ConocoPhillips Looks to Kentucky for Coal to Gas Plant

ConocoPhillips announced that it has chosen Kentucky as the focus of a feasibility study for a potential coal-to-natural gas facility. Peabody Energy, the world's largest coal company, has signed on as a partner in the venture to increase the supply of natural gas to the energy market.

The two companies hope to find a spot suitable for a "'mine mouth' gasification project" which could produce in total 1.5 trillion cubic feet of natural gas, with an estimated 190 million cubic feet daily. The cost of the facility is estimated at $3 billion and will bring 500 jobs to the area.

The facility will employ ConocoPhillips E-Gas method of burning coal in a cleaner way that also produces pure carbon dioxide in order to use in other industries. The carbon dioxide can also be used to pump into older reservoirs of oil, so that the gas drives the oil up out of the well, and in turn sequesters the carbon underground.

The feasibility study will continue into 2008, taking nearly a year to complete. The study will take environmental standards into account in the site and design of the facility. Midwest Geological Sequestration Consortium and Kentucky Geological Survey are working with ConocoPhillips and Peabody to develop the plans.

The Peabody President of Generation and Btu Conversion Rick Bowen said in the ConocoPhillips press release, "With natural gas demand continuing to grow, turning abundant U.S. coal into synthetic gas represents an exciting new market opportunity. We appreciate the effort by Kentucky's elected officials and regulatory bodies in pulling together the balanced legislation and follow on agreements to attract investments and help us with this important decision."

ConocoPhillips Senior Vice President Willie Chiang continued in the press release, "We are pleased to work with Peabody Energy to pursue the development of new energy supplies from Kentucky coal. Meeting tomorrow's demand for energy requires innovative ways to use existing resources that meet our needs today. Such efforts help strengthen energy security by increasing and diversifying supplies in an environmentally responsible manner."

Peabody Energy, aside from being the world's largest coal company, also boasts a strong environmental record. Peabody was recognized by the US Department of the Interior for its sustainability and reclamation practices last month. Peabody received the National Excellence in Surface Coal Mining Reclamation Award for its work rehabilitating its former Gibraltar Mine in Central City, Kentucky. Additionally, Peabody has reclaimed considerable areas that were former mines, planting more than 70 million trees.

For its part, ConocoPhillips has a strong record of conservation efforts in Alaska and Indonesia. A ConocoPhillips oil field in Alaska is considered a model for its low waste output and recycling program.

Sources: ConocoPhillips, Peabody Energy