Interior Alaska coal-to-diesel plant faces setback

FAIRBANKS — Local officials hoping to build a coal-to-diesel plant near Eielson Air Force Base are up against the wall trying to coordinate with the military and could be out $10 million in federal funds anticipated to move the planning into a second phase.
But U.S. Sen. Lisa Murkowski said a top Air Force official told her the military will work with Fairbanks officials about concerns that the joint endeavor is off track.
At a Senate subcommittee hearing last week, Murkowski raised the concerns with Deputy Assistant Secretary of the Air Force for Installations Kathleen Ferguson.
“The community leaders don’t feel that the Air Force has been listening to their concerns, and the concern is that they will go forward, spend $10 million on studies that may have very little value,” Murkowski said.
Ferguson said the service is committed to working with the community and said Air Force officials met with leaders earlier this month to lay out the military’s plans for the $10 million.
Former Sen. Ted Stevens worked $10 million into the Air Force budget, earmarking the money for phase-two studies of a coal-to-liquids project at Eielson, said Jim Dodson, executive director of the Fairbanks Economic Development Corporation.
FEDC has taken the lead on studying the feasibility of a coal-to-liquids plant and spent $550,000 on an initial evaluation.
Dodson said he expected the $10 million to cover a more in-depth review.
“But the Air Force has basically gone ahead, to a large extent, without us involved,” he said. “What I’m concerned about is that there is going to be $10 million spent and there’s going to be no phase two of the study done.”
Dodson met May 10 with officials from Tyndall Air Force Base in Florida, where the research is centered.
The $10 million earmark was split 50-50 with $5 million directed to research and $5 million to operations.
“I don’t know where the money is going,” Dodson said.
Murkowski’s office quoted Ferguson as saying the earmark was “unusual” and created some delays as the military figured out how to deal with it.
Murkowski said she’ll keep on top of the project.
“We are certainly hoping that this is going to prove a fruitful and a productive partnership between the community and Eielson and the Air Force,” Murkowski said. “This is an opportunity here for a real win. You can create economic opportunity through a coal-to-liquids facility that would benefit the entire area.”
The Air Force said it is committed to transitioning to synthetic fuels, such as those produced from coal, but prefers to purchase the product rather than manufacture it.

By:  By Rena Delbridge
Source: Concern grows about $10 million federal earmark