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Coal-to-liquid project pitched

Posted: Friday, April 15, 2011

A Texas-based company is considering a Cook Inlet resource project that would turn coal into liquid fuels.

John McClellan, a Anchorage consultant for Accelergy, talked to the Kenai and Soldotna chambers of commerce about the project at a joint lunch on Wednesday.

The project would take coal -- likely from either the proposed Chuitna coal mine or a Usibelli development -- and turn it into jet and other fuels using a proprietary process that McClellan said is cleaner and more efficient than the usual method of liquifying coal.

McClellan said the plant would be just under 700 acres, located near both coal and a port. Ladd Landing and North Foreland were two possible inlet locations that would require a port to be built, while Port McKenzie is a possibility with an already built and permitted transportation hub.

Nikiski wasn't on the list, but when asked, McClellan said it might be a possibility, depending on permitting and transportation issues.

"Nikiski might wind up being an alternative," he said. "People a lot smarter than I have to look at it."

Before the company decides where to build, Accelergy is waiting for the state of Alaska, which owns most coal in the state, to agree to pay half the cost of certifying the coal, a necessary part of the regulatory process.

Certification will cost about $1 million, McClellan said.

"The investors are willing to put up half that money, but they want the rest of it to come from the coal owner or the state of Alaska," he said.

There are two possibilities for state funding in the works.

Accelergy applied for an emerging energy technology grant from the Alaska Energy Authority that would provide the state's contribution. McClellan said the authority is supposed to announce the projects eligible to continue competing for money later this month.

"We expect to be short-listed," McClellan said.

But he didn't know if the project would make it from the short list to the funded list.

Money for the certification is also in a state capital budget. The line-item would go to the Alaska Industrial Development Export Authority. Time will tell whether or not it makes it through the final days of the session and past the governor's pen, McClellan said.

If that funding comes through, the project will still have to secure a buyer for their product.

McClellan said the facility is designed to produce 60,000 barrels per day of jet fuel, about 20,000 less than the amount Anchorage International Airport and the military use. The facility could expand to produce more than 60,000 barrels, he said. The initial plans call for 12 units that can each process 6,000 barrels a day.

"But if demand is there, they keep adding more units," he said.

To sell to the military, McClellan said a bill in the U.S. Senate allowing the Department of Defense to set 20-year fuel supply contracts needs to pass to give investors long-term security in the military as a buyer.

Molly Dischner can be reached at molly.dischner@peninsulaclarion.com.



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