Tuesday, October 07, 2008

Credit crisis threatens energy projects in the West

The credit crisis could have implications for many big energy production projects in Wyoming and Montana, where natural gas, coal and oil production have spiked. The price tags for some of these projects reaches into the billions, and with banks on shaky ground, securing loans could prove difficult. Economists say whether big projects such as these will survive the current financial crisis depends on two things: How much credit versus existing capital is needed to pay for the project, and how good is the project plan?"

Some of the proposed facilities include coal-fired power plants. Wyoming officials have encouraged private lenders to fund such projects, but that may be in jeopardy because of the difficulty in securing funding. The Rural Utilities Service of the Department of Agriculture stopped making new loans for coal-fired plants several months ago, and rural electric cooperatives in Montana are seeking private financing, reports Karl Puckett of the Great Falls Tribune.

There is hope that many of these energy projects could still get funding. David Siever, of Capital Technology Inc. told Bleizeffer, "The bright spot for any of these energy sources is that energy is the one area of the economy, I think, that is going to get pulled to the forefront. We have to have cheap energy to keep the economy going." (Read more)

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