This news story originally provided by The Daily Mail

October 12, 2005

Coal liquefaction plant likely, Arch chief says

George Hohmann
Daily Mail business editor

Arch Coal Inc. is looking at the possibility of a coal liquefaction plant being built in Wyoming, and Arch's top executive predicted West Virginia will see a coal-to-liquids plant.

Steven Leer, president and chief executive officer of Arch Coal, said the technology needed to turn coal into liquid fuels has been around since 1916-18 and has been used by the Germans and South Africans.

The barrier to coal liquefaction has been price, not technology, Leer said. But now, with oil trading above $60 a barrel, "it's very economic," he said.

Leer was keynote speaker Tuesday night at a fundraiser for Concord University scholarships at Embassy Suites.

Leer told a banquet hall filled with education leaders and coal executives that he believes the energy crisis -- and elevated prices -- will continue for four or five years because of increasing demand from China and India and the damage sustained by the nation's energy infrastructure as a result of hurricanes Rita and Katrina.

If you overlay a chart of per capita oil consumption in the United States from 1900 to date with a chart of per capita oil consumption in China from 1970 to date, the charts look identical, he said. If the Chinese experience continues to mirror that of the United States, Chinese oil consumption is about to grow exponentially, he said.

Leer said the recent hurricanes illustrate the fragility of our energy infrastructure. He said Hurricane Rita destroyed 63 drilling rigs and Katrina destroyed 46. In comparison, last year's Hurricane Ivan destroyed seven.

The infrastructure damage has not been widely reported because the media has been preoccupied with the destruction of New Orleans, he said.

"West Virginia is going to play a pivotal role in our energy future," Leer predicted. He said the good news for the state is that coal prices are up, severance taxes are up and wages are up. The bad news is, the cost of all of the things we buy is also going up.

"I hope the people in this room spend their money wisely because, ultimately, the boom will go away," he said.

In recent years nuclear, coal and natural gas have been racing to meet the increasing demand for electricity, Leer said. Nuclear power plant operators have raised their running rates from 70 percent to 91 percent, thus filling much of the increased demand.

But nuclear plants have reached their limits so it "is now a two-horse race," Leer said.

"Coal is abundant," he said. "Coal is affordable. It is five times cheaper to generate electricity with coal than with natural gas."

Leer noted that American Electric Power has already announced plans to build a next-generation coal-fired power plant. He said the energy bill rushed through Congress last week contains provisions that encourage the construction of coal liquefaction plants.

The coal industry needs a well-educated workforce and education is valued and fostered at Arch Coal, said Leer, who heads the nation's second largest coal producer. He urged bright students like Concord student David Lewis to "give me your card -- we'll be calling you."

Lewis, a pre-med student from Chapmanville, said Concord has changed his life.

Under a Concord program, Lewis toured orphanages in South Africa and attended lectures by the world's leading AIDS experts.

"I am a blessed and changed man," Lewis said. "Had it not been for my professors at Concord, South Africa would still be a place on a map instead of a place in my heart."

Lewis thanked Concord's financial supporters for making programs like the Students of Excellence Summer Academy possible.

Concord University President Jerry Beasley said the dinner raised more than $100,000, a record. Proceeds fund scholarships for Concord students.

Contact writer George Hohmann at 348-4836.