Coal industry all fired up over next generation uses

With its huge reserves of low-sulfur coal, Wyoming’s coal industry has developed the most productive mines in the world and produces more coal for traditional electric power plants than any other state in the nation.

Its next step will be to capitalize on the next generation of uses for coal, from “zero-emission” coal-fired power plants to new plants that convert coal into gas, diesel fuel or hydrogen.

The federal Energy Policy Act of 2005 designates up to $200 million a year in financial aid for developers of a pilot plant using integrated gasification combined cycle, or IGCC, technology at altitudes greater than 4,000 feet. The purpose of the provision, written in part by Wyoming’s senior U.S. Senator Craig Thomas, is to demonstrate that Western coal can be used cleanly and effectively close to the mines.

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The Wyoming Infrastructure Authority is soliciting partners for a demonstration project using IGCC technology, and two pilot projects under way at power plants at lower altitudes in Florida and Indiana are using the process.

In Colorado, Xcel Energy recently announced a $3.5 million investment in preliminary development of a plant designed to convert coal to gas through IGCC. In IGCC, coal is baked under high pressure and temperature to produce a gas that burns more cleanly and efficiently than raw coal in electricity-producing turbines.

Xcel’s proposed plant would be the first in the nation to use carbon-capture technology to reduce emissions and divert the recovered carbon dioxide underground. If injected into declining oil or natural gas wells, the process could help boost their production as well.

Final construction of the Xcel plant, tentatively planned for a site near the existing Pawnee power plant in Brush, is expected to cost at least $500 million and up to $1 billion. When completed, the plant would generate 300 to 350 megawatts of electricity, enough power to serve about 350,000 homes in Colorado, according to company estimates.

The earliest the proposed plant could be online is 2013, but under a bill passed this year in the Colorado legislature, Xcel could begin collecting money from customers to pay for the plant years before its scheduled opening.

Xcel’s plans require approval by the Colorado Public Utilities Commission before moving forward.

If commercial-size zero-emission power plants prove successful, Wyoming will be trying to entice construction of similar plants close to its huge Powder River Basin coalfields.

Meanwhile, several conventional coal power plants are under construction in the Powder River Basin.

A key to mine-mouth power plants will be increased transmission capacity for electricity. The Infrastructure Authority, formed in 2004, is helping finance a transmission line in northeast Wyoming and is involved in studies that could lead to increased transmission lines to Colorado and Arizona.

The governors of Wyoming, Utah, Nevada and California have approved the concept of the Frontier Line, a major new high-voltage transmission line that would carry power from Wyoming to the other Western states.

Other fuels now feasible

Interest is also growing in producing natural gas, diesel fuel and gasoline from coal. Although the technology has existed since before World War II, it has not been economically feasible until recently, when international oil and gas prices skyrocketed.

Perhaps the farthest along is the proposed Medicine Bow Fuel & Power coal-to-liquids plant. Planned by DKRW Energy LLC, a Houston corporation, the plant would produce diesel fuel and other clean fuels using coal-gasification equipment developed by General Electric and coal provided by Arch Coal from the Hanna area in Wyoming’s Carbon County.

Earlier this year, Medicine Bow Fuel signed a site license agreement with GE Infrastructure Technology. DKRW hopes to be the first to market with diesel fuel from coal, producing about 11,000 barrels per day of ultra-clean fuel.

DKRW also has an agreement with Rentech Inc. of Denver to license its Fischer Tropsch technology for use in the project.

Rentech, meanwhile, conducted a feasibility study for the state of Wyoming on a coal-to-diesel plant in Campbell County. Rentech and Peabody Energy, a major Wyoming coal producer, recently announced plans to evaluate sites in the Midwest and Montana to transform coal into liquid fuels, particularly diesel and jet fuel.

Another project on the drawing boards involves work by Converse County and California interests to build a similar coal-to-diesel facility near Douglas.

Marion Loomis, director of the Wyoming Mining Association, says he believes coal-to-liquid and coal-to-gas plants will be developed in Wyoming. He expects the market demand for gasoline and diesel fuel will prompt investment in coal-to-liquid conversion plants first. But when the coalbed methane play in the Powder River Basin ebbs, he predicts the pipeline infrastructure will make the area attractive to coal-to-gas conversion plants.

“I think that’s a real possibility,” he said. “I think that’s a win-win for everybody.”