Billings Refineries and Canadian Shale

MONTANA, Sep 23 2008 (Neo Natura) - Billings petroleum geologist Bob Fisher is saying that the United States would be wise to rely on a friendly country like Canada for more of its imported oil. Canada is one of our closest allies, is the leading exporter of oil to the United States and is the only major oil-producing country, besides the United States, that allows Western countries to freely explore and develop its oil resources, he said.

Fisher, with Augustus Energy Partners, wrote a guest editorial in The Gazette in late June, calling on Congress to repeal legislation that prohibits the U.S. government from using gasoline and other oil products refined from oil sands. The U.S. Air Force has also asked Congress to rescind the ban.

Fisher said he is against the congressional ban for many reasons, not least because it is nearly impossible to trace fuels back to their source when so many different crude oils are blended before being shipped to American refineries.

Regional oil producers may feel another effect of Canadian developments, he said, because there might be a lack of skilled workers, which could dampen oil exploration and development. It is also possible that Montana businesses will be able to cash in on helping build Canadian infrastructure.

All three refineries in the Billings area will have a finger in the oil-sands pie. Pat Kimmet, manager of the CHS refinery in Laurel, said 90 percent of the crude oil entering the Laurel refinery is already heavy crude, with high sulfur and asphalt content, from conventional wells.

Part of refinery's feedstock is "western Canadian select," or WCS, a blend of various crude oils including some processed from the oil sands of northern Alberta.

As the supply of oil from conventional fields declines, Kimmet said, western Canadian select "is really the future of our refinery here in Laurel." Oil derived from the sands, he said, "is a huge reserve."

In anticipation of handling heavier crude oil, the CHS refinery completed a $400 million upgrade this spring that will squeeze more gasoline and diesel out of each barrel of crude. CHS has its own crude pipeline from the Canadian border to its refinery in Laurel.

Kimmet said the supply of crude from Canada is particularly welcome nowadays, when people are "concerned about the stability of other oil-producing regions of the world."

"We are just very fortunate to have it available to us from a stable country, from a country that's friendly and close to us," he said.

And even though the refinery is using heavier, dirtier feedstock, Kimmet said, upgrades over the years have cut down substantially on sulfur dioxide emissions from the plant. In the early 1990s, when emissions were at their highest levels, he said, the CHS refinery emitted about 9,000 tons of sulfur dioxide a year. That number is now down to 400 to 500 tons a year, he said.

"We've been very progressive in dealing with the environmental issues," Kimmet said. "We have the equipment in place to deal with this kind of crude."

The ConocoPhillips refinery in Billings also plans upgrades that will make it possible to handle some Canadian crude. Charlie Rowton, a company spokesman in Houston, said construction of new crude and vacuum units, which has not begun, is scheduled for completion in 2011.

The new units will be used to perform the initial separation of the crude oil into various products, which would then be further refined in other units at the plant. When the new units are in place, the capacity of the Billings refinery will go from 58,000 barrels of oil a day to 70,000 barrels.

Rowton said it is difficult to say what impact oil-sands developments will have on the Montana economy.

He also states, "Having access to more secure Canadian crude oil and upgrading our U.S. refineries ... will help maintain the economic vitality of all our refineries, including the one at Billings."

The ExxonMobil refinery in Billings was designed to handle heavy crude and has been processing oil from the oil-sands industry in Alberta for many years, according to spokeswoman Pam Malek.

Malek said ExxonMobil, which processes 55,000 to 60,000 barrels of oil a day at its Billings refinery, isn't planning upgrades related to the oil sands.

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.

Zero Emission Coal Plant Nixed

MONTANA, Mar 13 (Neo Natura) - When the Department of Energy announced in January that it would cancel funding for the vaunted FutureGen project (to build the world’s first coal-fired power plant with zero carbon dioxide emissions), the decision was widely viewed as the biggest setback to date for carbon capture and storage (C.C.S.) technologies.

First announced by the D.O.E. in 2003, FutureGen was seen as a prototype for a new fleet of coal plants that would strip the carbon from coal and coal plant smokestacks, and bury it deep underground where it would remain for thousands of years. Working with a coalition of domestic and foreign energy companies, the federal government was to pay 74 percent of the cost – which by the time the concept was scrapped had soared to a projected $1.8 billion, up from $1 billion.

FutureGen also bore the hope of industry and government officials that “clean coal” – long an oxymoron to those who actually mine and burn the stuff – could become a reality. In February 2007, Energy Secretary Samuel Bodman called FutureGen “one of our most exciting projects,” noting that it would build “the world’s first commercial scale, coal-fired power plant that produces no significant emissions of carbon or pollutants into the atmosphere.” In December, less than two months before the D.O.E. backed away, the new FutureGen plant site at Mattoon, Illinois was announced with great fanfare.

Now those plans are in ruins – along with the projections of the most optimistic proponents, who had hoped to build on a grand scale, so that we could significantly reduce carbon dioxide emissions in this country while continuing to rely on coal for most of our electricity.

FutureGen CEO Michael Mudd, for one, hasn’t given up, saying he hopes “to continue to work with the D.O.E.” to salvage the ambitious project, or else to seek new funding from Congress, where members from coal-producing states have been big FutureGen supporters. “FutureGen is too important for the future of coal, and for the advancement of [carbon capture and storage] technology, not only for Illinois and the U.S. but actually for the world, to just to walk away from,” Mudd said two weeks after the D.O.E. decision was made public.

But while it has all the characteristics of a massive government boondoggle – a bloated original concept, ballooning budgets, competing interests focused as much on their own piece of the pie as on the overall goal, and an abrupt and embarrassing pulling of the plug – the FutureGen debacle did not occur within a vacuum. Nor is it the only setback for a viable nationwide C.C.S. system.

Problems with FutureGen had been noted for months, most prominently in a March 2007 report by a research group from Massachusetts Institute of Technology headed by Ernest Moniz, a physics and engineering systems professor. That report characterized the project as overregulated, underfunded, and poorly managed. “The Future of Coal: Options for a Carbon Constrained World” was characterized by the mainstream press as casting a cold eye on the concept of clean coal, particularly on the gasification technology known as integrated gasification combined cycle (I.G.C.C., which involves converting coal into a gaseous state rather than pulverizing it, before it is burned in boilers). That’s not the case: Moniz has stated that I.G.C.C. “looks like the most economic option for using coal and capturing the carbon dioxide for sequestration,” and the report makes it clear that the government should put more, not less, money and muscle into C.C.S. projects.

But the report also states that a single, federally funded “super-project” will be insufficient to prove the technology and attract the investment necessary to make C.C.S. into a reality.

Meanwhile a number of other proposed designs for C.C.S. projects have suffered FutureGen’s fate.

- Minneapolis-based Xcel Energy, an electric utility that serves eight states across the Midwest and the Rockies, said in November it will postpone for at least two years its plans to build an I.G.C.C. plant with carbon capture capability in Colorado.
- Rebuffing a coalition of mayors headed by Laura Miller of Dallas, Mike Green, CEO of Texas energy giant TXU Power, said that I.G.C.C. will not work with Texas lignite or Western coal. Green told The Dallas Morning News that I.G.C.C. and C.C.S. are “not ready for prime time.”
- In 2006, Governor Brian Schweitzer of Montana announced a grandiose scheme for coal plants featuring C.C.S. technology, saying that Montana and three other Rocky Mountain neighbors could produce enough liquid fuel from coal and oil shale to supply America’s oil and gas needs for the next 800 years. But he has been forced to concede that his original vision was overblown, and that none of his envisioned projects have gotten past the press-release stage.

Despite years of glowing pronouncements from politicians and D.O.E. officials, and hundreds of millions in research and development funds from the states and the federal government, not a spade has been turned to build clean coal plants in Montana – or anywhere else in America, for that matter. Does that mean that carbon capture and storage, and its associated technologies like I.G.C.C., are beyond repair? Hardly. But it does mean that we are moving beyond the period of artists’ renderings and enthusiastic press conferences to a phase of hard realities, as the promise and the challenge of capturing and storing large amounts of carbon dioxide are examined in a harsher light. A look at a pair existing C.C.S. projects – one on the Northern Plains and one on the Gulf Coast of Texas and Mississippi – demonstrates that capturing carbon from coal-based power generation is difficult, storing it for hundreds of years is quite feasible, and building the infrastructure to do so on a national scale is going to be very, very expensive.

It is not entirely accurate to say that FutureGen would have been the world’s first coal-based plant with a carbon-capture system attached. That distinction belongs to the Dakota Gasification Plant about 50 miles northwest of Bismarck, North Dakota. However, Dakota Gas doesn’t produce electricity; it just converts coal into natural gas, in the process capturing carbon dioxide from the coal and sending it via a 325-kilometer pipeline to EnCana’s Weyburn oilfield in Canada. There the carbon dioxide is pumped deep underground to aid with enhanced oil recovery (E.O.R.), prolonging the life of the Weyburn wells.

Dakota Gas is actually a remnant of America’s first energy crisis, the 1970s oil shock that lead to a brief flowering of alternative-energy research, and its tangled history gives an idea of how difficult it might be to finance and build a full-fledged coal-fired electricity industry using carbon capture. Planned and funded under President Jimmy Carter, the gasification plant was completed at a cost of $2.1 billion in 1984 and filed for bankruptcy on the first day natural gas from coal began flowing from the plant. Operated by the government for four years, it was sold in 1988 to the Great Basin Electrical Co-op, which also owns two 450-megawatt coal stations adjacent to the gasification plant.

Now run under a revenue-sharing agreement with the D.O.E., the plant sends an annual 3 million tons of carbon dioxide north to the Weyburn field, which has produced nearly 400 million barrels since its 1954 discovery. There, at a rate of around 125 million cubic feet per day, the carbon dioxide is pumped down into the reservoir, where it mixes with the oil and makes it easier to pump to the surface. Carbon dioxide that is removed with the oil is extracted and recycled back into the wells.

By almost any measure, the Dakota Gas/Weyburn project has been a success. It has proven the technological and geological feasibility of stripping carbon dioxide from coal prior to burning and using it for E.O.R. – an increasingly important technique as domestic oilfields face depletion. The economics, though, are a different matter.

“If this thing cost $2 billion in the 1970s, what do you think it would cost today?” asks Gary Loop, the C.O.O. of Dakota Gas. He questions whether such greenfield plants can be built and run to make them commercially profitable. In fact, a Phase 2 plan to build a generating station at the Beulah facility using gas from the Dakota Gas plant has been on the books for years, but Loop says, “We don’t believe Phase 2 is economical.”

“Of course, we’ve got 1970s technology,” he adds. The company is currently looking for a partner – and federal funding, naturally – to build such a generating station nearby, plus an expanded pipeline system that would collect carbon dioxide from other plants in the region and ship it north to Weyburn. “If you took all the carbon being produced in electrical plants in this area – most of which have carbon dioxide that would be more difficult to capture than ours – there’s enough known E.O.R. sites within 300 miles, which is the economic distance, to handle all the output for the next 50 years.”

There are several “ifs” embedded in that statement: if you could find a way to economically retrofit the existing plants; if the utilities could find financing to build the new capture systems; if consumers could be convinced to absorb the added price per kilowatt-hour of their electricity; and if you could successfully store the CO2 underground once you ran out of oil wells needing E.O.R.

That last question is the piece of the puzzle being examined by a team of geologists and oilfield engineers, at the Bureau of Economic Geology at the University of Texas. With funding from the D.O.E.’s Regional Carbon Sequestration Program, which is backing seven such partnerships around the country, the researchers have spent the last 4 years injecting 1,850 tons of carbon dioxide into the Frio formation, about 30 miles east of Houston. Soon they’ll begin scaling up the system for a much more ambitious project near Natchez, Mississippi.

Scheduled for 10 years, with $38 million in D.O.E. funding, this second phase will be the first long-term project in the U.S. to study the feasibility of injecting large volumes of CO2 into underground storage locations. Unlike the Frio project, which stored relatively small amounts, the Mississippi experiment will handle commercial volumes, from a plant owned by Denbury Resources, Inc. of Plano, Texas. According to lead scientist Susan Hovorka, that will come to around 1 million tons of carbon dioxide a year. “We need to go to the next level,” says Hovorka. “We’ll be injecting at a rate of 1 million tons a year in four wells.”

Noting that a typical 450 MW power plant produces 5 million to 8 million tons of CO2 annually, Hovorka says, “The math is easy – you’ll need a well field. If we can get 1 million tons [a year] easily in four wells, and you want to do five times that, that gives you 20 wells.”

So far the data from the Frio tests has been encouraging. The carbon dioxide injections have been stable, and no leaks have been detected – to the extent that even drilling a well and trying to “produce” carbon dioxide (i.e., pump it to the surface) proved difficult. The storage part of capture-and-storage is “in the bag,” says Hovorka. “If you want it, it’s there,” she adds. “The question of whether you want to pay for capturing it also remains open.”

Environmentalists vs. Coal

MONTANA, Feb 04 (Neo Natura) - In federal and state courtrooms across the country, environmental groups are putting coal-fueled power plants on trial in a bid to slow the industry's biggest construction boom in decades. Environmental opposition has sped up since the U.S. Supreme Court decision in April that said carbon dioxide is a pollutant open to regulation.

The case, Massachusetts vs. U.S. Environmental Protection Agency, involved vehicle emissions. Some believe environmentalists aim to use the decision as a fulcrum to leverage regulators to take a harder line on greenhouse gases in several emerging power-plant disputes.

At least four dozen coal plants are being contested in 29 states, according to a recent Associated Press tally. The targeted utilities include giants like Peabody Energy down to small rural cooperatives.

From lawsuits and administrative appeals against the companies, to lobbying pressure on federal and state regulators, the coordinated offensive against coal is emerging as a pivotal front in the debate over global warming.

"Our goal is to oppose these projects at each and every stage, from zoning and air and water permits, to their mining permits and new coal railroads," said Bruce Nilles, a Sierra Club attorney who directs the group's national coal campaign. "They know they don't have an answer to global warming, so they're fighting for their life."

Among the projects being challenged is a 680-megawatt coal-gasification plant proposed by Energy Northwest, a public-power consortium based in Richland.

Industry representatives say the environmentalists' actions threaten to undermine the country's fragile power grid, setting the stage for a future of high-priced electricity and uncontrollable blackouts.

"These projects won't be denied, but they can be delayed by those who oppose any new energy projects," said Vic Svec, vice president of the mining and power company Peabody Energy.

While observers say forecasts of power-grid doom are exaggerated, the importance of coal -- one of the country's cheapest and most abundant fuels -- is undeniable.

Coal plants provide just over half of the nation's electricity. They also are the largest domestic source of the greenhouse-gas carbon dioxide, emitting 2 billion tons annually, about a third of the country's total.

Environmental groups cite 59 canceled, delayed or blocked plants as evidence they are turning back the "coal rush." That stacks up against 22 new plants now under construction in 14 states -- the most in more than two decades.

Mining companies, utilities and coal-state politicians promote coal in the name of national security, as an alternative to foreign fuels. With hundreds of years of reserves still in the ground, they're also pushing coal-to-diesel plants as a way to sharply increase domestic production.

The outcome of the fight over coal could determine the nation's greenhouse-gas emissions for years to come, said Gregory Nemet, assistant professor of public affairs at the University of Wisconsin.

"It's pretty much irreversible," Nemet said. "Once a coal plant is built, it will last 50 years or so. There's too much pressure -- in terms of energy independence and the inexpensiveness of that resource -- to not use that coal," Nemet said.

One of the latest challenges to a utility came in the heart of coal country -- Montana, which boasts the largest coal reserves in the nation.

On Friday, a state panel refused to rescind an air-quality permit it had granted for a plant proposed for the Great Falls area by Southern Montana Electric, despite concerns about the plant's carbon-dioxide emissions. The 250-megawatt plant is projected to emit the equivalent of 2.8 million tons of carbon dioxide annually, as much as 500,000 vehicles.

The Montana Environmental Information Center, which had asked the panel to review the permit, vowed to appeal the ruling.

Nilles said the Sierra Club spent about $1 million on such efforts in 2007 and hopes to ratchet that figure up to $10 million this year.

Meanwhile, coal interests are pouring even more into a promotional campaign launched by the industry group Americans for Balanced Energy Choices. It spent $15 million last year and expects to more than double that to $35 million in 2008, said the group's director, Joe Lucas.

Funding for the group comes from coal-mining and utility companies such as Peabody and railroads that depend on coal shipments for a large share of their revenues.

Peabody's Svec acknowledged a rush to build new plants but denied the goal was to beat any of at least seven bills pending before Congress to restrict carbon-dioxide emissions -- a charge leveled by some environmentalists.

Rather, he said, the construction boom is driven by projections that the country will fall into a power deficit within the next decade if new plants are not built.

Industry attorney Jeffrey Holmstead said that could lead to rolling blackouts as the economy expands and electricity consumption increases. Holmstead was in charge of the U.S. Environmental Protection Agency's air program during the first five years of the current Bush administration.

The power deficit cited by industry officials is based on projections from the North American Electric Reliability Corporation. NERC Vice President David Nevius said his group is "neutral" on what kind of plants should be built to meet rising demand.

"We're not saying the lights will go out. We're just saying additional resources are needed," Nevius said. "We don't say coal over gas over wind over solar."

Utilities now burn more than 1 billion tons of coal annually in more than 600 plants. Over the next two decades, the Bush administration projects coal's share of electricity generation will increase to almost 60 percent.

That projection held steady in recent months even as courts and regulators turned back, delayed or asked for changes to plants in at least nine states.

Some were canceled over global-warming concerns. Utilities backed off others after their price tags climbed over $1 billion because of rising costs for materials and skilled labor.