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Great Plains Coal Gasification Remarks Announcing Federal Loan Guarantee for Plant To Be Built in North Dakota.

July 18, 1980

THE PRESIDENT. This is one of those rare historic moments in the history of a nation and its interrelationship between government and the private sector of our economy to launch a new vista for improvements and for a better quality of life for all Americans.

The Canadian Government has just announced that they have approved the construction of the first leg of the 4,800-mile natural gas pipeline from Prudhoe Bay down to the heartland of America. We are very pleased with this. This will be the biggest single private contract operation in the history of the world. And by 1985 it will be completed and will provide about 2 1/2 billion cubic feet of natural gas per day, equivalent to about 400,000 barrels of imported oil that we won't have to buy.

This project here, which is a very rapid-moving project, since we only signed the Energy Security Act 3 weeks ago—less than 3 weeks ago—is another example of the progress that is being made toward making our Nation energy secure.

I would like to announce this morning and deliver to these assembled leaders the approval by the Federal Government of a $250 million loan guarantee for the construction of this coal-to-natural gas conversion plant to be built in North Dakota. I would particularly like to thank Governor Art Link and Senator Quentin Burdick for the leadership role they have played in coordinating the Government effort. And Mr. Seder, on my left, represents a consortium of five energy-producing industries in our Nation that will be responsible for the design, the construction, and the operation of the plant.

This plant will be the first commercial coal-to-gas plant ever built in our Nation. There have been other pilot models built of a relatively small size, but this will be a full-scale commercial plant. We expect it to produce the equivalent of 9 million barrels of oil per year, and this will mean, during the construction phase, the hiring of about 3,000 workers and the permanent hiring of about 500 to operate the plant, highly advanced in its design, in the forefront of engineering technology of the modern age throughout the world.

This is a very good example of how the Government, through its own action in devising an energy policy, can provide for the private enterprise sector of our economy the means by which their tremendous resources can be tapped for the benefit of our Nation.

I would also like to express my thanks that President J. Turner is here this morning and President Jack Lyons. I understand that President Bob Georgine will be coming in a few minutes. And there are representatives, behind, of the other companies involved in the private consortium.

It's with a great deal of pleasure that I deliver to Mr. Seder this conditional commitment to guarantee the $250 million in loans from which a great deal more money can be derived from private sources for the construction of this remarkable plant. We'll be observing its progress with great interest and anticipation, and the entire Nation will be benefited by this project.

Mr. Seder, congratulations to you, and it's a pleasure to have you with us.

MR. SEDER. Thank you very much, Mr. President.

THE PRESIDENT. Art, would you like to comment, you and Senator Burdick?

GOVERNOR LINK. I want, first of all, President Carter, to thank you and the Department of Energy for this support for the construction of the first coal gasification plant in the Nation. I want to commend and congratulate you, Mr. Seder, on behalf of the consortium, my formerly in the Congress and now is working in the U.S. Senate in very close cooperation, for this very important historic moment in the energy industry.

There's a significance connected with this that we should also note, that it's being built on the same ground and in conjunction with an electric coal-fired generating facility operated by Basin Electric. And they have a close working relationship that will put into effect a great many economical, innovative procedures, both from the economic and utilization of the fuel and also from the environmental impact effects of this kind of development.

And so, Mr. President, all of us in North Dakota and those who have worked very closely, particularly in promoting this plant, are deeply grateful to you, the Department of Energy, and to your foresight and support and encouragement in the progress that we've made in getting this project off the ground as we are this morning. I think we'd certainly want to hear from Mr. Seder and from Senator Burdick. And I want to thank you personally.

THE PRESIDENT. Senator Burdick?

SENATOR BURDICK. Mr. President, this is indeed a moment in history. It means that we are going ahead, determined to secure energy independence in this country. This is a project that will save, as the President said, millions of gallons of oil, and it will be a key in our development of energy independence.

And I want to thank the President and all those who had anything to do with this development. It's much needed, and I think our country will go forward with it.

THE PRESIDENT. Thank you very much, Senator Burdick.

One of the things that's interesting, also to the coal industry is that, I believe, this plant will use about 22,000 tons of coal per day. Is that correct?

MR. SEDER. Yes, that's correct.

THE PRESIDENT. That's good news, too, because as all of you know, our most plentiful supply of energy is in coal, and we're very grateful that this project will go forward.

I'd like to ask Mr. Seder to comment if he would.

MR. SEDER. Mr. President, apropos of your last remark, I think it's significant that this plant will take the 22,000 tons of low-grade lignite coal, which otherwise can't be properly utilized, will convert it to natural gas, which has a very high end use, as you know, and will transport it to homes and businesses throughout the country. I think it's also important to note that this plant will be located only a few miles from that Alaskan gas pipeline, or the U.S. segment of it, so that at the time this plant is completed, we hope that segment of the Alaskan pipeline will also be completed so that we can use joint facilities.

Mr. President, I want to thank you for taking time to be with us and to announce this commitment this morning. For the project, of course, it's a very important day. We've been working on this project for nearly 8 years, so it's been a long time in coming, but certainly is worth it.

I think it's important, as you suggested, for the Nation, too, that this plant be constructed and that it get underway at this particular time. It will produce a significant amount of energy, the equivalent of 20,000 barrels of oil a day, or 9 million barrels a year, as you suggested. But that's only the beginning. I think that this plant will be the prototype of many additional plants to come. And so, within the next decade and certainly beyond, synthetic fuels made from coal will provide a very important part of our Nation's energy mix.

So, I want to thank you and to say that we have enjoyed tremendous cooperation from the Department of Energy. And I want to say just one word for Governor Link. I think when these outlanders from Detroit first came up to North Dakota, he wasn't entirely sure what it was we were proposing. But he took the time to analyze the project, its environmental consequences, its capacity to provide energy for the country and for North Dakota, and once he was convinced that it was a desirable project, he's been a tremendous bulwark of support. And Senator Burdick in the Senate has helped us over several very rough periods. So, I want to thank them and especially to commend the Department of Energy for their role in this.

THE PRESIDENT. Thank you. Let me ask you a question. Where is the pilot plant located, and what size is it, on which this design is predicated?

MR. SEDER. Well, actually, Mr. President, there isn't a pilot plant, because we already have the prototype of this plant several places, most particularly in South Africa, where, within a few years, over 60 percent of that country's petroleum needs will be provided by plants of exactly this kind. So, we are working on the basis of a design and a concept that has been proven commercially, but it has never been done in this country. And what this plant will do will be to provide the proof of the economics, the environmental consequences, the desirability of the plant generally, so that then this can be the prototype for many more to come.

GOVERNOR LINK. Art, you might mention the amount of coal that you shipped there from the source.

MR. SEDER. Yes, Governor. Before going forward with the design of this plant, we shipped an entire boatload, 12,000 tons of coal, from North Dakota down to South Africa to be run through those plants to be sure that the process worked with the North Dakota coal. So, it's a proven process. But there's still a lot to be learned, and this project will provide the basis on which that learning process can go on.

THE PRESIDENT. IS it your thought that in the future this would be kind of a standard size plant, or would they be a good bit larger? Or can you multiply what's basically here and have a higher production?

MR. SERVER. This is only phase one of a multiple-phase plant that has already been projected.

THE PRESIDENT. For the same site?

MR. SEDER. For the same site. We will have certainly a phase two of comparable size, and then there are other sites in North Dakota and elsewhere where plants of this general design can be replicated. So, this is a very large plant. It will cost in the neighborhood of a billion and a half dollars when it's completed in 1983, so it's by no means a small plant. Nevertheless, it's capable of being duplicated continually.

So, as I say, we're looking forward much beyond this project. If there were only this in the offing, why, it wouldn't be worth going forward, but certainly this must be an important part of the Nation's energy mix as we go forward and reduce our dependence on foreign sources of energy.

THE PRESIDENT. And you anticipate the environmental problems to be pretty well solved?

MR. SEDER. Yes. That was one of the concerns that the Governor raised at the very outset—what would be its environmental effects. And much of the process, the conversion of coal to gas, takes place within contained systems, so that the emissions are less than for an electric generating plant, for example, and the sulfur is removed within these contained systems. And so far as the mining of the coal is concerned, North Dakota, I think, is probably in the forefront of reclamation requirements, which we're quite prepared to meet. And I think the people, Governor, are reasonably well reassured that the land can be returned to its original state or even better, and that is our intent and our goal.

THE PRESIDENT. Thank you. Did Bob Georgine ever come in?

PARTICIPANT. No, I didn't notice, sir.

THE PRESIDENT. Well, I know the construction workers, the iron workers, and others are very happy to see these kinds of plants get started in our country. And this is the first one of many that will be now supported and aided by the Federal Government through the windfall profits tax funds. But the emphasis ought to be placed, I think, by the news media and the understanding of the American people that these are private enterprise projects. The Government will not design, build, nor operate this plant. We will provide the facilities by which the initial commitment can be made, but it's completely within the private enterprise system of our Nation. That's the way I prefer to have it.

Good luck. Thank you very much.

Note: The President spoke at 11:30 a.m. in the Cabinet Room at the White House. Arthur Seder is president of American Natural Resources Co., Detroit, Mich.

Jimmy Carter, Great Plains Coal Gasification Remarks Announcing Federal Loan Guarantee for Plant To Be Built in North Dakota. Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/250830

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