Public sounds off on DKRW

Wade Cline, executive vice president of construction for DKRW, told an audience of around 47 people in Medicine Bow Thursday that there are only two things left for DKRW Advanced Fuels LLC to get their coal to liquefaction plant built, but they are big things.

One is the Engineering, Procurement and Construction (EPC) agreement. Cline said Sinopec was not meeting the time lines they need to complete the EPC and that was becoming very problematic for DKRW.

Cline said DKRW has had multiple meetings with EPC contractors who are familiar with the project and had bid on it the first time it went out for bid.

"We have a conceptual agreement with them on the process forward, what it takes from today to signing an EPC agreement with them," Cline said.

Cline said the agreement also includes the front end engineering design (FEED) study, which is a very detailed blueprint of the project. Cline said that they are still trying to determine what the project will cost; how long it will take to build the plant before the lender can be paid back and the financial strength of the EPC contractor.

Cline referred to the U.S. Department of Energy (DOE) loan guarantee that DKRW sought in 2009 and said that after two years of inaction on the loan the DOE has pulled it out and said "Let's look at this again."

Part of the reason is because the DOE has money allocated from the federal government that they have not spent in programs that were developed in 2005 and 2007, Cline said.

"The current administration is getting a lot of criticism for basically adopting rules that are hurting the coal industry," Cline said.

Cline talked about equity ownership, which could possibly change the percentage of the company that DKRW could own. "It could go from 68 percent down to possibly 50 percent, or 63 percent," Cline said.

A timeline was presented with the cautionary note that it changes daily. Cline said timeline will be updated continually.

In the second half of 2014, the FEED will be reviewed. It contains around two terabytes of information. The EPC contractor validates the information. With these plans, the EPC contractors say "We can build it with 'X' and then explain what 'X' is," Cline said. They are receiving preliminary numbers on what 'X' is."

DKRW will then select the final EPC contractor and will be diligent with the DOE loan guarantee. Documentation will be supplied to the parties and DKRW will continue to work on permits through 2015. In 2015, they will also update the socio-economic impact study, a process that takes around four months Cline said.

In 2016, DKRW will finalize the plans to begin construction. The plans include determining where the man camps will be located.

Once the permits from the Industrial Siting Council are approved, Cline said he predicts construction will begin in the fourth quarter of 2016. The beginning construction work will be ground preparation work, according to Cline.

After 40 minutes of explaining the details of what is required to build the plant, public comment began.

Carbon County Commissioner Leo Chapman asked about a $66 million loss written off by Arch Mineral. Cline did not know the details. Chapman also asked why DKRW was delinquent in paying the $10,000 owed to Bureau of Land Management (BLM). Cline stated that they had already paid around $250,000 in cost reimbursement to BLM, and had received a letter that they needed to pay another $10,000. Cline did not explain why the $10,000 was not paid by the first deadline, but said the amount had been paid.

Cindy Chase, with the Medicine Bow Town Council, said that she knows a lot of people think that DKRW is just a big farce, but people have no idea what DKRW has to go through to meet the demands of the federal government.

Cindy Wallace, with the Carbon County Economic Development Corporation, said she is received calls from housing developers and how this is going to be coordinated with the Sierra Madre and Choke Cherry projects. "I like to be kept in the loop because we do get a lot of questions," Wallace said.

Wallace said people are losing interest because the project it taking so long. Cline replied that he too is receiving calls from people who want to come to Medicine Bow. He referred to one lady from Montana who wants to operate a food service truck. "I told hernot to spend a dollar yet. Projects have risk and although I do believe this project will go forward, I can’t guarantee it.”

Wallace has concerns that all of the construction could hit all at once. Cline responded that is part of the socio-economic impact study and if there is not enough housing for the constructions workers, DKRW will be required to build the housing at their own cost.

Reese Johnson, whose ranch is located near the plant proposed by DKRW, asked why DKRW has submitted and withdrawn three different construction proposals over the course of 12 months. Johnson asked for specifics on a man camp near the construction site. She also asked for the name of project manager at the Department of Energy.

Cline responded the project manager with the Department of Energy is Lynn Alexander.

About the construction schedule, Cline said, “We had an unrealistic schedule … it was too optimistic.”

Johnson said she couldn’t understand how they can have 360 pages about the FEED and can’t have an idea of where the man camp is going to be located. Johnson said the man camps will have a significant impact on the communities.

Cline told Johnson while the man camps are significant, they are not part of the FEED and EPC process.

Determining the location for a man camp is not nearly as critical as knowing exactly where the gasifier is going to be, Cline said. He explained there are several companies that build man camps and they have several modular designs those companies can use for the man camps.

Lillegraven said that the geographic location of the man camp is required by the Industrial Siting Council. Based on that, Lillegraven stated the permit should not have been approved by the Industrial Siting Council. Lillegraven has been asking where the man camp is going to be placed for a very long time and said “I really want to know and I think a lot of people want to know.”

Lillegraven had a copy of the official map and asked Cline to mark where the man camp is going to be placed. “We should have known in 2007 and certainly in 2008 when the permit was approved.”

Cline said he would not submit anything the night of the meeting. “On that map as I see it, our facility is further east and north of that.”

Cline and Lillegraven disagreed on the township in the legal description of the map.

A discussion began asking about the number of workers and when they would be in the construction area and whether or not they are coordinating with Power Company of Wyoming. Cline said that one of the purposes of the Industrial Siting Permit and that it is explained in the permit how many people will be on the job site during certain times of construction. “It’s on a bell curve,” Cline said.

Dave Throgmorton, of Rawlins, asked what would happen that if the Department of Energy doesn’t award the loan guarantee.

“If they turn us down, we will continue to pursue other means of financing,” Cline said.