August 25, 2005

Montana’s governor eyes coal to solve U.S. fuel costs

By Adam Tanner

HELENA, Montana (Reuters) - Montana's governor wants to
solve America's rising energy costs using a technology
discovered in Germany 80 years ago that converts coal into
gasoline, diesel and aviation fuel.

The Fischer-Tropsch technology, discovered by German
researchers in 1923 and later used by the Nazis to convert coal
into wartime fuels, was not economical as long as oil cost less
than $30 a barrel.

But with U.S. crude oil now hitting more than double that
price, Gov. Brian Schweitzer's plan is getting more attention
across the country and some analysts are taking him very

Montana is "sitting on more energy than they have in the
Middle East," Schweitzer told Reuters in an interview this

"I am leading this country in this desire and demand to
convert coal into gasoline, diesel and aviation fuel. We can do
it in Montana for $1 per gallon," he said.

"We can do it cheaper than importing oil from the sheiks,
dictators, rats and crooks that we're bringing it from right

The governor estimated the cost of producing a barrel of
oil through the Fischer-Tropsch method at $32, and said that
with its 120 billion tons of coal -- a little less than a third
of the U.S total -- Montana could supply the entire United
States with its aviation, gas and diesel fuel for 40 years
without creating environmental damage.

An entry level Fischer-Tropsch plant producing 22,000
barrels a day would cost about $1.5 billion, he said.

The Democratic governor of this Republican state said he
had met with Shell president John Hofmeister, General
Electric's CEO Jeff Immelt, as well as officials from the
Department of Defense, and the Burlington Northern Santa Fe
Railroad to discuss his proposals.

Schweitzer added that the recently passed federal energy
bill includes an 80 percent loan guarantee for a Fischer-
Tropsch plant.

A former cattle rancher who lived for seven years in Saudi
Arabia working on irrigation projects, Schweitzer is also
seeking energy deals with other states, especially California.

California "says they need 25,000 megawatts of electricity
during the next ten years," he said. "We'll give you a
delivered price and we'll forward contract that for the next 20

"Transmission companies from England, from Canada, from all
over America are coming to my office and saying 'we'll build
these transmission lines as soon as you have the contracts to
build the generation."'