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Dow Chemical Takes Option on Gas from Hydromethanation

GreatPoint Energy Inc. and Dow Chemical Co. have struck a deal giving Dow the option to purchase natural gas from future GreatPoint facilities that would produce gas from coal through a catalytic process called hydromethanation.

Hydromethanation does not rely on combustion and therefore does not produce the nitrogen oxide (NOx), sulfur oxide (SOx) and particulate emissions typically associated with the burning of carbon feedstock.

In 2007 Dow led GreatPoint's $103 million equity financing following an agreement for Dow to support GreatPoint's plant testing. Dow is one of the country's largest industrial users of natural gas. GreatPoint could provide Dow with a portion of the gas from its first three projects under development in North America. The contract projects a 15-year term.

"This potential gas agreement will also enable us to move forward with the development of large-scale facilities in North America," said GreatPoint CEO Andrew Perlman.

Eighteen months ago Dominion's Brayton Point Power Station in New England was selected as a GreatPoint demonstration site (see NGI, Oct. 29, 2007). Brayton Point in Somerset, MA, is now the site of the Mayflower Clean Energy Center, a $30 million feedstock testing facility that went on-line earlier this year.

"We just went through our first round of tests," GreatPoint spokesman Dave Gerzof told NGI. "This facility is testing various different feedstocks and it's not going to be making natural gas in any way that would be going into a pipeline. It's very much a research facility. The company's in discussions with a bunch of different players as far as building out a hydromethanation plant both here in the U.S. and also in China."

In January 2008 Peabody Energy said it would provide coal to GreatPoint, making it GreatPoint's "preferred coal supplier." The companies said they expect to develop gas manufacturing facilities at or near Peabody mines.

Hydromethanation produces natural gas through the reaction of steam and carbonaceous solids in the presence of a catalyst. It enables the conversion of a low-cost feedstock such as coal, petroleum coke and biomass into methane. GreatPoint plans to build, own and operate large-scale natural gas production facilities at the intersection of natural gas pipelines and low-cost feedstock, as well as at locations where the carbon dioxide produced and captured in its process can be geologically sequestered.

Cambridge, MA-based GreatPoint said its cost of production is expected to be significantly lower than current prices of new-drilled natural gas and imported liquefied natural gas (LNG). The natural gas produced through hydromethanation meets all natural gas quality specifications, can be transported through pipelines already built and can be used interchangeably with drilled natural gas and imported LNG, the company said.

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