Peabody Energy and ConocoPhillips entered into an agreement to explore developing a commercial-scale coal-to-substitute natural gas (SNG) facility using proprietary ConocoPhillips E-GAS technology.
E-GAS technology converts coal or petroleum coke into a clean synthesis gas, allowing virtually all impurities to be removed.
The project would be developed as a mine-mouth facility at a location where Peabody has access to large reserves and existing infrastructure. It would be designed to annually produce 50 billion to 70 billion cubic feet of pipeline quality SNG from more than 3.5 million tons of Midwest sourced coal, according to a release.
Peabody and ConocoPhillips would participate in project ownership along with other potential equity partners. The preliminary design and economic assessment is expected to be complete in early 2008.
Jim Mulva, ConocoPhillips chairman and CEO, said in a statement, "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."
ConocoPhillips (NYSE: COP) is an integrated energy company and one of the largest natural gas producers in North America. With about 38,700 employees worldwide, the firm operates in more than 40 countries and has assets of $173 billion.
St. Louis-based Peabody Energy (NYSE: BTU) is one of the world's largest coal producers.
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