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Home:Finance & Business
Sasol, Shell may license first coal-to-diesel project in US
Published: Thursday, 29 September, 2005, 11:57 AM Doha Time
NEW YORK: Sasol Ltd, the world’s biggest maker of motor fuel from coal, and Royal Dutch Shell Plc are in talks to provide technology for the first US plant that will produce diesel from waste coal.
The plant will be in Gilberton, Pennsylvania, and will have capacity to produce 5,000bpd, John W Rich Jr, president of project developer WMPI Pty LLC, said this week in an interview. He said Eastman Chemical Co, which makes plastics from coal, may operate the plant, and Sasol and Shell may get a portion of sales by licensing their technology.
Loan guarantees in the US energy bill signed into law last month and soaring fuel prices spurred the project, Rich said.
Pennsylvania Governor Edward Rendell plans to announce today an agreement for the state and its trucking association to buy 40% of the plant’s output. WMPI is asking $1.30 a gallon, less than half of current retail prices for diesel.
“It’s a fantastic price,’’ Rendell said in a September 20 telephone interview. “It’s doable.’’
The governor also is urging the US Defense Department to sign a supply contract, arguing that promoting a new domestic fuel source improves national security. The state, home of about 8% of US coal deposits, has gotten inquiries from others who want to convert coal to motor fuel, he said.
Unlike an earlier synthetic fuel programme now used by companies that process coal waste to be used for power generation, WMPI won’t depend on federal tax credits for profit, Rich said.
He said won a state tax credit and is negotiating federal loan guarantees.
Private financing will fund $465mn of the $612mn project cost, Rich said.
Rich, who is pitching similar projects in Indiana, Colorado and Wyoming, said he’s trying to negotiate a 10-year supply contract with Pennsylvania that would allow prices to rise as production costs increase.
Sasol produces 160,000bpd at the world’s only commercial coal-to-liquids refinery, in Secunda, South Africa. The 50-year-old plant provides 28% of South Africa’s supplies of such fuels as diesel, gasoline and kerosene, Sasol said in an August 24 statement.
The Hague-based Shell, Europe’s second-largest oil company, is in talks to license to WMPI technology for the first part of the conversion process, cooking coal into a gas that can be scrubbed of sulphur and other pollutants.
Paul Hamilton, president of the Shell Global Solutions US technology unit, said the company has licenced 14 gasifiers in China. – Bloomberg