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Consol, Synthesis Energy Announce New $800 Million Coal-to-Gasoline Plant: Plant, to Be Located in Marshall County, Will Be the State’s First

July 28, 2008

By George Hohmann, Charleston Daily Mail, W.Va.

Jul. 28–CHARLESTON, W.Va. — Two companies have formed a joint venture that will build an $800 million coal-to-gasoline plant — the state’s first — at Benwood, Marshall County, officials announced today.

Gov. Joe Manchin and Sen. Jay Rockefeller, D-W.Va., joined officials of Consol Energy Inc. and Synthesis Energy Systems Inc. in making the announcement at a ceremony near the site.

“It’s clearer than ever that one of the biggest issues our state and country faces is meeting our energy needs,” Manchin said in prepared remarks.

“Technological solutions like this plant at Benwood will lead to more environmentally friendly ways to use our coal and hold the key to America’s energy security.”

Manchin’s administration has written a state energy plan built around the idea that coal-to-liquids plants will be constructed in West Virginia.

Today’s announcement goes a long way toward making good on Manchin’s December 2005 vow to have a coal liquefaction plant built in the state “by the end of my first term,” which is January 2009.

Rockefeller, D-W.Va., said the project will give West Virginia an opportunity to show the world that the state is a global leader in energy issues and modern coal technology.

Sen. Robert C. Byrd, D-W.Va., said, “America cannot meet its energy needs. West Virginia has the coal, the brains, and the determination to meet that challenge and demonstrate to the world that we intend to be part of the solution.”

The plant will be built in the Marshall County Industrial Park, at the south end of Benwood, next to McMechen. The plant will use newly mined coal and mine waste from the normal preparation process at Consol’s nearby Shoemaker mine.

The coal will be converted to a synthetic gas using Synthesis Energy Systems’ proprietary U-GAS technology. The synthetic gas will be used to produce about 720,000 metric tons of methanol annually. The methanol can be used as a feedstock for the chemical industry.

It is also expected that the plant will be capable of converting the methanol into about 100 million gallons of 87-octane gasoline annually.

Consol and Synthesis Energy said Northern Appalachia Fuel is currently negotiating with ExxonMobil Research and Engineering to license ExxonMobil’s proprietary methanol-to-gasoline technology.

The companies said the project as envisioned will include a river terminal where products will be stored in tanks for loading into barges for ultimate delivery.

Don Rigby, executive director of the Regional Economic Development Partnership, said it is estimated the plant will create 300 to 500 construction jobs and, when the plant begins production, it will have about 60 full-time permanent employees.

Consol and Synthesis Energy officials said they will develop the plant under a joint venture, Northern Appalachia Fuel Limited Liability Co.

The companies said their boards of directors have authorized funds for development activities, including the front-end engineering design package. The companies said each will contribute equally to this phase of the project.

The companies said Northern Appalachia Fuel is finalizing agreements with Aker Solutions US Inc., a subsidiary of Aker Solutions ASA, to perform the front-end engineering design.

The companies said the design will include a plan for carbon sequestration, which is the process of trapping carbon dioxide and pumping it underground.

Northern Appalachia Fuel will file for environmental permits and other permits necessary for construction at a later date, the companies said.

Consol and Synthesis Energy said they have signed a memorandum of understanding with the state and the Regional Economic Development Partnership, a division of the Ohio Valley Industrial and Business Development Corp. Under the terms of the memorandum, the state and the partnership will provide financing and tax incentives to the project over a 10-year period.

Consol Energy is the nation’s largest producer of bituminous coal. The company is headquartered in Pittsburgh, Pa. Consol traces its roots to Fairmont.

“This project has the potential to transform West Virginia from a major coal-producing state to a national energy center as well,” said J. Brett Harvey, president and chief executive officer of Consol in prepared remarks.

“By converting some of our region’s abundant, high-BTU coal into gases and liquids, not only will we create economic value for the state, but we will help West Virginia become the linchpin of American energy security.”

Synthesis Energy System builds, owns and operates coal gasification plants that use its proprietary U-GAS fluidized bed gasification technology to convert coal and coal wastes into higher value energy products, such as gasoline and ammonia.

The company licenses the U-GAS technology from the Gas Technology Institute. Synthesis Energy has offices in Houston, Texas and Shanghai, China.

Tim Vail, president and chief executive officer of Synthesis Energy Systems, said he is proud of the progress his company has made toward the development of the first industrial-size gasification plant in the United States using U-GAS technology. He thanked the state and the Regional Economic Development Partnership for their support.

“Together with our partner, Consol Energy, Synthesis Energy Systems will be taking a first step toward securing energy independence in the U.S. as we convert raw and residual coal from Consol’s Shoemaker mine and plant into gasoline in an environmentally responsible and cost-efficient manner,” Vail said.

Contact writer George Hohmann at business@dailymail.com or (304) 348-4836.

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Copyright (c) 2008, Charleston Daily Mail, W.Va.

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