Wyo officials say DKRW’s coal-to-liquids project is ‘out of compliance’

— March 20, 2013
(updated on March 23, 2013)

After first trying to delay a hearing before Wyoming regulators to buy more time to modify its construction schedule, Houston-based DKRW Advanced Fuels LLC today formally withdrew its request to modify its plans for the proposed Medicine Bow Fuel & Power coal-to-gasoline plant in Carbon County.

That means DKRW is out of compliance with its Industrial Siting Council permit, further threatening the company’s ability to secure financing for the project.

“The division’s position right now is they (DKRW) are out of compliance with their permit,” Industrial Siting administrator Luke Esch told WyoFile.

Esch said he received a letter from DKRW around lunchtime Wednesday notifying the state it was withdrawing its request to modify the permit. On Friday, Esch told local media that his agency had given DKRW until June 19 to bring its permit back into compliance, listing terms that DKRW officials say they’d already planned on pulling together well in time to meet that deadline.

The Industrial Siting Council is still scheduled to meet April 1 in Casper to hear other matters. However, since DKRW has withdrawn its “Industrial Siting Permit Socioeconomic Impact Analysis Report,” which was a condition to maintain its permit, there may be no DKRW business before the council at the April hearing.

Esch said the council will decide within the next couple of days what to request of DKRW regarding its new noncompliant status. He said the agency typically provides an opportunity for permittees to come back into compliance, but if terms are not met the permit will be revoked.

A call to DKRW officials was not returned before publication of this article.

For years, DKRW has been promising to begin construction on what would be the nation’s first ever commercial scale coal-to-gasoline plant, consistently delaying the project as it attempts to complete financing. In the meantime, communities in Carbon County have been preparing to meet the demands of the construction project, estimated to require some 2,000 workers at the peak of the 40-month construction period.

Total capital cost of the project is estimated at about $2 billion.

The exact specifications of the Medicine Bow Fuel & Power plant have changed over time, but the general description is this: the plant would convert coal from Arch Coal’s adjacent Saddleback Hills and Elk Mountain mine properties into a daily output of 11,686 barrels of gasoline. In 2011, DKRW signed a 25-year contract with international commodities trader Vitol Inc. to purchase 100 percent of the gasoline production, which will be transported by pipeline and sold into the Colorado Front Range market.

St. Louis-based Arch Coal, a major coal producer in Wyoming, holds a 24 percent interest in DKRW.

— Dustin Bleizeffer is WyoFile editor-in-chief. You can reach him at (307) 577-6069 or email dustin@wyofile.com. Follow Dustin on Twitter at @DBleizeffer

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