Articals of interest to the coal industry.

Monday, February 26, 2007

Rep. Boucher wants to see coal to liqiud fuel

Virginia lawmaker wants U.S. to start using liquid fuel from coal

SUE LINDSEYAssociated Press

ROANOKE, Va. - Rep. Rick Boucher believes liquid fuel derived from coal can help the U.S. break its dependence on foreign oil, and as the new chairman of a House Energy subcommittee he hopes to jump-start the process.
Boucher is renewing legislation he first introduced last year that would provide price guarantees to investors to encourage construction of coal-to-liquids conversion plants.
"The greatest challenge that we face in terms of a national energy policy is defining a strategy to move the country away from petroleum as the primary fuel," the southwest Virginia Democrat said in a telephone interview.
An energy policy that reduces dependence on oil is necessary, he said, "both for economic and national security reasons."
Other nations, such as China and South Africa, use motor fuel derived from coal, but so far there are no coal-to-liquids plants in the U.S. More than a dozen are in the planning stages, according to information provided by Michael Karmis, director of the Virginia Center for Coal and Energy Research at Virginia Tech.
Boucher, whose 9th District includes Virginia's coal region, noted that the nation has the largest coal reserves of any in the world.
The technology to convert coal into diesel fuel or gasoline has existed for decades. The Germans used liquefied coal during World War II after the Allies bombed their oil refineries.
Nearly 30 percent of South Africa's fuel today is extracted from coal, but the conversion process is expensive. It can cost up $1 billion to get a coal-to-liquids plant up and running, Karmis said.
Under Boucher's legislation, the price guarantee for coal-to-liquids operations would be tied to the price of oil. Should the oil price fall below a certain level, probably about $40 a barrel, the government would make a payment to the conversion operations. If the price of oil rose above a certain level, probably $75 a barrel, the plant operators would pay the government.
It's likely that neither the government nor coal-to-liquids operations would make payments, Boucher said, but he believes the measure is needed to instill confidence in investors.
"You need some kind of cushioning," Karmis said, "to try to take some of the risk away."
A study last year by the Southern States Energy Board called for coal-to-liquids to supply the greatest share - 29 percent - of alternative fuels needed to erase the nation's dependence on foreign oil by 2030. Alternative fuels would have to supply 60 percent of the fuel that now comes from imported oil.
A greater amount of fuel could be produced from the high-quality coal mined in Virginia, West Virginia and Kentucky than the mineral found in other parts of the country, Karmis said. So far, the only conversion plant planned in the region is in Mingo County, W.Va.

© 2007 AP Wire and wire service sources. All Rights Reserved.

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