DKRW Plans to Develop a $2.75 Billion Coal Liquefaction Plant and Cogen in the Rocky Mountains

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). DKRW Energy LLC (Houston, Texas) is planning to develop an intergtrated coal liquefaction plant on the Medicine Bow River Ranch in Carbon County, Wyoming. The proposed facility will utilize coal and produce both low-sulfur petroleum products, such as diesel, as well as provide electric power for the local grid. The scope of the proposed facility in production terms could be as high as 50,000 barrels per day of diesel, naphtha, and iso-butane.

DKRW intends to capitalize on the highly exothermic process along with the production of 300 million cubic feet per day of synthetic gas to produce approximately 300-750 megawatts of power at a planned cogen at the plant site. Some of the power production would be used for the plant and the rest will be sold to the power markets of Denver, Salt Lake City, and southern California. The proposed plant would be located thirteen miles south of Medicine Bow and could employ 500 permanent workers at the liquefaction facility and nearby underground coal mine.

DKRW is negotiating with Rentech Incorporated (AMEX:RTK) (Denver, Colorado) to employ its Fischer-Tropsch (FT) based coal gasification technology for the process, a process that was first developed by Germany before World War II and produced much of that nation's aviation fuels. In the Rentech Once-Through process, coal and oxygen are sent through a gasifier, resulting in a syngas, which is further upgraded in an FT reactor to produce a high grade wax, which is then further upgraded, using a different technology into the final products, such as diesel with a sulfur content of less than one part-per-million. DKRW is also negotiating with the Houston, Texas, office of Bechtel Corporation for the engineering contracts for the product upgrading section of the project. Construction on the liquefaction project could begin as early as 2007, with completion and first production scheduled for some time in 2009.

As the prices of natural gas and crude oil continue to remain historically high, many alternatives are now becoming economically viable, such as coal gasification, gas-to-liquids (GTL), and LNG. To put things into perspective, there are roughly 270 billion tons of coal reserves in the U.S., making it the largest known coal resource in the world. This equates roughly 20 trillion gallons of GTL products. Annual coal production in the Powder River Basin is approximately 380 million tons. If this were increased by 20% to 460 million tons per year, then 270,000 barrels per day of TF fuels could be produced. By-products of this increase would include 1.3 Giga/tons of CO2 for potential sequestration in EOR projects and the release of 1.9 trillion cubic feet of coal bed methane gas for market over a twenty-year time period.

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