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Plant to pay today

The owners of North Dakota's Great Plains Synfuels plant will hand Uncle Sam a check today for $39.2 million, the latest in a string of payments for what once was dismissed as a boondoggle.

The owners of North Dakota's Great Plains Synfuels plant will hand Uncle Sam a check today for $39.2 million, the latest in a string of payments for what once was dismissed as a boondoggle.

The plant, which turns lignite coal into natural gas, defaulted on $1.5 billion in federal loans one year after it opened in 1984. The failure of the plant, originally owned by a consortium of five energy companies, was a combination of technical problems and a plunge in natural gas prices.

"It was sitting like a big white elephant on the prairie," said Rep. Earl Pomeroy, D-N.D. "It was struggling."

Gradually, after years of trial-and-error fixes and almost $500 million in additional investments, the plant broke into the black financially. With the latest repayment - and counting unused federal tax credits - the plant now has returned $1.1 billion to the treasury.

The synthetic fuel plant's risky birth and long fight to achieve profitability underscore the essential role that federal loan guarantees play in helping to develop risky, costly new technologies, said Pomeroy and the other members of North Dakota's congressional delegation, Sens. Kent Conrad and Byron Dorgan.

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A subsidiary of Basin Electric Power Cooperative bought the troubled plant in 1988 for $85 million, leaving on the table

$755 million in unused federal tax payments. The Basin Electric subsidiary, Dakota Gasification Co., previously repaid $275 million to the U.S. Department of Energy.

By the time the Great Plains Synfuels' profit-sharing payments to the government end in 2009, it's possible the $1.5 billion in federal loan guarantees will have been repaid in full, said Floyd Robb, a Basin Electric spokesman.

"It was a huge challenge," said Conrad, D-N.D., who worked as a freshman senator to help rescue the plant and steer it to new owners who had an interest in its long-term success. Basin Electric deserves credit for taking on a huge risk and turning the plant around, he said.

The plant complex, a mammoth commercial chemistry set located near Beulah, was a pilot project launched by the Carter administration in response to the energy shortage of the 1970s.

A key to making the plant reliably profitable was to find commercially viable uses from lignite byproducts, including anhydrous ammonia and, most famously, carbon dioxide.

The plant captures roughly half of the carbon dioxide emitted during the coal conversion process and transports the gas via pipeline 200 miles to oilfields in Canada, where it is used to help pump oil out of the ground. The project is the world's largest at capturing and sequestering carbon, Robb said.

"It's taken a long while, but it's the right investment for the country," Dorgan said of the Great Plains Synfuels plant. "Coal is a feedstock that is in abundant supply."

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The key, he and the other delegation members said, is continued research and demonstration to find ways to use coal that allow the carbon to be captured and stored to curb greenhouse gas emissions.

Meanwhile, Great Plains Synfuels proves that complex new alternative energy sources can be developed, with the federal government and private sector working together, Pomeroy said.

"These are lessons we can carry into new technological endeavors going forward," he said.

Readers can reach Forum reporter

Patrick Springer at (701) 241-5522

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