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Peabody and ConocoPhillips Enter
Into Agreement to Explore
Development of Midwest Coal-to-Substitute Natural Gas Facility
ST. LOUIS and HOUSTON -- Peabody
Energy (NYSE: BTU) and ConocoPhillips (NYSE: COP) have announced they have
entered into an agreement to explore development of a commercial scale coal-to-
substitute natural gas (SNG) facility using proprietary ConocoPhillips E- GAS(TM)
technology. The project would be developed as a mine-mouth facility at a
location where Peabody has access to large reserves and existing infrastructure.
It would be designed to annually produce 50 billion to 70 billion cubic feet of
pipeline quality SNG from more than 3.5 million tons of Midwest sourced coal. In
addition, presuming there is a supportive regulatory framework in place, the
project scope will provide for carbon capture and storage. “Our
agreement with ConocoPhillips combines the strength of global industry leaders
and proven technology that further demonstrates coal’s ability to build energy
reliability, security and price stability,” said Gregory H. Boyce, Peabody
president and chief executive officer.
“The energy value in Peabody’s vast coal
reserve base exceeds the energy in the oil or gas reserves in the Continental
United States, offering strategic advantages for coal-to-gas projects and other
Btu Conversion projects.” Peabody and ConocoPhillips would
participate in project ownership along with other potential equity partners. The
preliminary design and economic assessment is expected to be complete in early
2008. “ConocoPhillips believes the key to a secure energy future is the
development and efficient use of diverse energy sources,” said Jim Mulva,
ConocoPhillips chairman and chief executive officer. “This project, as
currently envisioned, would be designed to deliver over 1.5 trillion cubic feet
of SNG in its first 30 years of operation from proven, domestic coal reserves.
It also offers an excellent opportunity to use our company’s project
management capabilities, manufacturing expertise, and advanced technology to
help increase the supply of alternative fuels.”
Gasification has been used for the refining,
chemical and power industries for more than 50 years. E-GAS(TM) technology
converts coal or petroleum coke into a clean synthesis gas, allowing virtually
all impurities to be removed. Natural gas demand has grown rapidly in
recent years, and development of coal-to- SNG projects is gaining increasing
interest. In a 2006 study, the National Coal Council called for using coal to
provide at least 15 percent of U.S. natural gas consumption, or 4 trillion cubic
feet per year, using nearly 350 million tons of coal annually. Peabody
Energy is the world’s largest private-sector coal company, with 2006 sales of
248 million tons of coal and $5.3 billion in revenues. Its coal products fuel
approximately 10 percent of all U.S. electricity generation and more than 2
percent of worldwide electricity.
ConocoPhillips is an international, integrated
energy company and one of the largest natural gas producers in North America. It
is the third-largest integrated energy company in the United States, based on
market capitalization, oil and gas proved reserves and production; and the
second- largest refiner in the United States. ConocoPhillips operates in more
than 40 countries. The company has approximately 38,700 employees worldwide and
assets of $173 billion. For further information, contact Peabody Energy at
314-342-7768 or ConocoPhillips at 281-293-1978 or 212-207-1996.
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