Proponent touts coal-to-liquids plant

Official encourages Fairbanks business people to look beyond multibillion-dollar price tag

Posted: Thursday, January 08, 2009

FAIRBANKS - The multibillion-dollar price tag on a coal-to-liquids plant might seem expensive but a project proponent says the benefits could outweigh the cost.

Jim Dodson, executive director of the Fairbanks Economic Development Corp., addressed business people this week at the Greater Fairbanks Chamber of Commerce luncheon.

He asked them to look beyond the estimated $2 billion to $6 billion price tag.

"It brings tremendous opportunity to Alaska, not just Interior Alaska, but really, all of Alaska," Dodson said.

The Fairbanks Economic Development Corp. spent $550,000 in 2008 on a feasibility study developed by Toronto-based consultant Hatch. Released in November, the study indicated that a coal-to-liquids plant using Fischer-Tropsch and gasification technology could be economically feasible in Alaska's Interior, providing that oil prices remain high and that investors don't expect a high rate of return.

Ideally, a coal-to-liquids plant could supply Fairbanks with fuel on par with $2 per gallon about the same price customers pay when oil is going at $88 per barrel, Dodson said. At that level, investors in such a plant could expect a 5 to 7 percent rate of return, not likely high enough to attract big money, he said.

Dodson and others, including borough Mayor Jim Whitaker, have touted the plant as a solution for Fairbanks' long-term economic viability. Proponents say the plant could ease the region's dependence on oil by processing coal into liquid fuels and help reining in energy costs.

At the same time, the plant could offset some air quality concerns as liquid fuels are generated without the emissions released by oil-fired refineries, proponents say.

Dodson said the FEDC has discussed terms with and is waiting to start negotiating with the U.S. Air Force for a contract to study further a coal-to-liquids plant, possibly located near Eielson Air Force Base. The air force has $10 million available to advance those studies, he said.

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