Peabody teams with Rentech on coal-to-fuel projects

Peabody teams with Rentech on coal-to-fuel projects

Peabody Energy and Rentech Inc. said Tuesday they agreed to evaluate sites in the Midwest and Montana for projects that would transform coal into diesel and jet fuel.

Peabody spokesman Vic Svec told the St. Louis Business Journal that the coals-to-liquids projects would be sited where the company has large reserves, specifically Montana and the Illinois basin, which is comprised of western Kentucky, southern Indiana and southern Illinois. Peabody has about 4.5 billion tons of coal reserves in the Illinois basin and 160 million tons of coal reserves in Montana, according to Svec.

The two projects would be designed using Rentech’s proprietary Fischer-Tropsch coal-to-liquids process, an emerging technology in the coal industry. The technology produces ultra low sulfur fuels.

The plants could range in size from producing 10,000 barrels to 30,000 barrels of fuel per day, which annually would use 2 million to 3 million tons of coal to 6 million to 9 million tons of coal, respectively, based on the quality of coal. According to a Peabody statement, with more than 9.8 billion tons of reserves, Peabody has dozens of domestic sites it is evaluating for conversion projects.

Peabody President and Chief Executive Gregory Boyce said in a statement, “We’re seeing an overwhelming need for coal-to-liquids developments in the United States.”

Peabody’s statement cited U.S. Energy Information Administration projections that global energy consumption will increase by more than 70 percent by 2030, and the United States will import 62 percent of its oil.

Denver-based Rentech (Amex: RTK ) is a developer of Fischer-Tropsch coal- to-liquids and gas-to-liquids technologies.

St. Louis-based Peabody Energy (NYSE: BTU ) is one of the world’s largest coal producers.

Published July 18, 2006 by the St. Louis Business Journal

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