Railway considers coal-to-liquids ideaadmin
The head of BNSF Railway Co. has sent an engineering team to Montana to analyze a possible coal-to-liquids project to supply diesel to fuel-thirsty locomotives, Gov. Brian Schweitzer said Monday in Billings.
Matthew K. Rose, chairman, chief executive and president of BNSF, has expressed interest in producing diesel fuel with the coal-to-liquids process, which has been championed by Schweitzer.
During a Gazette editorial board meeting Monday, the governor said that in July 2005, he met with five BNSF executives who tried to convince him that Montana farmers were getting fair shipping prices for their grain. He said he refuted their points about fair prices and the two sides agreed to disagree.
Then Schweitzer said he told the executives that they were overlooking their company’s biggest economic challenge.
“The most important thing is, you don’t know the price of your diesel 40 years from now,” Schweitzer said. “They just looked at me. They were still mad with me about freight rates and cleaning up Livingston.”
BNSF has been charged with cleaning up an estimated 1 million gallons of diesel fuel the company and its corporate forerunners dumped and spilled in Livingston during decades of railroad operations.
Schweitzer said he told BNSF it should build a coal-to-liquids plant in Montana to produce diesel fuel, especially because the railroad cannot hedge its costs that far into the future.
Then last summer, Schweitzer said Rose telephoned him to say, “Brian, I just wanted to let you know we were paying attention. The more we looked at it, the more we liked it.”
The governor said he laid out all the state’s potential sites with lignite or coal deposits from Otter Creek to Roundup to Nelson Creek in Eastern Montana.
“The best location for you is Nelson Creek,” Schweitzer said he told Rose. “Oswego can take 60 (rail) cars and it’s halfway between Minneapolis to Seattle.”
Montana’s Chief Business Officer Evan Barrett said part of developing coal-to-liquids in Montana is finding customers for the fuel. Union Pacific and BNSF are two of the country’s largest consumers of diesel, with BNSF’s 6,300 locomotives burning 1.4 billion gallons in 2005.
Nelson Creek lies west of Circle in McCone County. The BNSF Oswego site lies west of Wolf Point and about 30 miles north of Nelson Creek. Barrett said that is within easy reach of a pipeline.
“I’m aware of at least two additional sites where they’ve had discussions about locating in Montana,” Barrett said.
BNSF spokesman Pat Hiatte said the railroad remains interested in at least a study.
“We are still studying the economic and technical feasibility of the technology,” he said. “Montana locations, along with other locations, are being considered.”
In a September press release, BNSF said it was working with independent energy developer Tenaska Inc. of Omaha, Neb., on a joint study to evaluate multiple locations for a commercial-scale coal-to-liquids plant. The plant would use the Fischer-Tropsch technology to produce the diesel fuel.
This process was developed in the 1920s in Germany to make diesel fuel from coal and helped power the Nazi war efforts. The process also is used in South Africa.
Schweitzer said BNSF officials told him they were considering Alliance in western Nebraska and Guernsey, Wyo., northeast of Wheatland. However, the governor said he was told later that those two sites are no longer on the list.
“So, I feel pretty good about our chances,” Schweitzer said.
Montana has 120 billion recoverable tons of coal, the biggest reserves in the United States.
Chuck Kerr, a former Billings resident who now is president of Great Northern Properties in Houston, said he hadn’t heard of BNSF’s potential interest in the Nelson Creek site.
His company is developing the Nelson Creek reserves to power a more traditional coal-fired electrical plant, he said, but the times are changing.
“We’re on a completely different economic and environmental arena than we were two or three years ago,” Kerr said. “I think we would be remiss in not looking at other opportunities.”
In the 1990s, vast mineral rights owned by Burlington Resources were sold. Great Northern Properties bought the coal and other mineral rights, including at Nelson Creek.
Burlington Resources, which was purchased last year by ConocoPhillips, owns the oil and gas and coalbed methane mineral rights around Nelson Creek.