Another Solyndra? Wyoming delegation feels differently about DKRW Advanced Fuels

Time, location, plan are the differences for Barrasso, Lummis and Enzi
2014-03-30T10:00:00Z Another Solyndra? Wyoming delegation feels differently about DKRW Advanced FuelsBy BENJAMIN STORROW Star-Tribune staff writer Casper Star-Tribune Online

When the California solar panel manufacturer Solyndra defaulted on a $535 million government loan in 2011, Wyoming’s all-Republican congressional delegation was among the loudest critics of the federal program that offered the loan.

Sen. John Barrasso called the Department of Energy program a “disaster.” Rep. Cynthia Lummis said, “We should make sure that we’re using technologies that are ready for prime time.” And Sen. Mike Enzi supported calls to investigate the company.

But the delegation struck a decidedly different tone about another project applying for an Energy Department loan. In 2009, the department said it would consider a $1.75 billion loan guarantee for DKRW Advanced Fuels’ proposed coal-to-liquids plant near Medicine Bow.

The $2 billion facility would convert coal into liquid petroleum products such as gasoline, butane and propane.

Wyoming’s congressional representatives were enthusiastic backers of the project, writing letters on the project’s behalf to the Energy Department, sending representatives from their offices to speak in favor of it at public meetings and touting its progress in news releases. 

“It uses Wyoming coal, Wyoming workers. It helps our economy in terms of around the state," Barrasso said in a recent interview. "If you’re using Wyoming coal, that’s going to be tax revenue from the state.”

Five years after DKRW's loan application was submitted and 10 years after the plant was first proposed, work on the project has yet to begin.

DKRW remains mired in construction delays. No private financing has been publicly announced, and the Energy Department’s loan review is still pending.

The question of public financing for the project re-emerged in February after DKRW executives said talks with the Energy Department had resumed and negotiations over the company’s application were moving forward.

Company executives said in 2012 that they would finance the plant privately. That was after their loan with the government had stalled following the Solyndra controversy. 

The debate over the financing of the project pits the state's elected representatives, who say it would boost Wyoming's economy, against some watchdog organizations and industry observers. They argue that DKRW's plans may be a bigger risk to taxpayers than Solyndra.

DKRW has never announced private financing for the project, said Autumn Hanna, a senior project director at Taxpayers for Common Sense, a Washington, D.C.-based watchdog organization. 

Construction was to begin last year but was delayed after DKRW said it was unsure when the Chinese engineering firm hired to build the plant could begin construction. That firm, an arm of the state-owned oil company Sinopec, announced in February that DKRW had terminated its contract.

“These are the kinds of large red flags that just show there is a lot of risk for taxpayers," Hanna said. "When you can’t see a lot of interest and other skin in the game from other partners, this isn’t the next new thing we should be getting behind.”

All three Wyoming lawmakers rejected comparisons to Solyndra. The Obama administration failed to properly scrutinize the solar manufacturer, they said, pushing through the company’s loan to help meet the president’s goal of boosting renewable power generation. DKRW’s application, by contrast, has been under review for five years. 

“To me, that’s the difference,” Barrasso said. “With the amount of time and effort put into the DKRW project, it seems they are doing it right in this case.”

The Energy Department's consideration of the project led Lummis to believe that the proposal "had stronger economics than Solyndra and some of the other projects." Asked about the delays in construction, Lummis said setbacks are inherent with such a large project.

"I would say, sadly, this is the new normal," Lummis said. "We need to change that. We need to change the new normal because it is holding our nation back."

All three stressed that their support is contingent on a thorough vetting of the project and a finding by the Energy Department that the project is economically feasible.

Enzi spokesman Daniel Head's response to a question about the cancellation of the Sinopec contract exemplified the sentiment.    

"Senator Enzi generally supports the development of new energy projects as long as they live up to their claims and if there are safeguards in place to make sure tax dollars aren’t wasted," Head wrote. 

DKRW Executive Chairman Robert Kelly noted that Solyndra was just one in a long list of Energy Department loans, many of which were successful.

He cited department figures showing that loan guarantee projects have created some 55,000 jobs. If it received the loan, DKRW would pay what is essentially an insurance policy to the government to offset the cost of a default should the company run into trouble. But Kelly said that is unlikely.

“We think our project is well-structured,” he said, adding that the project's ability to turn low-cost Wyoming coal makes it competitive with producers trying to tap into new oil reserves.

He said the decision to terminate the Sinopec contract was made so DKRW could move forward with the project and engage other engineering firms. 

Still, others doubted the project’s viability.

Michael E. Webber, deputy director of the Energy Institute at the University of Texas at Austin, said coal-to-liquids’ history offers a clue about its economic feasibility.

The Nazis employed the technology during World War II, as did South Africa’s apartheid government. Both had limited access to oil supplies. The lesson: Coal-to-liquids is possible but usually makes sense only as a necessity.

He said DKRW’s proposal and Solyndra’s are “basically identical.”

“They are both new technologies that are uneconomic without help,” Webber said. “If they were an economically viable solution already, it wouldn’t need a loan guarantee.”

Reach energy reporter Benjamin Storrow at 307-335-5344 or Follow him on Twitter @bstorrow

Copyright 2015 Casper Star-Tribune Online. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(17) Comments

  1. Wyopoke
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    Wyopoke - April 03, 2014 6:54 pm
    Liberals believe government can solve all of our problems and that there are no winners or losers and that fate, not hard work and committment to self reliance governs success or failure.

    Liberals believe that a benevolent government is the spackle that repairs all the cracks and fissures in life's path, ignoring the fact that without a little fibrous backing in the form of self reliance each successive layer of spackle only tends to turn fissures into deep fractures.

    I believe that an independent mind can examine and process the facts and come to a conclusion sans outside influence by political party or the usual compliment of talking heads on both liberal and conservative leaning TV.

    I for one have not watched one minute of cable or network news since November 6, 2012. I prefer to listen, read and research and of course think my way through issues as opposed to bring spoon fed.

    Your on deck Side Oiler.
  2. Wyopoke
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    Wyopoke - April 03, 2014 4:42 pm
    The Germans did this out of necessity as they were cut off from world petroleum supplies. Most of the the alternative coal tech originated in this manner.

    The problem is we are trying to turn coal into stuff that comes right out of the ground or is more efficiently extracted from petroleum feed stock.

    The coal companies support the research out of necessity and because it eventually means their survival. I wish them well and applaud their efforts.

    At this juncture however, it isn't economically viable without being subsidized. I am pretty much against subsidies (other than the R&D write off) for anything. Including wind and ethanol and companies like Solyndra and Tesla.

    If it is economically viable the investors will get on board. If not they won't. It's up to the coal companies to do the heavy lifting here.
  3. Wyopoke
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    Wyopoke - April 03, 2014 4:32 pm
    In my mind the only issue would be that I'm not sure it would be cost effective to build the final processing facility next to the source.

    In rare earth processing the ore is usually mined, partially processed with that product shipped to a facility for final processing and purifying the various rare earth metals. These facilities are already up and running so it is cheaper to ship the rough grade semi finished product off as opposed to building a new facility.

    Same philosophy as shipping uranium yellowcake off for refining.

    Great thought though - if we keep thinking that way something will take root.
  4. Pioneerpete
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    Pioneerpete - March 31, 2014 4:07 pm
    Any chance someone is "cooking the books?" That seems to be a popular explanation for opposition to a program.
  5. jc45
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    jc45 - March 31, 2014 12:12 pm
    The German government converted coal to fuel for their war machines during WWI. Since then many people have been trying to tweak the process to make it economically feasible. I cannot find a single example of an economically successful example worldwide. If DKRW is such a great deal there should be private investors getting on board instead of leaving a sinking ship
  6. Todd
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    Todd - March 31, 2014 8:02 am
    Just as a matter of course, I believe that ANY project with real potential would be picked up by private investors. If private financing is leary , so should public tax dollar financing. The very fact that private investors seem to be hands off tells me that it just isn't that viable.
  7. side oiler
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    side oiler - March 31, 2014 7:43 am
    Poke,as soon as you enlighten us all as to what your definition of a Liberal or Independent is.
  8. markp1950
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    markp1950 - March 31, 2014 12:07 am
    Now if you would fully open your mind,and engage your brain. Look at it this way. Tesla is going to open a HUGE battery plant in AZ, TX, NM or CA. You have a huge Lithium find near Rock Springs. Why don't you offer to build the plant down there. You could create a BIG green energy boom down there. Build a mine down there. You could mine, process AND put the Lithium into the batteries. And probably create MANY more jobs than coal ever would. You probably have enough wind and solar energy down there to power the processing facility AND the battery plant. Open your mind, think out of the box. Don't waste time!
  9. Kool Kat
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    Kool Kat - March 30, 2014 8:52 pm
    Attn Wyopoke, the Coal Companies have spent $millions to build a school of Technology at the U of dub. With the right research, breakthroughs are said to be "almost imminent" and that's the main reason I support his.
    The Solyndra's of this world are just guess and tweaking to see if they can follow suit, but unfortunately the Technology is not there to meet the abundant natural resource - the Sun.
    This is why I'm for - at least - for trying to see where this goes, as we know the Technology needs fine tuned, where the natural resources available to meet the technology, less political interference.
  10. Wyopoke
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    Wyopoke - March 30, 2014 6:41 pm
    KK typically you and I are on the same side of the issue but not this time. Look at my comments on DKRW canceling the contract with its latest engineer.

    They have many issues the least of which are the enviros - this time...

    Coal to gas and coal to liquids are just two more alternative energy boondoggles that can't bear their own weight without being subsidized. These just are not good investments or investors would be all over them.

    I've been involved with this peripherally since it came about. I would love for it to proceed but only under its own steam.
  11. Kool Kat
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    Kool Kat - March 30, 2014 5:58 pm
    Thanks for the story Benjamin, however you are trying to equate "unproven technology" by Solyndra for energy use, compared to the "already proven" technology of coal gasification. Lets not cut off our noses in-spite our faces.
    Wyoming has already had the opportunity to test turning coal to gasoline and diesel with success, completely different situation than Solyndra tried. The Technology is there and the resources for that same Technology is in great abundance.
    There are only two hurdles for such Technology, Environmental Organizations and their ally, the President. As Obama is trying to kill the coal industry, the Eviro-fascists along side with the US EPA are doing their best to stop this proven Technology.
    What the enviros and this President want to do is, destroy a Conservative State from getting ever more popular with common sense technology. This would actually help lower the cost of the "ever so rising cost" of diesel and gasoline.
    Meantime, we are seeing, more and more assaults from the enviros in conjunction with the US EPA on Wyoming's ability to help meet this nation's energy needs.
  12. reesej
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    reesej - March 30, 2014 2:55 pm
    Oh, the stench of hypocrisy. I guess the argument from our delegation is that Solyndra, Fiskar Automotive, A123 Systems, Beacon Power, Evergreen Solar, Spectra Watt, AES, Nevada Geothermal, Sun Power, First Solar (and probably a host of others) just weren’t properly vetted. But we’re sure that the Department of Energy has a winner with DKRW. Or are they suggesting that some other agency will be doing the vetting? An in depth, technological review of this company and it’s proposed project has never been done by a single agency in our State – we’re just happy to rubber stamp the permits and don’t need to get bogged down in the technological details. But now it’s OK if the Federal Government wants to spend a couple billion on this stumbling project in Wyoming.

    According to a Bloomberg Businessweek article from 10/31/11, Senator Barrasso (just two weeks prior) was proclaiming from the Senate floor that the administration “shouldn’t be betting with the taxpayer’s money”. When asked about the support of DKRW’s project, a spokesperson with his office said that the Senator only supports projects that are “financially sound, transparent, and based on sound science.” In the case of DKRW, they’ve been unable to find investors, were recently mandated by the ISC that they had to have periodic public meetings due to their lack of information and transparency, and their science might be just as sound as all of the other projects previously mentioned. In other words, the criteria for congressional support just doesn’t seem to add up.

    Guess the DKRW guys, with their Enron management resumes must have made pretty persuasive arguments to our delegation in order for them to cast aside their coveted “conservative” positions about the careful use of taxpayer’s dollars.
  13. Wyopoke
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    Wyopoke - March 30, 2014 12:22 pm
    What is your definition if conservative so I know if I am one?
  14. side oiler
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    side oiler - March 30, 2014 11:51 am
    Not all commentators in this fish wrap are "liberal leaning",many of us are just sick and tired of the continuous right wing "I claim to be a conservative" Limbaugh and Hannity BS that permeates these threads on a daily basis.There are no real conservatives anymore,mostly party hoppers like Reagan leftovers,so party affiliation is moot now. As for the three stooges,they need replaced, and not with more like them as it will do NOTHING to fix the problem.
  15. Wyopoke
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    Wyopoke - March 30, 2014 11:25 am
    Totally agree as you will note in my comments on the other article related to DKRW.

    I disagree however that the promotion of this home state boondoggle is limited to our three beloved stooges. This is a shining example of business as usual in government and does not warrant a party label. This is precisely why we need term limits for congress. Most of those elected go to Washington on both sides go with the best intentions but are soon engulfed in politics and the every day game of pay for play.

    I too am embarrassed by the fact that we are against "Solyndra" for someone else but advocate on behalf of a "Solyndra" that brings the bacon to our home state.

    Again I am against this 100% regardless of which party or which State the bad actors are from.

    As a Conservative I look forward to the liberal leaning commentators on trib town to take those who represent them on the national level Reid, Pelosi, Obama, etc. to task for their shortcomings as I have done here with the three ring circus Wyoming sends to Washington every 2 and 6 years.
  16. side oiler
    Report Abuse
    side oiler - March 30, 2014 11:05 am
    Hypocrisy has no boundaries in Wyoming anymore.The three stooges need to go.
  17. Cody Coyote
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    Cody Coyote - March 30, 2014 10:45 am
    The DKRW project is doomed, and has been from its inception. There are no surprises in this revelation.

    It also confirms yet again what a tub full of partisan hypocrites the Wyoming All Republican All The Time delegation are.
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