Montana tribe: $7B coal-to-liquids plant needs more federal support or investors will shy away

Mont. tribe: Coal-to-liquids needs support in DC

BILLINGS, Mont. — Leaders of the Crow Tribe warned Wednesday that a $7 billion coal-to-liquid fuels plant proposed for the Montana reservation could founder unless the federal government throws more support behind the industry.

Crow Chairman Cedric Black Eagle said a perceived anti-coal attitude in Washington, D.C., is scaring off potential plant investors.

A federal tax credit for coal-to-liquids recently expired. Unless the political climate for coal improves, Black Eagle said, the tribe could be forced to suspend its project, which has been billed as a means to pull the rural reservation out of poverty.

“If the investment community decides for whatever reasons that they won’t invest in the project, then we will put it on hold,” Black Eagle said.

The anticipated start of construction for the plant has been pushed back from 2012 to 2013, Black Eagle said.

The chairman and other tribal leaders stressed that the situation was not yet dire, but needed to be addressed soon given the years it would take to develop the project.

The expired tax credit would have given companies 50 cents for each gallon sold of liquid fuels derived from coal. No coal-to-liquids plants have been built in the United States.

The Crow Tribe is putting up the land, coal and water needed for the proposed plant, known as Many Stars CTL. A private partner, Australian-American Energy Co., would assemble the financing and develop the project.

Plans call for a plant that would initially convert 14 million tons of coal annually to liquid fuels. Carbon dioxide produced as part of the conversion process would be captured and stored or sold for industrial purposes.

The plant would produce 50,000 barrels a day of diesel, jet fuel, fertilizer or other products.

Future expansions could ultimately boost Many Star’s fuel production to 125,000 barrels a day. That’s about 50 million barrels a year — equivalent to roughly 1 percent of the petroleum imported into the United States annually.

The tribe’s plans have raised concerns among environmentalists who fear it will perpetuate the country’s dependence on fossil fuels. Critics also question whether coal-to-liquids is financially viable without government support.

The Crow are not the only tribe to advocate for coal. The Hopi and Navajo tribes of Arizona, New Mexico and Utah depend heavily on coal mining to bring in revenue. Both have been subject to campaigns by environmentalists opposed to the fuel, prompting Hopi leaders last year to declare environmental groups unwelcome on their reservation.

“Coal is not evil,” said Heather Whiteman Runs Him, an attorney for the Crow tribe. “It is possible to use coal in an environmentally friendly way.”

The Crow have other energy projects in the works, including a 10-megawatt hydropower plant on the Bighorn River downstream of Yellowtail Dam and a wind project that could be as large as 150 megawatts.

Also, companies working with the tribe already produce natural gas from the reservation.

But coal is the cornerstone of the tribe’s economic development ambitions. The reservation sits atop an estimated 9 billion tons of the fuel — enough to meet the electricity demands of the U.S. for about four years.

In a meeting Wednesday with Black Eagle and other Crow leaders, Gov. Brian Schweitzer pledged to promote the plant on the tribe’s behalf. He described the development of the tribe’s resources as crucial to its future.

“There was a time when the (Crow’s) wealth was the buffalo. Now it’s the energy,” Schweitzer said. “It’s the coal. It’s the wind. It’s the gas. It’s the hydro.”