Coal idea tantalizing
Coal veteran's $312 million effort could help make U.S. energy independent

Tribune-Review
Sunday June 11, 2000

Pottsville native John W. Rich, Jr. grew up in the anthracite coal fields of Schulykill County, and as a teen acquired a keen interest in coal and World War II.

What is somewhat unusual is that it wasn't necessarily the political dynamics or resultant combat that piqued his curiosity, but instead his interest focused on how the Germans were able to convert coal into oil.

Today, Rich 47 and a third-generation anthracite coal operator, is proposing to build the nation's first plant to convert coal waste into a clean, diesel-like liquid fuel -- which he claims will rid the state of a long-standing environmental blight, and liberate America from its dependence on the Organization of Petroleum Exporting countries and other foreign oil producers.

"The true cost of oil isn't at the pump; it's hidden in your income tax bill to protect our interest in the Persian Gulf. OPEC is just one big price-fixing scheme," said Rich, president of Waste Management and Processors, Inc., based in Gilberton, Schuylkill County.

Rich's ambitious, $312 million "ultraclean" fuels project essentially fine-tunes and commercializes existing technologies to transform coal, coal waste and any coal-like feedstock into a clear liquid diesel fuel.

However, every pioneer runs the risk of failure, and at least one environmental group hopes that Rich's project doesn't become the flavor of the month of government-subsidized synthetic fuel conversion projects that have come and gone since the early 1970s.

"In general, there haven been a lot of things pushed to clean up the environment, but many tend to be a fair amount of hype. Really, it's a mixed bag," said Carolyn Johnson, staff director for the Citizens Coal Council, an environmental federation based in Washington, D.C., and Denver, Colo.

With 53 member groups spread over 22 states, the federation's pre-eminent goal is to make sure existing federal and state mining laws are enforced

Johnson is familiar with Rich's proposed conversion process -- a method that today dominates fuel production in South Africa and traces its lineage back to Germany in the 1920s.

Rich said the prototype plant would be on 34 acres in Gilberton, Schuylkill County, a project that would create 1,000 temporary construction jobs and 150 permanent jobs.

Following a three-to-four-year timetable for planning, approvals and construction, the plant would produce about 5,000 barrels, or 60 millions gallons, of the clear liquid diesel fuel daily.

The product would be sold to energy companies under long-term, fixed price contracts. He claims the fuel he intends to produce can be blended into the existing diesel infrastructure without changing diesel engine specifications.

"Think of this as a major environmental reclamation project, which just happens to produce some clean fuel in the process," Rich said.

At full production, Rich said the plant will process an estimated 1 million tons of anthracite culm and silt each year into 1.4 million to 1.8 million barrels of clean liquid hydrocarbon transportation fuel annually.

Coal gasification/liquefaction technology was originally pioneered in Germany before World War I. However, government-subsidized research accelerated by the mid 1930s in order to meet the Nazi regime's oil needs as it prepared for World War II.

"I grew up in a coal family. I knew in high school that the Germans made oil from coal in World War II. I was really interested in gasification," Rich Said.

Utilizing a proven technology already in use in South Africa and originally developed by German scientists Franz Fishcer and Hans Tropsch in 1922, the process essentially uses heat to break coal into its primary elements of carbon monoxide and hydrogen -- then recombining them to form liquid fuels.

Rich said that Pennsylvania has an estimated 34 billion tons of coal -- about 25 billions tons of bituminous coal and 9 billion tons of anthracite coal.

Rich believes his project could conceivably produce 136 billions barrels of liquid fuel-theoretically trumping Iraq's proven 100 billion barrel crude oil reserve.

"This has the potential to liberate this country. We won't be at the whim of OPEC nations, who can arbitrarily adjust demand and price. The United States imports 60 percent of what it needs . . . Talk about being at someone's mercy," Rich said.

Rich contends his product is "environmentally superior" because of low particulates and high cetane number -- a measure of how fast the fuel liberates energy, more commonly known as the rate of ignition. "The higher the cetane, the more efficient it is,"he said.

Eventually, Rich envisions a series of small, de-centralized plants popping up all over the state. Rich said the technology demonstrated by the project can easily be transferred to other contiguous coal states such as Ohio and West Virginia.

"A lot of coal out here has fallen out of favor because of high sulfur content, or low fusion, but it's beneficial for us. . . It has even better characteristics than anthracite waste," Rich said.

Waste Management and Processors Inc is one of several companies operated under the John W. Rich Companies. One is Pottsville-based Reading Anthracite Co., originally formed in 1871.

In Schulykill County, the company operates an open pit surface mine at Wadesville that produces about 300,000 tons of raw coal annually -- only 30 percent of which can be marketed, because the old underground area are mined out and full of overburden, or layers of earth and rock covering the coal seam.

Rich also has a stake in two co-generation plants, including Schulykill Recovery Resources and Gilberton Power Co., an ancestor of Gilberton Coal Co., which was founded in the 1940s. Cogeneration systems utilize one fuel source to produce two energy products, such as electricity and steam.

Rich said Schulykill Recovery Resources uses waste coal to supply power used to heat the state prison at Frackville. Power from Gilberton is used to dry coal from the Wasdesville surface operation and also run his aqua farm -- New Tilapia Co., an indoor fishery where a hybrid white fish/striped bass is raised and sold to grocery stores in Philadelphia area and Canada.

But Rich's first target is the culm piles that populate much of northeast Pennsylvania, unsightly leftovers from a bygone anthracite coal industry. Culm is waste from anthracite coal mines, consisting of fine coal, coal dust and dirt.

An even bigger bullseye is the bituminous coal fields of western Pennsylvania, home to thousands of acres of abandoned mine lands and coal refuse piles, collective waste nicknamed "gob piles."

As far as his goal to reduce domestic dependence on foreign oil, Rich easily qualifies as a champion of the working motorist, who is paying an average of $1.53 for one gallon of gasoline, and the homeowner who uses heating oil to keep warm in the winter.

Generally speaking, abandoned mine lands is a catch-all term for the end result of mining. It can include gob, which is generally coal leftover from underground mining; refuse piles, which is leftover coal and shale; and "spoil," which is rock and dirt generally associated with surface mining.

No matter what you call it, the state defines it as one big headache, according to Ted Kopas, spokesman for the state Department of Environmental Protection in Harrisburg.

He said the state estimates there are about 250,000 acres of abandoned mine lands statewide -- including high walls and gob or refuse piles. Of that total, the state has managed to identify 827 separate gob piles-spanning 8,600 acres or 211 million cubic yards -- spread throughout the western bituminous coalfields and eastern anthracite fields.

For many years acid mine drainage has been inextricably linked to abandoned mine sites, polluting an estimated 2,400 miles of streams, according to the state.

Mine cleanup is currently funded through the federal Abandoned Mine Land fund, which is financed by coal operators, who contribute 35 cents for each ton of surface coal mined, and 15 cents for every ton of coal mined underground.

Kopas said the state's share of the pot generally amounts to about $23 million annually.
However, the state estimates it would cost a whopping $15 billion dollars to take care of the problem statewide.

"We keep an inventory, but the first sites tackled are the ones that threaten public health and safety. They take precedence. . . But it's large, comprehensive problem," said Kopas.

Trying to cope with the problem by encouraging private cleanup efforts, Kopas said the department vigorously supports "no-cost reclamation," a state-created program that streamlines the standard mining permit process and exempts contractors of liability for preexisting environmental problems at the site. Under state supervision, private contractors can remove the waste, grade the site and revegetate, under DEP supervision.

On Dec. 15, Gov. Tom Ridge launched "Growing Greener," an initiative that provides about $650 million over the next five years to tackle environmental priorities -- including, but not limited to, abandoned mine reclamation and watershed restoration.

But Rich believes his culm-to-clean-fuel project, the first to take coal waste into diesel fuel, is a logical extension of his family's early efforts in the use of cogeneration plants that use fluidized-bed combustion to generate heat and electricity, while using coal refuse or culm as feedstock.

Fluidized-bed combustion is a clean coal technology process that removes sulfur from coal combustion and limits the formation for nitrogen oxides.

So what is the next step? According to Rich, the economic feasibility of the project depends on whether Congress gives the plant a generous exemption from the federal excise tax on highway diesel fuel, along with federal and state investment tax credits.

Endorsed by state environmental and economic development officials, Rich's project has already received approval from the state legislature for $46.8 million in state tax credits.

Last month, the U.S. Department of Energy authorized the project's inclusion in the National Energy Security Act of 2000 -- which essentially means that the DOE will be able to provide grants for the design and construction of liquefaction plants, including the type Rich plans to build.

A previously approved $7.8 million cost-share from DOE's National Energy Technology Laboratory in Pittsburgh, along with about $4 million from Waste Management and Processors, Inc., will be used for up-front studies, engineering and permit procurement.

Rich said a number of companies are lined up to help, including Bechtel National Inc., a global engineering and construction company; Texaco Global Gas & Power Co., and Sasol Technology Ltd. of South Africa, a leader in Fischer-Tropsch technology.

"To me, having this team in place is like wanting to get into aviation back in 1906, and having Wilbur and Orville Wright on your team," Rich said.

But the biggest unknown, according to Johnson of the Citizens Coal Council, is whether Rich can succeed on his own.

"The big test, and it always is, can you make it without government subsidies? Can you make a profit. . . So far, nobody's been able to. Pricing is volatile, and at the end of the day can you sustain once subsidies are removed?" Johnson questioned.

Johnson said there is a lot of money invested in exploring, producing, exporting and importing oil.

"I have no doubt he is trying to do the right thing, but there are big market forces out there, and I don't think this country wants to be liberated." she said.

Undaunted, Rich said he intends to bring as much pressure to bear on the government as possible in order to expedite funding.

"We have the feedstock. We have the team. We need to deal with this false economy, and we're asking the government to help pay. Progress begets progress," Rich said.

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