E9-28389. Notice of Intent To Prepare an Environmental Impact Statement for a Proposed Federal Loan Guarantee to Support the Construction and Startup of the Medicine Bow Fuel & Power Coal-to-Liquid Facility in Carbon County, WY

AGENCY:

Department of Energy.

ACTION:

Notice of Intent to Prepare an Environmental Impact Statement and Conduct a Public Scoping Meeting, and Notice of Proposed Floodplain and Wetlands Involvement.

SUMMARY:

The U.S. Department of Energy (DOE) announces its intent to prepare an environmental impact statement (EIS) pursuant to the National Environmental Policy Act (NEPA) of 1969, as amended (42 U.S.C. 4321 et seq.), the Council on Environmental Quality (CEQ) NEPA regulations (40 CFR parts 1500-1508), and the DOE NEPA implementing procedures (10 CFR part 1021) to assess the potential environmental impacts for its proposed action of issuing a Federal loan guarantee to Medicine Bow Fuel & Power LLC (MBFP) (DOE/EIS-0432). MBFP, a wholly-owned subsidiary of DKRW Advanced Fuels LLC, submitted an application to DOE under the Federal loan guarantee program pursuant to the Energy Policy Act of 2005 (EPAct 2005) to support the construction and startup of the MBFP coal-to-liquids (CTL) facility, a coal mine and associated coal handling facilities in Carbon County, Wyoming (the Facility).

MBFP proposes to develop the Facility in eastern Carbon County north of I-80 between Rawlins and Laramie, Wyoming. The CTL facility and coal-handling facility would be located near the mouth of the Saddleback Hills Mine, located approximately 6 miles northeast of the Town of Elk Mountain and approximately 13 miles southwest of the Town of Medicine Bow. The CTL facility would use an advanced industrial gasification and liquefaction (IGL) process to convert coal into approximately 21,000 barrels per day (bpd) of low-sulfur, low-benzene regular gasoline. The Facility would capture at least 50 percent of the CO₂ and over 99 percent of the sulfur compounds that would be otherwise be emitted. The CO₂ stream would be compressed and delivered at the fenceline to another party for pipeline transportation to enhanced oil recovery operations and geologic storage at a location to be determined by the offtaker.

The EIS will evaluate the potential impacts of the issuance of a DOE Loan Guarantee for MBFP's proposed project and reasonable alternatives.

The purpose of this Notice of Intent is to inform the public about DOE's proposed action, invite public participation in the EIS process, announce plans for a public scoping meeting, solicit public comments for consideration in establishing the scope and content of the EIS, and provide notice of proposed floodplain and wetlands involvement. DOE invites those agencies with jurisdiction by law or special expertise to be cooperating agencies. The Bureau of Land Management has expressed interest in becoming a cooperating agency for this EIS.

DATES:

To ensure that all of the potential environmental issues related to this proposal are addressed, DOE invites comments on the proposed scope and content of the EIS from all interested parties. Comments must be postmarked or e-mailed by December 28, 2009 to ensure consideration. Late comments will be considered to the extent practicable. In addition to receiving written comments (see ADDRESSES below), DOE will conduct a public scoping meeting in the vicinity of the proposed project at which government agencies, private-sector organizations, and the general public are invited to provide comments or suggestions with regard to the alternatives and potential impacts to be considered in the EIS. Further details about the public scoping meeting will be announced through local news media and on the DOE Loan Guarantee Program Office Web site (http://www.lgprogram.energy.gov/​NEPA-2.html) at least 15 days prior to the meeting. Advance requests to speak at the public scoping meeting may be sent to Ms. Lynn Alexander at the address indicated below prior to the meeting. Requests to speak may also be made at the time of registration for the meeting. However, persons who submitted advance requests to speak will be given priority if time should become limited during the meeting.

ADDRESSES:

Written comments on the proposed EIS scope and questions regarding the public scoping meeting should be addressed to: Ms. Lynn Alexander, Loan Guarantee Program Office (CF-1.3), U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585. Electronic submission of comments is encouraged due to processing time required for regular mail. Comments can be submitted electronically by e-mail to: [e-mail]. All comments should reference Project No. DOE/EIS-0432.

FOR FURTHER INFORMATION CONTACT:

To obtain additional information about the MBFP project, this EIS, the public scoping meeting, or to receive a copy of the draft EIS when it is issued, contact Ms. Lynn Alexander by telephone at 202-287-5656, toll-free telephone at 800-832-0885, ext. 75656, or e-mail at [e-mail]. For general information on the DOE NEPA process, contact Ms. Carol M. Borgstrom, Director, Office of NEPA Policy and Compliance (GC-54), U.S. Department of Energy, 1000 Independence Avenue, SW., Washington, DC 20585; telephone: [phone]; facsimile: 202-586-7031; e-mail: [e-mail] or leave a toll-free message at 800-472-2756.

SUPPLEMENTARY INFORMATION:

Background

EPAct 2005 established a Federal loan guarantee program for eligible energy projects that employ innovative technologies. Title XVII of EPAct 2005 authorizes the Secretary of Energy to make loan guarantees for a variety of types of projects, including those that “avoid, reduce, or sequester air pollutants or anthropogenic emissions of greenhouse gases; and employ new or significantly improved technologies as compared to commercial technologies in service in the United States at the time the guarantee is issued.” A principal goal of the loan guarantee program is to encourage commercial use in the United States of new or significantly improved energy-related technologies. DOE believes that accelerated commercial use of these new or improved technologies will help sustain economic growth, yield environmental benefits, and produce a more stable and secure energy supply.

Purpose and Need for Agency Action

MBFP submitted applications to DOE for a loan guarantee to support construction and startup of the Facility. The purpose and need for agency action is to comply with DOE's mandate under EPAct 2005 by selecting eligible projects that meet the goals of the Act. DOE is using the NEPA process to assist in determining whether to issue a loan guarantee to MBFP to support the proposed project.

Proposed Action

The DOE proposed action is to issue a loan guarantee to MBFP to support construction and startup of the MBFP Facility and coal mine near Medicine Bow, Wyoming. The CTL facility and coal mine surface facilities would be constructed near the mouth of the Saddleback Hills Mine, which is located in eastern Carbon County north of I-80 between Rawlins and Laramie, Wyoming, approximately 6 miles northeast of the Town of Elk Mountain and 13 miles southwest of the Town of Medicine Bow. The MBFP project would be located within the boundary of the Carbon Basin Coal Project, which the U.S. Department of the Interior's Bureau of Land Management and Office of Surface Mining analyzed in an EIS issued in January 1999. The Carbon Basin Coal Project EIS analyzed potential environmental impacts and assessed necessary mitigation measures for an area that encompasses an Arch Coal, Inc., surface mine (The Elk Mountain Mine) that began operations in 2006, and the yet-to-be-constructed underground Saddleback Hills Mine that MBFP is proposing to purchase and construct to supply the bituminous coal needed by the MBFP project. The CTL facility would require approximately 200 acres and the coal mine surface facilities would require approximately 205 acres for a total of 405 acres. During construction of the CTL facility, there would also be an approximately 338-acre equipment and construction laydown area north of the CTL site. All of these parcels are within the existing boundaries of the Arch Coal mine property. MBFP also proposes to construct two or three short access roads (approximately 1 mile total of access roads) from County Road #3 to the proposed CTL site and use the area between the county road and the site as additional temporary construction lay-down area of approximately 100 acres, resulting in a total 438 acres of the site used as temporary construction lay-down areas.

As proposed, the CTL facility would use an advanced IGL process to convert coal into regular gasoline while capturing and sequestering CO₂. A total of 450 employees would be required for operations at both the CTL facility and the underground Saddleback Hills coal mine. The CTL facility would use approximately 9,500 short tons (wet basis) per day of bituminous coal to produce approximately 21,000 bpd of gasoline. The gasoline produced would be delivered to a pipeline which would be constructed, owned and operated by a third party for transportation to a location near Cheyenne, Wyoming. From this location, the gasoline would be transported through an existing pipeline to the Denver, Colorado, gasoline market. MBFP would purchase the 180 million ton recoverable coal reserve in the Saddleback Hills mine, including all existing permits and approximately 18,000 acres of land. The project would include construction of a long-wall underground coal mine, which has a current mining permit from the Wyoming Department of Environmental Quality's Land Quality Division, and coal surface facilities, as well as the CTL facility. The coal would be transported from the mine via an approximately 1-mile-long conveyor system. During construction the peak water use would be less than 1,000 gallons per minute. During operation the Facility would use approximately 300 gallons per minute which would be supplied by wells located on the MBFP property or in the northern utility corridor. The water source would be the Mesaverde Aquifer which contains non-potable water. The raw water would be treated prior to use at the Facility.

Steam and tail gas produced from the IGL process, as well as purchased natural gas, would be used onsite to provide electric power for internal Facility use. If additional power is required, it would be purchased from the grid. Power would not be sold to the grid. Other by-products for sale in the market would be elemental sulfur, slag, and possibly other chemicals such as propane and butane. Any slag not sold for re-use would be sent to a solid waste landfill in the area for disposal. An acid gas removal unit removes sulfur compounds from the syngas and recovers most of the CO₂. The Facility would capture at least 50 percent of the CO₂ and over 99 percent of the sulfur compounds that would be otherwise be emitted.

Regular-grade gasoline would be the primary product of the Facility. The gasoline produced at the Facility would be transported offsite to an interstate pipeline owned and operated by third parties for delivery to the Denver, Colorado, market. A third party would construct, own, and operate the gasoline pipeline from the Facility to a location near Cheyenne, Wyoming.

The proposed action would include: construction of a lateral pipeline spur to connect to an existing natural gas pipeline; the construction of a pipeline from the Facility to Cheyenne for the transportation of the gasoline product; one spur pipeline to transport the CO₂ to a pipeline of the company purchasing the CO₂ for EOR projects in the state of Wyoming; and several interconnects for utilities. The Facility would need to connect to the existing power grid for electricity supply, and to route a fiber optics cable to an interconnection at the Town of Medicine Bow. All utilities would be routed from the Facility through a northern utility corridor.

For the natural gas supply pipeline, the gasoline product sales pipeline, and the CO₂ pipeline, there are two optional corridor routes that MBFP is considering for the proposed action. In option 1, the natural gas, gasoline, and CO₂ pipelines would be constructed in a western corridor that would cross the MBFP property from the Facility going west to connect to an existing pipeline corridor parallel to I-80. The natural gas and CO₂ pipelines would be approximately 8 miles long in option 1, and would connect to an existing natural gas pipeline and a proposed CO₂ pipeline located in the I-80 pipeline corridor. In option 1, the gasoline pipeline would be approximately 128 miles long going through the western corridor and then along the existing I-80 pipeline corridor to Cheyenne. In option 2, the natural gas, gasoline, and CO₂ pipelines would be constructed in an eastern corridor that would go southeast from the Facility. The option 2 corridor for the natural gas and CO₂ pipelines would be approximately 12 miles long and would also connect to the existing natural gas pipeline and a proposed CO₂ pipeline located in the I-80 pipeline corridor. The gasoline pipeline in option 2 would be approximately 118 miles long going from the Facility, along the eastern corridor, and then along the existing I-80 pipeline corridor to Cheyenne.

A portion of the proposed MBFP site may affect a 100-year floodplain. There are also wetlands on the site. Therefore, DOE will include in the EIS a floodplain and wetland assessment prepared in accordance with the DOE Regulations for Compliance with Floodplain and Wetland Environmental Review Requirements (10 CFR part 1022). The 100-year floodplain is located along Medicine Bow River at the southeast boundary of the Carbon Basin Coal Project EIS boundary. One wetland is located near where temporary construction lay-down areas may be sited.

Alternatives

In determining the range of reasonable alternatives to be considered in the EIS for the proposed MBFP Facility, DOE identified the reasonable alternatives that would satisfy the underlying purpose and need for agency action. DOE currently plans to analyze in detail the project as proposed by MBFP and the no action alternative. DOE will also analyze mitigation measures as appropriate.

Under the no action alternative, DOE would not provide the loan guarantee for the MBFP project and the project would not be constructed with the backing of a DOE loan guarantee.

Preliminary Identification of Environmental Issues

The following environmental resource areas have been tentatively identified for consideration in the EIS. This list is neither intended to be all-inclusive nor imply a predetermined set of potential environmental impacts:

• Air quality
• Greenhouse gas emissions and climate change
• Energy use and production
• Water resources, including groundwater and surface waters
• Wetlands and floodplains
• Geological resources
• Ecological resources, including threatened and endangered species and species of special concern
• Cultural resources, including historic structures and properties; sites of religious and cultural significance to Tribes; and archaeological resources
• Land use
• Visual resources and aesthetics
• Transportation and traffic
• Noise and vibration
• Hazardous materials and solid waste management
• Human health and safety
• Accidents and terrorism
• Socioeconomics, including impacts to community services
• Environmental justice.

DOE invites comments on whether other resource areas or potential issues should be considered in the EIS.

Public Scoping Process

To ensure that all issues related to the DOE proposed action are addressed, DOE seeks public input to define the scope of the EIS. The public scoping period will begin with publication of the NOI and end on December 28, 2009. Interested government agencies, private sector organizations, and the general public are encouraged to submit comments concerning the content of the EIS, issues and impacts to be addressed in the EIS, and alternatives that should be considered. Scoping comments should clearly describe specific issues or topics that the EIS should address to assist DOE in identifying significant issues. Comments must be postmarked or e-mailed by December 28, 2009 to ensure consideration. (See ADDRESSES). Late comments will be considered to the extent practicable. DOE invites those agencies with jurisdiction by law or special expertise to be cooperating agencies.

A public scoping meeting will be held in the vicinity of the proposed project at a date and time to be determined. Notice of this meeting will be provided through local news media and on the DOE Loan Guarantee Program Office Web site (http://www.lgprogram.energy.gov/​NEPA-2.html) at least 15 days prior to the date of the meeting. Members of the public and representatives of groups and Federal, State, local, and Tribal agencies are invited to attend. Displays and other forms of information about the proposed agency action, the EIS process, and the MBFP proposed Facility will be available. DOE personnel will also be available at the meeting for discussions with attendees. DOE requests that anyone who wishes to present oral comments at the meeting contact Ms. Lynn Alexander by phone or e-mail (see ADDRESSES). Individuals who do not make advance arrangements to speak may register at the meeting. Speakers who need more than five minutes should indicate the length of time desired in their request. DOE may need to limit speakers to five minutes initially, but will provide additional opportunities as time permits. Written comments regarding the scoping process can also be submitted to DOE officials at the scoping meeting.

Issued in Washington, DC, on November 20, 2009.

Steve Isakowitz,

Chief Financial Officer, Office of the Chief Financial Officer.