Windfall Oil Tax

MONTANA, Jun 13 2008 (Neo Natura) - Montana Senator Jon Tester lashed out at Republicans on Tuesday, after the Consumer First Energy Act received only 51 votes, which was nine short of that needed to pass the legislation. The act was designed to roll back tax cuts for oil companies, impose a permanent windfall tax on those companies, and to help protect consumers from high gas prices caused by oil speculation.

"I remember when gas was a buck-46. It wasn't that long ago. It was before the Bush Administration took over. That was before the War in Iraq. Before speculators and market manipulators spiraled out of control. Before that $17 billion Bush tax cut for our nation's biggest oil companies." Tester said in a prepared statement.

Sen. Mitch McConnell (R-Ken.) said, "Hitting the gas companies might make for good campaign literature or evening news clips, but it won't address the problem. This bill isn't a serious response to gas prices. It is just a gimmick."

The purpose of the gas tax is simple: to raise revenue for building and maintaining roads and related infrastructure. This approach conforms to what economists call the "benefit principle" of taxation, which stipulates that consumers of government services should pay in proportion to the benefit they obtain from those services. It follows that the revenue raised from a tax that adheres to the benefit principle should be used solely to provide the good or service on which the tax is levied. Therefore, if gas taxes are paid by the individuals who benefit most from roads (drivers) and if the revenue is used solely for road building and maintenance, then the tax is a good one.

However, there is also the question of whether gas taxes should be used to decrease fuel consumption in order to protect the environment and reduce pollution. Pigouvian taxes, named after Arthur C. Pigou, a renowned English economist from the early 20th century, are taxes that attempt to make up for undesirable side effects of certain industries—what economists call "negative externalities." Pigouvian taxes are controversial and often difficult to calculate; they complicate the gas tax debate considerably.

Tax Foundation President Scott Hodge's Tax Gouging at the Pump and Record Taxes Paid before Record Oil Profits explain that oil companies actually pay more in taxes than they earn in profits, contrary to some people's notion that "greedy" oil companies are raking in huge profits without paying their fair share of taxes. The Tax Foundation Background Paper Paying at the Pump: Gasoline Taxes in America provides an in-depth look at the history and use of gas taxes (send us an e-mail if you'd like a free hard copy). The Fiscal Fact Questions to Ask before Raising the Federal Gas Tax presents a concise discussion of the role of fuel taxes. The Distributional Impact of Windfall Profits Taxes and a Gas Tax Holiday shows how much money taxpayers in each income group stand to gain or lose under the gas tax proposals put forth by the presidential candidates.

The Democratic energy package would have imposed a 25 percent tax on any "unreasonable" profits of the five largest U.S. oil companies, which together made $36 billion during the first three months of the year. It also would have given the government more power to address oil market speculation, opened the way for antitrust actions against countries belonging to the OPEC oil cartel, and made energy price gouging a federal crime.

"Americans are furious about what's going on," declared Sen. Byron Dorgan, D-N.D. He said they want Congress to do something about oil company profits and the "orgy of speculation" on oil markets.

As with all tax initiatives instituted by governments, there is always a divide between those who are for and those who are against the tax. The benefits of a windfall tax include proceeds being directly used by governments to bolster funding for social programs. However, those against windfall taxes claim that they reduce companies' initiatives to seek out profits. They also believe that profits should be reinvested to promote innovation that will in turn benefit society as a whole.

There were arguments in the early 1980's about whether it made economic sense to tax away much of the gain from higher oil prices. But there was no question that the windfall tax was needed to ease the political sting of allowing the domestic price to rise to the level set by OPEC.

Congress hammered out a complicated formula for determining the revenue base liable for taxation and the tax rate. The criteria vary according to the date that oil was discovered, the difficulty of extraction and the size of the company. For some categories of oil, taxes phase out early in the 1990's. In all categories, the taxable base price is adjusted each year for inflation.

The tax raised a whopping $26 billion in 1981, 27 percent of domestic oil revenues. Thereafter, revenues sagged with the price of oil, running just $5.6 billion in 1985 and nothing in 1986. If the price inches above $20 a barrel, Washington may collect a few hundred million dollars this year from the owners of oil discovered before 1978. New discoveries won't be taxed again unless the price
soars to $29.

Despite a number of government studies and congressional hearings, no evidence has been presented showing that the oil industry has colluded to keep retail gasoline prices high. For instance, the Energy Information Agency (EIA) in the U.S. Department of Energy found that approximately 85 percent of the changes in gasoline prices in the aftermath of Hurricane Katrina were due to changes in the market price of crude oil.

Global energy markets determine the price at which oil is bought and sold by even the largest oil corporations. For instance, ExxonMobil, the world's largest private oil company, accounts for only 3 percent of the market and the prices it pays for crude oil are set by trading on commodities exchanges in London, Hong Kong and Chicago.

What they won't get, however, is nearly as much money out of such a tax as they probably think. A windfall profits tax targeted at earnings far beyond the U.S. industrial average would return zero revenue to the Treasury because windfall profits in the oil sector are figments of the imagination.

While the raw earnings figures sound big, they are unexceptional when we take into account the size of those companies. Divide profits by sales, for instance, and you'll find that in the fourth quarter of 2005 (the last quarter for which data are available), profit margins were 6.8 percent at British Petroleum, 7 percent at ConocoPhilips, 7.1 percent at Shell, 7.7 percent at Chevron, and 10.7 percent at ExxonMobil. The 20 largest investor-owned oil companies earned a collective 8.8 cents on every dollar of sales for that quarter.

While tariffs provide an incentive to increase supply, taxes will decrease demand and therefore prices. With a sufficiently low price expensive domestic production may be crowded out. In the extreme, a halving of demand from 20 to 10 mbd would not eliminate imports, but instead raise their share to 100% with all domestic production becoming uneconomic.

Glacier Wind Energy: New Wind Turbines

MONTANA, Jun 09 2008 (Neo Natura) - San Diego Gas & Electric said yesterday it has signed power-purchase agreements with a renewable energy company for electricity generated from two soon-to-be-constructed wind farms in Montana.

Under two 15-year contracts, Glacier Wind Energy will add 210 megawatts from wind energy facilities under development near Glacier National Park to SDG&E's total power-generating capacity. The wind facility is owned by a U.S. subsidiary of Naturener SA, a renewable energy company based in Madrid, Spain.

The wind farms are expected to increase the amount of electricity produced by renewable energy sources for San Diego's power grid by almost 4 percent by 2010, the utility said. Under a statewide mandate, 20 percent of SDG&E's power must be generated by renewable energy sources by 2010.

To meet that goal, state utility regulators allow California's major utilities to tap renewable energy sources throughout the western United States and Canada.

Yesterday, SDG&E said renewable energy sources now account for 6 percent of SDG&E's total energy mix, an upward adjustment from the 5.2 percent the utility used as recently as last month.

SDG&E said the contribution from the wind farms will bring its renewable energy total to 10 percent. But the company says meeting the 20-percent goal depends on completing its Sunrise Powerlink transmission line. That point is heatedly disputed by environmental opponents of the $1.5 billion, 150-mile power line from El Centro to Rancho Peñasquitos.

Turning Algae Into Energy

MONTANA, Jun 05 2008 (Neo Natura) - Algae, that green stuff in your pond, is being used to make biodiesel in New Zealand. Algae can grow almost anywhere, even in deserts. And some species grow so fast that they double in size three or four times a day. According to Fred Krupp, author of the excellent Earth: The Sequel, it would take only 47 million acres of algae to produce fuel for half of America's cars, compared with 1.5 billion acres of soy beans. I never knew pondlife was so exciting.

Algae also eat carbon dioxide at a similarly prolific rate. That makes them multitasking miracle-workers: both a fuel and a way to clean up power-plant emissions. Not surprisingly, several companies are now trying to move from relatively small algae beds to industrial scale.

Green Star Products, Inc. algae facility in Montana is one of the world’s largest demonstration facilities and has served as a scientific and engineering milestone towards the commercial production of algae for energy and food.

The algae industry is in such an embryonic state that very few people even understand the real algae production problems, much less claim solutions for the production of algae.

The company's latest report delineates the real problems and engineering solutions provided by the demo project without revealing the patent pending intellectual property provided by the program.

A new algae production industry offers the potential to simultaneously solve three major world problems: energy crisis, global warming and food production crisis.

Here are a few factors that make algae competitive with other agricultural products:

• Algae produce 100 times more oil per acre than traditional food oilseed crops such as soy, etc. (Note: Algae produces 4,000 gallons of oil per acre per year versus 50 gallons per acre for soy.)
• Algae eat CO2, the major Global Warming Gas, and produce oxygen.
• Algae require only sunshine and non-drinkable (salt or brackish) water.
• Algae do not compete with food crops for either agricultural land or fresh water.
• Algae can reproduce themselves and their oil every 6 hours, while it takes Mother Nature millions of years to produce crude oil in the ground.
• Algae oil byproduct is a highly nutritious protein-rich food (30-50%), which will someday help feed the world
• Algae can produce high protein food at the rate of over 50 times (5,000%) faster than traditional food crops such as corn, soybeans and wheat.

Environment Permit Regulations

MONTANA, Jun 04 2008 (Neo Natura) - 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.

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 around the end of 2009.

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

“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.”

Brian Schweitzer ran into a permit problem trying to help a CTL plant startup. A Montana Department of Environmental Quality (DEQ) hearings examiner ruled that the state had improperly extended the company’s air quality permit after the original permit had expired. Because of the permit slipup the investors backed out since it would of taken more than 18 months to start construction. The CTL plant planned to have all of it's CO2 emmissions sequestered into underground caverns and unused oil fields around Montana.

XTO Purchasing Bakken Land

MONTANA, May 28 2008 (Neo Natura) - XTO Energy Inc. announced today that it has entered into a definitive agreement to acquire producing properties and undeveloped acreage from privately-held Headington Oil Company for $1.85 billion. Consideration in the transaction includes $1.06 billion of cash and 11,742,391 shares of XTO common stock valued at approximately $790 million, or $67.35 per share. The purchase includes 352,000 net acres of Bakken Shale leasehold in Montana and North Dakota.

XTO Energy's internal engineers estimate proved reserves on the properties to be 68 million barrels of oil equivalent, of which 60% are proved developed. Upon closing, the acquisition will add about 10,000 barrels of oil equivalent per day to the Company's growing production base. The acquisition is scheduled to close on or before July 15, 2008.

"Since 2004, XTO has aggressively pursued the best shale basins -- in terms of geology, productivity and economics -- to stake a claim for long-term growth. Our successful development results in these plays have created value for our shareholders and motivated additional investment for our future. With this acquisition in the Bakken Shale, our Company is now established as a leading producer and leasehold owner in this emerging oil shale play," stated Bob R. Simpson, Chairman and Chief Executive Officer. "As in our other producing arenas, the XTO team will bring experience and expertise to this multi-zoned, over-pressured and complex basin. We expect to grow production and reserves from this prolific shale into an environment of strong commodity prices."

"Across the 15,000 square mile Williston Basin, results from new Bakken wells, utilizing progressive horizontal drilling and completion techniques, are revealing the true potential of this extraordinary hydrocarbon target," noted Keith A. Hutton, President. "With over 3 billion barrels of oil held in place within our acreage position, our team expects to more than double the acquired reserve volumes over time. Drilling and operational activities should grow our production in the region by 12% to 15% annually, with about one-third of cash flow. Given the $3 per barrel production cost and high economic margin of these flowing oil wells, this expansive shale acquisition is a superb addition to XTO's portfolio of premier properties."

In a recent report, the U.S. Geological Survey published a new assessment of the Bakken Shale play of North Dakota and Montana. The report cites that 3 billion to 4.3 billion barrels of undiscovered oil are technically recoverable with current technology and industry practices. This estimate by the USGS made the Bakken Shale the largest continuous oil accumulation in the lower 48 states. In addition, the USGS has estimated total oil-in-place at 200 to 400 billion barrels.

The acquired properties are located in the Bar Trend and Nesson Anticline of the Bakken Shale development. At present, the primary producing field is Elm Coulee in Montana. Undeveloped leasehold comprises about 215,000 net acres of the total. Production volumes are 88% oil, but the associated natural gas is Btu rich in composition, realizing a 30% premium to NYMEX pricing.

"They come into a basin and they're very aggressive," Brian Corales, an analyst at Coker & Palmer in Metairie, Louisiana, who rates XTO shares a buy and doesn't own any, said in a telephone interview. The Bakken Shale "is a very hot play."

XTO said drilling and operational activities should increase production in the region by 12 percent to 15 percent annually. The acquisition brings the total of XTO's purchases this year to more than $4 billion.

"With over 3 billion barrels of oil held in place within our acreage position, our team expects to more than double the acquired reserve volumes over time,'' Keith Hutton, XTO's president, said in the statement.

A federal magistrate fined XTO Energy Inc. $10,000 and ordered it to pay another $10,000 in restitution in the deaths of two golden eagles electrocuted in 2006 by power lines leading to energy production sites near Gillette. They were charged on May 22, 2008.

Chief Executive Officer Dominic Domenici, resident agent in charge of the U.S. Fish and Wildlife Service for Wyoming and Montana, said Wednesday that XTO Energy, Inc. pleaded guilty last month to a misdemeanor violation of the federal
Bald and Golden Eagle Protection Act.

Dominic Domenici, the federal magistrate that charged them, said U.S. Fish and Wildlife Service Special Agent Tim Eicher of Cody found the dead eagles during a survey. Domenici said the birds were electrocuted after they touched improperly constructed power lines.

The Fish and Wildlife Service together with the Wyoming Game and Fish Department investigated the case, which was prosecuted by the U.S. Attorney's Office.

In addition to the court fine and restitution, Domenici said the company spent $988,000 on an avian protection plan that involved retrofitting miles of power line to make it safe for birds.

Jackson lawyer Hadassah M. Reimer represents XTO Energy. She said the company examined 95 miles of existing power lines and made improvements as necessary to make sure all of it was safe for birds.

According to a Fish and Wildlife Service statement, electrocution has been identified as one of the leading killers of eagles, hawks and owls since the 1960s. The agency said current standards in the electrical industry require power lines be placed at least 5 feet apart or insulated to make them safe for birds.

The agency statement says the $10,000 restitution that XTO Energy agreed to pay will go to the Murie Audubon Society in Casper, which rehabilitates sick or injured migratory birds.

John R. Barksdale, assistant U.S. Attorney in Casper, prosecuted the case. He said the company was responsive when contacted by his office and had already taken steps to address its power lines.

"We don't like to have any birds killed, but XTO was responsive when we contacted them," Barksdale said.

New Mexico-based Yates Petroleum Corp. last year also agreed to make improvements to its power line facilities in Wyoming and New Mexico to help prevent bird deaths.

A settlement between Yates, the U.S. Department of Justice and the U.S. Fish and Wildlife Service stemmed from the discovery of four dead eagles found near power lines owned by Yates at its coal-bed methane facilities in the Powder River Basin of northwest Wyoming.

Utilities Required To Create Renewable Energy

MONTANA, May 27 2008 (Neo Natura) - Montana code 69-3-2004 requires most energy providers to produce atleast 5% of their energy through renewable resources. In 2010 they are required to produce 10%, and in 2015 they are required to produce 15% from renewables.

The law lists the accepted types of renewables energy sources as wind, solar, geothermal, water power below 10MW, biogas, nontoxic biomass, and hydrogen fuel cells. The law mirrors the federal bill regarding nuclear power in the manner that it is not considered renewable.

Natural Gas Power Plant Expansion

MONTANA, May 21 2008 (Neo Natura) - Montgomery Energy officials said Tuesday they plan to expand a proposed natural gas-fired power plant north of Great Falls.

That surprising news came after Montgomery Energy was rebuffed Friday by the Federal Energy Regulatory Commission. The federal commission ruled Texas-based Montgomery had no right to leapfrog ahead of other power-plant projects that are waiting in line to hook up to transmission lines in the Great Falls area.

But Montgomery Energy officials said they simply had been trying to move ahead of projects that were struggling.

"The FERC ruling will have absolutely no impact on our project," said Dan Hudson, president of Montgomery Energy Partners. Instead, Montgomery officials said they not only plan to build north of Great Falls a 275-megawatt baseload power plant, estimated to cost up to $300 million, but also another 125-megawatt peaking plant, estimated to cost $96 million, which would be used to fulfill extreme power needs.

The combined facility would produce 400 megawatts of electricity, cost about $400 million to build and provide power flexibly to Montana's power grid, company officials said.

"Any time we have $100 million invested in energy in Montana, it's continuing evidence of the potential we have in all forms of energy," said Evan Barrett, chief business development officer in the governor's office.

"We're number one in coal potential and number one in wind potential, but natural gas is a resource we want to use as well," Barrett said Tuesday. "To be able to use this for peaking will allow us to use the whole combination better."

Cascade County Commissioner Peggy Beltrone praised Tuesday's announcement, saying the project "strengthens Montana's position as a national provider of clean energy." She said the plant would mean more jobs and tax base for the county. Interest in wind power is growing in Montana, and electricity produced by natural gas can be use to supplement wind energy.

In an interview, Hudson said the negative FERC ruling was "no big deal" to the company because of some positive negotiations between Montgomery Energy and NorthWestern Energy, the dominant utility in Montana. In fact, Hudson said Montgomery Energy and NorthWestern Energy had discussed mutually withdrawing the complaint several weeks ago, but the issue was too far along.

NorthWestern and Montgomery have been working in recent months to winnow down a huge estimated cost of $146.7 million for Montgomery to connect to NorthWestern's transmission lines.

That figure has now been reduced to about 2 percent of the original figure, or between $2.5 million and $3 million, he said. According to Hudson, the large cost was the principal basis for Montgomery's complaint to the federal energy regulatory board.

Hudson explained the smaller connection fee of less than $3 million is "a straight interconnect," rather than a more complex arrangement to join NorthWestern's larger network.

Mike Cashell, chief transmission officer for NorthWestern Energy in Butte, said Tuesday he could not confirm the figure of less than $3 million, but he agreed it is substantially less than before.

"There are two types of interconnections," Cashell explained.

One type of connection looks at integrating a proposed project into NorthWestern's network, and determines what type of "significant upgrades" would be needed, Cashell said. In the case of the natural gas plant, NorthWestern figured a new 238-kilivolt line would need to be built for the gas plant starting at Great Falls. That would have given Montgomery Energy all the room it needed on area transmission lines, any time of the day or night, he explained.

"We have to clear the congestion that might exist when this plant comes on," Cashell said.

Instead, Montgomery Energy opted for the second kind of connection, a simple hookup to NorthWestern lines, and to use NorthWestern's lines "if there is excess transmission available," Cashell said. "They would only get access as the transmission capacity is available."

That might be a problem for a power plant, except Hudson said his plant's prospective customers already have plenty of space reserved on transmission lines to more than cover the size of the Montgomery Energy plant.

Cashell agreed it's possible Montgomery's customers could clear the way for Montgomery to access those transmission lines.

Hudson said Montgomery Energy is still working to line up customers for what it hopes will be its 400-megawatt project, and that construction could begin late this year or in the spring of 2009.

"We need a couple things to fall into line," he said. "The design is completed."

Montgomery has a number of potential customers, including rural electric cooperatives, NorthWestern Energy itself, the city of Great Falls and customers in Alberta who could be reached through a proposed new transmission line between Great Falls and Lethbridge, Alberta, he said.

Great Falls has said it gets its power through the umbrella group Southern Montana Electric Generation & Transmission Cooperative, and SME officials have criticized wind power and natural-gas power as too expensive.

But Hudson contends SME and Great Falls may still be interested in buying power from Montgomery Energy, and/or wind farms, if plans for the proposed coal-fired power plant near Great Falls do not pan out.

"It's very hard to finance coal plants right now," Hudson said. He said Montgomery already has the money to build its project. The Rural Utilities Service earlier this year declined to finance SME's Highwood Generating Station.

Brett Doney, president of the Great Falls Development Authority, said one long-term solution is to build more transmission lines.

"We obviously want to see both projects go ahead," Doney said.

Montgomery Energy Partners' chief executive, Frank Giacalone, added, "We have the track record, are farther along in the development process, and have the ability to provide the relief to the energy needs of Montana sooner than anyone else." He said the company has built four similar facilities in the last two years, twice each in Odessa and Wharton, Tex.

Hudson said his company has been working with wind developers in Montana, since energy generated by wind turbines can complement natural-gas-fired electricity. He said Montgomery Energy's gas-fired facilities at Odessa manage 4,000 megawatts of total wind power being produced in the area.

"Our plant manages all the wind production for that area," Hudson said. "We really know how to manage it." He suggested the company could do the same in Montana, where wind development is on the rise, and said the Great Falls Energy Center is being designed to handle more than 2,000 megawatts of wind power.

Hudson said the Great Falls main plant might be expected to run about 40 to 60 percent of the time, while the smaller peaking plant might run between 15 and 40 percent of the time to accommodate customers' "extreme needs."

Hudson conceded natural gas is more expensive to burn than coal, but he noted natural gas generators are less costly to build than coal plants. The estimated cost of Montgomery Energy's 400-megawatt facility is about $400 million, half the estimated $800 million cost of the 250-megawatt coal-fired Highwood Generating Station.

Montana Wind Resource Map

MONTANA, May 19 2008 (Neo Natura) - The Department of Energy's Wind Program and the National Renewable Energy Laboratory (NREL) published a new wind resource map for the state of Montana. This resource map shows wind speed estimates at 50 meters above the ground and depicts the resource that could be used for utility-scale wind development. Future plans are to provide wind speed estimates at 30 meters, which are useful for identifying small wind turbine opportunities.

As a renewable resource, wind is classified according to wind power classes, which are based on typical wind speeds. These classes range from Class 1 (the lowest) to Class 7 (the highest). In general, at 50 meters, wind power Class 4 or higher can be useful for generating wind power with large turbines. Class 4 and above are considered good resources. Particular locations in the Class 3 areas could have higher wind power class values at 80 meters than shown on the 50 meter map because of possible high wind shear. Given the advances in technology, a number of locations in the Class 3 areas may suitable for utility-scale wind development.

This map indicates that Montana has wind resources consistent with utility-scale production. Good-to-excellent wind resource areas are distributed throughout the eastern two-thirds of Montana. The region just east of the Rocky Mountains in northern Montana has excellent-to-superb wind resource, with other outstanding resource areas being located on the hills and ridges between Great Falls and Havre. The region between Billings and Bozeman also has excellent wind resource areas. Ridge crest locations have the highest resource in the western one-third of Montana.