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Coal counties ask North Dakota to pump brakes on $1.8 billion hydrogen project

In a letter sent to Gov. Burgum and other state leaders on Wednesday, North Dakota's three coal-producing counties urged the state to hold off financial support for a high-profile hydrogen project that has applied for more than $100 million in state funding.

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The Great Plains Synfuels Plant near Beulah. FNS file photo
The Forum
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BISMARCK — As a new North Dakota board prepares to dole out possibly hundreds of millions of dollars in funding for energy projects next week, coal-producing counties are urging the state to hold off support for an expensive hydrogen venture that they fear could be risky and deplete jobs in coal country.

In a letter sent to Gov. Doug Burgum on Wednesday, Dec. 8, members of the Coal Conversion Counties Association, a group made up of elected leaders from North Dakota’s three coal producing counties, cautioned against putting state funds into a $1.8 billion retrofit of a synthetic fuel plant near Beulah that supports many coal-sector jobs, when the viability of plans to convert it to hydrogen production remain unclear.

John Phillips, chairman of the Coal Conversion Counties, argued in the letter obtained by The Forum that funding for “speculative hydrogen” could work against separate efforts the state has made to protect its coal industry, which has struggled in recent years to keep up with cheap natural gas and renewable sources like wind power.

“We believe state dollars should only be used to expand our energy resources, not substitute one energy resource for another,” Phillips wrote to Burgum and other state leaders, “especially when there exist numerous questions (about) whether hydrogen can ever be used as a viable fuel.”

The plans to convert the financially troubled Great Plains Synfuels into the start of a hub for so-called clean hydrogen were boosted by Burgum earlier this year when he appeared alongside developers from the Bismarck-based Bakken Energy and Mitsubishi Power Americas at a project debut. A relatively untapped energy source in the United States, hydrogen has drawn hype recently as a possible clean fuel for power generation and transportation. In addition to endorsing the hydrogen hub plans, Burgum initiated a successful effort to earmark $20 million for hydrogen grants during the Legislature's recent special session.

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A spokesman for Burgum declined to comment on the coal counties’ letter, saying the governor hasn’t had a chance to review it.

The letter comes as the Clean Sustainable Energy Authority, a newly formed state board overseeing hundreds of millions of dollars in energy project grants and loans, is slated to meet on Tuesday to award its first round of funds. Bakken Energy applied to the board for $10 million in grants and $100 million in loans for its venture at Great Plains Synfuels.

High on the list of concerns for the coal counties are uncertainties about what the hydrogen plans will mean for coal production in the area, which Phillips said accounts for up to 30% of the jobs tied to Great Plains Synfuels. The letter said that Coal Conversion Counties has invited Bakken Energy to speak to their organization about the ramifications of their project, but to date, “our efforts to have that dialogue with the company have not been successful.”

Mike Hopkins, CEO of Bakken Energy, said in an interview that his company is excited to speak on the project with community members in coal country, but added that they are holding off until they have had a chance to directly address employees at Great Plains Synfuels.

Bakken Energy has said that all 525 jobs at Great Plains Synfuels will be preserved as the plant converts to hydrogen production, though Hopkins said he could not speak to the implications for employees at the nearby Freedom Mine, which supplies the coal currently used to make synthetic gas at the plant. Hopkins referred comment on plans for the mine to the plant’s current owner Basin Electric Power Cooperative.

In a statement, Basin spokeswoman Joan Dietz said that the company has always worked closely with the Coal Conversion Counties and is committed to ensuring the well-being of both its employees and the local community. Dietz did not address the implications for Freedom Mine but said that "a lot of work remains" in the transaction before anything is decided.

The sale between Bakken Energy and Basin Electric is expected to be finalized in the spring of 2023. Hopkins said that the plant will continue to operate as a coal gasification facility for its first three years under new ownership, but in 2026 it will switch to natural gas to begin producing hydrogen.

An application by Bakken Energy the Clean Sustainable Energy Authority made public on Wednesday notes that the company is looking to fund 80% of its project through loans from the U.S. Department of Energy, which recently received billions of dollars out of Congress’ infrastructure bill to support hydrogen development .

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Phillips and members of the Coal Conversion Counties raised concerns about the viability of that strategy in light of President Joe Biden's administration's high bar for what qualifies as “clean” energy.

“If you fail in that, do you walk away from it?" Phillips said of the reliance on federal funds. "And then we have nothing out here."

Hopkins said that Bakken Energy remains committed to the project regardless of whether federal funding comes through, but added that he has been in communication with the Department of Energy and expects their venture to be a prime candidate for loans. He also said that the hydrogen hub would make the Beulah area a "magnate" for new industries, while the acquisition would ensure more security at Great Plains Synfuels, whose future has long been in doubt.

John Weeda, director of the North Dakota Transmission Authority, raised some concerns about an unestablished hydrogen market at a meeting of a Clean Sustainable Energy Authority advisory panel on Wednesday. But in an interview, Weeda, who has spent several decades in the North Dakota coal industry, added that hydrogen has shown promise and could spur job growth in the region.

The priority should be finding a way to ensure successful operations at Great Plains Synfuels, Weeda said, even if a change "may shift some of the employment opportunities."

Readers can reach Forum reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.

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