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Air Force Eyes Coal-to-Liquids Plant in Montana

Posted on: Monday, 24 March 2008, 03:00 CDT

By Darst, Paul

Officials in West Virginia are keeping an eye on a potential move by the U.S. Air Force that could pave the way for a new market for coal.

Air Force officials have outlined a $1 billion to $4 billion plan to develop a privately financed coal-to-diesel plant at Malmstrom Air Force Base near Great Falls, Mont., within the next four years. Although the plant would be in the west, it could jump-start the industry, said Bill Raney, president of the West Virginia Coal Association.

"I think it would be very significant," Raney said. "I think it's very important to have the Air Force interested."

The Air Force spends about $4.5 billion on aviation fuel each year - more than half of the fuel purchased by the U.S. government. Coal proponents in West Virginia and other parts of the country have tried for years to attract investors to construct a coal-to-liquids plant in the United States. So far, however, investors have been wary because of the high cost of constructing a plant and the lack of a guarantee that it will be successful.

Considering the Air Force's fuel needs, having it on board would be a boon for the industry, Raney said.

"They've proven it works at high altitudes," he said. "It's stable enough or even more stable than the fuel they use now."

In 2006, the Air Force conducted a test using a B-52 using a synthetic fuel that could be derived from coal. The test was a total success, according to the Air Force.

One reason the Malmstrom plant stands a good chance of becoming a reality is because it would be built on land owned by the Air Force, said Jeff Herholdt, director of the West Virginia Division of Energy.

"They have 700 acres of land ... to be developed next to (the air base)," he said. "They have the land, and they have the customer. The Air Force since early in the game has been interested in alternative fuels."

Another reason for building the plant in Montana is because that state has about 25 percent of the nation's coal reserves. West Virginia provides a significant amount of the nation's coal as well, so Raney believes it would make sense to build a plant here, too.

The Mingo County Redevelopment Authority has been working on a plan to do just that, said Randy Harris, the authority's project director.

The Mingo County project, called the Mingo Hybrid Energy Center, involves a different type of plant than the Air Force is considering backing, he said. It will use wood and other biomass in addition to coal to produce diesel and ammonium nitrate, a type of fertilizer. The authority hopes to begin construction on the plant in 2009.

"It takes a long time for something like this," Harris said. "We've been working on it for about three years."

The plan now is for production to begin in late 2010 or early 2011, he said. During the startup phase, plans call for the plant to use about 1,000 tons of wood and 1,000 tons of coal per day to produce 6,000 barrels of liquids and 200 to 300 tons of ammonium nitrate per day.

And the synthetic fuels market looks like it will be strong in the not-to-distant future. By 2016, the Air Force wants to use synthetic fuel for up to half of its domestic fleet, according to an article published Jan. 31, 2008, in Business Week. That would mean about 400 million gallons of synthetic fuel each year, the article said.

The Malmstrom plant is one of about 15 proposed in the United States. But only three such plants now are in operation around the world, according to Business Week. All of them are in South Africa.

Copyright State Journal Corporation Feb 29, 2008

(c) 2008 State Journal, The. Provided by ProQuest Information and Learning. All rights Reserved.

Source: State Journal, The

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