Article published Feb 1, 2008

Schweitzer touts coal-to-liquid plant

By PETER JOHNSON

Tribune Staff Writer

Presidential candidates are debating when the U.S. should withdraw from Iraq, but the nation is so dependent on Middle East oil, Gov. Bryan Schweitzer said Thursday, "that our troops won't leave the region until we develop a good supply of domestic fuel."

He also told the coal industry officials gathered in Great Falls that with 40 percent of the world's oil supply coming from the Middle East, U.S. gas prices could go as high as $20 a gallon if Iran started sinking supertankers passing through the narrow Strait of Hormuz.

The Montana Democrat was obviously preaching to the choir when he advocated the proposed coal-to-liquid, or CTL, fuel plant the Air Force wants a private developer to build and operate on underused Malmstrom Air Force Base property.

About 80 representatives of major industry players such as Chevron, ConocoPhillips, Shell, Rentech and the South African CTL pioneer Sasol were at the public portion of an industry forum at which the governor spoke. Air Force officials had planned to close the whole morning session so the energy companies could talk candidly, but Schweitzer said he told them, "I don't want to be at things where the press is not allowed."

The meeting was closed soon after Schweitzer spoke and Assistant Air Force Secretary William Anderson repeated a slide show from Wednesday night's public town meeting.

Corey Henry, vice president of the National Mining Association, said later that a cross section of CTL developers, technology providers, contractors and financiers were present at the meeting.

"The comments, questions and discussion I heard were all positive," he said. "They were eager to see this project move forward."

Henry said "a perfect storm" may be brewing to make the Malmstrom project one of the first U.S. CTL plants. Key ingredients include strong political support from Schweitzer, an abundance of coal and water and an interest in the project by the Air Force.

"These plants are expensive to build, in the $1 billion to $2 billion range, so will need a lot of capital from Wall Street," he said. "It helps to tell financiers that the Air Force not only wants to lease you land, but also expects to be a long-term customer."

Schweitzer agreed in a short interview that "the broad shoulders of the Air Force" may help the project go forward.

He also noted said that Montana offers "the best and cheapest coal," a skilled work force and a Great Falls community that appears anxious for the growth, including the 500 permanent jobs the plant could bring.

In his talk, Schweitzer said the Department of Defense, which is a huge fuel user, wants to come up with domestic sources so it won't have to fight wars over oil.

He said Montana's coal reserves, if used strictly for CLT plants, could provide the equivalent of 60 years worth of U.S. oil imports.

Capturing and storing the greenhouse gas carbon dioxide from CLT and other plants is "not futuristic stuff from the old 'The Jetsons' cartoon show," Schweitzer said.

Carbon dioxide, an unregulated pollutant, has been identified by scientists as contributing to climate change.

North Dakota and Texas plants have sold liquefied carbon dioxide for years to oil developers to pump into oil fields to push up remaining oil while leaving the carbon dioxide safely underground, he said. Scientists now are researching other commercial uses, such as pumping the substance into algae-filled ponds to create biomass energy, he said.

"But coal-to-liquid fuel is just one leg of a big table," Schweitzer said, adding that he also supports wind, solar and biomass energy development, conservation and the development of electric cars.

Anderson lauded Schweitzer as one of the nation's three governors, along with California Gov. Arnold Schwarzenegger and Utah Gov. Jon Huntsman, who are "leading the charge" in developing alternative energy.