Peabody, ConocoPhillips explore SNG

Using Midwest coal and proprietary ConocoPhillips E-GAS™ technology, partners look to produce 1.5 tcf over 30-year period

Petroleum News

Peabody Energy and ConocoPhillips plan to explore development of a commercial-scale coal-to-substitute natural gas facility using proprietary ConocoPhillips E-GAS™ technology.

The companies said July 23 that the project would be a mine-mouth facility where Peabody has access to large reserves and existing infrastructure.

The facility would produce 50 billion to 70 billion cubic feet of pipeline-quality substitute natural gas from more than 3.5 million tons of Midwest-sourced coal, an estimated 1.5 trillion cubic feet in its first 30 years.

In addition, presuming there is a supportive regulatory framework in place, the companies said 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 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 along with other potential equity partners.

The companies said 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, the companies said and the E-GAS™ technology converts coal or petroleum coke into a clean synthesis gas, allowing virtually all impurities to be removed.