Great Plains Coal-To-Gas Plant May Earn Its First Profit This Year
A HARDHAT on his head, Kent Janssen rides a van toward a huge hill of coal. From there, he looks down on the sprawling plant below with mixed feelings. ``This plant was a huge technical success, but it hasn't been a financial success,'' he says. Mr. Janssen, who heads the reorganized Great Plains synfuels plant, hopes to change that. For the first time since it began operating in 1984, the Great Plains facility might earn a small profit this year.
The plant was originally expected to turn the area's abundant coal into a steady and inexpensive substitute for natural gas. By the late 1970s, the fuel crisis was so severe that the federal government was willing to help finance a $2.1 billion large gasification plant here in central North Dakota. It gave out $1.5 billion in loan guarantees to a consortium of five energy companies.
But instead of steadily rising prices for natural gas, the market slumped in the early 1980s. The plant, which came on line in 1984 ahead of schedule and under budget, couldn't compete with low gas prices. A year later the consortium defaulted on its loans. The federal government stepped it to run the plant.
The future of Great Plains and nearby communities looked bleak until 1988, when the US sold the plant to the Basin Electric Power Cooperative. Basin Electric paid $85 million in cash, gave up $590 million in federal tax credits, and agreed on a profit-sharing arrangement. The government forgave the debt in the process. Basin Electric had good reason to buy the plant, since it had built an electric generating station next door.
The company has since streamlined operations, improved the plant's efficiency, and increased its output. Janssen and even the Department of Energy are cautiously optimistic.
``No company would come in and build it in today's market,'' says Robert Porter, an Energy Department spokesman. But ``we do think there will be revenues over expenses.'' Much depends, of course, on the direction of natural gas prices. The wellhead price of natural gas must rise to $3 per thousand cubic feet for the Great Plains plant to compete.
The improved outlook has also brightened prospects for Beulah, N.D. ``It has really stabilized the area,'' says John Phillips, the city coordinator.
Great Plains has developed byproducts from the gasification process, such as anhydrous ammonia, and plans to develop others, such as krypton and xenon, inert gases used in specialized lights and lasers.
The city is developing an energy park where it hopes to lure companies with a simple proposal: pay $1,000 an acre per year and get unlimited amounts of free hot water. The hot water, condensed steam from Basin Electric's generating station, would be a special attraction to a commercial greenhouse, floral company, or indoor fishery, Mr. Phillips says.