Coal-to-Liquids Quietly Becoming a Reality in U.S.

CHARLESTON, W.Va. -- While the energy industry has been focused on alternative fuels and new sources of oil, the coal industry is going forward with plants to turn coal into liquid fuels such as diesel and gasoline.

Supporters say at least some plans are a certainty, even if Congress doesn't approve incentives sought by coal-to-liquids supporters. But they argue some form of subsidy is vital to build enough plants to dent the nation's reliance on foreign oil.

"You're going to have a coal-to-liquids industry in the United States," said John Ward, vice president for marketing and government relations for Headwaters Inc. "The question is how fast will it happen."

The National Mining Association's Coal-To-Liquids Coalition is hosting a conference this week in Beckley, W.Va. The event's agenda includes speeches by Rep. John Murtha, D-Pa., Sen. Jay Rockefeller, D-W.Va., and other politicians and updates on various coal-to-liquids projects by representatives of the U.S. Air Force and Rentech Inc., which is working to develop proposed plants around the country.

South Jordan, Utah-based Headwaters is working on a coal-to-gasoline plant proposed for North Dakota and researching the feasibility of coal-to-liquid plants for Pittsburgh-based Consol Energy.

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While most plants are years away from construction, Los Angeles-based Rentech hopes to convert a natural gas-fed fertilizer plant in East Dubuque, Ill., by the end of 2009 or 2010. Production would start low -- 920 tons of fertilizer and 1,800 barrels of diesel a day.

That's at once a drop in the bucket compared with the nation's energy use and, to the industry's way of thinking, a big step in the right direction. Rentech Chief Executive Hunt Ramsbottom and others figure at least one of several larger proposed plants will be built.

The coal industry and coal-state politicians in particular say the nation can't afford to patiently wait for small developers to build plants on their own or in conjunction with coal companies.

But so far the notion hasn't gotten very far in Washington.

"There's not a concerted effort to be truly energy independent," said West Virginia Gov. Joe Manchin. "How are you going to get us from A to B and still be a world superpower?"

Supporters argue using domestic coal would reduce dependence on imported oil from unstable parts of the world.

"It has the potential to be a meaningful supply of fuel that would take the price off of gasoline and diesel fuel and would take the dependence down on the Mideast," said Don Blankenship, chief executive of Massey Energy Co., the nation's fourth-largest coal producer by revenue.

Environmentalists contend conservation and energy efficiency would do the same thing. And they argue coal to liquids plants double the greenhouse gases of oil refining, consume of vast quantities of water and increase coal production.

"Why in heaven's name would we be subsidizing anything that's giving double the greenhouse gases?" said Vivian Stockman of the Ohio Valley Environmental Coalition. "It's basically a way to prop up the coal industry and give them more subsidies and hold people economic hostage."

Ramsbottom and others contend they'll be able to reduce overall carbon dioxide emissions by capturing the gas and selling it to oil producers to extend the life of aging wells, among other things. If several plants get off the ground quickly, they can actually cut down carbon emissions, he said.

"It actually increases your pollution and decreases safety not to do coal to liquids," he said, explaining that oil producing countries "don't care anything about the environment. ... It's so backwards I don't really know how to describe it."

Source: Associated Press