Plant Expected to Produce Gasoline and Methanol
PITTSBURGH and
HOUSTON, July 28 /PRNewswire-FirstCall/ -- CONSOL
Energy Inc. ("CONSOL") (NYSE: CNX), the nation's
largest producer of bituminous coal, and Synthesis
Energy Systems Inc. ("SES") (Nasdaq: SYMX), a global
industrial gasification company, intend to develop
through a joint venture their first U.S. coal
gasification and liquefaction plant to be located in
West Virginia. CONSOL (through its subsidiary Terra
Firma Company) and SES have formed Northern
Appalachia Fuel LLC ("NAF"), as the company through
which the development will occur.
The Board of Directors
of CONSOL and SES have authorized funds for
development activities, including the front-end
engineering design ("FEED") package. Each member
company will contribute equally to this phase of the
project. NAF is finalizing agreements with Aker
Solutions US Inc., a subsidiary of Aker Solutions
ASA (OSL: AKSO), to perform the FEED. The FEED will
include a carbon management strategy that will focus
on carbon sequestration in a deep saline aquifer. At
a later date, NAF will file for environmental and
other permits necessary for the construction of the
plant.
CONSOL and SES propose
to site the plant near Benwood, West Virginia, south of Wheeling. It is expected that the plant will be
a 'mine mouth' facility with feedstock supplied
directly from CONSOL's nearby Shoemaker complex. The
feedstock will be a blend of run of mine coal and
coal otherwise not recovered in the normal
preparation process. Coal will be converted to
syngas utilizing SES's proprietary U-GAS(R)
technology. It is expected that the syngas will be
used to produce approximately 720,000 metric tons
per year of methanol that can be used as a feedstock
for the chemical industry. It is also expected that
the project will be capable of converting methanol
production to approximately 100 million gallons/year
of 87 octane gasoline. NAF is currently negotiating
with ExxonMobil Research and Engineering to license
their proprietary methanol-to-gasoline technology.
As envisioned, the project will include a river
terminal facility, where products will be stored in
tanks for off-loading into barges for ultimate
delivery.
CONSOL and SES also
have signed a memorandum of understanding ("MOU")
with the State of West Virginia and its partner, the
Regional Economic Development Partnership ("RED"), a
private West Virginia non-profit development
corporation focused on generating business
opportunities through job creation and economic
stimulus in the Ohio, Marshall and Wetzel counties
of West Virginia. Under the provisions of the MOU,
the State and RED will provide financing and tax
incentives to the project over a 10-year period.
"This project has the
potential to transform
West Virginia from a major
coal producing state to a national energy center as
well," said J. Brett Harvey, CONSOL Energy President
and Chief Executive Officer. "By converting some of
our region's abundant, high-Btu coal into gases and
liquids, not only will we create economic value for
the state, but we will help
West Virginia become the
linchpin of American energy security."
Harvey
thanked both the State of
West Virginia and the RED
for their assistance and support of the project. "In
every conversation I have had with Governor Manchin
in recent years, we have talked about ways to
leverage West Virginia's coal position into a
national energy leadership position -- a position in
which jobs, economic growth, and the enhancement of
American energy security flow from the harnessing of
West Virginia's resources and the 'can-do' attitude
of its people," Harvey said. "His vision is sound.
With West
Virginia's help, our success
with this plant will make the vision a reality."
"We are proud of the
progress we have made to-date toward the development
of the first industrial size U-GAS(R) gasification
plant in the United States and we appreciate the
support that the State of West Virginia and the RED
have demonstrated for this initiative," said Tim
Vail, President and Chief Executive Officer of SES.
"Together with our partner, CONSOL Energy, SES will
be taking a first step toward securing energy
independence in the U.S. as we
convert raw and residual coal from CONSOL's
Shoemaker mine and plant into gasoline in an
environmentally responsible and cost efficient
manner," Vail added.
"It's clearer than
ever that one of the biggest issues our state and
country faces is meeting our energy needs," said
West Virginia Gov. Joe Manchin. "Technological
solutions like this plant at Benwood will lead to
more environmentally friendly ways to use our coal
and hold the key to America's energy security. I am
committed to making
West Virginia the leader in
clean coal technology and the construction of clean
coal power and fuel liquefaction plants. We have the
resources and expertise to realize our goal."
Both of West Virginia's United States Senators voiced their
support as well. "America cannot meet its energy
needs," said Senator Robert C. Byrd. "West Virginia has the coal, the brains, and
the determination to meet that challenge and
demonstrate to the world that we intend to be part
of the solution."
Senator Jay
Rockefeller also added his support. "We are in the
midst of a serious energy crisis in
America. Today, with this project and
others in the works,
West Virginia is announcing
to the world that we're not waiting around anymore,"
Rockefeller said. "We're getting started with a CTL
plant that will create jobs, meet modern
environmental standards, and develop our most
abundant domestic resource - coal. This plant will
help put our state on the path to energy security
and greater economic growth."
About CONSOL Energy:
CONSOL Energy Inc., a
high-Btu bituminous coal and coal bed methane
company, is a member of the Standard & Poor's 500
equity index and has annual revenues of $3.8
billion. It has 17 bituminous coal mining complexes
in six states and reports proven and probable coal
reserves of 4.5 billion tons. In addition, the
company is a majority shareholder in one of the
largest U.S. producers
of coalbed methane gas, CNX Gas Corporation. CONSOL
Energy was named one of
America's most admired companies in
2005 by Fortune magazine. It received the U.S.
Department of the Interior's Office of Surface
Mining National Award for Excellence in Surface
Mining for the company's innovative reclamation
practices in 2002, 2003 and 2004. In 2002, the
company received a U.S. Environmental Protection
Agency Climate Protection Award.
About Synthesis Energy
Systems, Inc.:
SES is an energy and
technology company that builds, owns and operates
coal gasification plants that utilize its
proprietary U-GAS(R) fluidized bed gasification
technology to convert low rank coal and coal wastes
into higher value energy products, such as
transportation fuel and ammonia. The U-GAS(R)
technology, which SES licenses from the Gas
Technology Institute, gasifies coal without many of
the harmful emissions normally associated with coal
combustion plants. The primary advantages of
U-GAS(R) relative to other gasification technologies
are (a) greater fuel flexibility provided by our
ability to use all ranks of coal (including low
rank, high ash and high moisture coals, which are
significantly cheaper than higher grade coals), many
coal waste products and biomass feed stocks; and (b)
our ability to operate efficiently on a smaller
scale, which enables us to construct plants more
quickly, at a lower capital cost, and, in many
cases, in closer proximity to coal sources. SES
currently has offices in
Houston, Texas
and
Shanghai,
China.
For more information
on SES, visit www.synthesisenergy.com or call (713)
579- 0600.
Forward Looking
Statement - CONSOL Energy
Various statements in
this document, including those that express a
belief, expectation, or intention, as well as those
that are not statements of historical fact, are
forward-looking statements (as defined in Section
21E of the Securities Exchange Act of 1934 and the
Private Securities Litigation Reform Act of 1995).
The forward-looking statements may include
projections and estimates concerning the timing and
success of specific projects, our future production,
revenues, income and capital spending. When we use
the words "believe," "intend," "expect," "may,"
"should," "anticipate," "could," "would," "will,"
"estimate," "plan," "predict," "project," or their
negatives, or other similar expressions, the
statements which include those words are usually
forward-looking statements. When we describe
strategy that involves risks or uncertainties, we
are making forward-looking statements. The forward-
looking statements in this document speak only as of
the date of this document; we disclaim any
obligation to update these statements unless
required by securities law, and we caution you not
to rely on them unduly. We have based these
forward-looking statements on our current
expectations and assumptions about future events.
While our management considers these expectations
and assumptions to be reasonable, they are
inherently subject to significant business,
economic, competitive, regulatory and other risks,
contingencies and uncertainties, most of which are
difficult to predict and many of which are beyond
our control. These risks, uncertainties and
contingencies include, but are not limited to:
reliance on customers extending existing contracts
or entering into new long-term contracts for coal;
reliance on major customers; our inability to
collect payments from customers if their
creditworthiness declines; the disruption of rail,
barge and other systems that deliver our coal, or
pipeline systems which deliver our gas; a loss of
our competitive position because of the competitive
nature of the coal industry and the gas industry, or
a loss of our competitive position because of
overcapacity in these industries impairing our
profitability; our inability to hire qualified
people to meet replacement or expansion needs; coal
users switching to other fuels in order to comply
with various environmental standards related to coal
combustion; the inability to produce a sufficient
amount of coal to fulfill our customers'
requirements which could result in our customers
initiating claims against us; the risks inherent in
coal mining being subject to unexpected disruptions,
including geological conditions, equipment failure,
timing of completion of significant construction or
repair of equipment, fires, accidents and weather
conditions which could cause our results to
deteriorate; increases in the price of commodities
used in our mining operations and could impact our
cost of production; obtaining governmental permits
and approvals for our operations; the effects of
government regulation; the effects of stringent
federal and state safety regulations; the effects of
mine closing, reclamation and certain other
liabilities; uncertainties in estimating our
economically recoverable coal and gas reserves; we
do not insure against all potential operating risks;
the outcomes of various legal proceedings, which
proceedings are more fully described in our reports
filed under the Securities Exchange Act of 1934;
increased exposure to employee related long-term
liabilities; our participation in multi-employer
pension plans may expose us to obligations beyond
the obligation to our employees; lump sum payments
made to retiring salaried employees pursuant to our
defined benefit pension plan; our ability to comply
with laws or regulations requiring that we obtain
surety bonds for workers' compensation and other
statutory requirements; acquisitions that we
recently have made or may make in the future
including the accuracy of our assessment of the
acquired businesses and their risks, achieving any
anticipated synergies, integrating the acquisitions
and unanticipated changes that could affect
assumptions we may have made; the anti-takeover
effects of our rights plan could prevent a change of
control; risks in exploring for and producing gas;
new gas development projects and exploration for gas
in areas where we have little or no proven gas
reserves; the availability of field services,
equipment and personnel for drilling and producing
gas; replacing our natural gas reserves which if not
replaced will cause our gas reserves and gas
production to decline; costs associated with
perfecting title for gas rights in some of our
properties; we need to use unproven technologies to
extract coalbed methane on some of our properties;
location of a vast majority of our gas producing
properties in three counties in southwestern
Virginia, making us vulnerable to risks associated
with having our gas production concentrated in one
area; other persons could have ownership rights in
our advanced gas extraction techniques which could
force us to cease using those techniques or pay
royalties; the coalbeds from which we produce
methane gas frequently contain water that may hamper
production; and other factors discussed in our 2007
Form 10-K under "Risk Factors," as updated by any
subsequent Form 10-Qs, which are on file at the
Securities and Exchange Commission.
Forward Looking
Statements - SES
This press release
includes "forward-looking statements" within the
meaning of Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. All statements,
other than statements of historical facts, included
in this press release that address activities,
events or developments that SES expects or
anticipates will or may occur in the future,
including such things as future capital expenditures
(including the amount and nature thereof), business
strategy and measures to implement strategy,
competitive strength, goals, expansions and growth
of the Company's business and operations, plans
expansion and growth of the project, quantity of
methanol production, references to future success,
reference to intentions as to future matters and
other such matters are forward-looking statements.
These statements are based on certain assumptions
and analyses made by SES in light of its experience
and its perception of historical trends, current
conditions and expected future developments as well
as other factors it believes are appropriate in the
circumstances. Forward- looking statements are
subject to certain risks, trends and uncertainties
that could cause actual results to differ materially
from those projected. Among those risks, trends and
uncertainties are the project's early stage of
development, estimates of resources needed to fund
the project, successful completion of the FEED,
availability of financing and tax incentives and the
ability to successfully license methanol-to-gasoline
technology. Although SES believes that in making
such forward-looking statements its expectations are
based upon reasonable assumptions, such statements
may be influenced by factors that could cause actual
outcomes and results to be materially different from
those projected. SES cannot assure you that the
assumptions upon which these statements are based
will prove to have been correct. SES has no
intention, and disclaim any obligation, to update or
revise any forward- looking statements, whether as a
result of new information, future results or
otherwise.
SOURCE Synthesis Energy Systems Inc.
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