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Wyoming Pitch: Natural Gas, Coal to Make Gasoline

A state legislative committee decided Tuesday to try to have Wyoming state funding help underwrite a study of the potential for turning rich natural gas and coal resources into gasoline. Lawmakers were prompted to act by a pitch by a Casper, WY-based company.

Members of the Joint Minerals, Business and Economic Development Interim Committee decided to pursue state legislation providing matching funds for part of the estimated $5 million cost of the study needed to help design the proposed facility envisioned by privately held Nerd Gas Co. It hopes to build the complex on land it owns next to Lake DeSmet, south of Sheridan, WY.

Nerd's proposed study would build on earlier research by U.S. Department of Energy (DOE) researchers in Idaho, which at the time received funding from the industry and the state.

In related gas-to-liquids (GTL) developments, a feasibility study is expected to be completed in the fourth quarter for a project in Western Canada that is being considered by Talisman Energy Inc. and Sasol Ltd. (see Shale Daily, June 24). A Foster Wheeler AG subsidiary is doing the study, which will include a cost estimate to allow Talisman and Sasol to assess the economic viability of the proposed facility. Sasol is leading the GTL study with a front-end engineering design decision likely in the second half of 2012.

In Wyoming, the proposed site is the former location where a unit of Texaco in the late 1970s planned to develop a coal gasification plant, only to abandon the plans when the price of oil dropped significantly in the early 1980s. Nerd bought the land and water rights in 2005.

A spokesperson for Gov. Matt Mead said he was aware of the proposal, but the governor has not yet commented on it publicly. On Wednesday Mead was away from the capital.

Nerd representatives told the state lawmakers meeting in Riverton, WY, that it would cost about $1.7 billion for a natural gas-to-gasoline plant that could convert 288 MMcf/d to 34,000 b/d of gasoline. Earlier feasibility studies at the federal Idaho National Laboratory have indicated that $34 worth of natural gas can be turned into $140 worth of gasoline, allowing for some healthy profits reportedly.

Plans would call for first developing a natural gas-to-gasoline facility, and later developing the coal-to-gasoline part of the envisioned facilities, said Nerd Gas representatives, adding that they intend to pursue partnerships with majors, such as Exxon Mobil, BP, Shell and Encana Oil & Gas.

A unit of Houston-based DKRW Advanced Fuels, Medicine Bow Fuel and Power, already has begun construction in Medicine Bow, WY, on a $2-3 billion coal-to-liquids plant. Mead cited the project in his inaugural address early this year as an example of Wyoming being on the cutting edge of energy technology (see Daily GPI, Jan. 14).

Today's low natural gas prices can produce a lot of gasoline and "make a lot of money for ourselves and the state of Wyoming," according to Nerd President Mick McMurry, as quoted in local Riverton news media. DOE researchers at the Idaho Falls, ID-based national laboratory have completed initial studies on the facilities needed to convert gas and coal to gasoline and other liquid fuels.

Nerd's proposed site has a lot of existing infrastructure, including raised dams, underground coal, what the backers call "significant" transmission lines, a gas pipeline and a nearby railhead. Carbon dioxide produced at the plant during the conversion process would be captured and shipped to oilfields in the region to be injected underground for use in enhanced oil recovery.

McMurry stressed the importance of natural gas as a leading revenue source for the state, calling it the "Lady Gaga" of Wyoming's energy. Nerd also is stressing the timeliness in trying to make extra use of the state's coal supplies, which it warned may be of little value in another 50 years, given the changing regulatory and consumer environments.

Nearly 30,000 tons of Wyoming coal can equate to close to 44,000 bbl/d of gasoline, company representatives said.

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