September 1, 2008

Marshall County Lands Coal-to-Liquid Project

By Harris, Linda

CONSOL Energy and Houston-based Synthesis Energy Systems, the two companies bankrolling a new, $800 million coal-to-liquid plant in Marshall County, say it just makes sense to build it in West Virginia.

CONSOL and SES are teaming up in a joint venture, Northern Appalachia Fuel LLC, to develop and operate a coal gasification and liquification plant in Benwood. It will employ 60-plus workers on a permanent basis to start, and 300 to 500 people during the construction process.

The plant will be built on a brownfields redevelopment site near CONSOL's Shoemaker mine and will use high-sulfur coal from the mine - a blend of run-of-mine coal as well as waste coals that the energy giant's other customers can't use - as feedstock. Given its proximity to the Ohio River, plant operators will be able to store their finished product in tanks for off-loading onto barges.

"West Virginia is very open to new technology," CONSOL President and CEO J. Brett Harvey said. "We have a huge investment of mines that already are in place. Rather than build a new mine somewhere, we're taking coal from a mine we already have and securing those jobs, putting (the money) into new technology that creates value for West Virginia. The water is here, the coal is here, and the Ohio Valley is a very good place to do business. Other states wanted to do it, but West Virginia was most open to it."

How will it work?

SES President and CEO Tim Vail said the project will turn coal feedstock into syngas by using his company's proprietary technology, U-GAS. The syngas then will be used to produce high-quality methanol, some of which will be used as feedstock for the chemical industry. Most of the methanol, however, will be converted into gasoline using Exxon Mobil's proprietary methanol-to-gasoline technology.

If all goes as planned, the plant will produce roughly 720,000 metric tons of methanol each year that can be used as feedstock for the chemical industry. The plant will be capable of converting methanol production to roughly 100 million gallons of 87-octane gasoline every year.

"They're not going to go to an environment that's unfriendly to them," Gov. Joe Manchin said.

Manchin said the state, with its vast coal reserves, is positioning itself as a leader in developing new, environmentally friendly technologies that can help break the nation's dependence on foreign oil.

But getting those technologies into the nation's environmental psyche won't be easy, he said.

"It's a change for the West Virginia economy, a genuine change for our country's future," U.S. Sen. Jay Rockefeller, D-W.Va., said.

"But it has to be said, in all candor, that there is not an understanding of coal. Only 16 states produce coal; that means (the others) are suspicious of it and think we can do everything by alternative methods. Well, we've got to use everything we have - and the biggest thing we have is coal."

Manchin said even those who know coal generates half of the nation's energy "think there's another alternative."

"We have the resources, the technology has been there, and now we're refining it," he said. "But what's so exciting is this is the first commercial account; it's going to show the rest of the world West Virginia truly is an energy leader."

SES's U-GAS technology already is being used at a coal liquification plant in China. There, however, Vail said the end product is strictly methanol.

"This is not a science experiment," he said, "but a proven process that will cleanly convert West Virginia natural resources into valuable, domestically produced transportation fuels.

"We know how to do it - we know how to do it cleanly, we know how to do it efficiently. What's important about our process is that we don't burn the coal; we convert the coal without burning so we don't have the set of emissions normally associated with the combustion of coal. When you have an inherently clean-coal technology that doesn't create those emissions in the first place, you don't have to remove them afterwards."

Carbon dioxide produced during the process will be pumped into a secure underground storage area - a saline aquifer - where it can't do any harm, he said.

CONSOL and SES will spend about $20 million for the front-end engineering design, which will be done by Aker Solutions US Inc. Harvey said the permitting process could take as long as 18 months, and construction is expected to take two years.

Manchin said the plant should be an economic reality by 2011. No public money is at risk, though he said the state and the Regional Economic Development Partnership, a local nonprofit development group, will provide financing and tax incentives over a 10-year period.

"Whether we use the coal in this country or not, the rest of the world is insatiable and using more coal than ever before," Manchin said. "Why shouldn't we develop the technology right here still using our coal, cleaning it and developing new technologies so we can go around the world and help clean the whole world up?"

Copyright State Journal Corporation Aug 1, 2008

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