Representatives of a Houston company planning a long-delayed coal-to-gasoline plant in Carbon County hope a state permitting board will give them 2 1/2 years to provide a new construction schedule for their project.
In exchange for not having to provide the construction schedule, representatives of DKRW Advanced Fuels proposed to members of the Industrial Siting Council that if the company doesn’t start major construction at its site near Medicine Bow within 30 months, the state can yank its permit, said Bob Kelly, executive chairman of DKRW Advanced Fuels, who attended the Tuesday meeting in Wheatland and talked Thursday with the Casper Star-Tribune about the project.
Luke Esch, Wyoming Industrial Siting Division administrator, said that it’s the first time the council has ever been presented with such a proposal, which the company presented in the form of an amendment to its permit from the council. The council will decide on the amendment at a December meeting. In Wyoming, companies about to begin large-scale construction projects exceeding $190.8 million must get permission from the Industrial Siting Council.
The Industrial Siting Council was expecting an updated construction schedule but on Sept. 20, company representatives sent a letter saying they were going to propose the amendment at the meeting instead.
The council first issued the permit for construction in January 2008. Members of the Carbon County Commission said their patience is wearing thin.
“Either put up or shut up,” Commissioner John Johnson said a day after the meeting.
The commission created a deputy sheriff position to accommodate construction workers that the company said were coming. It said earlier this year construction would start in 2014. The county budget was already tight, but commissioners thought the DKRW project would be a boon to the local economy and hired for the new position, Johnson said.
Kelly, the DKRW executive, said the latest delay has to do with finalizing plans with the engineering contractors. He said DKRW previously was delayed by the recent global recession.
“Obviously, when you go into it you hope you can do it as soon as possible because we have money invested and we want to get a return on that money,” he said. “We’re as impatient as everyone else. But if you don’t do it with the right steps, you don’t get to the finish line.”
In the presentation to the Industrial Siting Council, company representatives said they’ve spent $100 million thus far on the project.
Kelly pointed to delays in other energy conversion projects, such as the Sasol’s Oryx plant and Royal Dutch Shell’s Pearl plant. Both are in Qatar, are costing billions to build and are developing slowly, according to the New York Times. Shell last year had spent $19 billion on its project.
The exact cost of DKRW’s project in Wyoming are confidential. But it will cost $2 billion “plus or minus,” Kelly said.
When the plant is up and running, Kelly said the result will be added value to Wyoming’s coal in a time when the traditional use of coal—power plants – are facing increased regulation and closure.
The plant will turn coal into four products, Kelly said: 87-octane gasoline that will go to the Denver, liquefied petroleum gas products of propane and butane, carbon dioxide that Denbury Resources will pipe to fields for enhanced oil recovery and sulfur that will be used by a company in chemical and fertilizer production.
Thus far, DKRW has built water wells and foundations for buildings. Esch of the Industrial Siting Division said construction lasted only a month or so.
But Kelly said he doesn’t consider the project stalled.
Kelly described a planning process that spanned from 2011 to 2012 . First, they designed a blueprint with specificities such as locations of pipes, electricity and instruments. Then, they spent months assembling packages of materials for contractors who wanted to bid to build the plant, which took months for the contractors to review. DKRW spent months selecting a contractor and negotiating related technical agreements with the contractor – details of which he said are confidential.
“There are provisions in the main contract which require the contractor to do certain things, make certain confirmations and we’re going through the review of that now and negotiations and discussions with our contractor and exactly what their final assessment is,” he said. “And that’s really where we’re at right now.”
In the proposed amendment to DKRW’s permit, the company would provide a construction schedule six months before major construction begins, as well as other updates such as affects to the local community, a housing plan and the number of workers by quarter. The advantage to that, Kelly said, is that the company doesn’t have to waste its and the public’s time on update after update.
DKRW took a risk by suggesting a 30-month deadline to its project, but believes that’s enough time to get going.
“If we get there and we aren’t ready to go, then the council has the right to and the authority to pull the permit,” he said. “We wanted to encourage them and people in the area there is potential light at the end of the tunnel here. And it’s not a continuing series of deferrals, deferrals, deferals.”
Also in the proposed amendment, DKRW will hire security, firefighting and medical staff at a man camp it plans to build for workers to not stress resources in local communities, according to a presentation document.
Carbon County Commissioner Sue Jones, who attended the meeting, said she has questions about the emergency services staffing. She wants an analysis on how many people DKRW thinks are necessary. At one point, DKRW indicated the man camp would house 1,000 people, she said.
“They’re talking big numbers,” she said. “I don’t think anyone has sat down and got to the logistics of how would you be able to do that.”