US's First Coal-to-Gas Plant Could Be Online By 2013

America is at an energy crossroads, balancing growing demand for energy with the new reality of high prices, and that could mean renewed interest in the next generation of alternative energy options, even the controversial ones.

Next year, DKRW Advanced Fuels will start construction on America’s first-ever coal-to-gasoline plant in Wyoming. It will take about four years for the development process and the plant will go into operation in 2013.

The controversial idea has found new support as American households spend $2,000 more per year on energy than they did four years ago, and overseas demand continues to soar.

While encouraging for U.S. energy independence, it's environmental and economic impacts are significant. The process of creating coal-to-liquid (CTL) is a controversial one because environmentalists say it causes excessive greenhouse gases.

Bruce Nilles, national coal campaign director of the Sierra Club, said “it has huge consequences on the landscape and you release enormous amounts of carbon dioxide.”

However, Bob Kelly, Chairman of DKRW Advanced Fuels said today’s coal technology is cleaner than it’s ever been and it continues to improve. The cost of producing gasoline from this technology is very attractive right now considering the record-highs in oil prices. Kelly says the break-even pricing is $30 to $40 a barrel.

That's no small feat with crude expected to go as high as $170 a barrel this summer.

DKRW Advanced Fuels is currently private, but Kelly says it would be nice to get subsidies but that it’s not necessary for the bottom line.
“Let the market do the talking," Kelly said. "If we can’t, we can’t. If we can, we can.”

Nilles, meanwhile, does not expect these projects to go forward without federal subsidies.