Medicine Bow Plant

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In August 2006, DKRW Energy and SNC-Lavalin announced plans to build a coal-to-liquids plant in Medicine Bow, Wyoming. DKRW Energy is a Houston-based firm, named after the initials of the four ex-Enron executives who founded it, with interests in wind, liquified natural gas, and coal-to-liquids. The plant has been described as the first coal-to-gasoline plant in the United States.[1]

In March 2011, the Wyoming Supreme Court upheld a state air permit for the facility. Work on the plant began in late 2010 and is planned to be completed by 2014. However, future funding has not been solidified.[2]

Ownership

The project is being developed by DKRW Advanced Fuels, LLC, a subsidiary of DKRW Energy. In 2006, Arch Coal, Inc. acquired a 25% equity interest in DKRW Advanced Fuels. In exchange, Arch agreed to extend its existing option agreement with DKRW Advanced Fuels, to work with DKRW Advanced Fuels to secure coal reserves for two additional coal-to-liquids projects outside of the Carbon Basin, and to invest $25 million in the company.[3]

An Arch Coal press release stated:[4]

"As part of the transaction, Arch and DKRW Advanced Fuels completed an extension of the existing option agreement on approximately 180 million tons of Carbon Basin coal reserves relating to the Medicine Bow coal-to-liquids project, and entered into a new agreement whereby Arch and DKRW Advanced Fuels will explore potential reserves and project opportunities of similar size to Medicine Bow in two other coal basins."

Economic Woes

Plans for the project have been delayed twice. In 2006, the company said it expected the demonstration stage of the project to be completed by the fourth quarter of 2010, and expected the full project to be completed by 2015.[5]

DKRW is privately owned. Company chairman Bob Kelly said that the project will not require subsidies: “Let the market do the talking," Kelly said. "If we can’t, we can’t. If we can, we can.”[6]

In 2006, Kelly said that the break-even point for the project would be at $30 to $40 per barrel.[7] From 2005 to 2008, the power plant construction index rose 69%.[8]

The Medicine Bow project would use coal provided by Arch Coal; Arch is also reported to be a 25% owner of DKRW Advanced Fuels, the subsidiary in charge of the Medicine Bow Project. The project would use the Fischer-Tropsch synthetic fuels technology licensed from Rentech.[9] A Product Demonstration Unit at the site is already under construction, and is slated to begin producing fuel in the spring of 2008.

The plant will use coal from the new Arch mine. It will generate up to 20,000 barrels of gasoline per day. About 2,300 people would be needed to build the plant and it would employ up to 450 people when it begins operating.

In September 2007, project sponsors filed a permit application with the state Department of Environmental Quality; the air permit is expected to be released in early 2008. On Dec. 6, 2007, the state Industrial Siting Council granted an industrial siting permit to the project. Project sponsors expect to finalize permits for the project in late 2008; full-scale construction is expected to begin in the second quarter of 2009.[10]

In October 2008, Tom Schroeder of the Industrial Siting Council told the Carbon County Commission that DKRW officials had delayed groundbreaking until January 2010, rather than the previously scheduled date of April 2009. He said the plant had not been cancelled. has been informed that construction on a proposed coal-to-liquids plant near Medicine Bow will be delayed for nearly a year until 2010.

Tom Schroeder of the ISC told the Carbon County Commission that DKRW officials informed him that the plant is likely to break ground in January 2010 instead of April 2009 as planned. Plans for the $2 billion plant have not been canceled, he said. The proposed plant would use clean-coal technology to convert coal from the new Arch mine into up to 20,000 barrels of regular gasoline per day, sulfur, mercury, carbon dioxide and other products.

In the wake of the late 2008 financial market meltdown DKRW Energy's chairman, Bob Kelly, told Reuters that "things have tightened up" and that companies proposing coal-to-liquids projects would have to go back to the drawing boards. In the wake of the banking industry collapse and dramatic drop in share prices, the oil price dropped from over $145 a barrel to $75 a barrel. "Everybody's got to evaluate their positions ... We have to wait to see how the capital markets evolve," Kelly said.[11]

Permit process moving forward

In February 2009, the plant received its siting permit from the Wyoming DEQ.[12] In March 2009, the DEQ approved the air permit for the project.[13] DKRW expects the plant to be online in 2013.[14]

According to an April 2009 Sierra Club update, they are currently working on an appeal of the final air permit. The deadline for the appeal is May 1, 2009.[15]

Department of Energy considering loan application

As of December 2009, the DOE was considering a loan application from DKRW for the plant. The company said it would capture over half of the carbon dioxide produced the coal refining process and pipe it to Wyoming oil fields for enhanced oil recovery. DKRW chairman Bob Kelly said the DOE would conduct an environmental impact study, which would take from 12 to 15 months to complete. He declined to specify the amount of the loan the company is seeking from the federal government.[16]

Project Details

Sponsor: Medicine Bow Fuel & Power, a subsidiary of DKRW Advanced Fuels
Location: Medicine Bow, WY
Capacity: 15,000 - 20,000 barrels per day.
Type: Coal-to-liquids
Projected in service: 2015
Status: Permitting

Financing

Citizen Groups

Contact Details

Website: http://www.dkrwadvancedfuels.com/fw/main/Medicine-Bow-111.html

Resources

References

  1. John Cook and Lulu Chiang, "US's First Coal-to-Gas Plant Could Be Online By 2013," CNBC, 7/15/08
  2. "Medicine Bow, Mead praise coal-to-gas plant ruling " Associated Press, March 16, 2011.
  3. "Arch Coal Acquires Interest in DKRW Advanced Fuels," press release, 8/24/06
  4. "Arch Coal Acquires Interest in DKRW Advanced Fuels," press release, 8/24/06
  5. Wyoming Mineral Update: Coal, Wyoming State Geological Survey, January-June 2006, page 4.
  6. John Cook and Lulu Chiang, "US's First Coal-to-Gas Plant Could Be Online By 2013," CNBC, 7/15/08
  7. John Cook and Lulu Chiang, "US's First Coal-to-Gas Plant Could Be Online By 2013," CNBC, 7/15/08
  8. "Construction Costs for New Power Plants Continue to Escalate: IHS CERA Power Capital Costs Index," IHS/CERA press release 5/27/08
  9. Rentech Comments on Recent Agreement Between DKRW and Arch Coal, Rentech press release, August 28, 2006.
  10. Panel Approves Coal-to-Liquids Plant Permit, Casper Star-Tribune, December 9, 2007.
  11. Bruce Nichols, "Fuel Your Car With Coal? Less Likely Now", Reuters, October 17, 2008.
  12. "DKRW Plans to Construct Coal Gasification Plant in Wyoming," Coal Gasification News, February 23, 2009.
  13. "Wyoming coal-to-liquids plant gets air permit," Associated Press, March 5, 2009.
  14. "Medicine Bow Fuel & Power LLC", DKRW Advanced Fuels website, accessed February 2009.
  15. "Stopping the Coal Rush", Sierra Club, accessed May 2009. (This is a Sierra Club list of new coal plant proposals.)
  16. "Plans progress for Wyoming coal-to-gasoline plant," Associated Press, December 18, 2009.

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