Coal-to-liquid fuel needs kickstart

A coal mining executive said on Tuesday it might take a terrorist attack or other crisis to provide the impetus for the United States to develop and invest more in technology to produce liquid fuel from coal.
Another industry executive quoted Democratic presidential candidates Hillary Clinton and Barack Obama as supporting technology to wean the country from foreign oil by using America's vast coal reserves.
The comments, at a coal industry conference, came after an amendment backing coal-to-liquid fuel (CTL) was excluded from an energy bill approved by the US Senate last week.
"I think America will go that route eventually, but I think it's probably going to require a crisis of some sort," said Peter Lilly, president of Consol Energy's coal group. "A crisis could come in any form," he said in response to a question on whether CTL had suffered a setback by not being included in the bill.
"Obviously, some major terrorism act, maybe something to do with Iran and its nuclear capability," he said at McCloskey's Coal USA conference. "At some point, one of these crises will occur, and if nothing else, there will be higher oil prices. I don't think we'll get it (CTL) until there's a crisis."
Appearing on the same platform, Arch Coal Inc Chief Executive Officer Steven Leer said CTL's omission from the energy bill did not spell the end for the technology, which has been criticised by environmental groups for still pumping greenhouse gases into the atmosphere.
"There will be several bites at the apple on this...," said Leer. "Was it a setback? I don't think I'd classify it as a setback other than it just didn't advance. "Clearly, it's still on the agenda, still clearly part of the discussion," he said during a question-and-answer period.
During his presentation, Leer noted US House of Representatives Speaker Nancy Pelosi has called for more investment in carbon-capture research, to make use of the abundant US coal reserves more environmentally friendly.
He quoted Clinton as saying, "The Strategic Energy Fund would provide $3.5 billion in incentives and grants to speed the development of more clean coal plants across the country."
He quoted Obama as saying clean coal technology "...will allow us to burn more coal, our country's most abundant fossil fuel." Earlier this month, Consol's chief financial officer, William Lyons, called on the federal government to step in and back development of CTL, saying this would encourage coal producers to spend the billions of dollars needed to build CTL plants.
"There is no doubt that coal-to-liquids and coal gasification works," he said. But he estimated a CTL plant would cost $3 billion to $5 billion - too much for a company to invest without government guarantees that the technology would be used.
To make CTL feasible, Consol believes oil would have to be selling for $55 a barrel or more. It was trading at around $68 in New York on Tuesday. Fuel using CTL, which was originally developed in Nazi Germany, has been used by the US Air Force in recent test flights of aircraft.