Developer Unveils New Coal-to-Gas Refinery for W.Va.

Fri December 19, 2008 - Northeast Edition
Tim Huber



ROANOKE, W.Va. (AP) A New York electric power plant developer announced plans to build $3 billion coal-to-liquids plant capable of refining an estimated 6.5 million barrels of gasoline annually in West Virginia.

TransGas Development Systems hopes to obtain a state air quality permit so it can begin construction by 2010 and start operations by 2013. The company is proposing to build the plant on an 800-acre (324 ha) site in the state’s southern coalfields leased from the Mingo County Development Authority.

While the project was unveiled amid much fanfare at Gov. Joe Manchin’s energy conference at Stonewall Resort, the governor himself conceded it’s probably a longshot. Among other things, TransGas proposes to raise all the money for the plant with an initial public stock offering.

“That’s a stretch,’’ Manchin said of a $3 billion stock offering given the world economic crisis. “God bless him. Maybe he knows something I don’t know.’’

TransGas President Adam Victor said he believes he can obtain the financing for the plant, which would use approximately 300 million tons of coal annually and employ about 200 people. The project would create 3,000 union jobs during construction.

While the plant would be economically viable with per-barrel oil prices in the $40s, some investors share Victor’s belief that oil prices that have plummeted this fall will rebound higher than the triple-digit prices seen last summer, he said.

“We think it’s going to shoot way past where it was,’’ he said.

U.S. Sen. Jim Bunning, R-Ky., said the location on the proposed plant borders Pike and Martin counties in Kentucky.

“Although not in Kentucky, the plant will be a jobs creator for the entire region,’’ he said.

TransGas, however, brings a mixed track record with power projects.

It owns one gas-fired electric plant in New York, but has been unsuccessful with efforts to build plants in Brooklyn, N.Y., and near Syracuse.

Victor blamed a lack of support from political leaders and a not-in-my-backyard attitude from local residents for those projects.

Last year the company proposed a $2 billion coal-to-gas plant near the New York community of Scriba. Town Superintendent Ken Burdick said local officials are still waiting for TransGas to file site plans and hold requested town hall-style meetings to discuss the proposal.

“It’s all in their ball park,’’ he said.

The company has not filed any applications for air quality permits with New York for the Scriba project, said Reggie Parker, with the air division office of the New York Department of Environmental Conservation.

TransGas has filed an application for an air quality permit with the West Virginia Department of Environmental Protection, said DEP spokeswoman Kathy Cosco.

Manchin said TransGas’ New York problems didn’t come up when the governor met with Victor and referred the developer to the Mingo County Economic Development Authority for additional talks.

“I didn’t get into all that with him,’’ said Manchin, who plans to contact New York Mayor Michael Bloomberg about TransGas’ stalled Brooklyn electric plant.

Although the state isn’t investing in the plant, Manchin said he might consider a long-term fuel contract if it’s built.

As proposed, sulfur, mercury and other pollutants would be removed from the coal, allowing the plant to produce high-octane gasoline more cleanly than crude oil refineries, Victor said. The plant also would generate much of its own electricity.

The plant’s design calls for it to capture an estimated 1.2 million tons of carbon dioxide — the main greenhouse gas linked to global warming — produced annually and store it if necessary, Victor said.

“The only people that would oppose it are people who are philosophically against coal,’’ he said. “This is a chemical plant more than a combustion plant. We end up with a scrubbed, clean syngas.’’

Manchin said he’s more confident in the ability of Pittsburgh-based Consol Energy to build a coal-to-liquids plant in the Northern Panhandle. Consol had to pull the plug at least temporarily on that project in October after its technology partner pulled out.

The company remains committed to building a plant to make chemicals or perhaps gasoline from waste coal in northern West Virginia, Vice President Paul Spurgeon said during the conference.

“We’re redoing our feasibility study. That should be done by the end of the year, maybe stretch into January a little bit,’’ Spurgeon said. “We’re very confident that we can find another partner.’’

Consol may switch from making methanol and gasoline to producing ammonia and urea for fertilizer, Spurgeon said.