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Deal Clears Way for Waste Coal-to-Synthetic Diesel Fuel Plant

Posted on: Friday, 30 September 2005, 00:00 CDT

By David DeKok, The Patriot-News, Harrisburg, Pa.

Sep. 30--After more than 30 years of talk and dashed hopes, the U.S. is about to get its first commercial plant to convert waste coal into synthetic diesel fuel.

Gov. Ed Rendell, who seemed barely able to contain his excitement, said Thursday that the state will guarantee $485 million in loans to help build a refinery near Mahanoy City, Schuylkill County. The state will also provide $47 million in tax credits.

The plant will convert waste coal into 40 million gallons of ready-to-burn diesel fuel annually. A consortium of buyers has committed to purchase nearly all of the plant's output.

"Every day we see the necessity for a national policy to address America's energy needs," Rendell said. "We only have to look at rising fuel prices to feel the impact. Working with the private sector, Pennsylvania is going to build its own energy and keep the money it now spends on foreign energy to make investments here."

The project is the brainchild of John Rich, a Schuylkill County coal producer, and his company, Waste Management and Processors Inc. of Gilberton. It is expected to create 1,000 construction jobs and 600 permanent jobs in a region where good jobs are often scarce. Construction is expected to begin next spring.

"I am determined to start bringing our independence back as a country," Rendell said. "We are going to keep our own energy dollars and put our own citizens to work by supporting innovative ideas."

He said the diesel fuel produced by the Mahanoy plant will be priced "well below" the current market. That is because the waste coal the plant will burn will be free, other than the cost of trucking it to the refinery.

The current high price of oil has made synthetic-fuels plants commercially feasible.

Synthetic fuels made from coal have been a dream ever since the first energy crisis in 1973. The U.S. has ample coal reserves underground in addition to waste coal. But converting it to liquid fuels in an environmentally safe manner and at a competitive price proved difficult until now.

Rich said the conversion process, a variation of what is known as the Fisher-Tropes process, turns waste coal into gas and the gas to diesel fuel, jet fuel or home-heating oil.

He and Rendell have had conversations about it for nearly 10 years, dating back to when Rendell was chairman of the Democratic National Committee.

The technology has been around for a while, Rich said, but the capital investment has been slow in coming.

Rendell compared the refinery to a shopping center project, where potential investors typically want to see signed leases before they commit their money. In this case, they wanted to see commitments to buy the diesel fuel.

The buyers consortium is led by the state but also includes private-sector participants such as Worley & Obetz Inc. and the Keystone Alliance, a fuel-purchase group for the trucking industry. Rendell said the U.S. Department of Defense is interested, and that was evidenced Thursday by the presence of Dr. William Harrison, an official of the department.

Rich waved off a question on what would be done with the ash that will remain after the waste coal is processed, calling it a "benign" substance that could be mixed with concrete or used to backfill the region's many abandoned strip mines.

That is being done with ash from waste-coal power plants, but there has been some public opposition to the practice.

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Copyright (c) 2005, The Patriot-News, Harrisburg, Pa.

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WMI,

Source: The Patriot-News

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