Is Coal America's Diamond In The Rough?

fuel, coal, hydrogen, gasoline, dieselFUTURE FUELSIs Coal America's Diamond
In The Rough?

CHICAGO (May 5, 2006) - Where coal is concerned, America has control of its destiny.

According to the National Coal Council (NCC), coal is an abundant, viable and environmentally friendly partner in America's road for energy independence. Both the NCC and the U.S. Department of Energy (DOE) accept that there is an abundant domestic supply capable of meeting needs for the next 200 years, at current levels of demand.

The case for coal DOE states that coal is one of the true measures of the energy strength of the United States. One quarter of the world's coal reserves are found within the United States, and DOE notes that the energy content of the America's coal resources exceeds that of all the world's known recoverable oil. Coal is also the workhorse of the nation's electric power industry, supplying more than half the electricity consumed by Americans. Given its abundance domestically, in these days of high oil prices and the expected long-term increases as world oil supply is depleted, harnessing the potential of coal would seem to be worth investigating.Coal synfuel, for example, is a mixture of carbon monoxide and hydrogen produced from coal using the Fischer-Tropsch process. The process is a catalyzed chemical reaction, in which carbon monoxide and hydrogen are converted into liquid hydrocarbons of various forms.

Typical catalysts used are based on iron and cobalt. One major problem with the process is greenhouse gas emissions. But, say proponents, modern technology - in particular carbon sequestration - can manage the problem successfully.

The resulting products can be used as an industrial fuel, replacing petroleum-based fuels. In addition, should oil prices rise high enough in the short-term future, as they have recently, liquified coal can be reformed into lubrication oil, gasoline, low-sulfur diesel or kerosene at a competitive price. Should oil prices rise over the long term, as many expect, the competitive advantage shifts to synthetic products.

Following a recent request from DOE Secretary Samuel Bodman, the NCC conducted and has just released a study that outlined a number of opportunities for coal to meet the nation's energy and transportation needs. Chaired by Peabody Energy CEO Gregory Boyce - whose company is not only the largest coal producer in the world, but which supplies 10 percent of the nation's current electricity - the study recommended that coal production be increased and put to the following energy and transportation purposes:

* Build 33 more coal liquefaction plants to produce 2.6 million barrels of coal liquids daily. These liquids are also known as synthetic fuel or "synfuel." These coal synfuels would be capable of meeting 10 percent of current U.S. petroleum demand.

* Use coal for ethanol production, rather than natural gas, diesel fuel and electricity. Using coal would reduce the cost of producing ethanol domestically, as well as displace oil and natural gas by significant amounts.

* Develop eight coal-to-hydrogen gasification plants to satisfy at least 10 percent of the nation's transportation needs with FreedomCAR efficiencies.

* Employ coal to produce natural gas. Conventional natural gas supply is in decline, and the study concluded that coal could be used to displace about 15 percent of U.S. annual natural gas consumption.

* Construct coal-to-clean electricity plants by 2025 to produce at least 100 gigawatts of electricity. This would enable coal to provide for the more than 60 percent anticipated increase in the demand for electricity.

Managing pollution control and supply

Clean coal plant.
(Graphic: U.S. Department of Energy)

According to DOE, past concerns about coal-based pollution have been overcome, as the industry and government have found ways to reduce sulfur, nitrogen oxides and other impurities such as mercury from coal. These include more effective ways of cleaning coal before it leaves the mine, use of "scrubbers" in power plants to clean sulfur from the smoke before it leaves their smokestacks, "clean coal" technologies that either remove sulfur and nitrogen oxides from coal, or converting coal to a gas or liquid fuel. The industry is regulated and monitored, like others, by the U.S. Environmental Protection Agency (EPA). Examples of the clean coal pollution technology can be found on the DOE Web site.

DOE's estimated reserves support the NCC's assertion. The Agency employs a number of measures used for estimating coal reserves, including:

2004 U.S. Estimated Coal Reserves
(Graphic: U.S. Department of Energy)

* Recoverable Reserves At Active Mines: These are coal at active mines that can be mined, using present-day mining technology.

* Estimated Recoverable Reserves: Recoverable Reserves At Active Mines and other proven reserves that could be recovered at active or new mines, by standard mining technologies and assuming a market with an adequate selling price at the time of mining.

* Demonstrated Reserve Base-I: Includes Estimated Recoverable and those proven reserves expected to be recoverable as technology improves within a reasonable timeframe.

* Identified Reserves: This encompasses the Demonstrated Reserve Base, as well as known reserves that require longer--term, improved technology to extract.

* Total Reserves: Consists of all Identified Reserves plus projected reserves that are based on an estimate of undiscovered reserves.

The NCC maintains that there is enough proven coal to supply all of these projects for more than 100 years. DOE uses "Demonstrated Coal Reserves" as its most common estimate, for it assumes proven reserves can be mined over time and improved mining technologies. In 2004, that estimate was 495 billion tons of coal.

But even using the more conservative "Estimated Recoverable Reserves," value of 267 billion tons, the NCC maintains there is more than an adequate supply, though not inexhaustible, to use coal to sustain all of the NCC study's recommendations presented for consideration by DOE, for the foreseeable future, with an ample surplus to spare.

The transition from an oil-based to a hydrogen-based economy is reinforced by American coal, concludes the study. Displacing foreign oil with a domestic supply of coal-based fuels and electricity relieves some of the dependency, without compromising national security or supply concerns. In addition, coal can help provide the time and peace of mind while the infrastructure for a hydrogen-based economy is developed and built, as well as allowing time for other renewable energy sources, such as wind, solar and wave (ocean), are ramped up.

(Source: NCC, DOE)