Company to build coal-to-diesel plant [Messenger-Inquirer, Owensboro, Ky.]

Aug. 23--U.S. Fuel Corp. has announced plans to build its first coal-to-diesel plant near Central City.

The publicly-traded company plans to invest $76 million to create the Muhlenberg County facility, said Ken Robinson, president of the Muhlenberg Alliance for Progress. That includes "hard and soft costs" for engineering, site preparation and construction.

The proposed plant site, which is still being finally negotiated, is 121 acres on a reclaimed coalfield near an active mining operation, Robinson said.

The company is now ready to start the engineering work, secure the permits and build the plant.

Muhlenberg officials said the project will generate at least 50 permanent jobs for the first unit and more than 300 construction jobs.

The facility will be designed to produce about 8,500 gallons of low-sulfur, high-grade diesel daily from 148 tons of coal.

"This is an excellent opportunity for Muhlenberg County, especially given our unemployment situation," Robinson said. "The bottom line is that the project takes an indigenous product present in Muhlenberg County and turns it into a marketable product. Muhlenberg County could be at the forefront in promoting energy independence for the country."

Muhlenberg's June jobless rate was 9.6 percent. A year ago in June, it was 10.2 percent.

While the company has not discussed specific salary ranges, it expects to have a $3 million annual payroll, Robinson said.

Rep. Brent Yonts said the project goes back to the spring of 2007 when the core people on the project first contacted Muhlenberg County leaders. At that time funding was an issue, and then the recession hit.

The company now has a new corporate structure and has secured funding from Global Private Funding Business Incubation Program, according to its announcement Tuesday. The company will provide debt-based financing to support the equity-based investments.

MAP has been working on the project "in the deep background" for a couple of years -- "handling their issues in a professional way so they could get to this point," Robinson said.

Robinson served five years as deputy commissioner in the Kentucky Cabinet for Economic Development before taking the post at MAP.

U.S. Fuel Corp. will be going through the state permit approval process. "With our help, they have that well at hand," Robinson said."Our board is totally behind this," he said.

Company officials have said their plans are scalable -- making it more cost efficient than larger coal conversion projects. They can add units as needed.

"There are no emissions that I'm aware of," Yonts said. "It's self-contained. It will use clean coal technology to provide jobs and hope to our local coal miners and give direction to the rest of the country about other ways coal can be used to provide energy to our nation."

Muhlenberg Judge-Executive Rick Newman said the new plant will provide good job opportunities for the county and the region.

"Obviously, this is a significant economic boon for us and the whole region," Newman said. "The project is related to coal and energy, and will be a clean process. With the bad rap coal is taking, this is exciting for us."

In years past, if a community was gaining 50 to 60 jobs, no one got excited, the judge said. "That's not true today."

The project may not have a significant impact on how much coal is mined in the county, but the company will buy some coal for the plant, he said. "The main thing is that if this pilot plant is successful, then obviously more plants will be built."

Once the engineering and permits are secured, the construction period would be about five months for the first unit, Yonts said.

A U.S. Fuel Corp. representative could not be reached for this story. The company's website states that it plans to design, build, own and operate scalable facilities to convert coal into non-petroleum-based alternative fuels, such as diesel, gasoline and aviation.

The company will use "scalable, proven and performance guaranteed coal to gas technology with scalable, existing and proven gas to liquid technology in a facility that will produce diesel fuel from coal in an environmentally acceptable manner," according to information on the website's home page.

After the first plant is completed near Central City, the company intends to replicate the process "in multiple, larger scaled commercial facilities."

Joy Campbell, 691-7299, jcampbell@messenger-inquirer.com

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