Montana

State Energy Profile

Quick Facts

The Williston Basin of Montana and North Dakota holds one of the largest accumulations of crude oil in the United States; its Bakken and Three Forks formations are currently estimated to be capable of producing 7.4 billion barrels of oil.
As of the end of 2013, Montana held more than one-fourth of the nation's estimated recoverable coal reserves and was the seventh-largest coal-producing state. It produced 4.3% of U.S. coal in 2013 and distributed coal to nine other states.
Montana's four refineries, with almost 30% of U.S. Petroleum Administration for Defense District 4 (Colorado, Idaho, Montana, Utah, and Wyoming) refining capacity as of January 1, 2015, are able to process heavy Canadian crude oil for regional markets.
Wind electric power generation in Montana grew by 12% in 2014 and supplied 6.5% of the state’s net electricity generation.
Montana created a Renewable Energy Resource Standard requiring that public utilities and competitive electricity suppliers obtain 15% of electricity sales from renewable energy resources by 2015. The standard requires electricity suppliers to buy a set amount of power from smaller community-based renewable energy projects.

Overview

Montana is the fourth largest state in the nation and the third least-densely populated. The state is a net supplier of energy to the rest of the country, producing energy from both fossil and renewable resources. About one-fourth of the nation's estimated recoverable coal reserves are in Montana, and the northern and eastern areas of the state also are believed to contain large deposits of crude oil and natural gas. The Missouri River, the longest river in the United States and the fourth longest in the world, begins in the Rocky Mountains in western Montana and flows eastward across the state. The river basin stretches from Montana to Missouri and has substantial hydroelectric energy resources. The state's vast plains, punctuated by mountains and canyons, provide Montana with some of the best wind potential in the nation.

The Continental Divide cuts east and then north through the mountains of western Montana, making Montana the only state in the nation with rivers that drain into the Pacific Ocean, the Gulf of Mexico, and the Hudson Bay. The mountains capture warm, moist air from the Pacific Ocean, creating a more moderate climate in the western third of the state than further east, where the Rocky Mountains give way to dry, wind-swept plains that stretch to the Dakotas. While summer days can exceed 100 degrees Fahrenheit on the plains, winter can bring Arctic blasts. Montana recorded the lowest temperature ever measured in the contiguous 48 states: 70 degrees below zero. The state's population is clustered in and around a few towns, mainly in the valleys of the Missouri River and its tributaries. Much of the eastern third of Montana has, on average, less than one resident per square mile.

Montana's early economy was built around ranching, wheat, mining, and timber. After World War II, spurred by such popular destinations as Glacier and Yellowstone National Parks, tourism increased, and, by 1970, it became the second largest industry in the state, after agriculture. Mining, oil and natural gas production, petroleum refining, agriculture, and the state's vast open spaces and long travel distances make the Montana economy energy-intensive, and per capita energy consumption is among the top one-third of all states. The transportation and industrial sectors lead state energy consumption. Together they account for about three-fifths of Montana's energy use.

Petroleum

Montana produces about 1 in every 100 barrels of U.S. oil. Production is concentrated in the northeastern part of the state near the North Dakota border. Montana's Elm Coulee field was initially the most prolific oil field in the Williston Basin, a geologic basin that spreads from eastern Montana into North Dakota and Canada. However, Montana oil production declined substantially from its 2006 peak, as drilling activity moved to North Dakota, where the productive Bakken Shale formation is thicker. Recently, production has rebounded as drilling activity has increased in northeastern Montana's portion of the Williston Basin. At the end of 2013, Montana had about 1% of proved U.S. petroleum reserves, but potential recoverable resources in the state are believed to be much greater.

Montana has four operating oil refineries, three in the Billings region and one at Great Falls. Those refineries receive crude oil mainly from Canada and Wyoming and produce a full range of refined products, including motor gasoline, diesel fuel, propane, and asphalt. Pipelines and railroads both are used to ship crude oil into and refined products out of the refineries. Several pipelines carry Montana crude oil to refineries in other states as well. New production in the region has been constrained by the lack of pipeline takeaway capacity. A number of new pipeline projects are in development, primarily to transport crude oil to major refining centers in the Midwest, in Oklahoma, and on the Gulf Coast. The transport of crude oil by rail has increased substantially as an alternative to pipeline shipment.

About two-thirds of Montana's petroleum consumption occurs in the transportation sector, and almost one-fourth is used by the industrial sector. Although Montana's total petroleum consumption is low compared with that of other states, it is among the top 10 states in terms of per capita consumption. During the winter months, federal air quality standards require oxygenated motor gasoline use in the Missoula area. The use of conventional motor gasoline is allowed during the winter in the rest of the state. Montana has no ethanol refineries, although some have been proposed. Ethanol is brought in from nearby states and blended with conventional motor gasoline at two locations in the state.

Natural Gas

Montana produces less than 0.5% of the nation's natural gas. Production from natural gas wells and coalbed methane wells in the state has been trending downward from its peak in 2007 and 2008, as exploration activities have focused more on drilling for oil than natural gas. More than three-fourths of Montana's natural gas wells are in the northern part of the state, near the Canadian border. Almost all of the remaining production comes from wells in smaller fields in the Williston Basin in northeastern Montana near the North Dakota border and from wells in south-central Montana.

Montana is crossed by natural gas pipelines from Canada and Wyoming, and most of the natural gas entering the state comes from Canada and continues on to North Dakota on its way to Midwestern markets. In 2014, three-tenths of net U.S. natural gas imports from Canada entered the country through Montana. Montana has more underground natural gas storage capacity than any other state in the Rocky Mountain region, and its Baker/Cedar Creek field in the Williston Basin is the nation's largest single underground natural gas storage facility.

More than half of Montana households use natural gas as their primary energy source for home heating. Overall consumption is fairly evenly divided among the industrial, residential, and commercial sectors. Despite cold winters that can be especially harsh in eastern Montana, the state's per capita natural gas use is near the national median. In recent years Montana residents have consumed more natural gas than the state produces, making the state a net importer.

Coal

Montana produces more than 4% of U.S. coal from just half a dozen mines. The majority of Montana's coal production comes from several large surface mines in the Powder River Basin in southeastern Montana. One of Montana's largest coal mines, the Rosebud surface mine, supplies almost all of its production to the state's largest electricity generating station, the coal-fired power plant at Colstrip, Montana. Almost all of the coal used in-state fuels electricity generation and is delivered to generating plants by conveyor. In 2013, about one-fifth of the coal mined in Montana was consumed in the state, and all but a small fraction of that coal was used to generate electric power. Almost half of Montana's coal production was sent by rail to other states in 2013. The remaining three-tenths of Montana production was exported to western Canada, where much of it continued on to Asia.

Montana has the nation's largest estimated recoverable coal reserves and holds one-fourth of the nation's demonstrated coal reserve base. U.S. coal demand has been declining because of competition from cheaper natural gas and more stringent environmental regulations. U.S. electricity generators are also retrofitting coal-fired generating plants with emission controls that allow use of higher-sulfur coal, thereby reducing demand for low-sulfur Powder River Basin coal. Montana coal mine development projects have been proposed to supply a growing export market, but U.S. exports of coal have also declined in recent years.

Electricity

More than half of Montana's net electricity generation comes from coal, but new federal environmental rules are affecting coal-fired generation. One of Montana's older coal-fired power plants is being shut down because of the projected costs of the new pollution controls needed to meet federal restrictions on emissions of mercury and other toxins produced by burning coal. Montana is hosting a test of carbon sequestration in a formation near the Canadian border, which could help coal-fired power plants reduce the impact of carbon emissions. Most of the rest of Montana's electricity generation comes from hydroelectric power plants. Wind generation is a small but growing component, and the state has a small amount of natural gas-fired generating capacity.

Montanans use about half of the electricity generated in the state. The rest is sent to other western states by high-voltage transmission lines. Generating more electricity for sale in other states is seen as an economic opportunity for Montana, but current transmission lines are congested, and new capacity must be built in order to expand sales. Most of Montana is part of the Western Interconnection grid serving western states and Canadian provinces. Several transmission projects are being developed to increase capacity to move electricity from both conventional and renewable sources out of Montana to states in the west and southwest and to expand an intertie between the Montana and Alberta, Canada, grids. Part of eastern Montana is connected to the eastern U.S. grid.

Montana deregulated its electricity system starting in 1997, but the state experienced rising retail electricity costs and later re-regulated some aspects. However, more than seven-tenths of Montana's net electricity generation still comes from independent power producers. The state's average retail electricity prices are well below the national average and are among the lowest one-fourth of states. The commercial and residential sectors each consume a little more than one-third of the electricity used in Montana, and the industrial sector consumes the balance.

Renewable Energy

Montana has substantial renewable energy resources. Its mountainous terrain along the Continental Divide creates fast-running rivers, and the eastern two-thirds of the state is drained by the Missouri River and its tributaries. The state is the fifth-largest producer of hydropower in the nation and has 23 hydroelectric dams. Six of Montana's 10 largest power plants by generating capacity are hydroelectric facilities, and hydroelectric generating capacity is being expanded around the state.

With its wide plains crossed by mountains, buttes, and canyons, Montana also has some of the best utility-scale wind potential in the nation. Montana has several electric utility-scale wind farms in the center of the state, and more in various stages of development. However, new wind projects depend in part on demand for renewable energy from other states and on available transmission capacity. To provide a stable supply of wind-based power to the grid, a large transmission and closed loop pumped hydro storage project is in development about 100 miles northwest of Billings, Montana.

Montana has both geothermal energy resources and biomass energy resources. The state has identified more than 50 geothermal areas and about one-third of them are high-temperature sites. Montana's most significant geothermal resources are in the mountainous southwest, but, so far, they have not been tapped for electricity generation. Low- and moderate-temperature resources are found in nearly all areas of the state. Those geothermal resources can be used for aquaculture, greenhouses, spas, resorts, and space heating. Several hot springs resorts and public bathing facilities in Montana take advantage of that resource and many also use it for space heating. Advanced geothermal technology is being explored as a means to tap into the energy from hot fluids (formation waters) that are produced along with crude oil and natural gas from wells in eastern Montana. The heat from those fluids may be enough to support small geothermal power plants at the sites. The state is also looking at increasing the use of biomass from wood waste, particularly trees culled as part of efforts to fight pine beetle infestations. Most of Montana's biomass comes from and is used at wood-processing facilities. Although Montana had 4 megawatts of installed solar generating capacity by the end of 2014, none of it was at electric utility-scale solar facilities. There are a variety of residential and commercial distributed solar generation installations around the state.

Montana's renewable resource standard (RRS) requires retail electricity suppliers to get at least 15% of the electricity they sell in-state from renewable energy sources beginning in 2015. Power must come from renewable facilities that began operation after January 1, 2005. The RRS recognizes renewable energy from wind, solar, geothermal, biomass, small hydroelectric facilities, landfill gas, anaerobic digesters, and fuel cells that use renewable fuels as qualifying renewable resources. The standard requires electricity suppliers to buy a set amount of power from smaller community-based renewable energy projects.

Energy on Tribal Lands

More than 5.5 million acres of Montana, about 6% of the state's land area, is held by Native Americans. Montana's tribal lands sit on top of a wealth of coal, crude oil, and natural gas resources. The largest of the seven federal reservations in the state, the Crow Nation Reservation, with more than 2 million acres in south-central Montana, is underlain by one of the largest coal reserves in the United States. The North Cheyenne Reservation in southeastern Montana, adjacent to the Crow Nation Reservation, also has a large coal resource. In addition to an estimated 9 billion tons of low-sulfur coal, the Crow Nation Reservation has oil and natural gas resources. The Blackfeet Reservation on the eastern slopes of the Rocky Mountains has, on its more than 1.5 million acres, oil and natural gas resources that are being developed. Oil was discovered in the early 1950s on the Fort Peck Reservation, the second-largest reservation in the state. The Fort Peck Reservation is located in northeastern Montana, above the western edge of the Bakken formation. There are several oil and natural gas fields near the reservation's borders, but the tribe has not yet had any successful Bakken wells drilled on its lands.

Much of Montana's tribal land has abundant renewable resource potential, and several tribes are focusing their energy development on those resources. The Salish-Kootenai tribe, on the Flathead reservation in western Montana, became the first tribal hydroelectric owners and operators in the nation when they acquired sole ownership of the Kerr Dam on the boundary of their reservation in September 2015. The Flathead and the North Cheyenne reservations, with their timber resources, have significant biomass potential. The best wind potential in Montana is in the eastern three-fourths of the state, particularly in the northern and northeastern regions where the Blackfeet, Rocky Boy, Fort Belknap, and Fort Peck reservations are located. The Blackfeet Reservation, the third largest reservation in Montana, has pursued wind energy projects for several years. In 1996, a utility-scale wind project came online at the Blackfeet Community College in Browning, Montana, offsetting the college's electricity costs. In 1999, the four 10-kilowatt wind turbines installed by the tribe at a wastewater treatment plant in Browning began supplying one-fourth of the plant's electricity needs.

Source: US Energy Information Administration (www.eia.gov)