Once a basket case and white elephant abandoned by its private-sector sponsors, the massive Great Plains Synfuels Plant in North Dakota delivered $39.2 million in profits to the federal Department of Energy (DOE) Monday under a revenue-sharing agreement dating to 1988 when DOE bailed out the then money-losing venture. Now operated by Dakota Gasification Co. (DGC), a for-profit unit of a major Bismarck, ND, cooperative utility, the plant has returned nearly $1 billion to the U.S. Treasury in the form of revenues and unused tax credits.
DOE Secretary Samuel Bodman was presented the revenue-sharing check by DGC President Ron Harper, who is also CEO of the parent organization, Basin Electric Cooperative. Harper touted the Great Plains plant as proof that “coal can be the cornerstone of energy development now and in the future.”
While congratulating DGC for what he called its “spectacular success,” U.S. Sen. Byron Dorgan (D-ND) said the 1988 revenue-sharing agreement has been a success for both the federal government and Basin Electric, allowing “a very important energy development project to continue” for the good of his state and the nation.
The $2.1 billion plant near Beulah, ND, has operated since 1984, but only profitably in the last decade or so, producing the equivalent of 160 MMcf/d of coal-based synthetic natural gas that is shipped to Ventura, IA, for transport to eastern markets, along with at least eight by-products (ammonium sulfate for agriculture fertilizers totaling about 110,000 tons annually; up to 400,000 tons annually of anhydrous ammonia used as farming fertilizer and a feedstock for chemical production; carbon dioxide at about 40.2 Bcf annually for enhanced oil recovery; along with an assortment of acids, gases, liquid nitrogen, naphtha and phenol).
The synfuel plant daily consumes about 18,000 tons of lignite supplied from the nearby Freedom Mine, owned and operated by a subsidiary of North American Coal Corp. Dakota Gas also has a for-profit unit, Souris Valley Pipeline Ltd., that delivers a daily average of 115 MMcf of carbon dioxide to two Canadian oilfields for enhanced oil recovery and sequestration.
North Dakota’s Congressional delegation promotes the annual revenue sharing with DOE from the Great Plains plant as an example of how federal loan guarantees can work effectively to promote new energy development. The elected officials call the synfuels plant “a wonderful example” of a successful public-private partnership.
In this carbon-sensitive time, the plant was an early participant in carbon capture going back to 2000 and expanded with a second Canadian oil field last year. The oil fields are operated by EnCana Oil and Gas Partnership Ltd. and Apache Canada Ltd. “This is one of the largest CO2 capture and sequestration projects in the world,” said Harper.
In the early 1980s, DOE guaranteed a $1.5 billion loan to the original developers of the synfuels plant, but the developers eventually defaulted on the loan in 1985, prompting DOE to operate the facility for a three-year period before putting it up for sale. Basin Electric purchased the plant, agreeing to the profit-sharing with DOE and to foregoing various production tax credits for producing synthetic fuels. Those tax credits expired in 2002 with a value of about $754 million, according to a spokesperson for Basin Electric.
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