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The Case: In 1988, the Basin Electric Power Cooperative of Bismarck, ND, bought a troubled chemical plant that converted coal into synthetic natural gas. The gamble paid off, and the story of Basin’s success is altering the business of power and the politics of pollution.

Dakota Gasification Company

FY 2005 revenues: $234.5 million
Employees: 700
CO2 stored underground: Six million tons

On september 14, 2000, the Dakota Gasification Company moved beyond survival. The company’s one-of-a-kind chemical plant in Beulah, ND – an industrial beast that converts 18,000 tons of lignite coal into 170 million cubic feet of synthetic natural gas per day (enough to heat 2,500 homes for a year) – had been written off 15 years earlier as a government-financed boondoggle, a misbegotten product of crisis-driven U.S. energy policies. But the determined subsidiary of a rural utility defied its critics. That September day, the company took a dirty by-product – carbon dioxide – and made it a financial asset by turning on a new CO2 pipeline. Not only would the move secure the plant’s viability, but it would also help clean up the environmental reputation of coal power.

Dakota Gasification operates a 300-kilometer pipeline full of carbon dioxide. This river of pollution heads north from Beulah to the aging oil fields of southeastern Saskatchewan. There the CO2 plunges a kilometer and a half below the earth’s surface into thick, stubborn oil deposits. The CO2 cuts the oil’s viscosity by a factor of four and eases its flow to the surface. Beulah’s CO2 is expected to help extract 130 million extra barrels of oil from the Saskatchewan oil fields, for which Dakota is well compensated. Once in the ground, the carbon dioxide takes the petroleum’s place, becoming trapped beneath an impermeable stack of limestone, sandstone, and shale. The process safely buries more CO2 in a year than a hundred thousand cars release in their operational lifetime.

Policymakers are increasingly looking to Dakota’s technology as the potential key to clean domestic power in the future. The Bush administration has advanced coal gasification and underground storage of greenhouse gases as a long-term solution to a long-term problem. The U.S. Department of Energy is championing a 10-year R&D program, dubbed FutureGen, that is aimed at perfecting a task that Dakota is currently accomplishing with technology that dates from the 1970s. “FutureGen is promoting technology that hasn’t even been demonstrated at small pilot plants,” says Dale Simbeck, vice president of technology for SFA Pacific, an energy consultancy based in Mountain View, CA. “But here’s a large-scale operation that’s technically successful and that’s doing all these things that are being talked about.”

Al Lukes, Dakota’s chief operating officer, says he’s used to the surprised reactions of international visitors who come to see what’s happening in the northern plains: “People look at us and say, ‘My God, you can do that?’”

As Dakota’s story spreads, policymakers face an increasingly stark choice. The International Energy Agency projects that enough coal plants to produce 1,400 gigawatts of electricity will have been installed between 2003 and 2030. These plants will generate about 118 billion tons of carbon dioxide over their operating lifetimes. That’s more than all carbon emissions from coal over the past 250 years combined. Even some pragmatic environmentalists agree that gasification technology may be the biggest single lever available for limiting greenhouse gases over the near term. “The coal is going to be mined. The only question is how it’s going to be burned,” says Antonia Herzog, a senior scientist with the Natural Resources Defense Council, an environmental advocacy group based in Washington, DC. “If new coal plants are going to be built, they should be gasification plants.”

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