Wyoming wind and coal need natural gas bridge

Wyoming wind and coal need natural gas bridge

Natural gas could be Wyoming’s “bridge” to finally achieving some measure of “value added” industry here, according to some heavy-hitters in the state.

For more than 30 years, Wyoming leaders have talked about the importance of adding value to the state’s mineral resources rather than simply exporting raw products — particularly coal. Companies have floated dozens of proposal for coal briquettes, coal-gasification for electrical export and coal-to-liquid fuels.

The closest any have come to fruition (save for a few fits and starts in coal briquetting) is DKRW Advanced Fuels LLC’s Medicine Bow coal-to-gasoline plant, which began its first phase of construction last fall, according to the Rawlins Daily Times.

But where most of these projects have failed is in the monstrous dose of capital needed to achieve commercial scale production. The estimated cost of DKRW’s plant in Carbon County tops $3 billion.

Natural gas, on the other hand, is nimble enough to gain less expensive footholds in multiple markets: compressed natural gas for vehicle fleets, small-scale electrical generation to “firm” wind energy and — on the larger scale — converting natural gas to liquid fuels.

“Wyoming should stop giving it (natural gas) away at $4 per mcf, and sell it for $15 (per mcf equivalent),” said Mick McMurry.

Last month, McMurry, Nerd Gas Co. president, made a well-received pitch to the Joint Minerals, Business and Economic Development interim committee for $5 million in bonding for a natural gas-to-liquids project at Lake DeSmet north of Buffalo. McMurry said the low price of natural gas provides a window of opportunity to lay the foundation for natural gas-to-liquids units which will set the stage for larger coal-gasification units at Lake DeSmet and elsewhere in Wyoming.

McMurry’s business partners believe that by converting natural gas to liquid fuels at its proposed Lake DeSmet plant, Wyoming would convert $34-worth of natural gas to $140-worth of gasoline. The same type of value-added conversion is possible for coal-gasification facilities.

“One of the biggest hedges against the boom-and-bust cycles is adding value to our products,” Mark Northam, director of the University of Wyoming’s School of Energy Resources, said at the same legislative committee meeting in June.

Northam said coal-gasification is “a technology whose time has come, and it’s good for the state.”

GAS UNLOCKS WIND

Wyoming’s natural gas may also be key to unlocking Wyoming’s vast wind resource. In order to sell a big chunk of Wyoming wind (approximately 2,400 megawatts) to California buyers, the backers of the Pathfinder wind project near Chugwater say they will add 600 megawatts of natural gas-based generating capacity in Wyoming to “firm up” the wind.

Because wind only blows part of the time, it has a reliability rating in Wyoming of about 40 percent. That means the wind is blowing 40 percent of the time, and therefore generating electricity 40 percent of the time. Natural gas-burning turbines — essentially jet engines — can ramp up to generating capacity within minutes, when the wind isn’t blowing. With G.E. Energy’s natural gas turbines, Pathfinder officials say they can promise their customers a reliability rating of about 97 percent.

“That puts the reliability of our wind project in the same realm of a modern coal-fired power plant,” said Mark Doelger of Casper-based Barlow & Haun Inc., a consultant to Pathfinder Renewable Energy, LLC. “When critics of wind say it is not reliable, well it is when you are able to build it and shape it with gas-fired generation.”

This scenario requires additional natural gas storage in eastern Wyoming, which is available in aging oilfields.

Doelger said utilities in California are willing to pay a premium for reliability, so the power purchase agreements they sign for wind- and gas-fired generation will have a higher value, “Which means a greater return to royalty owners in the state.”

Doelger has worked in the oil and gas industry for decades, and said he and others have envisioned natural gas as a “bridge fuel” for the nation for a long time. He said there’s a certain amount of frustration in understanding the potential role for domestic natural gas, while the nation has yet to put it into action.

“When people talk about natural gas being a bridge, it’s been one hell of a long bridge,” said Doelger.

— Contact Dustin Bleizeffer at 307-577-6069 or dustin@wyofile.com.

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