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Crow tribe pursues scaled down fuel plant after earlier effort stalled due to high cost

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BILLINGS, Montana — Montana's Crow Tribe is pursuing a scaled-down proposal to build a plant converting coal and natural gas to liquid fuels after an earlier project stalled because of its high price tag, tribal leaders said Thursday.

The tribe has been in discussions with potential financial partners but has not yet signed an agreement, Crow Chairman Darrin Old Coyote said.

In 2008, the Crow announced ambitious plans for a 50,000-barrels-a-day plant that would convert coal to diesel and other liquid fuels. The project was pursued in collaboration with an Australian company but never went anywhere after its price tag grew to an estimated $8 billion.

Yet over the past several years, Old Coyote said the tribe continued working with Houston-based Accelergy Corp. to refine the technologies that could be used to build a fuel-conversion plant. "We're working to take the technology and turn it into reality," Old Coyote said.

The proposal entails building a plant that would use natural gas initially and could later be switched to coal if gas prices rose. Although details have not yet been finalized, tribal officials said the price tag would be in the hundreds of millions of dollars.

Officials also said the plant would also produce far less fuel than the 50,000 barrels a day envisioned for the 2008 proposal.

The timetable for construction is uncertain, and even with the changes the plant is likely to present challenges.

Only five gas-to-liquid fuel plants are operating worldwide — two each in Malaysia and Qatar and one in South Africa, according to the U.S. Energy Information Administration. Only three gas-to-liquid fuel plants have been proposed elsewhere in the U.S.

Another U.S. project — a $20 billion gas-to-liquids plant sponsored by Royal Dutch Shell in Louisiana — was cancelled in December largely because of high construction costs.

In a related initiative, the tribe plans to grow camelina on several thousand acres for use as biofuel, Old Coyote said. Planting could begin this year or next, tribal leaders said.

If the fuel-conversion plant were built on the reservation, it would produce carbon dioxide that tribal leaders said could be trapped and used to make fertilizer to help increase yields of the biofuel crops.

The Crow's rural reservation sits atop an estimated 10 billion tons of coal at the north end of the Powder River Basin, an arid region along the Montana-Wyoming border that produces more of the fuel than any other area of the country.

The basin is dotted with major mines, but the Crow Reservation has only one, Westmoreland Resources' Absaloka Mine, which produces about 6.5 million tons of coal a year. A second mine has been proposed for the reservation by Cloud Peak Energy.

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