Kentucky rescinds coal-conversion grant to Peabody
Liquid conversion plan hadn't advanced
Saturday, February 16, 2008
courier-journal.com
By Stephenie Steitzer
ssteitzer@courier-journal.com
The Courier-Journal
FRANKFORT, Ky. -- Citing a lack of progress, the state has rescinded a $400,000 grant to energy giant Peabody Energy Co. to study the feasibility of a $3 billion, coal-to-liquid-fuel plant near Sturgis in Western Kentucky.
Peabody spokeswoman Beth Sutton said the St. Louis-based company agreed to forfeit the money and possibly reapply in the future because it is still researching the prospect of the alternative fuel facility.
"Since we did not project using the grant this year, we agreed to forfeit the funds, recognizing that we can apply again in the next budget cycle," she said in a statement.
Brad Stone, assistant director of the Division of Research, Development and Demonstration at the Governor's Office of Energy Policy, said the office rescinded the money because the company "wasn't making progress toward the agreed-upon work plan.
"Budget times being what they are, we decided we would terminate the grant agreement," he said.
Peabody was awarded the grant last spring in the midst of an effort by former Gov. Ernie Fletcher and the General Assembly to attract coal-conversion plants to the state.
The company never received any of the money because it did not submit reimbursement invoices, Stone said.
Peabody also is moving forward with plans to build a $3 billion, coal-to-natural gas plant at a yet-to-be-announced location in Western Kentucky.
In October, the company won preliminary approval to receive $250 million in tax incentives under an energy bill approved last summer by the General Assembly.
A Peabody subsidiary, Kentucky Syngas LLC, proposes to build the plant in one of five counties: Henderson, Union, Ohio, Webster or Muhlenberg.
"We're continuing with a feasibility study for the coal-to-gas project and working with the Kentucky Geological Survey to better understand the best options for carbon storage," Sutton said.
Stone said the Governor's Office of Energy Policy does not have plans to spend the forfeited $400,000.
Reporter Stephenie Steitzer can be reached at (502) 875-5136.
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State revokes Peabody grant
$400,000 canceled for lack of progress
By John Cheves
JCHEVES@HERALD-LEADER.COM
kentucky.com
FRANKFORT --
Gov. Steve Beshear is taking a $400,000 grant back from Peabody Energy Corp. because the company has made no visible progress toward studying the feasibility of a $3 billion coal-to-liquids plant in Western Kentucky.
Former Gov. Ernie Fletcher's administration awarded the grant in May.
Peabody originally told state officials that it might build a $3 billion plant near Sturgis in Union County to convert regional coal into synthetic diesel fuel. But the company submitted no progress reports or invoices for any of the $400,000, said Brad Stone, assistant director for research, development and demonstration at the Governor's Office of Energy Policy.
"It just never took off. The company never showed progress toward their deliverables," Stone said.
Beshear's office notified Peabody of the contract cancellation in January. A legislative committee approved it this week.
Peabody spokeswoman Beth Sutton said the company has agreed to forfeit the grant at this time, with the understanding that it can reapply in the future.
"We're looking to get a better sense of regulatory certainty" from Congress and the state governments regarding coal-powered energy, Sutton said. "We appreciate the state's support of alternative fuels development projects."
Union County Judge-Executive Jody Jenkins said Peabody owns the rights to a lot of coal in his area, so residents had hoped the plant would be built. However, Peabody never said much publicly, not even identifying a specific site where the plant might be located, Jenkins said.
"They've kept it all pretty close to their vest on how much progress they were making, which I guess is because they weren't doing very much," Jenkins said. "We were just waiting and trying to stay positive about it."
The coal-to-liquids project is separate from another Peabody deal, a proposed coal-gasification plant -- also valued at $3 billion -- that could be built in Kentucky.
Kentucky last year awarded up to $250 million in incentives for that plant to Kentucky Syngas LLC, a wholly owned subsidiary of Peabody. Peabody is considering possible sites in Henderson, Union, Ohio, Webster and Muhlenberg counties, where regional coal would be turned into synthetic natural gas.
The coal-gasification proposal is in the early stages, but it appears to be on track, said Catherine Staib, an attorney for the Kentucky Economic Development Cabinet. |
