Company proposes boosting Wyoming’s energy economy with coal-to-oil plant

Feb 10, 2012

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The town of Medicine Bow is currently planning for a DKRW proposed coal to liquids conversion facility. The plant would be a financial boom for the state and bring jobs to the county. But this isn’t the first time Wyoming is looking into a project that would add value to its coal so it’s undergoing close scrutiny.

IRINA ZHOROV: At Western Research Institute, or WRI, outside of Laramie, scientists are busy working to turn biomass into liquid fuels. The facility is scattered over several warehouses that hold complicated configurations of piping humming along quietly. The feedstock – or the biomass material being processed - sits off to the side as we walk outside between buildings…

VIJAY SETHI:On the right is from the old Bighorn Lumber from the facility at the south end of town and that's wood chips that were pine beetle kill trees. The coal is from Powder River Basin.

ZHOROV: Back inside, Vice President of Energy Production and Generation at WRI, Vijay Sethi, and Principal Engineer, Thomas Barton, show off the fruit of their labors. It’s a test-tube sized vial of clear liquid, tinted slightly with an amber hue.

SETHI: What you're looking at is methanol that was synthesized from syngas derived from coal and it's a clear liquid and it carries the energy that used to be in coal now is sitting in this vial. You could pour into your gas tank and run your car for a [laughs] a couple hundred yards.

ZHOROV: WRI is looking for ways to clean and efficiently add value to fossil fuels and biomass but most of their work so far is in the laboratory. Meanwhile, a company wanting to turn coal into liquid gasoline on a commercial scale has its eyes trained on Medicine Bow.

Medicine Bow Fuel and Power, a wholly owned subsidiary of DKRW Advanced Fuels, wants to build a coal to liquids facility outside of Medicine Bow. In its first phase, the facility plans to convert about fifty three hundred tons of coal into 10,600 barrels of gasoline per day. The coal would come from the Arch Coal operated Saddleback Hills mine and 100 percent of the produced gasoline would go to the Denver market by pipeline, through a contract with Vitol, an energy trading company.

Bob Kelly is the Executive Officer of Medicine Bow Fuel and Power.

BOB KELLY: If you think about it, Wyoming instead of shipping coal out of the state is adding value to the state. With a high technology complex, we’re using US coal to produce oil equivalents through the gasoline instead of bringing it in from abroad.

ZHOROV: If built, this plant would be the first commercial coal to liquids facility in the United States. Kelly adds that in terms of new technology, it will be the leader internationally, as well, comparable only to a similar project in China.

The idea is to develop a domestic fuel source.

KELLY: We have enough coal in this country to produce as much oil equivalent as the reserves in Saudi Arabia, if we choose to use it.

ZHOROV: For Wyoming specifically, there are the benefits of finding a new use for our coal and the perks that come with any large project.

Here’s Senator Phil Nicholas:

PHIL NICHOLAS: We need as a state to find alternative uses for coal. We can’t sit on our heels and just ignore the fact that there is a national campaign against the coal industry. That’s an important industry to us and finding clean coal methods and trying to convert coal to gasoline is of great interest, great importance, it creates jobs, the industry pays a large amount of our taxes in the state of Wyoming, and we can ill afford to sit back and do nothing.

ZHOROV: DKRW estimates that in its first phase, which Kelly says can take about twenty years, the project would contribute about 1.4 billion dollars in taxes and payrolls to Wyoming’s coffers.

During the construction period, which will last 3 to 4 years, the plant will add about 22 hundred jobs. And once completed, the facility and the mine will provide about 200 permanent positions each.   

KELLY: These are a variety of skill levels and so on and obviously we’ll try to bring on as many local people as we can subject to them having the skills to do that.  

ZHOROV: Further, according to plans, the plant will capture about 95% of carbon dioxide – DKRW has a contract with Denbury Resources, an oil and gas company, to purchase the captured carbon dioxide and use it for enhanced oil recovery. They’ll also sell off the captured sulfur and other byproducts of the process. This would make the gasoline cleaner than that produced from traditional petroleum and, depending on crude oil and coal prices, potentially cheaper.

County Commissioner for Carbon County, Terry Weickum think the plant is a good idea.

TERRY WEICKUM: I personally welcome them with open arms and have told the company if there’s any way that we can help them be successful feel free to ask us because we need the jobs, we want the tax money, we believe that this would be a great thing for Carbon County, or at least I do for sure.  

ZHOROV: But is it too good to be true?

Currently, DKRW’s technical plans are being reviewed by the Idaho National Laboratory and the company is casting its nets – to public and private entities - to fish for financing for this project.  

Questions remain about environmental issues surrounding the plant, the financing to get this project off the ground, and the inevitable bust after the boom in Medicine Bow.

For Wyoming Public Radio, I’m Irina Zhorov.