“We still have the coal. We’ve used everybody’s else’s oil.”
Importing foreign oil was easy compared to developing and investing in new fuel technologies, Frank Clemente, senior professor of Energy Policy at Penn State University, said.
However, by importing oil from other countries, we have saved our own natural resources.
The recent emphasis on coal-to-liquid plants, which convert coal into various fuels, is putting the nation’s coalfields — including those in southern West Virginia and Southwest Virginia — in a new light.
“People say we’re the Saudi Arabia of coal,” Clemente said. “Kentucky or West Virginia has 30 billion barrels of coal.”
These states “are as important as any OPEC country worldwide because they have the energy underground,” he said. “We still have the money in the bank. We’re lucky in that way. We still have resources we can turn to.”
A half-dozen states are now working on coal-to-liquid technology proposals, and the Mountain State is among the leaders in the pack.
“We need to get the greatest value we can out of our resources,” Gov. Joe Manchin said.
Turning coal into fuel is not a new idea. The process was developed by German scientists Franz Fischer and Hans Tropsch in 1925, and was used extensively by the country to fuel tanks and airplanes during World War II.
The method of turning coal into fuel is still known as the Fischer-Tropsch process.
Beginning in the 1950s, South Africa — oil-strained due to Apartheid-induced embargoes — began utilizing the technology. Led by the Sasol company, the country has produced more than 700 million barrels of synthetic fuels from coal since the 1980s
Plants to make gasoline and diesel from coal have now been proposed across the nation. “In just the past few weeks coal-to-liquids (CTL) plants have been announced in Mississippi, Ohio, Louisiana, Pennsylvania and Illinois,” Clemente said. “These are $2 to $4 billion projects.”
With oil now running at $70 a barrel, “I am certain potential CTL facilities in the Bluefield and Princeton area are currently being considered by various energy companies.
“Your section of West Virginia/eastern Kentucky is a prime candidate for a CTL project given the proximity to substantial coal reserves,” he said.
The cost of oil is a prime factor when analyzing the feasibility of CTL plants.
The magic number is $40 a barrel for oil, most experts agree. At less than that fuel made from coal is not economically sound; if oil costs more than that, it is.
While the Department of Energy is forecasting high oil prices until the year 2030, some Wall Street analysts believe a shift toward stability in some global hot spots — including Iraq — could cause the price to drop significantly.
This factor affects investors who are being courted by a number of states seeking to build the billion dollar-plus plants.
Among the coal-to-liquid action ongoing in the nation:
— Wyoming — a possible liquefaction plant is under consideration, with a current dialogue between energy companies and Gov. Dave Freudenthal.
— North Dakota — Gov. John Hoeven announced last summer he was working with energy, coal and mining companies to develop a potential coal-to-liquids plant in the state. The project calls for an initial investment of $750 million, and $3 billion in coming years.
— Montana — Last fall, Gov. Brian Schweitzer hosted a conference to discuss the future of energy in the West, and is actively seeking commercial partners and the U.S. Department of Defense for a coal-to-liquid project in the state.
— Pennsylvania — A $612 million coal-to-liquids plant is proposed to be the first of its kind in the nation. The developer has received $47 million in tax breaks and a $100 million low-interest loan from the Department of Energy.
— Louisiana — A $5 billion plant has been proposed in recent weeks, Clemente said, noting, “That’s bigger than a nuclear power plant in terms of expenditures.”
U.S. Rep. Rick Boucher, D-Va., said South Africa’s Sasol wants to build “an enormous plant” in the United States, which would create a huge demand for coal.
However, he predicts the plant will be located in the Midwest or West, where the cost of coal is considerably cheaper.
“Either coal, the cheaper coal found out West or our coal (which is suitably for coke manufacturing and for producing electricity) can be used for coal-to-liquids technology,” Boucher said.
Closer to home, the coal-to-liquids concept is moving at a brisk pace as well.
Manchin has reconstituted the state’s Public Energy Authority and charged officials with developing feasible projects for the coal-producing state.
West Virginia energy officials are also seeking private investors for a coal liquefaction plant in the state.
Manchin said there is “no competition” between the states for the plants; rather, the vast need for economical fuels means the economy can handle a number of such facilities.
He is working with Montana’s Gov. Schweitzer on the potential new energy source.
“We’re sharing everything we can,” Manchin said. “We’re working very well together.”
In Virginia, Boucher said he is working with coal companies about the possibility of building a CTL plant in the Southwest region, which would primarily produce liquid fuels for internal use within the coal industry.
Globally, the concept has taken off as well.
China is planning a $6 billion investment in new liquefaction plants, with an estimated annual production of 440 million barrels of liquid fuel, according to the National Mining Association.
And, in a similar vein, Nigeria and Qater are developing gas-to-liquid plants, Scientific American reported in May. The Qater plant is being called the world’s largest and most advanced such facility of its kind.
Motivation and money
Bipartisan efforts are now underway in Congress to assist those striving to make CTL plants a reality.
Last month, Boucher introduced a bill with John Shimkus, R-Illinois, to extend the alternative fuels tax credit until 2020.
The credit equals would help make fuels produced from gasoline economically viably even if the price of oil drops to the level some Wall Street analysts predict, Boucher said.
Sen. Jim Bunning, R-Ky., has also introduced the Coal-to-Liquid Fuel Promotion Act of 2006, which would create tax incentives for CTL technology and plants.
Paralleling the nation’s need for gasoline is a military interest in fuels produced by the Fischer-Tropsch process, Clemente said.
“They only freeze at extreme temperatures,” he said, describing fuels made from coal. “They also have a shelf life of eight years.”
Using a common analogy, Clemente said any individual who has attempted to start a lawnmower that has set idle all winter understands the value associated with a long shelf life.
The military wants a “universal fuel,” he said. “They want a fuel they can use whether they’re in Iraq, Afghanistan or Russia, which they don’t have now.”
Fuel produced from coal would solve many problems, Clemente said. And, now that oil is more expensive, “they’ve taken a lot more interest in developing CTL plants.”
Another factor in the movement toward CTL facilities is the possibility of independence from foreign oil.
“The answer to the war on terror is to eliminate our reliance on oil from the troubled Persian Gulf region,” Boucher said.
As incoming chairman of the Southern States Energy Board, a coalition of 16 southern states and two territories that promotes quality of life in the South through innovations in energy and environment policies, Manchin has called on states to make it a goal to reduce energy consumption by 10 percent.
Pat Esposito, Manchin’s energy advisor, questioned whether a monetary value could even be assigned to freeing the country from its dependence on oil.
“Even if it’s more expensive to have” coal-to-liquid plants, “isn’t that better than to have dependence on foreign products?” Esposito asked.
“We’ve made ourselves energy dependent,” Clemente said.
With oil, “we have a tremendous amount of money outflowing to people who are our enemies,” he said, while coal is “the most secure fuel you can have.”
There are more than 250 billion tons of recoverable coal from U.S. reserves, which is equivalent to an estimated 800 billion barrels of oil, according the National Mining Association.
Saudi Arabia has proven oil reserves of 260 billion barrels, the Mining Association reports.
The hurdle to overcome is the price tag on the plants, which can run in the billions, Esposito said.
“We have to develop a business case that shows the private sector investors the plants can be viable from an economic standpoint,” he said.
However, cost may be subjective, he said, discussing the difficulty in assigning a monetary figure to some programs.
Esposito used President Kennedy’s mission to the moon as an example, pointing out, “Sending someone to the moon, economically, didn’t make sense.”
— Contact Samantha Perry at firstname.lastname@example.org
In tomorrow’s Daily Telegraph: Optimism soars on the possibility of coal-to-liquid plants in the region’s coalfields.
Region poised to sit at forefront of fuel revolution
“We still have the coal. We’ve used everybody’s else’s oil.”
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