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.

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.

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?

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.)

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?

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.

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

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

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

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 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?

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.

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.