More federal coal eyed by energy companies

BISMARCK, NORTH DAKOTA - Energy companies are eyeing federal coal in North Dakota, possibly for gasification or coal-to-liquid plants over the next two decades.

The Bureau of Land Management is holding meetings in Bismarck, Beulah and Dickinson to gather comments about the future management of the federal coal in the state.

"We're asking coal companies to give us a 20-year look at their crystal ball," said John Hartley, a BLM project manager in Dickinson. "We're hopeful to get a dialogue between coal companies and public — that's the main thing we want."

The BLM crafted its last management plan for coal in 1988.

BLM spokeswoman Rebecca Spurgin said North Dakota has about 5 million acres of federal coal. The agency's last management plan identified about 574,000 acres with more than 10 billion tons of lignite that could be leased.

About 11,000 acres of federal land are leased now, but lignite is being mined on less than 2,000 of those acres, the BLM said.

Lignite is considered a low-grade coal. North Dakota's lignite deposits contains some 1.3 trillion tons but only about 25 billion tons of lignite can be recovered with current technology, said Ed Murphy, the state geologist. Still, he said, the interest is growing.

"We're seeing interest from throughout the country from companies that contact us for information on North Dakota's coal deposits," Murphy said. "Coal gasification and coal-to-liquids technologies can open up more of western North Dakota to potential coal production.

"I think we'll start seeing the expansion of coal mining in areas that haven't seen it in the past," Murphy said.

Some say coal is not the fuel of the future.

"Coal is the energy source at the turn of the last century," said Wayde Schafer, a North Dakota spokesman for the Sierra Club. "We should be getting off coal and putting efforts into alternative fuels and renewable fuels.

"We think it's time to get off coal, especially in the context of global warming," Schafer said.

Last year, 3.3 million tons of lignite was produced from federal land in North Dakota, generating about $868,000 in royalties, which are evenly split between the federal government and the state.

Hartley expects an increase in federal coal mining once a new plan is crafted and new tracts are identified for leasing.

The plan will take about a year to complete, Hartley said. It will include a map of federal coal tracts and where companies are interested in developing, he said.

Some of the parcels could be on split estates where the federal government owns the minerals below the surface on private property.

"The process also will allow surface owners to give their opinions about how they feel about a mine on their property or area," Hartley said. "Some may look at it as an opportunity to make money and some may say they don't want a mine.

"Significant opposition could take that coal out of the picture," he said.

Federal acres represent only a small percentage of recoverable reserves in North Dakota but they are important, said Steve Van Dyke, a spokesman for Bismarck-based Partners for Affordable Energy.

"Most of the federal coal leases are west of what is now considered 'Coal Country' in North Dakota, in McLean, Mercer and Oliver counties," Van Dyke said. Coal production in those counties support coal-fired power plants.

Hartley said his agency is seeing more interest in federal coal reserves in Morton, Stark and Dunn counties, possibly for use in other technologies.

There are no immediate plans to use federal coal for a coal gasification project in southwestern North Dakota. The proposal from Houston-based Great Northern Power Development, LP includes a mine and a lignite plant near South Heart. The plant is to produce 100 million cubic feet of gas daily.

"At this juncture, our plans don't include any federal coal, but down the road it could be a possibility," Great Northern Vice President Rich Voss said.

Voss said project, pegged at $2.5 billion, is still in the "engineering and permitting stages." He said the project would use about 5 tons of lignite each year, from private leases.

Developers of a coal-to-fuel plant in western North Dakota also say no federal coal is immediately planned for that operation. But David Straley, a North American Coal Corp. spokesman, said it's not being ruled out. He said the developers have not yet decided whether to build the $4 billion plant, which would produce 460 million gallons of gasoline a year and generate electricity to power the plant and to sell to markets in Minnesota and Wisconsin.