Businessman confident plant will still receive loan

 

by KATHERINE E. WHITNEY
STAFF WRITER

02/07/2007

GILBERTON — He’s not giving up.

Despite President Bush’s proposed budget plan rescinding a $100 million, low-interest loan for the country’s first coal-to-oil plant, John W. Rich Jr. said he doesn’t believe the Mahanoy Township project will lose the money.

“I don’t think for a minute that it’s going to prevail,” said Rich, president of Waste Management & Processors Inc. “We’re confused ... We’re trying to get to the bottom of it.”

The federal loan, promised four years ago, was slated to assist the development of the facility that is expected to produce 1,000 construction jobs and 150 full-time positions.

WMPI’s proposed plant will be fueled by culm, the mounds of black-particle anthracite coal waste dotting the hills of northern Schuylkill County. The plant is expected to burn 1.7 million tons of coal waste per year, according to the Department of Energy’s environmental impact study.

The process will create a clear, zero-sulfur product called syngas to create diesel fuel, jet fuel and naphtha, a light, gasoline-like fraction of crude oil used as a fuel and a solvent.

“I really don’t believe we’ll lose the money,” Rich said. “But it certainly adds an element of confusion.”

Rich said the $800 million project has been in the works for nearly 13 years and could be completed within the year.

In 1999, the state offered WMPI $47 million in tax credits for the project. In 2000, Rich’s plan won a competitive $7.7 million cost-share investment from the U.S. Department of Energy. Then, in 2003, the federal government promised $100 million through its clean coal power initiative program.

Bush’s budget proposal will be reviewed by Congress over the next eight months until the federal budget is adopted, traditionally Oct. 1.

“It doesn’t make sense,” Rich said. “During his State of the Union address (Jan. 31), the President said he wanted the country to reduce its dependence on foreign oil ... it’s just inconsistent.

“We’ve been working with the airforce to produce jet fuel for the military. We’ve been working with the Department of Defense for five years,” Rich said. “What’s going on out there? The left hand pulls the rug out from under the right hand?”

“I’ve been on the phone all day trying to get an explanation for this,” said U.S. Rep. T. Timothy Holden, D-17. “To redirect the money without explanation is unbelievable ... We were all blindsided.”

Holden said he and U.S. Sens. Arlen Specter, R-Pa., and Robert P. Casey Jr., D-Pa., have been trying to make appointments with the administration to discuss the sudden change of heart.

In a press statement released Monday on the 2008 budget, Specter said: “I am opposed to the president’s proposal to rescind $100 million to fund the nation’s first coal-to-diesel plant in Schuylkill County, which is vital for exploring and developing our nation’s alternative energy sources. As a senior appropriator, I am sure the president’s budget will be thoroughly revised in accordance with the constitutional provision which gives Congress the authority to determine spending levels.”

A spokesman for Specter said the Department of Energy has the discretion to terminate the agreement at any point and the authority to stop negotiations. However, it doesn’t have the authority to decide what gets done with the money after it’s rescinded. The spokesman said these loan agreements are no guarantee of funding, and said Rich was operating in good faith.

Holden said the proposed project was already being praised as a means to break the country’s dependency on energy overseas and was touted as an environmentally friendly.

Although Rich said he doesn’t believe the loan will be rescinded in the long run, he said this unexpected news is not going to expedite the project. He said he didn’t know whether the project would continue without the money, but planned to fight for it.

“We haven’t relented and don’t intend to,” he said.