By Tim Bradner
Alaska Journal of Commerce

The U.S. Defense Logistics Agency is developing a pilot program to supply a blend of alternative fuels to Air Force and Army units operating in Alaska, officials with the agency said March 11 at a conference in Anchorage.

Mark Iden, deputy operations director of the Defense Energy Support Center, a part of the Defense Logistics Agency, said his agency is soliciting proposals from industry to supply a 50-50 blend of alternative and conventional fuels.

The agency wants the alternative fuels made through the Fischer-Tropsch process, a chemical process that converts carbon-based material like biomass, natural gas or coal to high-quality liquid products.

The conference was sponsored by the Defense Energy Support Center, a part of the Defense Logistics Agency, to inform potential suppliers and get comments on the program, Iden said.

A minimum five-year purchase contract with options for extensions is planned, which is a departure from the agency's standard policy of one-year fuel purchase contracts, he said.

The U.S. Air Force has a separate project underway to evaluate a possible coal-to-liquids plants, also using the Fischer-Tropsch process, at Eielson Air Force Base near Fairbanks. That initiative is separate from the Defense Logistics Agency plan, which would supply the fuel to Elemendorf Air Force Base and Fort Richardson near Anchorage and Fort Wainwright in Fairbanks.

"Alaska is being used for the pilot program because it is an isolated region where the customer base, which includes several Air Force and Army installations, are fully committed to the program," Iden said.

The state also has abundant natural resources - coal, biomass and natural gas - which can be used as a feedstock for a Fischer-Tropsch plant, he said.

There is no preference as to where a plant to produce the fuels might be located, other than it must be within the U.S., Iden said. An Alaska location for the plant is preferred, however, because transportation costs would be reduced.

The agency also has no preference as to the type of feedstock that would be used, biomass, coal or gas.

Fischer-Tropsch was selected as the preferred technology because it is a well-established alternative fuels technology with a long history, Iden said.

"This is not about building a pilot plant. This is a program to purchase these fuels," he said.

Development of a plant to produce the fuel would be left to private industry,

The Air Force has been engaged in a jet engine test program with Fischer-Tropsch fuels for several years, but the fuel for the tests was purchased overseas from a Fischer-Tropsch gas-to-liquids plant in Malaysia operated by Shell and coal-to-liquids plants in South Africa operated by Sasol, Iden said.

The military has been interested in Fischer-Tropsch fuels for several years because of the superior performance of the fuel in advanced engines, as well as the environmental benefits. Use of the fuel results in almost no sulfur dioxide or nitrogen oxide emissions.

An important consideration is that a multi-year contract with the Defense Logistics Agency would have to supply fuel at prices competitive with conventional fuels, Iden said.

Firms interested in developing a Fischer-Tropsch fuels plant worry that the high capital costs of such a plant might not be recovered if the fuel has to be priced in the same range as conventional fuels.

However, Iden said his agency has circulated requests for information from potential suppliers and that some who responded felt they could build a plant if they had the security of a multi-year contract.

A second consideration is that federal rules require that the fuel supplier be able to demonstrate that the carbon footprint, or the greenhouse gas emissions, of manufacturing and transporting the fuel be equal to or below the carbon footprint of supplying the same quantity of conventional fuels.

This could be a challenge for a plant using coal as a feedstock because coal is particularly carbon-rich. Studies have shown that the manufacture of Fischer-Tropsch fuels with coal result in about 80 percent more greenhouse gas releases than conventional fuels, Iden said. Use of biomass or natural gas would result in fewer emissions.

The Fischer-Tropsch process was developed by German scientists in the 1920s. It was used by Nazi Germany to manufacture fuels from coal during World War II, and in the 1950s and 1960s Sasol, a South African company, developed large coal-to-liquids plants that made that country basically self-sufficient in fuel.

In recent years several major oil companies - including Sasol, Shell, ExxonMobil, BP and others - have worked to improve variations on the process. Shell and Sasol have operating gas-to-liquids plants in Malaysia and South Africa, and the two companies are developing two large gas-to-liquids plants in Qatar, which has large reserves of natural gas.

Several companies have been interested in using the process in Alaska, as the state has both North Slope gas and large, undeveloped coal deposits in the state.

One firm, Alaska Natural Resources-to-Liquids has worked for several years on a large coal-to-liquids project at the undeveloped Beluga coal fields west of Anchorage.

The Cook Inlet region offers advantages for such a project because it has large coal resources, as well as ways to store greenhouse gases produced by such a plant, according to Richard Peterson, managing partner of ANRTL.

Carbon dioxide can be injected into depleted or mature petroleum fields, stimulating the production of more oil, Peterson said.

Tim Bradner can be reached at timbradner.@alaskajournal.com.