Article published Nov 9, 2007

Panel hears drawbacks of coal-to-liquids facilities

By KARL PUCKETT

Tribune Staff Writer

HELENA — Coal-to-liquids technology, touted as a cleaner way to develop the state's vast coal resources, has drawbacks, including the large quantity of water the facilities need.

That was the message members of the Legislature's Energy and Telecommunications Interim Committee received Thursday from government, conservation and industry officials familiar with the technology.

"Now we have the facts on the table," said Rep. Brady Wiseman, D-Bozeman, who asked for the coal-to-liquids discussion.

Based on what he heard about water consumption at the facilities, Wiseman said after the meeting that development of coal-to-liquids plants is possible "but we can't have 100."

There are no coal-to-liquids facilities in the United States today, but two — one close to Bull Mountain near Roundup and the other at Malmstrom Air Force Base in Great Falls — are under consideration in Montana. South Africa has a developed coal-to-liquids industry.

Brett Doney, president of the Great Falls Development Authority, was in the audience at the committee meeting at the Capitol.

The U.S. Air Force announced earlier this fall that it is considering a coal-to-liquids facility at Malmstrom and area officials are gathering information about the technology.

"We're on a very steep learning curve," Doney told committee members.

He described the Air Force proposal as being on a fast track. The development authority considers the plant an exciting prospect but won't endorse the project until it has more facts, Doney said.

Gov. Brian Schweitzer has backed the technology, saying it's a way to develop the state's 120 billion tons of coal without polluting the environment and reduce the country's reliance on Middle Eastern oil. U.S. Rep. Denny Rehberg, R-Mont., has introduced legislation to have 10 pilot coal-to-liquid facilities built across the country.

The plants make synthetic fuel for use in vehicles or airplanes. The fuel is made from coal, natural gas or biomass, instead of oil. In the case of coal-to-liquids, the coal isn't burned so it's easier on the environment.

According to the experts who spoke at the meeting, lawmakers need to keep water in mind in any discussion of coal-to-liquids facilities.

"If you build a lot of plants, you need a lot of water" said Paul Cartwright of the state Department of Environmental Quality.

Government and industry estimates of water use vary — one to seven barrels of water per barrel of fuel — depending on the type of plant design, coal and climate. A report prepared by the governor's office notes that coal-to-liquids plants require significantly less water than most power plants producing electricity.

Water used at a coal-to-liquids plant won't be available for other uses, such as agriculture, Cartwright pointed out, so "the water question is a trade-off question," he said. Water consumption is particularly relevant in Montana, which has a near-desert climate, he added.

Chuck Magraw of the Natural Resources Defense Council told committee members that the amount of carbon dioxide the facilities can capture ranges from the 85 percent projected by the U.S. Department of Energy to industry predictions of 45 percent to 65 percent. Carbon dioxide is a greenhouse gas suspected in contributing to climate change.

"A huge range of difference there," Magraw said of the projections.

He added that a coal-to-liquids plant can cost as much as $4 billion to build.

Chuck Kerr, president of Great Northern Properties, which owns and manages coal reserves, said Eastern Montana has the attributes necessary for the construction of coal-to-liquids facilities, namely ample coal reserves and geography suitable for sequestering captured carbon in the ground.

Challenges include finding locations with enough water and dealing with the complex nature of the technology, he said.

Wiseman asked Kerr what lawmakers could do to facilitate efforts to sequester carbon dioxide. Uncertainties faced by the industry are questions about who owns the pore space — geographical formations where carbon can be stored — and liability in the event carbon escapes, Kerr said. He asked for clarity in the law, which is important in getting financing, and reasonable sequestration benchmarks.

"If you want to kill off the industry, pass some hurdle we can't reach," he said.

Wiseman added that Montana needs a state-of-the-art legal framework for the industry to operate within.

"We're willing to entertain ideas," he said.