2 Responses to Note to media: Credit crunch kills dirty stuff, too
Last week I noted the glee with which the media used the global recession to shoot the clean-energy wounded (see “Global recession? Must be time for the media’s alternative-energy backlash“). Now Greenwire reports “Credit crunch scuttles W.Va. coal-to-liquids project” (subs. req’d, excerpted below):
Citing the lingering credit crunch, mining giant Consol Energy Inc. and the Texas gasification company Synthesis Energy Systems Inc. are halting a joint venture to convert coal to methanol and gasoline in West Virginia.
Obviously the crash in oil prices played a role too. The wide-ranging WSJ energy/environment blog has now covered the story, too. And given their well-known obsession with balance (see “The Deniers are winning, but only with the GOP“), I can hardly wait for the stream of stories on this from the big print media giants. [Cut to sound of crickets chirping.]
Here are more excerpts from the Greenwire story:
In July, Pittsburgh-based Consol (NYSE: CNX) and Houston-based SES formed Northern Appalachia Fuel LLC to develop an $800 million coal-to-liquids refinery in Benwood, south of Wheeling. The “mine mouth” facility was to convert coal from Consol’s Shoemaker mine complex into a synthetic gas using SES technology.
The companies planned to produce both methanol for the chemicals industry and gasoline for vehicles. At full capacity, the plant would have produced about 100 million gallons a year of 87-octane gasoline.
The companies said today that they will cease funding front-end engineering of the Benwood facility, effectively killing the project.
“Given the current state of the U.S. credit markets, SES is proactively re-evaluating domestic capital investments at this time, consistent with our commitment to restrict equity capital investment in [coal-to-liquid] projects until debt financing is secured,” the company’s President and CEO Tim Vail said.
Vail said SES (Nasdaq: SYMX) would continue to work with North American Coal Corp. to evaluate sites in North Dakota and Mississippi for projects that would utilize SES’s fluidized bed gasification technology.
While Vail called the U.S. market a “core opportunity” for coal-to-liquids, SES is also turning its immediate attention to China.
SES said today it has entered a joint venture with YIMA Coal Industry Group Co. to develop a Henan Province plant that would produce about 500,000 metric tons of methanol annually. The deal stipulates that Yima City-based YIMA, which owns a 51 percent interest in the venture, must guarantee debt financing for the estimated $350 million plant.
SES officials expect that the debt financing would come from Chinese banks, which have decreased interest rates. China’s central government has also reduced reserve ratio requirements, enhancing the banks’ ability to lend money.
“The execution of the joint venture agreement with YIMA underscores our current focus on projects in China where traditional bank financing remains accessible,” Vail said.
The China piece of this seems at odds with the recent report that “With just two exceptions, China has officially halted all of its coal-to-liquids (CTL) projects due to environmental and economic concerns.” We will see how the China story plays out over time. Let’s hope that by the time serious investment in liquid coal plants in this country becomes plausible again, we will have a climate bill that makes them far less economically and environmentally attractive.
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- The WSJ (and Climate Progress) on Liquid Coal
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- The Post Gets Coal-Liquids Story Mostly Right
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