Senate panel OKs coal-to-gas funds

Stevens pushes for federal backing of Fairbanks synthetic fuels project to cut reliance of Interior military bases on foreign oil

Stefan Milkowski

For Petroleum News

FAIRBANKS – U.S. Sen. Ted Stevens has won tentative approval for a $10 million grant aimed at jumpstarting a synthetic fuels project near Fairbanks. The money was included in a draft defense spending bill approved Sept. 10 by a Senate Appropriations subcommittee. The measure has yet to pass the full committee and the full Senate and House.

The money would be used to complete feasibility and environmental studies for the project, which would use the Fischer-Tropsch process to make synthetic jet fuel and other liquid fuel substitutes from coal, Stevens said Sept. 15.

So far, the project has been pushed from the Alaska side. The Fairbanks North Star Borough put $250,000 toward the project earlier this year, and state lawmakers and Gov. Sarah Palin contributed $300,000 in the 2009 capital budget.

An initial feasibility study by the Toronto-based engineering firm Hatch Ltd. is expected out in a few weeks.

Jim Dodson, president of the Fairbanks Economic Development Corp., which is working to develop the project, said the new funding would allow the Air Force to pick up where the borough and state left off.

“The Air Force’s project is our project,” Dodson said. “What we asked them to do is pick this up as a project.”

The Air Force has made no formal agreement to pursue the project and did not ask for the funding, according to Stevens.

But the Air Force is seeking to reduce its reliance on foreign oil by using synthetic fuels, according to Gary Strasburg, chief of environmental public affairs for the Air Force.

“We are trying to get all our aircraft certified to fly on blended fuel by 2011, and then we would like to be able to have half of the fleet be flying on a 50-50 blend by 2016, the idea being that it would encourage the market to produce a coal-to-liquids fuel for us to fly on,” he said.

Stevens said the project could help protect Eielson Air Force Base and Fort Wainwright Army Post from base closure initiatives.

“If there is another base closure round, these bases are going to be challenged unless they can show that they have a long-term supply of available fuel,” he said. “What we’re trying to do is reduce the cost to these bases.”

Proponents are looking to develop the project as a publicly supported private venture. Current plans call for production of 20,000 to 40,000 barrels per day of liquid fuels, electricity production, and the distribution of waste heat. Cost estimates for the project range from $500 million to $2 billion, according to Fairbanks North Star Borough Mayor Jim Whitaker.

Whitaker and Dodson have both promised they will not pursue the project unless it proves capable of reducing greenhouse gas emissions, which have been linked to global climate change, either through increased efficiency or the use of biomass in place of coal.Stevens said his push for the federal funds reflects the strong support for the project at a July energy summit in Fairbanks and the Chena Hot Springs Resort. He said he hoped the spending bill would pass before Congress recesses later this month.