By Jay Harris
The Crow Tribe has agreed to work with the Australian-American Energy Company, a subsidiary of the Australian Energy Company, to construct a multi-billion dollar coal-to-diesel fuel production plant on the Crow Reservation.
Following the tribal legislature's 16-1 vote last Thursday in favor of the project, Chairman Carl Venne and company executive Allan Blood announced the news that now has many Crows buzzing about the potential for future large-scale economic development in a resource-rich yet chronically underemployed portion of Montana.
The tentative agreement calls for an initial 50-year development period, which would begin following federal permitting and construction of the plant.
Depending on when it may be finished, the "Many Stars Plant" could be the first of its kind in North America. If constructed according to plan, it would create commercial grade diesel fuel from coal in a process known as Fischer-Tropsch Synthesis.
Only two plants, both operated by a company called Sasol in South Africa, currently produce commercial diesel using the Fischer-Tropsch synthesis and have been doing so successfully for 40 years.
Early projections call for somewhere between 3,000-4,000 temporary construction jobs and perhaps as many as 900 permanent positions to operate the facility, the Billings Gazette reports. Construction may begin as soon as 2012 and production in 2016.
One barrel of diesel contains 42 gallons and a gallon of diesel in Montana currently ranges from $4.43 to $4.66 at the pump, according to MontanaGasPrices.com. So if the anticipated level of production was put to the domestic market right now the Many Stars Plant could gross millions of dollars every day and would likely expand to meet an increasing demand.
If carried out as planned, the project would be by far the largest economic development investment in the history of the Crow Reservation.
Governor Schweitzer, who has long voiced support for clean coal power projects in Montana, attended the announcement ceremony at the Multi-Purpose Building on Friday, along with tribal and industry officials.
The Crow Tribe has marketable coal below 33,000 acres of land along the eastern boundary of the reservation. Estimates of what may be economically recoverable run as high as 19 billion tons. It takes roughly one ton of coal to produce one barrel of diesel under the synthesis method currently employed.
While the Fischer-Tropsch Synthesis technology has been around for decades, the expense of making diesel from coal has traditionally been expensive and unattractive to investors.
But the spike in crude oil prices over the past ten years has now made previously cost prohibitive energy sources economically viable -- at least Down Under. Australia is a particularly attractive market for diesel given their expanding economy and reliance on diesel for transportation fuel.
According to the US Department of Energy, 94% of freight in America is moved by diesel fuel and 95% of all transit buses and heavy equipment use diesel. In total, 56 billion gallons of diesel are used in America every year.
While similar plans for large-scale coal-to-diesel plants exist in America and elsewhere, the attractiveness of conventional oil and gas investments -- coupled with an uncertain regulatory future amidst concerns of stricter environmental standards in response to growing concerns about global warming -- have together made investment in major, new fossil fuel projects somewhat unattractive.
Just last year, PacifiCorp (which operates as Rocky Mountain Power in Wyoming) withdrew plans to build two large-scale coal-fired power plants in southwestern Wyoming due to worries that tighter environmental regulations may be on the horizon.
Both major party presidential candidates have made clear their serious concerns about global warming and it is likely that Congress will soon be asked to issue a moratorium on all new coal-fired power plants or any projected projects such as Many Stars unless they have the ability to sequester or recycle carbon and other greenhouse gases.
Anticipating such a regulatory environment, Australian-American Energy Company is planning to construct a plant which captures 95% of the carbon it will produce.
Neither the Australian Energy Company nor the Australian-American Energy Company are listed on the Australian Securities Exchange, the New York Stock Exchange, or NASDAQ, which means they are not publicly owned or traded in either the United States or Australia.
This story was posted August 11, 2008.




Here is a link to a Gazette article that hints at the major difficulties that lie ahead for this project.
http://billingsgazette.net/articles/2008/08/09/news/state/18-coalcrow.txt
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