Defense department seeks alternative fuels partners

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August 9, 2005 –

Morgantown, W.Va. – With oil prices topping $62 a barrel, an official with the U.S. Department of Defense (DoD) told a national audience of fuel researchers that the department is actively looking for partners to build a commercial plant to produce alternative liquid fuels from domestic resources such as coal. “If you build it, we will come,” said Bill Harrison, Senior Advisor to the Assistant Deputy Undersecretary of Defense for Advanced Systems and Concepts.

Appearing at the annual meeting of the Consortium for Fossil Fuel Science August 1-3 at Stonewall Resort in Roanoke, W.Va., Harrison told the group about the DoD’s Clean Fuels Initiative.

While the DoD is interested in all energy sources, currently the nearest term approach appears to be to gasify coal to produce fuels via a process called Fischer Tropsch (F-T), he said.

“This is the type of opportunity we plan to share with our state legislators and others,” said Richard Bajura, director of the National Research Center for Coal and Energy at West Virginia University. WVU has been a member of the CFFS since the consortium was created in 1986.

“Developing alternative fuels through coal gasification offers the promise of starting new industries in West Virginia that could also increase demand for West Virginia coal,” Bajura said.

The defense department is working with several federal agencies—the Department of Energy, Department of Transportation, Department of the Interior, and EPA—a variety of industries—power generation, chemicals, coal, and others—and academic programs like the CFFS which includes West Virginia University, the University of Kentucky, University of Utah, University of Pittsburgh, and Auburn University.

Harrison said the DoD’s goal is to reduce the military’s reliance on foreign oil. The Clean Fuels Initiative includes the Total Energy Development (TED) program to promote commercial production of fuels for the DoD and the Battlefield Use Fuel of the Future (BUFF) program to evaluate, demonstrate, certify, and implement clean fuels for all DoD tactical equipment including ground, aircraft, and ships.

“The BUFF program will need to purchase approximately 20 million gallons of alternative fuel over the program’s lifetime,” he said. Currently the DoD uses approximately 370,000 barrels per day of fuel worldwide.

The U.S. is increasingly relying on foreign sources not only for crude but also for refined products as well, said Harrison. “We haven’t built a refinery in this country in more than 30 years,” he said. “Also, the mega refineries we do have are all on the coasts which make them vulnerable to hurricanes and terrorist attacks,” he added.

Harrison cautioned that any alternative fuel has to be commercially viable.

“Twenty-five years ago the U.S. government spent millions on synfuels that went nowhere because there was limited investment by industry to see synfuels succeed. Companies that put their own money at risk are more dedicated to the success of the venture. So our strategy is not to write big checks, but rather to bring the right mix of industries together to make processes commercially viable,” he said.

He added that the department is only interested in technologies that are environmentally sensitive which is another major difference between today’s program and those of 25 years ago. Coal gasification has received a nod from environmental groups such as the National Resource Defense Fund.

One strategy Harrison suggested was to link multiple types of plants into one.

As an example, Harrison proposed the co-production of F-T fuel, electricity, and fertilizer from a single gasification plant in a joint venture involving coal, power, and chemical companies. Such so-called polygeneration plants may offer the type of commercial success that the defense department seeks to ensure long term supply of domestic fuel.

“Most people don’t know that the U.S. imports more than 50 percent of its fertilizer since fertilizer is made from natural gas and natural gas is less expensive in places like Russia, China, and Trinidad,” he said. “So now biodiesel, ethanol, and food supplies also hinge on imports, making us more vulnerable,” he said.

Coupling a polygeneration venture with the proper state incentives would help catalyze a commercial industry, Harrison said.

“For example, states like Illinois, Pennsylvania, and Ohio have rules that say as long as a plant makes 50 megawatts of electricity then the plant is designated a power plant and comes under the rules for permitting power plants, even if the plant produces other products. This streamlines the siting and permitting process,” he said.

Other incentives Harrison offered included direct investment by a state, federal and state tax credits, loan guarantees, and long term contracts for purchases of a polygen facility’s output, such as electricity.

Ohio, Illinois, and Pennsylvania also are investing in research, Harrison said.

“We have been talking with Bill and the defense department for about a year now,” said Bajura about WVU’s research efforts. Bajura hopes to bring Harrison back to West Virginia to meet with groups like the Chemical Alliance Zone.

“With West Virginia’s coal reserves equaling about 70 billion barrels of oil, perhaps West Virginia could be the new Kuwait,” said Harrison.