Plans progress for Wyoming coal-to-gasoline plant

AP News
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Posted: Dec 18, 2009 7:32 PM

Wyoming Gov. Dave Freudenthal is supporting a Texas company's proposal to build a major plant for turning coal into gasoline.

The U.S. Department of Energy is weighing an application from DKRW Advanced Fuels LLC of Houston for a loan to help build the proposed $2.7 billion coal-to-gasoline plant.

"This would be the first major industrial gasification facility that produces transport fuels _ gasoline or diesel _ from coal in the United States," DKRW chairman Bob Kelly of Houston said Friday.

The public has until Monday to comment on what issues the DOE should address in an environmental study. The Sierra Club has voiced concerns about the project, saying it's concerned about greenhouse gas emissions tied to global warming.

The plant would be built next to a coal mine about 13 miles from the town of Medicine Bow, about 100 west of Cheyenne in southeastern Wyoming.

The plant would process nearly 10,000 tons of low-sulfur coal a day from a mine into 21,000 barrels a day of gasoline. The fuel then would be piped roughly 200 miles southeast to the Denver market.

"It's really the great strength of what we're doing, producing gasoline from U.S. coal reserves," Kelly said. He said the nation currently imports almost two-thirds of its petroleum products.

"It's got real strong benefits for the country, that's why we think it's in the interests of the country to do this," Kelly said.

Technology to transform coal to liquid fuels has been around for decades. Germany used a similar process during World War II to make up for the country's lack of oil reserves.

Kelly said similar plants are now in operation in China and South Africa, but said they use different techniques.

"The price of oil has increased, and it makes the technologies that have developed over the last 50 years economic to use at this point in time," Kelly said.

DKRW also proposes to incorporates environmental refinements that supporters say will highlight U.S. coal as a viable alternative to imported oil.

The company proposes to capture over half of the carbon dioxide emitted during the coal refining process. It plans to pipe the CO2 gas to Wyoming oil fields where pumping it underground would serve the dual purpose of keeping it out of the atmosphere while pressurizing the oil reserves to allow more of it to be pumped out.

Kelly said the resulting gasoline also would have much lower sulfur levels than typical gasoline.

Completing the federal environmental analysis will take from 12 to 15 months, Kelly said. He declined to say how much money the company is seeking from the federal government, but said his project is one of four finalists the federal agency has selected nationwide to seek a share of $8 billion in available funding.

Kelly said he said construction would more than 2,000 workers at maximum levels. He said the plant and associated coal mine would employ 450 during regular operations.

Construction would be completed in 2015 and the plant could have a useful life of perhaps 50 years, Kelly said.

Gov. Dave Freudenthal wrote to the DOE this week in support of the project. Wyoming is the nation's leading coal-producing state and relies heavily on energy revenues to fund government operations.

"The project is important to Wyoming and to the United States," Freudenthal said Friday. "It will be the first of its kind. It will combine technology for converting coal to liquids with an aggressive carbon capture and sequestration effort."

The Sierra Club has unsuccessfully challenged the project's application for an air quality permit.

Martha Martinez del Rio of Laramie, an officer on the Sierra Club's state board, spoke against the project at a public meeting on the project Wednesday night at the Medicine Bow Community Center.

In a telephone interview on Friday, Martinez del Rio said she's concerned that the plant would produce greater amounts of carbon dioxide than producing the same amount of gasoline from a conventional oil refinery.

Martinez del Rio said she's concerned that there's no proven technology for capturing and storing carbon. "We're going to be adding to the gases that contribute to global climate change," she said of the project.

Martinez del Rio said she's concerned that the plant will produce air pollution and disrupt sage grouse, a species that the federal government is considering for endangered species protections.