Mining giant Consol Energy Inc. is placing an $800 million bet on turning West Virginia coal into gasoline and other products to compete with the oil industry.
Consol said Monday it plans to build a coal gasification plant capable of producing 720,000 metric tons of methanol for chemicals and 100 million gallons of 87-octane unleaded gasoline annually. Consol and development partner Synthesis Energy Systems hope to complete the project in Benwood, in Marshall County, by 2012.
Pittsburgh-based Consol sees the northern West Virginia plant as a way to cash in on soaring world demand and limited supply of petroleum products, spokesman Tom Hoffman said Monday.
"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," Hoffman said. "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."
West Virginia political leaders say they're thrilled to land the project, which would be the first of its type in the country. Synthesis has built one similar plant in China and is working on two others. Several coal-to-liquids projects are under way around the U.S., including one in Mingo County, and others in Mississippi, Wyoming and Ohio.
"It's clearer than ever that one of the biggest issues our state and country faces is meeting our energy needs," Democratic Gov. Joe Manchin said in a statement. "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."
The state and the Regional Economic Development Partnership in Ohio, Marshall and Wetzel counties, have agreed to providing financing and tax incentives over a 10-year period.
The Northern Appalachia Fuel plant shows West Virginia is a leader in global energy issues and modern clean-coal technology, Sen. Jay Rockefeller said.
"We are in the midst of a serious energy crisis," Rockefeller, a Democrat, said. "With this project and others in the works, West Virginia is announcing to the world that we're not waiting around anymore."
In a statement, Sen. Robert C. Byrd, D-W.Va., praised the project for its promise of energy security and economic growth. "America cannot meet its energy needs. West Virginia has the coal, the brains and the determination to meet that challenge and demonstrate to the world that we intend to be part of the solution."
Consol and Houston-based Synthesis said they'll contribute equally to the initial phase of the project. The plant would use mostly marginal coal that would be thrown away from Consol's Shoemaker Mine, also in Marshall County, to produce 720,000 metric tons of methanol annually for the chemical industry. Methanol also would be used to produce about 100 million gallons of 87-octane gasoline annually.
Consol operates mining complexes in West Virginia, Pennsylvania, Virginia, Utah, Kentucky and Ohio. Its stock rose $3.14, or 3.8 percent, to $85.64 in midday trading Monday.
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