in issuing permits), but we’re not going to cut any corners,” he said.