Energy development may face challenges in Montana

With gas prices breaking records, the national average at about $4 a gallon, energy and energy development is on the tip of everyone’s tongues. From politicians advocating ethanol to windfarms to more national drilling, it seems that any ideas to reduce America’s dependence on foreign oil are being heard as election season heats up.

Around the Bakken Formation, discussions of new oil refineries being built both in Montana and North Dakota have been heard.

Lindsey Bright | Sidney Herald Floorhands handle pipe on a horizontal well in the MonDak area.

A document released by the North Dakota Pipeline Authority on April 22 states the Three Affiliated Tribes of Fort Berthold Indian Reservation are considering building a 15,000 barrel a day refinery. In Williston, a group is considering building a refinery adjacent to the ethanol facility; the document states, “The North Dakota Industrial Commission, through Oil and Gas Research Council, has provided funding to study the viability of the project.”

On the Montana side of the Bakken, these discussions are much less advanced. No grant has been gained to study the viability of a refinery in the area, and talks of building an oil refinery are only talks amongst local persons and politicians. The question of why North Dakota has moved along at a quicker pace of developing their oil has been raised, however, the question must extend to all energy development. In addition to the possible refineries in North Dakota, currently American Lignite Energy is exploring building a coal-to-liquids plant. Great Northern Power Development, L.P. [GNPD] and Allied Syngas are working toward building a coal gasification plant in South Heart, N.D., with an expected starting construction date of late 2009/early 2010.

GNPD owns the largest collection of coal reserves in Northern America beside the U.S. federal government. The company had to decide between two project sites, which one they would move forward with first - the one in South Heart or the one in Circle.

“The question of which site to develop first came up,” GNPD consultant Bill Pascoe said. The company decided to first focus on the site in North Dakota for various reasons - better pipeline infrastructure, better power line, gas pipeline on site, to name a few.

“If all the factors were the same, though, we would have still chosen North Dakota,” Pascoe said. “The reason for this is that business and regulations are more hospitable in North Dakota and this has primarily to do with the permitting process.”

To build almost anything affecting land, a permit is required. The larger the facility with the more effects it will have on a place, the more rigorous and lengthy the process can be. Even so, for most states, this process is regulated by the laws of the U.S. Environmental Protection Agency. In this regard, the process in both Montana and North Dakota would be quite similar. To build a power or energy developing plant, the two main permits a company would have to go through would be water and air quality permits.

“The process is regulated by the state health department…and is long and cumbering to achieve the permits,” director of North Dakota’s Oil and Gas Board Ron Ness said.

“Permit issuance is a long procedure that may take several years, depending on the complexity of proposed management process, quality of the initial application and degree of public participation,” said Moriah Peck, environmental engineering specialist with the Montana Department of Environmental Quality.

A few of the permits set by the National Environmental Protection Agency required for building a large power/energy facility or oil refinery are New Source Review - Prevention of Significant Deterioration, Ground Water Pollution Permit, Title V Operating Permit and more.

However, Montana’s process is rigorous because of the need to prove it complies with all the standards and regulations set out by the EPA.

“There are two things that make getting a permit tougher in Montana: Montana Environmental Protection Act [MEPA] and the constitution which states that everyone is entitled to a clean and healthful environment,” Rep. Walt McNutt, R-Sidney, said.

MEPA requires either an Environmental Assessment [EA] or Environmental Impact Statement [EIS] whenever there is any state action, such as any type of construction requiring issuance of permits from the state.

“If it is determined that the facility will have a significant impact, then an EIS will be needed,” Montana Legislative Environmental Analyst Todd Everts said. “It is a fairly extensive review process.” This MEPA required environmental review is said by Everts and others to go hand-in-hand with the permitting process. Once the draft for the environmental review is completed, then the public is invited to review the draft and give input.

Steve Wade, an attorney for Roundup Power Plant developers Bull Mountain Development, had first-hand experience with some of the delays and complications that can stop or stall energy development projects.

“We were able to go through the permitting process and get a permit,” Wade said. “When we got our permit, we were subjected to an administrative appeal…also the MEPA analysis was challenged in district court.” Wade explained that in the circumstance involving Roundup, the appeals tied the company up in long and tedious litigation.

“The litigation ties up the move forward under the permit because the outcome of the appeals is uncertain,” Wade said.

The company made it through the appeal, but that was appealed. The company also received a favorable judgement in district court, so the environmentalist groups opposing the plant, including Montana Environmental Information Center appealed to the Montana Supreme Court.

“The process ended up taking a couple of years,” Wade said. “After that long of time the project was moot because the time the permit had given the company to commence the project had passed.”

The company had been given 18 months by the permit to commence the project.

“The time given on the permit is too short,” Wade says. “It does not give any time for litigation.”

A similar scenario is happening with the proposed Highwood Generating Station near Great Falls. The Highwood Generating Station would be a coal-fired power plant. In late April, the Montana Board of Environmental Review, a board set up by MEPA, was the first regulatory U.S. body to call for measurement and emissions controls for a tiny-particle pollution PM 2.5. This decision came after the air quality permit was a result of an appeal made by MEIC, Citizens for Clean Energy and the Sierra Club. In the case of the Highwood Generating Plant, the appeal reached the U.S. Supreme Court. The environmentalist organization argued their case on a 2007 Supreme Court ruling that affirmed, “harms associated with climate change are serious and well recognized,” Massachusetts v. EPA. This ruling makes it possible for the threat of greenhouse gas emissions to be taken as a serious threat to health and the environment, and thus, proper grounds for opposition.

The Highwood Generating Plant has until Nov. 30 of this year to begin construction under the permits issued by Montana’s DEQ. It was announced Saturday that they will begin construction on all parts of the plant except the boiler.

“MEPA alone is not the problem,” Jeff Schaeff, an engineer with Bison Engineering, said. “It often becomes litigation in courts…The judge and court can turn back the EIS, the time and effort and difficulty getting through the litigation.”

Schaeff explained that the MEPA allows organizations who oppose the building of the facility more time and more opportunities to appeal and stall the process through litigation than in other state.

“They [the opposing organizations] know very well how to work with the laws and take advantage of them,” Schaeff said. “Conceptually it’s a good idea, but the process gets exploited by the opposition.” The question Schaeff poses is how can this process be made fair?

reporter@sidneyherald.com