A proposed coal liquefaction plant south of Medicine Bow is no more, according to an email sent to the Wyoming Industrial Siting Council (ISC) by the project’s proponent, Houston-based DKRW, Inc.
The beleaguered project met its end after DKRW decided market conditions were not favorable to continue construction of the coal-liquefaction plant which would have turned coal into gasoline using a series of chemical reactions called the Fischer-Tropsch process that was developed in Germany in the 1920s.
Coal liquefaction has been used successfully in other parts of the world to produce liquid fuels—including gasoline and diesel—from coal. Most notably, the technology became popular in South Africa during the apartheid era when the country was under a strict international embargo. The South African Government established South African Synthetic Oil, Limited (SASOL) to produce liquid fuel from coal, and the company became the largest producer of coal-to-liquid fuels according to the company’s website.
DKRW’s Medicine Bow project was proposed during the height of the Great Recession. The project was popular with Republican lawmakers, including Wyoming Senator John Barrasso, a key proponent of the project. According to reporting by Bloomberg in 2011, Barasso had written to then U.S. Secretary of Energy Steven Chu in February 2011 to speed along the approval process for the facility and to guarantee federal funding for the project.
The funds dried up with the failure of Solyndra, a solar panels manufacturer that declared bankruptcy after receiving federal loans. The company was banking on its copper-indium-gallium-selenide (CIGS) thin-film solar technology for success, but a crash in silica prices gave Solyndra’s competitors—who manufacture more traditional solar cells—a price advantage over the company.
Likewise, the precipitous price drop in oil and oil-derived fuels has made coal-to-liquid fuel production less economically feasible. SASOL, the South African company, recently reported that its profits in the first half of 2016 sank 63 percent.
A 2005 study by the US Department of Energy said that coal-to-liquid fuel technology was a viable solution for competing against foreign oil, as long as the price of oil remained above $45 per barrel.
In July 2014, the cost of a barrel of West Texas Intermediate Crude Oil (WTI) began a long-term plunge, from $90 per barrel to a low of $28.50 per barrel in January, 2016. The current cost of a barrel of WTI is $48.85 and has been declining over the course of the week.