A company called DKRW is soliciting state and local financial incentives to build a multi-billion dollar coal conversion plant near Elk Mountain. So far, all plans for coal-to-fuel plants in Wyoming have created nothing more than short-term economic disruption for investors, speculators and local governments.
Post-1973 Arab oil embargo: Wyoming was mapped with all sorts of proposals for coal-to-gas and coal-to-liquid fuel projects. Energy companies bought up speculative reservoir permits and proposed to build dams on the Middle Fork of the Powder, the main stem of the Powder, La Prele Creek, and enlarge Lake DeSmet and elsewhere. Only two of those projects (LaPrele and Lake DeSmet reservoirs) were actually built, but they have been used solely for non-industrial purposes for 40 years.
Oil companies (Shell, Mobil, Exxon, Sun, Atlantic Richfield, Kerr-McGee) bought land and got into the coal mining business on a large scale in Campbell County, only to eventually divest all of their mines to actual mining companies (Amax, Kennecott, Arch, Peabody).
Texaco, then owner of Lake DeSmet, proposed first a federally subsidized coal-to-gas plant, then a power plant. Both projects were abandoned without turning one shovelful of dirt. People speculated on land, local governments were excited, but the bloom faded. This was not a new experience for Johnson County, having watched Reynolds Aluminum play with Lake DeSmet’s water and coal reserves for decades before selling all of them to Texaco.
Then came the Hampshire project, a massive coal conversion plant proposed for Campbell County. Speculators bought land and businesses in reliance on a projected massive influx of workers; industrial siting permit hearings were convened, then the big money behind it succumbed to the inevitable conclusion that the project would never cash flow. Some people around Gillette and Buffalo were really stung when the plug was pulled.
Now there is discussion of a boom in Carbon County. Am I rushing down there to buy land? Not.
These projects are talked about only when massive subsidies are offered. It’s expensive to build a plant which uses coal as the fuel to drive the chemical processes needed to turn long-chain carbon molecules (coal) into short-chain molecules (gasoline and diesel). Costly pollution controls must be built for every stage of the process. Operating and maintaining just the pollution controls will add great expense to the product. These plants tend to catch fire from time to time. The Germans made gasoline from coal in WWII because they had to, not because it was economic; they didn’t worry about pollution controls.
The Carbon County Commission has approved issuance of $245 million in industrial revenue bonds. Who is going to buy them? Who is going to pay them off if DKRW, the putative owner, goes under?
What we really need in Wyoming is a new plant which will convert crude oil to motor fuels. Oil refineries use proven, economic technology. Huge pipelines, some built and more coming, will carry Canadian and North Dakota oil to Oklahoma and Texas for refining. Oil producers around here are taking big discounts in price because of a lack of refinery capacity. Building a new refinery on an impervious substrate like the Pierre Shale or the copious bentonite deposits in northeast Wyoming could reduce the risk of groundwater contamination. Abundant, locally cheap natural gas could be used to power a refinery. But, is it politically possible to build a new refinery in Wyoming?
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