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Report: Baard Energy Planning $4B Coal-to-Liquids Plant in Ohio

21 August 2006

The Morning Journal reports that Baard Energy, a Vancouver, Washington-based energy company that is building ethanol plants in Ohio and Nebraska, may soon announce plans for a $4-billion coal-to-liquids (CTL) plant in Wellsville, Ohio. Wellsville is south of Youngstown, Ohio and west of Pittsburgh, Pennsylvania.

Neither the company nor county officials would confirm the report, although Baard’s president reportedly told the Ohio Coal Association that the company had selected the site.

The plant is expected to use seven million tons of coal a year—supplied by barges on the Ohio river—to convert into 35 million barrels of product—about 95,000 barrels per day.

The Youngstown Business Journal notes that Baard would finance the plant through a mixture of debt and equity. Under the Energy Policy Act of 2005, the Department of Energy is authorized to guarantee loans for such efforts, which could reduce Baard’s costs of borrowing.

August 21, 2006 in Coal-to-Liquids (CTL) | Permalink | Comments (28) | TrackBack (0)

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This is the direction the East Coast processors are heading towards in coverting our natural resources to something that can sustain us. The Middle East Terrorists who persist on thrusting their Oil prices skyward will not have the United States as a source of revenue in the future as we will turn our direction to the valuable assets that lie in our own backyards. Similar plant going in Central PA:
Click on my name below for the news article.

Clint LeRoy,
The real potential would be for CTLs to be tranformed into BTls. They may be also fitted with combined cycle gas+steam turbine with hot water/steam cogeneration. The pant may provide electricity during the day while making fuel/chemical feedstock during the night. The Ohio river could also transport biomass feedstock. Algae is one potential source.

I for one hope this project makes it through all the evironmental hurdles. Four million gallons per day is not to be sneezed at. Plus I'm tired of all these early CTL/CTG projects going to China, Spain, etc.

This sounds like another of those projects from the 2005 energy legislation from hell. The gift that just keeps on giving.

Like Measba (coal-gas) in Minnesota and Medicine Bow (coal-to-liqids) in Wyoming these plants would never see the light of day without the huge government pork attached to it.

These plants are dirty and inneficient nightmares. The technology is so unproven private funding won't touch them. So, if they don't work the taxpayers will pay off the loan gaurentees.

They need lots of water, infrastructure, pollute air, and need eminent domain to operate.

let's hope congress strips funding from all these projects and funds real and sustainable renewables

Like Measba (coal-gas) in Minnesota and Medicine Bow (coal-to-liqids) in Wyoming these plants would never see the light of day without the huge government pork attached to it.

Why is that? At current oil prices, the CTL projects would be enormously lucrative even without subsidy. Remember that study for Wyoming that showed an IRR of better than 100%/year at current oil prices. Are you saying the price of oil is going to collapse back to below $40/barrel before these plants can be brought online?

Why is that? At current oil prices, the CTL projects would be enormously lucrative even without subsidy. Remember that study for Wyoming that showed an IRR of better than 100%/year at current oil prices. Are you saying the price of oil is going to collapse back to below $40/barrel before these plants can be brought online?

Then why did those projects need enormous subsidies, Paul?

Then why did those projects need enormous subsidies, Paul?

I don't know that they do, Joseph. Do we know that these plans would not be going forward without them?

But anyway, one can argue that subsidies for first movers are justified purely on public policy grounds. Pioneers of new technologies produce a public good (the proving of the new technology) for which they may not be adequately compensated by the market. Subsidy for this positive externality can help correct the market failure (just as penalities for negative externalities, such as pollution, also improves the function of the market.)

This may be just another way to continue feeding our gas guzzlers for another 50+ years. Where will all the GHG (from those plants and the gas guzzlers) go?

Using our farm land to produce feedstocks for ethanol plants is not sustainable in the long term. The total energy required to produce enough ethanol for a large SUV for one week can feed 58 people for a full year. The price of food will skyrocket and many of us will have to choose between the SUV and the Stomach..

We (and our neighbours) would be much better off with the introduction of various ways to make our vehicles more efficient and to reduce consumption of liquid fuels and GHG by 50+++%.

Clean electricity from waves-sun-wind etc is by far the best energy for most usages including vehicles, homes, offices, industries etc. The basic infrastructures are there already and could be upgraded quickly where and when required.

I don't know that they do, Joseph. Do we know that these plans would not be going forward without them?

I'm not familiar with Medicine Bow, but the Mesaba Energy Project has HUGE subsidies, mostly in the form of loan guarantees, but also in direct grants. It wouldn't have gone forward without those.

But anyway, one can argue that subsidies for first movers are justified purely on public policy grounds. Pioneers of new technologies produce a public good (the proving of the new technology) for which they may not be adequately compensated by the market. Subsidy for this positive externality can help correct the market failure (just as penalities for negative externalities, such as pollution, also improves the function of the market.)

You can make that general argument, but each case has to be specifically addressed.

But, again, if it's so lucrative, as you claim, then why are the subsidies necessary?

But, again, if it's so lucrative, as you claim, then why are the subsidies necessary?

And, again, I don't know that they are necessary, in a global sense. From the point of view of a business, they will take subdidies even if they aren't 'necessary'. It's free money, after all. From the point of view of the local politicians, the subsidy may be preferable to losing the business (and its jobs and generated tax revenue) to another state. So a rational businessman will demand local subsidies, and the rational politician will provide them.

And, again, I don't know that they are necessary, in a global sense. From the point of view of a business, they will take subdidies even if they aren't 'necessary'. It's free money, after all. From the point of view of the local politicians, the subsidy may be preferable to losing the business (and its jobs and generated tax revenue) to another state. So a rational businessman will demand local subsidies, and the rational politician will provide them.

We aren't discussing the general/global case. We're talking about specific cases, one of which you yourself referred to. The loan guarantees for Mesaba, for example, are federal, so it's not about some "local politician" trying to keep something from moving.

If, for example, we use your claim that these projects have 100% IRR numbers over a 1 year period (exclusive of subsidies), then it's completely irrational to think that somehow investors are waiting on the sidelines for small grants and loan guarantees.

The loan guarantees for Mesaba, for example, are federal, so it's not about some "local politician" trying to keep something from moving.

If, for example, we use your claim that these projects have 100% IRR

Read again what I wrote; that was for CTL projects. I do not know the economics of coal->methane, which is what Mesaba is, right?

Jason, I agree about GHG's, but what do you mean when you say CTL is inefficient?

Last time I looked, we use about 400B terms of NG per year in the U.S. If we are going to run out in 10 years, which is the projection, I would like to see coal and biomass to SNG. We are more likely to run out of NG before we run out of oil and if the threat is a hit to our economy, this is a good place to start.

The capital cost of this CTL project is only $45,000 per bbl/d capacity about 25% less than other projects.

Mesaba, in particular also requires huge state and local subsidies for roads and other infrastructure. we're not just talking federal subsidies.

Both Mesaba and Medicine bow will use eminent domain to secure land from private landowners.

Mesaba, according to the locals who are fighting the project, will use up to 5,000 gallons of water per minute.

Here's some links to locals in opposition to Mesaba:

http://www.mncoalgasplant.com/

http://legalectric.org/

Would you want one of these plants in your neighborhood?

Medicine bow is run by former enron employess who worked in a unit of enron that is tied to the california energy crisis and market manipulations there.

Mesaba's management has a similiar history.

These folks are experts at fleecing the government, not at producing energy.

You can do a search for the plants at public citizen:
to check their background:

http://www.citizen.org/

I strongly urge to inform yourselve's on the hisory of these projects. They are boondoggles

Here's a link to another local group fighting Mesaba:

http://www.mncoalgasplant.com/

The capital cost of this CTL project is only $45,000 per bbl/d capacity about 25% less than other projects.

I sure that's partly due to scale. This thing is to be nearly nine times the output of the Medicine Bow project's Phase 1.

In another message, jason posted:

Mesaba, according to the locals who are fighting the project, will use up to 5,000 gallons of water per minute.

So, tell me, what's the water consumption of fields growing corn for conversion to ethanol? How many gallons of water are transpired by the plants per gallon of ethanol produced? I suspect if we figured this out, the synfuel projects would seem downright stingy in their water use, even if the synfuel plants are stipulated to use evaporative cooling rather than dry cooling.

I don't buy into ethanol so i don't know how much water it uses. It's a loser. Wind Wave and solar don't use any water and are much better candidates for subsidies. Especially wind in this area. You might try a little conservation too. which is very cost effective.

I don't know where the 45,000 bpl/d comes from. They probably only count the cost of capital equipment and don't figure in the subsidies. Since as someone already mentioned-they are free anyway. The number is probably drastically low if you add in all the taxpayer paid portion and all the free infrastructure.

The loan guaranties for Mesaba are are $800 million alone - not counting tax breaks, and other free infrastructure subsidies. Why in the world do they need $800 million in loan guarantees just to start the project.

Can you show me a wind farm that needs $800 million in loan guarantees.

Sorry but these projects are part of the good ol' boy oil circuit run by bush/cheney. just throw money at your contributors.

Doesn't the enron connection raise a red flag?

I don't know where the 45,000 bpl/d comes from.

Arithmetic?

They probably only count the cost of capital equipment and don't figure in the subsidies.

Which are...? Don't start talking about Mesaba, now.

BTW, one of the functions of government is to provide essential services to its citizens. This includes providing infrastructure, such as roads, to businesses. It's one of the reasons businesses pay taxes. This is no more a subsidy that are police or fire protection.

Can you show me a wind farm that needs $800 million in loan guarantees.

Since the post was about coal-to-LIQUIDs, why do you keep harping on coal-to-METHANE? Maybe you should get some evidence on the subject at hand?

Since the post was about coal-to-LIQUIDs, why do you keep harping on coal-to-METHANE? Maybe you should get some evidence on the subject at hand?

This is getting silly.

You readily switch from general pronouncements about government, the market, and so forth, to specific mentions about the IRR of a specific project. You're the one who raised the notion that the CTL project in Wyoming is an amazing investment without subsidies, yet I haven't seen you yet explain why we aren't seeing a million CTL plants popping up -- which would be the rational response to an enterprise which guaranteed a 100% return in one year's time, before any subsidies.

It's one of the reasons businesses pay taxes.

Businesses pay taxes because they're part of society. It's not something they choose to do. If roads weren't provided for them, they couldn't just opt out of paying taxes.

Come on, Paul - tell us why 100% IRR investments need subsidies and why there isn't an explosion in investment without subsidies. You seem to be positing a very rational viewpoint, so rationally explain that.

Under a binding carbon cap more CTL means less of something else that burns coal. For example driving around in a CTL fuelled SUV means less coal fired electricity for say airconditioning in nursing homes. The energy will go to whoever can pay the higher price. Sooner or later there will be another Katrina and GHGs will be capped.

We won't get that far.  Heck, look at the price.  $4 billion for about 0.5% of US liquid fuels consumption, and it increases US coal consumption by roughly 0.7% all by itself.

Nope, we're going to run out of financing, mines or railroad capacity before we get anywhere close to running the country on those things.

Hey, here's a novel idea. Why not leave the coal in the ground. These coal to liquids projects, along with tar sands oil projects, have to take the prize in the race to hasten our self destruction. We know that we are wrecking global climatic systems through GHG emissions yet these projects seem to indicate a goal of hastening the process.
I know that the goal is moving away from dependence on mid-east oil and that makes sense but this is not the way. I think someone famous said that stupidity is about continuing to think in the same mindset and expecting a different result.

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