ConocoPhillips and Peabody Energy, which previously said they planned to build a $3 billion synthetic natural gas facility somewhere in Kentucky, have filed an air permit to place the Kentucky NewGas facility near Central City in Muhlenberg County in the state’s western coal fields region, the companies said Tuesday.

Peabody subsidiary Kentucky Syngas LLC plans to convert coal and petroleum coke into substitute natural gas, annually producing approximately 50-70 Bcf of pipeline-quality synthetic gas from more than 2.5 million tons of Kentucky-sourced coal. The project would use proprietary ConocoPhillips E-GAS technology and would be developed with the capability to capture and store carbon dioxide. Emissions from Kentucky NewGas are anticipated to be less than 5% of the emissions of a comparably sized traditional coal plant, according to ConocoPhillips and Peabody. Carbon dioxide captured by the E-GAS technology could be permanently stored or used for enhanced oil recovery.

When Peabody announced last year that Kentucky had been selected as home for the project — planned to be one of the largest commercial coal-to-natural gas facilities in the United States — it said the search had been narrowed to a five-county region encompassing Henderson, Union, Ohio, Webster and Muhlenberg counties (see Daily GPI, Oct. 30, 2007). The project would be developed as a mine-mouth facility in an area where Peabody has access to large reserves and existing infrastructure. The company reportedly had been considering locations in Indiana and Illinois in addition to sites in Kentucky.

Last year the Kentucky Economic Development Finance Authority gave its preliminary approval to Kentucky Syngas for up to $250 million in inducements under the state’s Incentives for Energy Independence Act. The legislation, passed in 2007 by the Kentucky General Assembly, gave energy companies an incentive to build plants in Kentucky that convert coal, corn and other products into clean fuels.

Peabody and ConocoPhillips announced in 2007 that they would explore development of a commercial scale coal-to-substitute natural gas facility (see Daily GPI, July 24, 2007).

©Copyright 2008Intelligence Press Inc. All rights reserved. The preceding news reportmay not be republished or redistributed, in whole or in part, in anyform, without prior written consent of Intelligence Press, Inc.