Synthetic Fuel Corporation

MONTANA, Apr 30 2008 (Neo Natura) - Back in 1980, Congress passed the Energy Security Act, which led to the creation of something called the Synthetic Fuels Corp. (SFC). Lawmakers provided SFC with up to $88 billion in loans and incentives to get started (the equivalent of about $230 billion in today's dollars) with the goal of creating two million barrels a day of synthetic oil within seven years.

So why aren't you putting SFC oil into your SUV right now? Well, it turns out that members of the Organization of Petroleum Exporting Countries didn't appreciate the competition so they started bringing down the price of oil. From 1980, when SFC launched, to 1986, when it was shut down, oil went from more than $39 a barrel to less than $8 a barrel. Suddenly, synthetic oil didn't seem so important anymore.

In announcing the SFC's closure, then-Energy Secretary John Herrington said that oil prices had simply dropped too low to make it a viable business.

But the good news is that those economics don't work anymore. The state of Montana, which is leading the synthetic fuel charge, says we can now make it for
somewhere around $55 a barrel. That's more than a 50 percent discount from what it costs to buy the real stuff.

Oil isn't the only resource going up in price, though. The highest price affecting CTL synthetic fuel creation is the price of coal.

There is an abundance of coal in the United States, but like many other commodities its price is increasingly dependent on events elsewhere in the world. Snowstorms this winter cut coal production in China and heavy rain flooded mines in Australia — the world's largest coal exporter. Meanwhile, demand for coal to generate electricity and make steel is rising almost everywhere, especially in fast-growing China and India.

Congress doesn't seem to keen about helping to boost synthetic fuel from coal. The new farm bill concentrates it's investment of renewable energy exclusively towards providing grants and loans to help advance the development of cellulosic biofuels.

Air Force's Domestic CTL Plans

MONTANA, Apr 25 2008 (Neo Natura) - On March 19th, 2008, the Air Force successfully completed another in a series of tests designed to switch their planes over to synthetic fuel blends made partly from a Fisher-Tropsch (F-T) coal-to-liquids (CTL) process. In 2006 the Air Force successfully flew a B-52 using the new fuel mix. The latest demonstration involved a B-1B Lancer, which flew at supersonic speeds over Texas and New Mexico using a blend of F-T and JP-8 jet fuel.

"The goal is to have every aircraft [certified for] synthetic fuel blends by 2011," said Maj. Don Rhymer, assigned to the Air Force Alternative Fuels Certification Office. "By 2016 we hope at least 50 percent of this fuel will be produced domestically."

Will the Air Force's scheme be implemented? Coal-to-liquids conversion emits lots of carbon dioxide but produces a viable substitute for diesel and jet fuel made by refining crude oil. An epic battle is shaping up between those concerned about climate change and those seeking to lower their transportation fuel costs and enhance their energy security. But is this the right battle for Americans to fight?

Although the Air Force program is currently purchasing gas-to-liquids synfuel purchased overseas, they are pushing for a CTL facility to be built in Montana. While coal is plentiful in the American West, natural gas is far too precious in the North American market to be used as the input for F-T conversion.

With every $10 rise in the price of a barrel of oil costing the Air Force $600 million, the service is converting its entire 6,000-plane fleet to run on a synthetic fuel mixture. Tentative plans call for construction of a coal-to-liquid fuel plant at a Montana air base.

Air Force officials have been testing synthetic fuels based on coal or natural gas. They plan to certify the fleet of nearly 6,000 aircraft to fly on a 50-50 blend of synthetic fuel and traditional petroleum-based jet fuel by 2011.

Assistant Air Force Secretary Bill Anderson said the search for affordable, cleaner-burning alternative fuels was driven by economic and national-security concerns. The United States would be all but powerless to protect the American economy in the face of a catastrophic disruption of oil markets, high-level participants in Oil Shockwave concluded yesterday.

Even without a large oil shock like those of the 1970s, relentless price increases and the possibility of declining global liquids output leading to supply shortfalls in the U.S within the next decade has led the Air Force to the coal-to-liquids solution. If the Air Force thought we were going to be swimming in oil by 2016, their target implementation date, they would not be proposing using F-T to meet their jet fuel needs.

Many obstacles stand in the way of the Air Force's plan. The climate change lobby is not going to roll over on the issue, which creates a bad precedent and provides momentum for carbon-intensive F-T operations in the United States.

"I think across the board there is going to be opposition from the environmental movement," said John Topping, the president of the Climate Institute in Washington. "I'd say it's going to be almost universal because of the climate concerns."

As awareness of the climate problem grows in the United States, the economic squeeze brought on by higher oil prices creates pressure to implement supply-side solutions to alleviate soaring diesel fuel costs.

On April 1st, truckers staged a slowdown to protest high diesel prices. Tons of freight idled across the country Tuesday as independent truckers pulled their rigs off the road while others slowed to a crawl on major highways in a loosely organized protest of high fuel prices.

Using CB radios and trucking Web sites, some truckers called for a strike Tuesday to protest the high cost of diesel fuel, hoping the action might pressure President Bush to stabilize prices by using the nation's oil reserves.

"The gas prices are too high," said Lamont Newberne, a trucker from Wilmington, N.C., who along with 200 drivers protested at a New Jersey Turnpike service area. "We don't make enough money to pay our bills and take care of our family."

Last week's A Recipe For Disaster touched on the record-high average price for diesel fuel in the United States, which now stands at $4.025/gallon according to AAA's Daily Fuel Gage Report. The big rigs get only 5 or 6 miles to the gallon, so long-haul truckers' profit margins are now disappearing. Trucker Lamont Newberne told the AP that "a typical run carrying produce from Lakeland, Fla., to the Hunt's Point Market in The Bronx, N.Y., had cost $600 to $700 a year ago. It now runs $1,000".

According to data compiled by the ATA and the Air Transport Association, the 2007 fuel bill for all U.S. passenger and cargo airlines was $41.2 billion, but the diesel tab for moving goods by truck was $112.6 billion. Trucking fuel consumption far surpasses use for air travel.

Clayton Boyce, a spokesman for the American Trucking Association (ATA), says his group "is pushing for a number of measures to keep the prices down or to otherwise help truckers, including allowing exploration of oil-rich areas of the U.S. that are now off limits...."

It would take years and years to get any diesel fuel from the outer continental shelves, presuming there are commercial oil reserves out there. Where is the diesel supply going to come from? With the Air Force paving the way, Anderson said the private sector, from commercial air fleets to long-haul trucking companies, would follow.

"Because of our size, we can move the market along," he said. "Whether it's (coal-based) diesel that goes into Wal-Mart trucks or jet fuel that goes into our fighters, all that will reduce our dependence on foreign oil, which is the endgame."

A beleaguered trucking industry will seize the opportunity initiated by the Air Force to push for coal-to-liquids. It won't matter politically that such production, like drilling on the outer continental shelves, is many years away, thus providing little tangible relief for truckers. It won't matter that the quantities of diesel fuel produced will be relatively small, or that coal-to-liquids conversion using an F-T process is exorbitantly expensive, or that building an F-T plant presents difficult engineering hurdles that must be overcome, despite the success of South Africa's SASOL, which operates the only CTL plant running anywhere in the world today.

A heavyweight bout is coming soon between the climate lobby, who are trying to reduce carbon dioxide emissions, and the transport industry, which wants cheaper liquid fuels. The latest issue of the Oil & Gas Journal contains a comprehensive special report GTL, CTL finding roles in global energy supply that sheds light on the conflict. The coal-to-liquids data buttresses the positions of both the climate and transportation antagonists. The data comes from a National Energy Technology Laboratory (NETL) study for the Air Force.

A 50,000 barrel-per-day CTL plant configured as NETL specified will produce 27,819 barrels of diesel and 22,173 barrels of naphtha, which is a principle component of jet fuels like the Jet-B used in the Air Force's certification tests. The F-T process also produces small amounts of lubes and waxes, which can be hyrdrocracked to make more diesel or naphtha. The naphtha itself "[can] be steam-cracked to syngas and recycled back to the F-T reactor to increase production of high quality diesel" according the Oil & Gas Journal report. These numbers will appeal to the transportation industry.

The NETL data also shows that the envisioned F-T plant will produce 32,481 tons of carbon dioxide every day running at full capacity, a ratio of 1.32 tons of CO2 to every ton of coal burned. Without carbon capture, compression and sequestration (CCS) technology, CTL is viewed as a disaster from the climate perspective. This CTL plant would emit 11.8 million tons of carbon dioxide operating at full capacity over a year's time.

Carbon dioxide emissions in the U.S. declined by 1.3 percent in 2006 to 5,877 million metric tons according to the EIA. The 50,000 barrel-per-day CTL plant would add 0.2% to the U.S. 2006 emissions. On the other hand, the U.S. consumed an average of 5.818 million barrels of jet fuel and diesel in the 4 weeks ending March 28th, 2008 according to the EIA's latest Weekly Petroleum Status Report. The CTL plant's output would be 0.8% of this total.

A number of CTL projects are on the drawing board in the United States. Rentech and Peabody have formed a partnership to look into the feasibility of two 10-30 thousand barrel-per day projects, one in Montana and another somewhere in the Midwest. Only one of the projects listed is larger than the CTL specification used in the NETL study.

None of the projects are anywhere close to implementation because of two main factors: 1) uncertainty about future carbon policy and the CCS option and 2) CTL unit CAPEX costs running between $70,000 and $100,000 per barrel of capacity.

The coming battle between climate activists and those in the transportation industry is oddly disconnected from peak oil concerns. We want to reduce carbon dioxide emissions, right? We want the transportation segment of the economy to function, right? This debate misses some salient points. First, global middle diesel production has been flat for some time now and won't increase much, if at all, in the near future. The further out in time one goes, the more likely declines in global diesel production become. Second, substitutes such as diesel from coal-to-liquids will not become available in a timely fashion to produce significant enough quantities to relieve supply-side shortfalls in the next decade. And there are insufficient railroads to replace long-haul trucking or air freight in the United States.

Looking out a decade from now, carbon emissions from diesel in the U.S. are likely to decrease because overall middle distillate consumption is likely to decrease due to price escalation and constrained world supply. Any carbon emissions coming from CTL are not likely to replace what will be lost from decreased consumption, which is a good thing from the climate perspective. It is a disaster if you want a functioning economy. In the meantime, higher fuel costs will eventually be passed through to consumers, spurring destructive inflation. We will require a functioning economy to fix all of our other problems, including anthropogenic climate change.

Regulators OK'd To Set Wind Tax

MONTANA, Apr 24 (Neo Natura) - The Public Service Commission has agreed that NorthWestern Energy should be allowed to charge a wind developer for costs related to bringing the alternative energy source into the utility's grid system, but gave the utility less than it had sought.

Northwestern Energy had wanted Two Dot Wind of Billings to pay for "regulating reserve" power to replace wind power during non-production. The utility noted wind power does not provide a steady source of electricity and the wind company should pay for that reserve power.

Two Dot Wind countered NorthWestern was overcharging the company.

On Tuesday, the Public Service Commission developed two separate formulas that it says provides less than what NorthWestern wanted to charge, but will force Two Dot to pay something.

Commissioner Ken Toole said the dispute was to be expected as the state develops a system to handle expanded development of alternative energy sources.

"I think this is normal and natural that we are going to struggle with this new kind of resource," Toole said. "This resource is one that represents a lot of challenges, but it also represents a lot of benefits."

Commissioner Brad Molnar voted against the measure and said he was worried the plan would shift the cost of integrating wind power to consumers.

Chairman Greg Jergesen said the approach taken by the PSC "carefully threaded the needle" to reach a workable compromise.

Jergesen said the arrangement might be used as a template if other disputes arise between NorthWestern and wind developers.

NorthWestern buys power from Two Dot Wind, and others, as part of a requirement under state and federal rules to buy energy from small wind developers.

NW Energy Unsure On Future Energy Costs

MONTANA, Apr 17 2008 (Neo Natura) - NorthWestern Energy Corp. told regulators Wednesday that rising fuel costs and the potential for carbon taxes are making it difficult to map the utility's energy future.

The Public Service Commission is reviewing the company's plan for buying electricity in the coming years. NorthWestern wants to get back into the energy production business that was lost during deregulation and the transformation from the old Montana Power Co.

But NorthWestern says it is hard to predict what will happen with carbon rules in Congress. Such rules, and the potential for a special tax, could impact decisions in trying to find the cheapest power sources for Montana consumers.

The company says the tax, and rising fuel costs, mean that Montanans will likely be paying more for electricity in coming years regardless of what is done.

"You are attempting to make a forecast predicting, when you have no idea what is going to happen," said commissioner Doug Mood. "We ought to be warning people in this state that we have no idea what is going to happen to the price of electricity."

Currently, NorthWestern does not have its own electricity production. The cost that NorthWestern pays for electricity, from such companies as PPL Montana, a unit of PPL Corp., is largely passed onto consumers.

John Hines, NorthWestern's chief supply officer, said the company is phasing in more long-term contracts out past five years as a way to steady market turmoil.

Hines said the company is carefully taking "baby steps" toward building its own energy production to further steady energy prices. It could take 20 years or more to become "fully integrated."

Such a move was allowed by legislation last year that undid some of the state's so-called deregulation laws of the 1990s. Deregulation banned the utility from also owning the power production.

Hines said there is an "incredible amount of risk" until then because the company will be subject to the cost of power on the open market.

Commissioner Ken Toole told the company that he believes there are strategies, such as conservation, that could mitigate the risk of fuel prices.

Other commissioners also talked about the need to develop resources that don't use fossil fuels, such as geothermal and compressed air storage.

Commissioner Chairman Greg Jergeson said he is critical of Northwestern for not analyzing the possibility of allowing the utility arm of the company to buy the corporate parent's interest in a Colstrip coal-fired power plant - which NorthWestern is considering selling.

Jergeson said that plant could provide valuable energy and help the utility.

"I think there are ways they could make that a valuable rate-based asset in their portfolio," he said.

The PSC will offer written comments in the plan in a couple of months, which will help the company make decisions down the road, Jergeson said.

Invenergy Plans 52MW Wind Farm

MONTANA, Apr 15 2008 (Neo Natura) - The owner of Montana’s largest operating wind farm, near Judith Gap, has proposed adding 35 1.5MW wind turbines, which would increase its power-production capacity nearly 40 percent, officials at NorthWestern Energy have confirmed.

Invenergy, based in Chicago, has pitched the expansion to NorthWestern, the utility buying the electricity currently produced by the wind farm north of Harlowton in central Montana.

NorthWestern should decide soon whether it wants to buy power that would be produced by the additional turbines, said John Hines, chief supply officer for NorthWestern. “We’re evaluating their offer and looking at it (versus) other electricity portfolio alternatives,” he said Thursday.

NorthWestern has 320,000 customers in Montana, and obtains most of its wholesale electricity on the open market or through long-term contracts with energy producers, such as Invenergy. That power is then sold to NorthWestern’s residential and business customers across Montana.

Invenergy, which operates the 135-megawatt wind farm, did not return a message seeking comment.

Under its 20-year contract to sell power to NorthWestern, Invenergy must give NorthWestern the first shot at buying electricity from any expansion up to 188 megawatts.

If NorthWestern turns down the offer, Invenergy can sell the power somewhere else, but not for a lower price than offered to NorthWestern, Hines said.

Hines said Invenergy is proposing to add 52.5 megawatts of production to the wind farm, or 35 new turbines. Each turbine can produce up to 1.5 megawatts of power. The project currently has 90 turbines, each of which is a large tower with a single blade.

The Judith Gap expansion is one of many Invenergy has planned for 2009. The energy company plans to secure 800 MW of wind turbines for 2009 projects in both North America and Europe.

GE Energy will provide an additional 600 megawatts (MW) of wind turbines to Invenergy Wind LLC for its 2008 projects in the U.S. and Canada. This order, which brings the total to 1,200 MW of GE 1.5-MW wind turbines for Invenergy projects over the next two years, replicates Invenergy's order last fall for projects planned for 2007.

One megawatt of wind power provides enough electricity for 240 to 300 homes.

At 135 megawatts, Judith Gap is the only major wind-power project in Montana.

NorthWestern is paying about $30 per megawatt-hour for electricity purchased from the Judith Gap wind farm, which began operating in 2006. Other costs associated with the power increase the bill to about $38 per mwh, but those costs are projected to increase this year, NorthWestern officials have said.

The cost is considerably less than the $56 per mwh that NorthWestern is charging customers for its “portfolio” power, which is electricity from a variety of sources, purchased on the market.

NW Energy Small Wind Farm Tax

MONTANA, Apr 15 2008 (Neo Natura) - Developers of small wind-power projects in Montana have their eyes on the Public Service Commission this week, as it may decide a crucial price issue affecting their ability to succeed.

NorthWestern Energy, the state's dominant electric utility and the primary purchaser of wind power in Montana, wants to charge small wind farms for the cost of “integrating” their power into the NorthWestern system, which serves 320,000 customers.

The utility says if wind-power developers don't pay that cost, then NorthWestern consumers end up absorbing it.

“To have a cost shifted to ratepayers, I don't think is in their best interest,” says John Hines, chief supply officer for NorthWestern.

Yet developers of small wind-power projects that sell, or hope to sell, to NorthWestern say the company hasn't shown that those costs really exist.

And even if some costs do exist, they're less than the charge NorthWestern wants to levy, developers say - a charge they say would make it all but impossible to do business in Montana.

“If they end up with (a charge) the way NorthWestern has proposed, it's a serious impediment and it doesn't reflect the cost of those smaller generators,” says Bill Pascoe, a Butte consultant who works with wind-power developers. “My view is that it's very damaging to small producers.”

The PSC, the five-member body that regulates utilities in Montana, could decide Tuesday whether and how NorthWestern can charge these small projects for integration costs.

Put simply, integration costs are what the utility believes it must pay for additional power to balance the intermittent nature of wind power.

Because wind-power production occurs only when the wind blows, NorthWestern or any electric-system operator says it must buy what it calls “regulating power” to keep the system within a certain range of voltage.

The cost of that regulating power, which must be available at all times, should be charged to wind-power producers, NorthWestern says.

NorthWestern wants to base the integration charge for small producers on what it says are the costs of buying regulating power for the state's largest wind farm, the 135-megawatt Judith Gap project north of Harlowton.

Under that proposal, small wind-power producers would pay anywhere from $8 to $22 per megawatt-hour of power produced.

Two Dot Wind, the operator of 33 small wind turbines in central Montana, has challenged this charge as unjustified and exorbitant.

NorthWestern buys power from these small wind projects at about $50 per megawatt-hour - a price the producers point out is already below market value and below what NorthWestern customers pay for electricity.

Taking $8 to $22 out of that price for integration costs is not only unfair and unjustified, but also would essentially halt all future small wind-power development in Montana, says Mike Uda, the attorney for Two Dot Wind.

“If the commission wishes to drive wind development out of the state of Montana, then it should by all means adopt NorthWestern's proposal,” Uda wrote in arguments submitted March 27 to the PSC.

Two Dot Wind and others say the costs of integrating small projects' power is negligible, if anything, and certainly should not be calculated based on the cost of one, large project like Judith Gap.

Pascoe earlier proposed that the PSC order NorthWestern and small producers to collaborate on a study that examines the cost of integrating power from multiple small projects.

NorthWestern has ignored this request, and said the only question is how much integration costs Two Dot Wind or other small producers should pay.

“It's not NorthWestern customers' responsibility to make a business venture work,” Hines says of the small producers' claims. “We're not asking developers to subsidize ratepayers, but we're not asking ratepayers to subsidize (small producers) either.”

New Wind Plant For Butte

MONTANA, Apr 10 (Neo Natura) - Governor Brian Schweitzer, along with Joachim Fuhrlander, CEO of German wind turbine manufacturer Fuhrlander, announced that the company will construct a manufacturing plant in Butte, MT to assemble 2.5 MW wind turbines to serve wind farms throughout Montana and other parts of the western United States.

“Montana’s on the move. I am very pleased that Fuhrlander Company, a growing wind turbine manufacturer, has identified Montana as the place to locate a production and assembly facility,” Schweitzer said about the announcement. “Montana’s business-friendly environment, along with our vast potential for wind energy development, make our state the natural choice for this level of investment.”

Construction of the plant, which will be located in Butte, is set to begin in the fall of 2008 and is initially estimated to employ 150 people. Plans to potentially expand into labor-intensive blade manufacturing at the Butte site could result in an additional 600 jobs in the future. The blades are 150 feet long and the turbines are 2.5 MW in size.

“This $25 million project will bring jobs and tax base to Butte and is largely a result of our ‘clean & green’ energy incentives,” said Governor Schweitzer, who has been recognized nationally as a leader in innovative energy ideas.

Fuhrlander began conversations with Governor Schweitzer and state officials in early 2007 while considering several U.S. locations.

“When I met with Governor Brian Schweitzer and all his highly qualified team in Montana, I could see all the opportunities for education and training, cooperation with universities, the infrastructure and the market, it was clear, that we had to do more than only to sell wind turbines. Now we have decided to install a manufactory line for the turbines,” said Joachim Fuhrlander.

The jobs will be in mechanical, electric and electronic work, welding, steel work, metal work, accounting, office work and marketing.

Montana currently has about 50 wind power projects in various stages of discussion that could total over 4,000 MW of wind energy.

USGS Releases Bakken Report

MONTANA, Apr 10 (Neo Natura) - North Dakota and Montana have an estimated 3.0 to 4.3 billion barrels of undiscovered, technically recoverable oil in an area known as the Bakken Formation.

A U.S. Geological Survey assessment, released April 10, shows a 25-fold increase in the amount of oil that can be recovered compared to the agency's 1995 estimate of 151 million barrels of oil.

Technically recoverable oil resources are those producible using currently available technology and industry practices. USGS is the only provider of publicly available estimates of undiscovered technically recoverable oil and gas resources.

New geologic models applied to the Bakken Formation, advances in drilling and production technologies, and recent oil discoveries have resulted in these substantially larger technically recoverable oil volumes. About 105 million barrels of oil were produced from the Bakken Formation by the end of 2007.

The USGS Bakken study was undertaken as part of a nationwide project assessing domestic petroleum basins using standardized methodology and protocol as required by the Energy Policy and Conservation Act of 2000.

The Bakken Formation estimate is larger than all other current USGS oil assessments of the lower 48 states and is the largest "continuous" oil accumulation ever assessed by the USGS. A "continuous" oil accumulation means that the oil resource is dispersed throughout a geologic formation rather than existing as discrete, localized occurrences. The next largest "continuous" oil accumulation in the U.S. is in the Austin Chalk of Texas and Louisiana, with an undiscovered estimate of 1.0 billions of barrels of technically recoverable oil.

"It is clear that the Bakken formation contains a significant amount of oil - the question is how much of that oil is recoverable using today's technology?" said Senator Byron Dorgan, of North Dakota. "To get an answer to this important question, I requested that the U.S. Geological Survey complete this study, which will provide an up-to-date estimate on the amount of technically recoverable oil resources in the Bakken Shale formation."

The USGS estimate of 3.0 to 4.3 billion barrels of technically recoverable oil has a mean value of 3.65 billion barrels. Scientists conducted detailed studies in stratigraphy and structural geology and the modeling of petroleum geochemistry. They also combined their findings with historical exploration and production analyses to determine the undiscovered, technically recoverable oil estimates.

USGS worked with the North Dakota Geological Survey, a number of petroleum industry companies and independents, universities and other experts to develop a geological understanding of the Bakken Formation. These groups provided critical information and feedback on geological and engineering concepts important to building the geologic and production models used in the assessment.

Five continuous assessment units (AU) were identified and assessed in the Bakken Formation of North Dakota and Montana - the Elm Coulee-Billings Nose AU, the Central Basin-Poplar Dome AU, the Nesson-Little Knife Structural AU, the Eastern Expulsion Threshold AU, and the Northwest Expulsion Threshold AU.

At the time of the assessment, a limited number of wells have produced oil from three of the assessments units in Central Basin-Poplar Dome, Eastern Expulsion Threshold, and Northwest Expulsion Threshold.
The Elm Coulee oil field in Montana, discovered in 2000, has produced about 65 million barrels of the 105 million barrels of oil recovered from the Bakken Formation.

Montana Ranked 2nd In Oil Expansion

MONTANA, Apr 08 (Neo Natura) - Montana is currently the second fastest state to expand in oil recovery. New York takes the lead with an average 133% expansion in U.S. oil production in the last 5 years. Pennsylvania took 3rd as it's oil production grew 76% in the same period.

In 2002 Montana produced 46,000 barrels of oil per day. In 2003 Montana produced 53,000b/d. In 2004 Montana produced 68,000b/d. In 2005 Montana produced 90,000b/d. In 2006 Montana produced 99,000b/d. This gives Montana a 115% increase in oil production from 2002 to 2006. In 2006 Montana ranked 7th in the nation for inland oil production.

New Natural Gas Interstate Pipeline

MONTANA, Apr 07 (Neo Natura) - Midstream energy firms Alliance Pipeline and Questar Overthrust Pipeline have entered into a memorandum of understanding to develop the Rockies Alliance Pipeline, a jointly owned interstate natural gas pipeline from Wamsutter, Wyoming, to the Emerson trading hub on the US-Canadian border in Minnesota.

The proposed 42-inch pipeline will traverse approximately 800 miles through the US states of Wyoming, Montana and North Dakota, connecting the Rockies natural gas producing region with natural gas markets in the US Midwest and central Canada.

The Rockies Alliance Pipeline (RAP) is proposing to interconnect with downstream pipelines to provide direct access to the Chicago Hub, Michigan and Dawn storage facilities, and upper Midwest and Northeastern markets in the US.

RAP reportedly provides maximum receipt flexibility to access the growing gas supplies in the Rocky Mountain region originating in the Wamsutter Hub as well as the Powder River Basin area. RAP also provides multiple delivery options and will offer zonal rates with the various interstate pipelines.

Alliance and Questar will work with prospective shippers to determine the most efficient size, route and timing of in-service date for the RAP facilities.

The Rockies Alliance project is one five pending pipeline proposals in Wyoming. Four of those would carry gas westward to California, said Brian Jeffries, executive director of the Wyoming Pipeline Authority. A sixth project, the Rockies Express, is under construction with plans to begin moving gas eastward by this summer. More than 50 per cent of Wyoming's tax and royalty revenues are based on natural gas, he noted.

The companies are targeting the fall of 2011 for opening the entire length of the pipeline, pending financing and regulatory approval.

Air Force Considers Montana CTL Plant

MONTANA, Apr 07 (Neo Natura) - Although the Air Force program is currently purchasing gas-to-liquids synfuel purchased overseas, they are pushing for a CTL facility to be built in Montana. While coal is plentiful in the American West, natural gas is far too precious in the North American market to be used as the input for F-T conversion. McClatchy's Air Force leads push to liquefied coal fuel (March 30, 2008) tells the story—

With every $10 rise in the price of a barrel of oil costing the Air Force $600 million, the service is converting its entire 6,000-plane fleet to run on a synthetic fuel mixture. Tentative plans call for construction of a coal-to-liquid fuel plant at a Montana air base.

Air Force officials have been testing synthetic fuels based on coal or natural gas. They plan to certify the fleet of nearly 6,000 aircraft to fly on a 50-50 blend of synthetic fuel and traditional petroleum-based jet fuel by 2011.

Assistant Air Force Secretary Bill Anderson said the search for affordable, cleaner-burning alternative fuels was driven by economic and national-security concerns.

Let's state the obvious up front—the Air Force is surely "peak oil aware." Branches of the military and the intelligence services do scenarios planning. "The United States would be all but powerless to protect the American economy in the face of a catastrophic disruption of oil markets, high-level participants in [Oil Shockwave] concluded yesterday."

Even without a large oil shock like those of the 1970s, relentless price increases and the possibility of declining global liquids output leading to supply shortfalls in the U.S within the next decade has led the Air Force to the coal-to-liquids solution. If the Air Force thought we were going to be swimming in oil by 2016, their target implementation date, they would not be proposing using F-T to meet their jet fuel needs.

Many obstacles stand in the way of the Air Force's plan. The climate change lobby is not going to roll over on the issue, which creates a bad precedent and provides momentum for carbon-intensive F-T operations in the United States. "I think across the board there is going to be opposition from the environmental movement," said John Topping, the president of the Climate Institute in Washington. "I'd say it's going to be almost universal because of the climate concerns" (McClatchy). The Congress will probably have a Democrat majority after the fall elections. This likely means tough sledding for the Air Force.

As awareness of the climate problem grows in the United States, the economic squeeze brought on by higher oil prices creates pressure to implement supply-side solutions to alleviate soaring diesel fuel costs.