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DKRW

DKRW Advanced Fuels

DKRW Advanced Fuels is considering plans to downsize its proposed coal-to-liquids plant near Medicine Bow, a company official told a meeting of Carbon County residents this week.  

The announcement prompted skepticism from residents, with even supporters of the project expressing doubt over the Houston-based company's ability to deliver a plant first proposed in 2004. The facility would turn coal into petroleum products like gasoline, propane and butane.

Wednesday's meeting in Medicine Bow was one of two updates DKRW is required to provide to local residents each year under the terms of its state permit.

Many who attended the gathering said the company had little new to report since the last meeting in Hanna in December.  

"It was the same old show. No answers," said John Johnson, a Carbon County commissioner who attended the event. "People came from Medicine Bow. They’re frustrated because they want it so bad, but there's no news."

Bill Gathmann, DKRW chief financial officer, framed the move to downsize the plant as a response to lower oil prices, which have tumbled roughly 40 percent since last year.

A smaller plant would give DKRW some flexibility in construction, Gathmann said, allowing the company to build the facility in pieces and ship them to the site. That may be cheaper than building the entire plant on-site, as initially proposed, he said. 

"There could be some economies there to do that," Gathmann said in an interview Thursday. "How much smaller we would have to go to realize those economies we don’t know yet."

DKRW will need an amended construction permit from the state for any changes to the plant, said Luke Esch, administrator of the Department of Environmental Quality's Industrial Siting Division. 

However, DKRW would not be required to resubmit a new application for the plant, which would take much longer to complete, he said.  

Some residents said they doubted whether the plant is moving forward at all. They noted DKRW terminated an agreement with a Chinese construction firm to build the facility last year.

A new construction firm has not been hired. Gathmann reported DKRW remains in conversation with three firms over the possibility of building the facility.

"Nothing has changed in their story for eight years," Johnson said. "It is getting harder and harder to believe it."

The estimated $2 billion project has struggled to raise money since its proposal, with company officials expressing varying preference for public and private financing.

DKRW pursued a $1.75 billion loan guarantee from the Department of Energy in 2009 after the recession wreaked havoc on private credit markets. But the company gave up on the public funding in 2012 after concerns over government loans to the bankrupt solar panel maker Solyndra halted the loan guarantee program. 

Last year, DKRW said it had resumed conversations with the Energy Department. Gathmann told residents in Medicine Bow that the company had been placed on the department's 2016 budget. 

On Thursday, he said that meant DKRW remains one of the companies eligible to receive federal assistance, as it has been in previous years. Discussions with the government are ongoing, he said. 

"They’re certainly very interested," Gathmann said. 

Arch Coal, which owns a 24 percent share of the project, wrote the plant off as a $57.7 million loss last year after the fallout with Sinopec, the Chinese construction firm. 

Arch remains active in the project, attending board meetings, but is no longer contributing money to it, said Gathmann. 

Carbon County Commission Chairman Leo Chapman has long supported the project, saying it would provide a much-needed injection of jobs and tax revenue to the region. 

Chapman missed Wednesday's meeting for medical reasons, but said his patience, too, was wearing thin. 

"The progress report is the same as it was two years ago," Chapman said, referring to the quarterly written updates DKRW sends the county. 

In 2013, the Wyoming Industrial Siting Council gave the company until June 2016 to resubmit a construction schedule and a July 2017 deadline to begin work. 

Chapman said he worried the company will not meet those deadlines. DKRW has yet to begin work on an environmental analysis for the power lines, roads and pipelines that will cross U.S. Bureau of Land Management property and serve the plant. BLM representatives have told the county that an environmental analysis could take 30 months, he noted. 

"I want this thing to go," Chapman said. "But you can only cheerlead for so long."

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Follow energy reporter Benjamin Storrow on Twitter @bstorrow.

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