GE: Wyoming coal could be converted to shirts

Bent on dismissing the urgency for the U.S. to address climate change, and reflexively insisting that coal is the victim of an anti-development agenda, Wyoming leaders are now in a sort of slow-motion realization that their argument has won — politically — and as a result Wyoming’s economic workhorse is losing its U.S. utility market — perhaps for a long, long time.

“Right now, for the next decade or less, growth in electricity will be (limited to) growth in renewable (energy) and natural gas,” said Keith White, director of GE Energy’s coal gasification business .

For now, Wyoming’s coal producers are looking to export to China to make up for the loss.

Somehow, knowing that CO2 emission caps seem inevitable to utilities, yet not having targets to aim for, has forced coal-burning utilities to look to other energy sources.

“Unfortunately, despite many bills, none passed and we are left with no energy policy, so our customers (electric utilities) today are looking at their planning horizons … And they see new natural gas and no new coal,” White told Wyoming’s Joint Minerals, Business and Economic Development interim committee this week.

For the third year in a row, GE Energy has testified before Wyoming lawmakers about the imperative of a national energy policy in order to keep Wyoming coal in the U.S. energy mix. Presumably, they’ve been delivering the same message to Wyoming’s congressional delegation. But so far, the message seems to have fallen on deaf ears.

Lawmakers responded to White’s testimony by re-affirming — at least verbally — their support of the $100 million High Plains Coal Gasification research facility in partnership with the University of Wyoming. But, well, what can state-level lawmakers do about a national energy policy and a national utility market?

Last month, GE announced it had put the High Plains project on hold — a major blow to the state’s commendable effort in laying the groundwork for a technological insurance policy for coal in a future carbon-constrained world. Wyoming has committed some $50 million toward coal-gasification and other carbon capture and sequestration technologies in preparation for a policy framework that would require lower greenhouse gas emissions from coal.

The fact is that while Wyoming has smartly made investments in cleaner coal research and development in recent years, those efforts have been countered by the work of Wyoming’s congressional delegates who insist that greenhouse gas reduction targets and schedules presented so far are unacceptable — an argument that would have more validation if they, or the coal industry, had put their own emission caps and schedules on the table. They have not.

White didn’t lay all the blame of the dwindling U.S. coal utility market on lack of a national energy policy. He said the recession softened overall demand for electricity. At at the same time utilities are turning to natural gas to meet more stringent air quality standards, the nation saw a huge boom in domestic shale gas supply in the eastern and southern U.S.

So, as utilities plan to shut down old coal-fired electrical generation units, GE officials say Wyoming leaders should continue their support of coal-gasification with other markets in mind: plastics and other refined products. White said an astonishing volume of coal in China is refined into liquid byproducts such as naphtha, and other products that are the feedstock of plastics and the Chinese garment industry.

“We make a majority of our money in China today. They use their coal for quality high-end products,” said White.

Perhaps a shorter route to an end-product of coal is CO2, said White. CO2, the main greenhouse gas contributing to climate change, according to the world’s top scientists, is a hot commodity in Wyoming where companies are eager to inject the gas into aging oilfields, sweeping large volumes of oil left behind from traditional recovery methods.

CO2 for “enhanced oil recovery,” along with coal-gasification for liquid and plastic byproducts, is the kind of value-added and economically diversified business that Wyoming leaders have talked about for decades. But to think that Wyoming can push one of these multi-billion coal refineries to fruition without the influence of a national energy policy may prove frustrating — yet again.

But that isn’t stopping them from offering financial support for a gasification project proposed by local oil and gas businessman, Mick McMurry, who made his fortune in proving the productivity of the Jonah natural gas field. McMurry’s company, Nerd Gas Co., along with other partners, propose to build a gasification plant at Lake DeSmet in the Powder River Basin, first using natural gas as a feedstock to convert to gasoline, then using coal as a feedstock once the process is proven commercially.

The company made its second appearance before the Joint Minerals committee this year, asking for political and financial support — up to $5 million for feasibility and engineering work. But maybe $5 million isn’t enough for that phase of work. Committee co-chairman Sen. Eli Bebout, R-Riverton, suggested the state could pitch in $10 million — but perhaps from the Abandon Mine Lands fund rather than the state’s general fund.

McMurry and his business partners are correct in noting that a gasification plant in Wyoming fits the state’s needs to diversify and push the technology that could help fit coal into a carbon-constrained world. There’s already a commercial market for the CO2 byproduct in enhanced oil recovery. They’re as spot-on as the dozen or so other independent businessmen who have been floating the same idea for the past 15 years or more.

But until Wyoming leaders understand that they need to push for these technologies in national policy, there’s little reason to expect our investments in independent gasification projects will ever come to fruition in the Cowboy State. The real action is outside Wyoming’s borders.

— 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.