US: Company mulls coal-to-diesel plant

A company has begun studying the feasibility of a plant that would convert coal into diesel fuel.

Rentech Inc. is investing $950,000 in the study of whether the plant could feasibly produce 10,000 barrels per day of low-sulfur diesel fuel using 3 million tons a year of Wyoming coal. The study is expected to be completed by this fall.

Both Rentech and Wyoming Business Council officials said it is too early to say where the plant could be built, although Campbell County produces 97 percent of Wyoming's coal.

"Under current conditions, with oil and gas at the levels they're at and probably remaining somewhere in the $25-$35 a barrel area, it makes it more economically feasible to do these kinds of projects, especially with the cost of Wyoming coal at the mine mouth," said Mark Koenig, Rentech's director of investor relations.

The plant would use the Fischer-Tropsch process, developed by German scientists in 1923, which converts coal-derived synthetic gas or natural gas into low-emission fuel.

The process has been used before by nations that have found themselves isolated from oil-exporting countries. South Africa used it during the Apartheid era, when the country was under an oil embargo.

The energy crisis of the 1970s prompted a series of gasification and synthetic fuel proposals in Campbell County. All of them ultimately failed. The largest, a proposed Hampshire Energy plant expected to produce 500,000 barrels a day of unleaded gasoline, was abandoned in December 1982, and the idea evaporated with low gas prices in the 1990s.

Proponents of the Rentech project say that, compared to past trends, higher gas prices are more likely to be the rule than the exception over the next several years. They point to soaring demand in China and India.

Meanwhile, federal regulations requiring a 97-percent reduction in highway diesel fuel sulfur emissions by 2006 has prompted California to incorporate the Fischer-Tropsch process into its projected transportation fuel use over the next two decades.

Henry Haynes, professor emeritus of chemical engineering at the University of Wyoming, said a reexamination of coal-to-liquid-fuel technology is overdue.

"It's becoming more difficult to find oil and certainly converting coal into liquid fuels is something that needs to be revived," he said. "I'm kind of excited about the prospect that these areas may be coming back."