Article published Jan 28, 2008

Public invited to Air Force meeting

By PETER JOHNSON

Tribune Staff Writer

Top Air Force officials are expected to provide more details of a coal-to-liquid-fuels plant proposed for Malmstrom Air Force Base and take public comments at a town meeting scheduled from 6 to 8 p.m. Wednesday in the Civic Center's Missouri Room.

Montana Department of Commerce representatives also will be on hand to explain state tax incentives for clean-coal technology that captures carbon emissions. Great Falls Development Authority President Brett Doney said he has been assured by top Air Force officials that the expensive, privately developed and operated plant would be subject to property taxes, even though it would be built on federal property.

Attorney Warren Wenz, chairman of the Chamber of Commerce Committee of 80 group that lobbies for local military missions, predicted a strong turnout for the informational meeting.

"I would expect some opposition to the proposed Malmstrom plant, given concerns raised locally about the proposed Highwood coal-fired generating plant," he said. "And I anticipate a lot of people will just want to learn more about the Malmstrom project and its technology."

The Highwood plant is a coal-fired power plant proposed for eight miles east of Great Falls. It has met with opposition because of emissions and its proximity to a historic Lewis and Clark site.

Assistant Air Force Secretary William Anderson met with Gov. Brian Schweitzer and Montana's congressional delegation in the fall to propose offering some 700 acres of "underutilized land" at Malmstrom to a developer willing to build and operate a coal-to-liquid plant that could make 20,000 to 30,000 barrels of fuel a day.

Potential for 400 jobs

Doney said he's been told that the facility it would be a multi-plant operation employing many skilled workers in oxygen, steam, gasification and power generation subplants. It also would have a large coal yard to handle a 125-car coal train each day.

Congressional members have said that as many as 1,000 workers could be employed during construction and 300 to 400 as plant operators, but Corey Henry, vice president of the National Mining Association, projects even bigger numbers.

South Africa has operated large CTL plants for 30 years, China expects to open its first such plant in the next few months and at least two U.S. plants are being built, a half dozen others are close to being started and another nine are being considered, he said.

A 25,000-barrel-a-day plant being built in Wellsville, Ohio, is expected to cost $2.5 billion, employ 2,000 construction workers and require up to 1,000 permanent plant operators, he said.

Anderson said the Air Force is doing its part to lessen U.S. dependence on foreign oil, which he called a financial challenge and a national security risk. The Air Force, the government's biggest energy user, is converting its jets to synthetic fuel.

He said Malmstrom is a good site because of its proximity to abundant southeastern Montana coal reserves, water from the Missouri River and a good transportation system.

Col. Bob Griffin, senior military adviser to Anderson, said in an e-mail Friday that a 30,000-barrel-a-day CTL plant whose entire production was dedicated to producing jet fuel could meet the Air Force goals of procuring 50 percent of its jet fuel from domestic, "greener," or more environmentally friendly, sources by 2016.

Industry forum scheduled

The Air Force also has scheduled an invitation-only "industry forum" Thursday at the Holiday Inn, where military officials will showcase the proposal to some 100 industry developers, contractors and financers who might be interested in building the plant. Local and state government officials also are expected to attend. Schweitzer, an advocate of clean-coal production, will give the opening remarks and listen for about an hour, an aide said.

Griffin said that attendance is being limited to industry representatives and elected officials because it will be "a technical, working session designed to facilitate ideas and proposals from industry."

Anne Hedges, program director of the Montana Environmental Information Center, called the closed meeting "an outrage."

"The Air Force will listen to public concerns and give pat answers on Wednesday night," she said. "But the real discussion between the Air Force and industry folks about how the plant will work will take place the next day, when the public and press are excluded."

Concerns about location

Local economic development groups are supporting the plant, to a point.

Wenz, a long-time Malmstrom booster, said he believes the nation has to begin developing its 100-plus years of coal reserves as an alternative source of fuel, therefore he is "not opposed to the plant."

"But I don't want it located where it will interfere in any way with Malmstrom's present mission or the potential future use of the base runway," he added.

Wenz and other Malmstrom supporters have expressed concerns over a preliminary drawing that shows the proposed 700-acre plant and buffer area crossing the middle of Malmstrom's runway, which has been closed for a decade. They also said the proposed site seems too close to the base missile wing's weapons storage facility, where nuclear warheads are stored. Base supporters believe the Air Force will want to reopen Malmstrom's runway someday to take advantage of Montana's wide-open air-training space as other urban bases, and their flying spaces, become more congested.

Griffin has stressed that Malmstrom has not had a flying mission for a decade and that the 2005 Base Realignment and Closure commission plan did not discuss the possibility of reopening the base runway.

On Friday, Griffin said the proposed site for the plan still overlaps Malmstrom's runway, but the final land requirements and plant placement will be driven by the developer's requirements. He also said the Air Force's decision to proceed with the plant depends on a private developer proposing a plan that wouldn't impact the missile mission.

The GFDA's Doney said nobody involved would want a coal plant built in such a way that it would affect the safety, security, cost effectiveness or operations of Malmstrom's existing missile mission.

"It's a very exciting prospect, though it's still in the early stages," Doney said.

"A coal-to-liquid plant makes a lot of sense in reducing the nation's reliance on foreign oil," he added. "And Great Falls has access to water, coal and Malmstrom's excess land."

Environmental impact

MEIC's Hedges criticized the environmental impact of CLT plants such as the one proposed for Malmstrom.

"Coal-to-liquid energy development is the wrong direction for the nation," she said. "The (federal) Environmental Protection Agency's own data shows that coal-to-liquid plants generate twice the global warming emissions as conventional oil refineries and other experts say carbon sequestering is still 10 to 15 years away."

She cited an August 2007 Scientific American editorial that criticized the economic and environmental costs of developing coal-to-liquid plants as a means to replace foreign oil.

The National Mining Association's Henry agreed that coal-to-liquid fuels produced without capturing carbon would produce more carbon dioxide emissions than conventional oil refineries.

However, he said, all CTL developers seeking to build plants in the United States are committed to capturing carbon dioxide and reducing those emissions.

Initially, the carbon would be liquefied and piped to depleted oil fields for what's called enhanced oil recovery, Henry said. That involves pumping the liquid carbon into a rock formation, where it stays, while pushing oil reserves out.

But members of the Coal to Liquid Coalition, who want to build and operate such plants, are confident that scientists will eventually perfect carbon sequestration, in which the carbon dioxide would be captured and injected into vast, deep geological formations, where it couldn't be released into the atmosphere.

Henry said environmentalists sometimes overlook the fact the proposed coal-to-liquid-fuel plants would produce considerably less criteria pollutants — the carbon monoxide, sulfur dioxide and particulate matter that cause smog and harm human health — than conventional oil refineries.

"CTL plants are large, producing from 20,000 to 60,000 barrels of fuel a day; very expensive, ranging from $1 billion to $6 billion, and have a long lead time for construction, even after passing environmental review," he said.

The federal government has one incentive to encourage construction of such CTL plants, he said: a 50-cent per gallon tax credit for every gallon of fuel produced.

The industry is lobbying congress for two other incentives, he said.

Those incentives would:

Allow the Department of Defense, which is trying to wean itself from potentially unstable foreign fuel sources, to negotiate long-term contracts at fixed prices with CTL producers.

A "price collar," in which both a floor and a ceiling price are set for CTL fuel. Plants would receive government payments when oil prices exceed the minimum price and pay the government when they exceed the maximum price.

Henry said such a system would "shield the CTL industry and its customers from being manipulated by foreign oil cartels."

He recalled that U.S. companies took an interest in producing similar synthetic fuels during the 1970s, when OPEC nations raised oil prices significantly. However, OPEC eventually lowered prices and squelched efforts by the fledgling U.S. synthetic fuel companies, he said.