July 29, 2008

Consol Planning $800 Million Coal Plant in West Virgina

By Rick Stouffer, The Pittsburgh Tribune-Review

Jul. 29--Mining giant Consol Energy Inc., hoping to cash in on the demand for gasoline and other oil-based products, said Monday it will develop and build an $800 million plant in West Virginia to convert coal into methanol and gasoline.

Consol Energy and partner Synthesis Energy Systems Inc. formed a joint venture to develop and build the plant south of Wheeling, W.Va.

"Most observers would say that the balance between supply and demand for petroleum products over the next several decades is probably going to be a precarious balance," said Consol spokesman Thomas Hoffman. "If the U.S. can bring on liquids derived from our domestic reserves of coal it certainly not only brings more product onto the market, but from an energy-security standpoint, we think it's a good step."

The new coal-to-gas plant is one of a number under development worldwide. It's projected to annually convert a 1.2-million-ton mixture of newly mined coal, plus coal generally inseparable from rock, into 793,800 tons of methanol for chemical industry usage, or 100 million gallons of unleaded regular gasoline.

By comparison, motorists in the United States use about 390 million gallons of gasoline per day, while the country's largest oil refinery, Exxon Mobil Corp.'s Baytown, Texas, plant, can refine more than 23.8 million gallons of gasoline per day, according to Energy Information Administration.

The new plant would use coal from Consol's Shoemaker Mine, which is undergoing modernization, including installation of a conveyor system, to be completed in 2010. The new coal gasification plant could be on-line as early as 2012, Consol estimates.

"We selected Benwood because it's a brownfield site. It's on the river so that output from the plant can be moved efficiently and cost-effectively, and because we're in the process of modernizing Shoemaker," said Hoffman. The town of Benwood is about three miles south of Wheeling.

"This project grew out of the agreement between SES and Consol announced last September, that they would together explore development of coal-gasification facilities," said Synthesis Energy spokesman Tim Grace.

Synthesis Energy is headquartered in Houston. Earlier this year, a joint venture plant between Synthesis Energy and the Chinese company Shandong Hai Hua Coal & Chemical Company Ltd., similar to the synthetic gas production facility proposed for West Virginia, began operation in Shandong Province, China. Another plant is under construction in China, while a third is under development.

The Houston-based company holds an exclusive license for what's known as the U-Gas gasification technology, developed over the last three decades by the research and development organization Gas Technology Institute in Chicago. It's designed to use mined coal or waste coal, generally deposited into landfills and, in earlier times, left in huge piles near mines, into synthetic natural gas.

The China plant has solved one of the biggest problems associated with any new coal-fired plant, what to do with the carbon dioxide emissions. The new Synthesis Energy facility is sequestering the carbon underground, Hoffman said.

"We know that carbon dioxide capture in any new plant is a great concern for many," Hoffman said. "The ongoing front-end engineering design process will address this. Plus with the commercial-size plant already operating in China, we can build on its experience."

The synthetic natural gas is used to produce liquid transportation fuels such as gasoline and diesel fuel, bulk chemicals and other energy products.

"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," West Virginia Gov. Joe Manchin said yesterday, during an announcement ceremony in Benwood for the facility.

The facility during construction will employ between 300 and 600 workers, while the complete plant would employ 60 full-time workers.


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