Financing woes slow fuel-production plan
Friday, September 22, 2006
pennlive.com
BY DAVID DeKOK
Of The Patriot-News
John Rich is ready to build a $600 million plant near Gilberton to convert waste coal to liquid fuel.
He just wishes the U.S. Department of Energy would hurry up and iron out the details of a federal loan guarantee that Congress approved for his project.
"Our bankers are meeting with DOE on the terms of the loan guarantee," Rich said during remarks yesterday at a meeting of the Pennsylvania Petroleum Marketers and Convenience Store Association in Hershey. "This has tied us up a year already."
Republican U.S. Sens. Arlen Specter and Rick Santorum of Pennsylvania obtained a $100 million loan for Rich and his company, WMPI, in the Energy Policy Act of 2005. They also secured a federal loan guarantee for Rich that is critical to him getting the private capital he needs for project financing.
Rich said the loan guarantee would cover about $560 million of the estimated $725 million cost of the project. Details of that loan guarantee have been under discussion between Rich's bankers and the Department of Energy for a year.
Efforts to determine from the Energy Department what is holding up the process were not immediately successful yesterday.
U.S. Rep. Tim Holden, D-Schuylkill, who obtained a $9 million grant for Rich during the Clinton administration, suspects the problem is that the Energy Department has never dealt with loan guarantees before, unlike, say, the U.S. Department of Agriculture.
Robert Traynham, Santorum's press secretary, said yesterday that the senator met with U.S. Energy Secretary Samuel W. Bodman shortly after the loan guarantee was approved last year by Congress to "move forward expeditiously."
"We've repeatedly urged them to develop this as quickly as they can," he said.
The project also will get $47 million in Pennsylvania tax credits. The plant would convert mammoth piles of waste coal across the anthracite region of the state into clean-burning aviation and diesel fuel. Rich, whose family has been in the coal business for decades, said he can produce finished fuel for $1.50 a gallon.
Gov. Ed Rendell said a year ago that the state would commit to buying some of the fuel produced by the plant, although details of that are still being discussed. An estimated 1,000 construction jobs and 600 permanent jobs are expected to be created.
Rich plans to use the Fisher-Tropsch process to make liquid fuels from coal or other carbonaceous material. He said the production process will be environmentally benign, although his project has drawn opposition from some environmentalists.
His plan also has interested the U.S. Department of Defense, which would like to develop an entirely American source of liquid fuels for the military.
DAVID DeKOK: 255-8173 or ddekok@patriot-news.com |
