U.S.‘s First Coal-to-Liquids Plant Coming to Big Sky Country

Australian-American Energy, a subsidiary of energy giant Australian Energy Co, has signed a $7 billion with the Crow Nation to build the United States’ first coal-to-liquids plant. The 50 year agreement will cede close to 50 percent of annual revenue to the Crow Tribe, whose reservation in Big Horn County, Montana is one of the poorest areas in the country. It is expected that annual revenue to the tribe could top $1 billion annually. Construction on the Many Stars project won’t get going for another few years, and initial production capacities at the plant will start at close to 50,000 barrels per day of synthetic fuels. Production capacities of 125,000 barrels per day are likely in the long-term.

Coal analysts estimate the tribe is sitting on top of close to 9 billion tons of coal, making the land under the Crow reservation one of the largest coal repositories in the world. Australian-American and the Crow Nation are expecting to encounter opposition to the project, which is planned for mostly undisturbed land, and is similar in its extent and ambition to the oil shale and tar sands projects currently under way in Northern Canada. According to the tribe, the Many Stars project will be equipped to capture 95 percent of its carbon dioxide emissions. Plans are under to store the CO2 in underground formations or to broker long-term contracts with oil producers who use the gas to increase production at declining wells.

Coal to liquid fuel technologies were perfected by Nazi Germany and Apartheid South Africa after the global community shut off access to oil for those regimes. There are two basic ways of liquifying coal - either directly or indirectly. In indirect liquefaction, a hydrogen and carbon monoxide-based synthetic gas is created from heated and pressurized coal. The syngas is then converted into liquid fuel form through Fishcer-Tropsch synthesis. Direct liquefaction creates synthetic crude oil through the pressurized combination of oil, hydrogen, and coal. South Africa hosts the world’s only commercial-scale coal to liquids plant.

The development of coal to liquids in the U.S. is driven largely by rising oil prices. Coal is cheap and abundant in the U.S. and, proponents claim, liquid fuels created from coal to liquids processes are cleaner than comparable fuels, like diesel. Countries like China and Australia, both of which have coal surpluses and must import oil, have done some pioneering work in this area. The trick for continuing development of coal to liquids in the U.S. is to make clear these technologies are cleaner and cheaper then options currently being pursued by oil companies to expand their dwindling reserves. Increasing reliance on coal for fuel, however, may create long-term supply pressures for the coal-reliant electricity industry. Luckily, for every Many Stars project, there’s a Native Energy to balance it out.