WyoFile Energy Report

Can Wyoming put its mouth where its money is?

A series of recent events suggests a major shift has already occurred in the direction of the U.S. coal industry. And it isn’t much closer to lowering greenhouse gas emissions.

— This month Ameren announced it hit a financial stumbling block in its participation of the long-embattled FutureGen project, a near-zero emissions coal-gasification project intended to pave the way toward maintaining coal as a base-fuel for electrical generation in the U.S. under inevitable greenhouse gas emission limits.

Dustin Bleizeffer

— The University of Wyoming and GE Energy partnership to build the High Plains Gasification-Advanced Technology research center in Cheyenne was put on hold due in large part to the lack of a national energy policy limiting greenhouse gas emissions.

— And, the University of Wyoming’s and U.S. Department of Energy’s Rock Springs Uplift carbon sequestration project was put on hold due to the competing demand for CO2 for enhanced oil recovery. The 3 million tons of CO2 needed to prove the project would cost an estimated $750 million. Ouch!

These are just a few examples of a shift from a promise of “advanced” coal technologies to a promise of simply converting coal to “value-added” products such as synthetic gases and liquid fuels. But can those endeavors make up for coal’s losses in the U.S. utility market? GE Energy officials recently advised Wyoming lawmakers that the state’s coal industry could take a cue from China and convert coal into products such as T-shirts and jeans — which seems to me a miniature, weak parody of coal’s energy potential.

Coal — one of Wyoming’s powerhouse economic drivers — is likely to continue to lose its share of the U.S. utility market to natural gas due in large part to huge operational successes in tapping shale gas reserves, a phenomenon that has changed geopolitics and the world energy picture. And rather than pull anthropogenic (man-made) CO2 from coal-fired power plant stacks for carbon sequestration, it seems oil and gas operators will instead chase after natural geologic reserves of CO2 to push a burgeoning enhanced oil recovery industry chasing profits in the high price of crude oil.

So what do these major shifts in the world of energy mean for Wyoming?

“My own opinion is that the coal resource, through time, will start to take on more importance in things other than (electrical) power,” Rob Hurless, energy policy advisor to Wyoming Gov. Matt Mead, told WyoFile.

So, rather than maintain coal’s strong presence in powering American electrical generation, domestic coal reserves could simply be destined to power China’s burgeoning middle-class growth — that, and a handful of “conversion” projects touted as value-added products like gasoline and synthetic gases. Small beans compared to potential losses in the U.S. utility market.

A significant financial component of both the DKRW Medicine Bow coal-to-liquids project in Carbon County and Nerd Gas Co.’s natural gas to liquids (initially proposed for Johnson County and  now seeking a home in southwest Wyoming) project is to sell CO2 byproduct to the oil industry to sweep large volumes of oil left in place after conventional production, according to Hurless. At $100 per barrel, oil producers are clamoring for any secure supply of CO2 they can find. Unfortunately, capturing CO2 from any smokestack in the U.S. has proven elusive. Instead, the CO2 supplies for enhanced oil recovery are likely to come from ancient geologic deposits.

What a missed opportunity that we don’t already have carbon capture facilities in place to supply that CO2 demand in Wyoming.

If there’s any silver lining to be found for those concerned about global warming, it’s that the oil industry’s hunger for CO2 supplies will at least fund a CO2 pipeline network that might one day tie into coal-based power plants. Most likely, this would be limited to those geographic areas that provide opportunities for both — access to CO2 and enhanced oil recovery. Wyoming is one. Even this scenario does little to address climate change due to man-caused emissions of greenhouse gases — a crisis that many of the world’s top scientists say is already at hand.

In the hunt for CO2 for enhanced oil recovery, you can expect to hear a lot more about “residual oil zones,” which describe the outer reaches of old oilfields targeted for tertiary recovery. The potential for these residual oil zones is a huge focus of the UW Enhanced Oil Recovery Institute. The thinking among industry leaders is that a robust enhanced oil recovery industry will use CO2 to sweep oil far beyond those traditional oilfield boundaries. And as folks in the Bighorn basin already know, that means industry is going to put up a big fight against any further “wildland” designations of public lands.

Let’s face it, there’s much to condemn about the American coal industry’s foot-dragging on climate policy, particularly if you’re eager to reduce carbon emissions and move on to a cleaner energy regime. But coal producers themselves seem to be struggling to deal with the realities of recent events — not the least of which are competition from shale gas and a growing insistence for cleaner energy among utilities and their customers, even in the absence of greenhouse emission caps.

Are Wyoming’s coal producers to pin their hopes on exports to China in fierce opposition among coastal communities and on a handful of questionably financeable “conversion” and “value-added” projects such as DKRW’s proposed coal-to-liquids plant? If you live in Wyoming, where coal injects $1 billion into the economy per year, you have a vested interest in both addressing climate change and making sure coal continues to remain in demand in the U.S.

“Some of the big players, particularly the coal players, have been recalcitrant in (recognizing the need) to be proactive on these technologies and policies and regulatory steps in anticipation that sooner or later we’re going to have to deal with this,” said David Wendt.

Wendt is president of the Jackson Hole Center for Global Affairs, and ran unsuccessfully as the Democratic challenger against Rep. Cynthia Lummis (R-Wyoming) in 2010. He attended the Carbon Sequestration Leadership Forum in Beijing in September, and said there was clear mutual interest among leaders of industries and governments — both the U.S. and China — in using CO2 for EOR as a financial stepping stone toward cleaner coal for electrical generation.

But the policy drivers still must come in to play.

“What we don’t have is any systematic thinking from any of our national leaders as far as what would a national energy policy look like,” Wendt told WyoFile.

The Joint Minerals, Business and Economic Development interim committee has drafted a bill — the “Advanced conversion technologies study” — that would set aside $10 million from the general fund for projects such as Nerd Gas Co.’s natural gas to liquids project and any other project to convert coal into “value-added” products.

Of value-added projects for Wyoming’s coal and gas, there have been many: Char-Fuels, KFx, Hoe Creek, Buffalo Gasification, FutureGen, Medicine Bow and countless coal-briquetting proposals. (Help me out, readers, I know I’m missing a few.) All of these have enjoyed either political or monetary support (or both) from Wyoming’s elected officials. It’s easy to understand their enthusiasm for such projects. But it’s difficult to cheer these endeavors knowing that for more than a decade Wyoming’s leaders have refused to put their mouth where our money is.

By that I mean, it’s been a losing proposition to spend Wyoming’s taxpayer dollars on advanced fuel projects at home while shouting down the very policies in Washington D.C. needed to drive them to commercial fruition.

— Dustin Bleizeffer, WyoFile editor-in-chief, has covered Wyoming’s energy industry for 13 years. He can be reached at 307-577-6069 or dustin@wyofile.com.

— If you enjoyed this column and would like to see more quality Wyoming journalism, please consider supporting WyoFile: a non-partisan, non-profit news organization dedicated to in-depth reporting on Wyoming’s people, places and policy.

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Published on November 17, 2011

  • http://www.wyofile.com Dustin Bleizeffer

    Be sure to read this article by Michael Economides, “Wyoming CO2 Sequestration Project Falling Apart.” http://www.energytribune.com/articles.cfm/9213/Wyoming-CO2-Sequestration-Project-Falling-Apart

    Economides, who has spoken at energy forums in Wyoming, delivers a I-told-you-so lecture about what he says is the fallacy of carbon sequestration efforts; these are not truly permanent CO2 storage options. As for any gains toward addressing climate change through CO2 injections for enhanced oil recovery?

    “CO2 that needs to be managed dwarfs any EOR potential applications. And yet, for now CCS projects have to compete with CO2 that is in short supply and very expensive for ongoing oil EOR projects. Mind-boggling,” Economides writes.

    — Dustin Bleizeffer, WyoFile editor-in-chief

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