Peabody looks into plant site in Sturgis
By CHUCK STINNETT
, Gleaner staff/With AP reports
831-8343 * cstinnett@thegleaner.com
Friday, June 29, 2007
courierpress.com
Sturgis could be the site of a $3 billion plant to convert coal into diesel fuel that Peabody Energy Corp. is considering constructing.
The Governor's Office of Energy Policy, without making a public announcement, approved a $400,000 grant on May 1 to help Peabody study the feasibility of the project.
The plant, if built, would create more than 500 plant and mining jobs and require more than 2,000 construction workers.
"It's a lottery ticket," Union County Judge-executive Jody Jenkins said Thursday. "I'll be glad to have it."
And more big coal conversion projects could surface.
"This won't be the last study you hear about in this region of northwest Kentucky," Kevin Sheilley, president and CEO of the Northwest Kentucky Forward regional economic development agency, said Thursday.
"We've got seven clean coal projects that we're working with in some way, shape or form," Sheilley said Thursday.
He has identified energy projects, such as coal conversion or ethanol plants, as one of Northwest Kentucky Forward's targeted industries.
"This is a chance to take an asset from this region that we forget about, and create a new future," Sheilley said.
As described in the executive summary of the state grant agreement, the Peabody coal liquefaction plant would create approximately 300 permanent plant jobs, 225 permanent mining jobs, 2,250 construction jobs and an estimated 1,850 permanent ancillary jobs in the region.
Peabody estimates an economic impact of $4.5 billion over the life of the project.
The plant would convert approximately 5 million tons of Kentucky coal to 10 million barrels of "ultra clean" liquid fuels, using Rentech Inc.'s proprietary Fischer-Tropsch fuels technology, Peabody said.
The primary fuel would be diesel fuel that would be sold regionally.
Over the life of the plant, it would use approximately 150 million tons of Kentucky coal and produce 300 million barrels of liquid fuels.
The plant would be located on a 200-acre site either near the coal mine site or at a site conducive to delivering the liquid fuels to market.
The location of the plant was redacted, or blacked out, in a copy of the agreement provided by the Office of Energy Policy. But The Courier-Journal reported on Thursday, and Sheilley confirmed, that Sturgis is the site.
The $400,000 state grant will pay for 22 percent of the $1.8 million feasibility study, which Peabody spokeswoman Beth Sutton will cover detailed engineering, drawings and marketing issues.
She indicated that Kentucky is the only state being considered by Peabody for this project, although it is considering Montana for another coal-to-liquids plant.
To attract coal conversion plants proposed by Peabody and other companies, Gov. Ernie Fletcher has indicated he will call the legislature into special session next Thursday to consider approving special incentives.
"The policies of various states will certainly be important in our decision-making process," Peabody's Sutton said.
Fletcher's proposed legislation would allow alternative-energy companies to recoup 100 percent of the sales and use tax paid on materials and construction, and up to 80 percent of the severance taxes paid on Kentucky coal used at the plants, The Courier-Journal reported.
"It would be devastating to counties, us not being able to get coal severance dollars," Henderson County Judge-executive Sandy Watkins said. "It's how we build water lines and build infrastructure."
Gov. Ernie Fletcher has said repeatedly that Kentucky would not even be considered for such projects without tax incentives that he is proposing for a special legislative session, tentatively scheduled to begin next week.
"This corporate welfare Fletcher proposes would be devastating to local governments," Watkins said.
Jenkins, the Union County judge-executive, said he would withhold judgment until he learns how the governor's incentives would affect the single-county coal severance funds that have helped his county undertake community improvement investments such as water and sewer lines, volunteer fire trucks, ambulances, a senior citizens building and the Herron Technology Center.
Democratic leaders in the House have taken the position that the incentive issue can be dealt with during next year's regular session and that a special session is unnecessary.
The special session would cost about $60,000 a day.
The Peabody feasibility study isn't even expected to be completed until April 2008, when next year's session would be ending.
House Speaker Jody Richards, D-Bowling Green, said Wednesday that the grant to Peabody and a $2 million grant to help EnviRes LLC develop technology in the Ashland area to gasify coal are further evidence that a special session to pass tax incentives for such companies is not needed.
"Those companies are already very interested in Kentucky, obviously, and the contracts show that there's no need for a special session to attract these companies to Kentucky," he said. "They are considering us; there's no question about it."
Sen. Bob Stivers, R-Manchester, said the state money directed to the two proposed projects is evidence that a special session is needed.
"If there is this type of interest, we don't want it to wane because we don't have incentive packages that are comparable to Illinois, Indiana, Ohio and West Virginia," he said.
Fletcher's office said in a statement that "the special session is focused on generating economic development, creating high-paying jobs and attracting a $3 billion alternative-fuels facility to Kentucky." |
