It’s been three years in the making but developers are now constructing a coal-to-gas facility in West Virginia. While the plant will be a source of economic development and add to the tax base there, critics are saying it will be wasteful and result in increased pollution levels. 

It’s generally a function of volatile oil prices and the need to become less dependent on foreign sources of petroleum. Coal-to-liquids, or coal liquefaction, provides such an option. Hurdles abound for the sector but if the price of oil stays high, the technology may inch forward and investors may be more enticed. 

“We need to come together on a comprehensive energy plan that is environmentally responsible, but that also relies on a mix of our nation’s best resources: coal, natural gas, wind, solar power, biomass and nuclear energy,” says Sen. Joe Manchin, D-WV. “We need to continue our cutting-edge research into technology just like coal liquefaction as well as carbon capture and sequestration."

Once the West Virginia plant is operational, it will convert 7,500 tons per day of regional coal into gasoline. It is expected to create about 300 full time jobs. 

Coal liquefaction takes a solid such as coal and then breaks it down to form a fuel oil. And while it can remove the mercury, sulfur and heavy metals from the coal, it does nothing to eliminate the carbon dioxide that traps heat in the atmosphere. 

South Africa's Sasol Co. has used the technology since 1955. It now produces as much as 150,000 barrels a day of oil from coal. This technology came of age during the apartheid era when the world had embargoed South Africa and it was forced to come up with new methods to replenish its oil needs. Sasol's three plants meet 40 percent of the oil demand in the country. 

Sasol, meanwhile, is working with the Chinese government so that it can employ the idea. China has a voracious appetite for energy, including those fuels tied to transportation. In fact, China says that it would hope to meet 10 percent of its transport needs from converting coal to gas. 

Environmental Worries

To be sure, reaching those goals won’t be easy for China -- or other places that are testing the tools. A global credit crunch in combination with unpredictable oil prices makes it risky. Companies in the business of converting coal to liquids have stumbled, along with various projects where the price tags had soared. 

The cost on the front end is high at about $1 billion. Besides that capital costs, there’s the price of removing all the contaminants from the solid product before it can be gasified and converted to oil. Meantime, the process of turning natural gas into liquids is a possible competitor to turning coal into liquids. Not only is gas-to-liquids a cleaner process but is also less capital intensive. 

Environmental worries are also a part of the equation. While the United States is seeking to limit its foreign oil consumption, it is also trying to cut its carbon emissions. The conversion process whereby coal is transformed into gasoline is a double-whammy: During the alteration, greenhouse gases are produced and then again after the newly-formed gas is burned. And in a typical coal-to-liquids plant, about 40 percent of the energy is lost in the conversion process.

Even the World Coal Association acknowledges those facts, although it goes on to say that the emergence of new tools can change that predicament: Carbon capture and sequestration is real, it adds, noting that if such technologies are applied, the greenhouse gas emissions associated with coal-to-liquids could be one-fifth those of conventional oil. 

That’s something with which the Natural Resources Defense Council disagrees. It says that even if 90 percent of the carbon could be captured and sequestered, the whole process is still less efficient than just refining crude oil. Therefore, “By investing in a combination of efficiency (and) renewable fuels ..., we can reduce our oil consumption more quickly, more cleanly, and in larger amounts we could with coal-derived liquids.” 

Clearly, the high price of oil along with tougher environmental regulations applied worldwide has forced developers to look for alternative ways to run power plants -- and to move all vehicles. Coal-to-gasoline is a possibility. But it has miles to go before it hits the mainstream here in the United States.