You sort of have to believe in peak oil to want to invest in this, right? It makes total sense if there's really a near-term peak (within seven or eight years, say). It makes no sense if peak is several decades off (you'll lose your shirt long before then). Be very interesting to see whether they can raise the money.

Why should they send in the coal on a railroad?  They should truck it in!  Trucking is the way of the future!  Better yet, bring the coal in on SUVs manufactured by GM and Ford.

The danger is if they are in fact able to pull this off.  The problem is this wacky notion that we need to continue AS WE ARE, when continuing as we are is the source of all our problems of environmental degradation, climate change, overpopulation, soil depletion, fresh water shortages, etc.  How do you stop a runaway train except by running over the cliff of 'not enough energy to keep going'?  Let's hope this Montana thing doesn't fly.  

If this makes economic sense, it can clearly be funded entirely by th eoil industry--the costs are in the ballpark of other big oil projects.  So there's no need for a govt giveaway.  

It's clear oil prices will be in the range where this will be profitable (if production costs are really $32/bl).  So I glad to hear the Governor supports it and will help it along.  A project like this will take a decade to get up and running, and peak oil by or before 2015 is a forcast many oil experts would agree with.  

I wouldn't worry about a project this small allowing US oil use to remain at current levels--even with this and other future projects US oil use will, the only question is how far?

Actually there is a highly efficient technology for transporting coal which might be just the ticket for this grand new project.  It's not quite fully baked but if the good folks of Montana are going to be throwing money around, they ought to at least look into it.  It's called a coal log pipeline and it was developed by a researcher at the University of Missouri.
http://www.missouri.edu/~cprc/Facts%20about%20CLP.html

Well, I think that the Fischer-Tropsch method will be the most promissing and important way to create liquid energy in the future.
You can put virtually anything in the process; coal, wood, domestic garbage and even chemical waste!
In the Netherlands there is a small facility in wich there is being experimented with this. It is very succesfully and it shows it works.

Offcourse there are to downsides to this; there are still bad environmental sideeffect (but they can be overcome or minimilized).
The second is offcourse that it will never produce the same enourmous amounts of energy as the free flow of oil does.
But still, it can offset the doom-pictures most of us peak-oilers might have; there will be less energy to go around, but still enough to keep the western world fed for a couple of decades more...

How much will this project cost when a barrel of WTI is $95, $150, $200?  What's the EROI?  

Groan.  I suppose this is inevitable that people will try this.  Same as with the tar sands gunk in Alberta.

I suppose the bright side (if there is a bright side) is that the same equipment could be used for biomass-to-liquids - kind of like what Choren does, I suppose.

Why is it that I keep wanting to write "Fisher Price" instead of "Fischer Tropsch"?

Here is a shortfall.

His mine will only generate 12 million tons of coal per year.
Is 12 million tons enough for all them barrels?

I don't know what the conversion from lump of coal to barrel of oil is.

anyone?

Media In Trouble

^^^We hashed this out over on peakoil.com.  The consensus is that it's in the neighborhood of 2-5 barrels of oil/ton of coal, depending dramatically on coal quality as well as other factors like plant specifications, etc.

Sorry if I can't whip up much enthusiasm at more coal mining and more coal burning.

Definitely not a very "moving forward" solution.. It would just keep our society inefficient and wasteful until we get to a "peak coal" crisis, and nothing will have been solved.

It could be useful on the small scale to gain some time while we invest massively in clean technologies, maybe.

The most laughable/sad part of the article is "without creating environmental damage." Every step of almost everything humans do creates environmental damage. So, lets poison the planet and ourselves some more so we can poison ourselves and the planet further. I would rate this suggestion and those who support it as very dangerous.

I like the idea of liquidating Montana coal, into oil and I believe it will be done.

However, I think this statement by the Governor is overly optimistic and coal liquidation is only part of the answer.

First of all, their estimate of how long the coal will last are based on how long it will take to use every single ton of coal.  And as the readers here all know, any resource peaks in production half way through the total reserves.  Simply because it is far harder to mine the second half, then it was to mine the first half.  So 20 years into their estimate coal production will decline and become much more expensive.

Secondly, the estimate is based on U.S. consumption.  And unless they are going to bar the sale of this cheap new oil to foreign counties this is misleading.  The U.S. consumes 25% of all oil.  And if we sell this new oil source to the rest of the world, they have underestimated demand by 400%.  Therefore based on this new demand estimate the coal reserves will last 10 years of demand, NOT 40 years.

Lastly when you combine these two facts, 4 times under stated demand, and a production peak half way through the reserves.  The numbers come out that Montana Coal can be used for 10 years of production and on the 5th year of production, coal prices will rise because of declining returns.

5 years of $32 oil production sounds a lot different than 40 years of $32 production.

But if I stopped writing here, readers might think I have forgotten that there are larger reserves out side Montana.  They might dismiss my arguments because "we can always use the coal from another state."

So in an effort to put these arguments into the big picture context lets do the calculations for the entire U.S.A. coal reserves.  

The entire nation's coal reserves are estimated to last for the next two hundred years based on current consumption.  Now, we add the fact that we are liquidating coal to replace the decline of oil.  If oil production declines at 3 percent, then each year we must increase coal consumption by 3 percent just to keep production flat.  Now we add economic growth; if the economy grows at only 3 percent and our electrical consumption keeps pace with it, then every year we must increase our coal consumption by an additional 3 percent for electrical generation.  

This is another reason statements like "we have two hundred years of coal" are misleading.  These statements assume 0% growth in consumption!  If we take a more realistic estimate of 6% annual increase in coal consumption, instead of 200 years of coal reserves, we have 35 years of coal reserves.  Now we include the fact that half way through the reserves there is a peak in production.  

Instead of 35 years, we have 17.5 years of coal at $32 a barrel of oil for the entire nation's coal reserves!

17.5 years of "cheap" coal, is a lot different than 200 years of coal.        

My main point is that coal liquidation is NOT the silver bullet that will replace crude oil.

I don't believe there is a silver bullet that will replace crude oil, any time soon!

Instead of a silver bullet, I think there must be an effort to increase the use of many crude oil replacements.  Such as;  Biodiesel, Wind Power, Coal Liquidation, Solar Power, Tar Sands, and Ethanol.   Only by using all of these power systems can we hope to replace the large role crude oil has played in all our lives.

Maybe we can also go back to manufactured gas (illuminating gas) once the natural gas peak hits.  I didn't realize it until I was doing some local history research, but 19th century cities used to have huge gas plants where they baked coal, with the resulting gas by-product used as the illuminating gas of the gas-light era.  Gradually, these disappeared as they were supplanted by natural gas or electricity.  (Not always a smooth transition:  in 1865, half of Pittsburgh burned down when the city decided to convert from coal gas to natural gas. But they didn't tell anybody. When the coal gas was shut off and gas lights went out all over town, people tried to re-light them -- just as the odorless natural gas was coming through the pipes.)

I guess everything old is new again.  (Though given the doubts over Saudi oil reserves, I get nervous when people proclaim that "we are the Saudi Arabia of coal".)

We should point out to the politicians that by the time the first 150,000 bbl/day plant and all its supporting infrastructure is ready, US domestic conventional production will be down by an amount far more than that amount.

The cumulative average for this year alone is off approx 170,000 bbl/day year over year compared to same period last year, or -1.4%.

Comparing the same period of time in each of the prior 8 year - 6438 - 5432 = 1006 M bbl/day domestic production loss over the past 8 reporting periods = 126,000 bbl/day loss on average per year, potentially accelerating over the past two years despite high motivation to produce all that can be done at these persistant high prices.

So the good Governor will need to get a move on, because by the time the first plant is ready to go (how long? 2, 3 years?) they'll need to have built 3 by then just to replace that which is lost.

Can't blame him for looking for an economic angle - if his role model is Alberta (not far away) he's probably tired of hearing about Alberta's balanced budget (no debt at all, not just no deficit) and multi-billion dollar annual surpluses. VP Cheney is heading to the alberta oil sands - perhaps he's coming back with notions of digging coal at home, who knows.

One of the concerns I'd have is if "traditional" economic remedies are the only things being considered, and if PO is nearby, simple, traditional, economics are not going to "work" and by that I mean allow most of us to escape without significant financial harm.

From EIA history data:
http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr_histo rical.html

2005    2004    Chg
5,432   5,509    -1.4

2004    2003    Chg
5,525   5,720    -3.4

2003    2002    Chg
5,827   5,862   -0.6

2002    2001    Chg  
5,899   5,802   1.7

2001    2000    Chg
5,818   5,828   -0.2

2000    1999    Chg
5,825   5,868   -0.7

1999    1998    Chg
5,954   6,372   -6.6

1998    1997    Chg
6,417   6,438   -0.3

I guess that this was hashed out mentally by me as follows:

Oil has a Peak and depletion curve. Thus it is not sustainable long term. Coal has a similar peak, and thus falls into the same category. Uranium also does, although with radioactive isotopes this peak may be very long, provided we have adaptive breeder reactors.

The real issue is that this is a WORLD problem. We live in a GLOBAL economy. Everything is interrelated - so if we do not tackle this from a global perspective, then we will fail - globally. That means a return to a much different era - not?

But IMHO, the only long term solution is to reduce consumption and operate within the confines of renewable resources. And IMOHO, this means a reduction in world population through some mechanism, and an end to the belief in never-ending growth as an economic goal.

Frankly, resource depletion will likely be one of the population controls. Liebig wasn't wrong, and we do live in a finite, "pond-like" environment. Long-term, population is self limiting in a closed ecosystem by means of resource depletion. We may be smarter than a lot of previous animals, but we are still subject to the same laws. Humans just seem to bend these laws for short term gain, i.e. profit, using our technology.

They still apply, despite our machinations to avoid them.

Re: "without creating environmental damage"

The governor of Montana is apparently a CTL pimp. And that's at least $40/barrel, not $32/barrel for synfuels. I've been hearing about this miracle technology all my life, so lets walk the walk, not just talk the talk. Everybody's got something to sell, don't they? It's sad and pathetic.

More importantly, without a CO2 sequestration program in place, the damage vis-a-vis global warming would be so enormous for this kind of ambitious CTL program that it boggles the mind to think of it.

IMHO Peak Oilers (myself included) are a bunch of arithmetic geeks.  Sometimes, however, we lose the message we are trying to communicate through our amazing grasp of mathematics.

Also IMHO, I agree with the people who write in and accuse us of being gleeful in the prediction of gloom and doom.  I personally hope we are completely wrong and Peak Oil is a fantasy.  I don't believe that, but humanity would be better off if that were true.  What are the potential solutions, even if partial and temporary, to this upcoming catastrophe?

Lastly, we need to separate the way we'd like the world and people to be from the way that humans really seem to be in reality.  All of my observations worldwide suggest that most of humanity lives by the following rules - bigger is better, more is better, I am more important than the next guy, I care about my family more than my neighbors, I care about my neighbors more than the people in the next town, I care about my region more than other regions etc. Don't expect the majority of humans to act in an altruistic manner.  It does not seem to be in our genes.

That rant aside, and discarding everything I wrote above, does this $32/bbl CTL price include: cost to purchase and transport the coal to the CTL site?  Does it also include the necessary markup to the end user that any CTL company would be requiring to get a satsifactory ROI?  If not, then the Fischer-Tropsch process applied on a large scale will only come into play when companies are convinced that the long term price of an equivalent oil will be greater than $50-60???/bbl or more.  We aren't there yet (even if the futures markets suggest we are).  Also, as writers above have pointed out, there is no way that this technology can replace 84 mmbopd or even 20 mmbopd.  I do think coal to liquids will become a technology utilized in the future, though.

Montana is not going to pull us out of the peak oil dilemma, but it is very hopeful that something may cushion our fall.  We'll have a bit of fuel to get around and keep things going.  I hope it doesn't go to keep jet skis and other nonsense going, but to keep some semblance of civilization going, like busses and trains.  

While coal to oil (CTL) has some environmental concerns, it is probably the only technology that can be ramped up in time to make a difference.  Even then it would be more than 5 years to get the first large plant going and then the real ramp up could get started. As others have said it is a fairly well proven technology. Major oil has much of the required technology and that may be a hold up.  Two independent companies have the technology and could supply the plants. A US company, Syntroleum, is pushing it fairly hard, I suspect they may have had some influence on Montana's interest.  They have a rather small module which is largely factory built and could be deployed fairly rapidly. Sassol of South Africa is selling the process and would be interested in any sizeable project.  It is a matter of will to get the ball rolling.

Although this is the only well proven technology and that can possibly offset the decline in oil production for the next 40-60 years, coals supply is finite and we will run out at some time, although the US has very very large reserves, which if we used it only for our own needs might last as long as 100 years. Bio based products are the green solution, but they are only starting to have the technology that could help and it would be longer before they could be an important factor.  Biorefineries producing ethanol from cellulose, rather than corn, are in the prototype stage and should be one of the long range solutions. The new energy bill provides loan guarantees for the first few plants.  They do not suffer from the same land use requirements (for growing the biomass) that corn based ethanol plants have. Choren in Europe (Shell just bought a 20% interest) has a gasifier that they claim works well on biomass - this is the step that is is holding up Fischer-Tropsch processes for biomass - coal gasifiers do not work well on biomass.  These processes are supposedly more expensive than biorefineries, but they supply a liquid that is more versatile, more oil like, and more feedstocks are possible than for biorefineries.

Back to coal. Because you are gasifying, rather than burning the coal, the pollution problems are more manageable. SOx, NOx, etc can be handled quite well and this has been demonstrated.  What has not been demonstrated is handling the CO2 which is reduced about 20% compared to plain burning.  However the CO2 is in a smaller, more pure stream than in current coal plants, meaning it can be sequestered more easily.  Terrestial sequestering is the most likely canidate.  It can be used as an EOR technique if located near oil fields or stored in abandoned and sealed coal seams (for how long is unknown).  A new startup has a process where it is used to grow algae and then biodiesel made from the algae.  There selling point is that it is a less expensive way of getting rid of CO2, not a better way of making biodiesel.  They require a lot of land for their algae growing, as they need to get sunlight to rather thin layers of algae. Another problem is the environmental damage caused by mining and this has not been addressed very well, although it could be by requiring backfiilling after mining is completed.  All of these environmental solutions cost money and you are no longer at $32 per barrel, although probably competitive with $65 oil.

A CTL plant is being built in Australia and DOE has a very small plant in the pipeline for PA.  A fairly recent DOE report concluded that if CTL was built as part of an IGCC power plant it had a lower electrical cost than a straight foreward IGCC plant. It appears they are taking note of this and putting greater emphasis on developing the process.  

Well gee whiz!  I guess all the angst I've been through over over-shoot, Peak Oil, global warming, the credit bubble and H5N1 is for naught.  However, possibly there remain a few niggling details in this assessment by an elected official of the world's greatest democracy...
A few minor questions-- Where is the capital going to come from to build the amount of infrastructure required for this effort?  American savings?  Oops!  There is none.  Foreign investment?  Well, of our primary financiers, Japan, just (maybe) coming out of a very long recession, is possibly going to be involved in a conflict over the natural gas reserves in the South China Sea.  China?  I guess they have the wherewithal, but we just headed them off at the pass over Unocal.  (Maybe if we said "Pretty please"?)

I don't know what problem I have but my name did not appear on the previous comment.  Jim from The Energy Blog

If you are interested in BtL, here are two relevant links:

http://www.renew-fuel.com/home.php

http://www.choren.com/en/

Somebody should have noted that there is no real coal in Montana. There are mostly lignite and sub-bituminous coal (http://www.rocksandminerals.com/coal.htm). That's different stuff than coal (bituminous coal). Its heat value is about half of bituminous coal. Synoil oil is made from bituminous coal.

And try to get the numbers right. A 3% decrease of oil energy can not be replaced by increasing coal production 3%. The share of coal in energy production is less than that of oil so coal production must be increased relatively more. If you have to replace conventional oil with synthetic oil made from coal the coal production must be increased a lot more.

The point is not the technology nor even the cost. It is the energy. All coal produced now is consumed for electricity and other uses. All coal that will be used to compensate loss of oil production must be from new production, new mines.

To replace all oil with coal as energy would mean producing 2.5 times as much coal as today. To replace all oil with synoil would require producing 4 times as much coal as today. We must see that the demand for electricity alone is growing too. More coal is needed for that, too. The technology to make synthetic oil from coal, natural gas or biomass is there. The problem is the needed volume.

Most people who like to forget this just want to see some kind of technological solution save us from the dire future of depleting oil. But let's do the numbers right here, too. What kind of problem do we really have? Look at the official ASPO oil & gas depletion profile 2004 base case (http://www.peakoil.ie/downloads/newsletters/newsletter56_200508.pdf).

We can see from the graph that the world primary energy from oil and gas (measured by barrels of oil equivalent) will be in 2030 (25 years from now) quite the same as now! And we can safely assume that the coal production will be somewhat higher then and rest (nuclear, hydro, biomass, wind etc.) will be the same or higher. So after 25 years the world will still have more energy to consume than now. In 2050 the world can still consume more oil and natural gas than in 1970. This is not a catastrophe. Oil will be depleting faster but in 25 years we will still be at the level of 1970 in oil consumption.

Nobody likes the real picture. We will not get a dramatic shock. No quick end of suburbia, no new green communalism, no new era of alternative fuels. Still some economic growth for 5 - 10 years (maybe 15). But the Peak Oil will come. The economic growth will not go on unlimited. We will have a long period of negative growth and decay. In the short run the world will not be very different from now but in the long run it will be.  

It is not important to get people believe in Peak Oil. It is not a matter of belief. Most important is to be able to do long range decisions based on the fact that we are really at a turning point.

Hey guys, the original coal estimate is off. When they say 200 years of coal, that's 200 years of coal at todays's prices and today's technology. Assuming that consumption will go up the same way it's been going up, and that technology will not keep going up the same way it's going up, is not honest, either.
I know this guy is my competition and I do expect to beat him with my all-singing/all dancing amazing solar power technology, but I try to be honest with myself.