The Governor Continues to Implement Energy Independence Plan by Delivering Funding for Innovative Coal Gasification Project
CHICAGO – Gov. Rod R. Blagojevich today continued to roll out his comprehensive Energy Independence Plan by announcing a $500,000 grant to support Power Holdings of Illinois LLC’s efforts to construct a $1 billion coal gasification facility near Mt. Vernon that will produce pipeline-quality synthesis natural gas. The grant from the Illinois Department of Commerce and Economic Opportunity’s (DCEO) Office of Coal Development is for a portion of the costs associated with preliminary design and engineering work. The project also is receiving $2.5 million for design and engineering studies from the Illinois Clean Coal Review Board, which administers a public-private endowment fund for clean-coal projects. DCEO Director Jack Lavin joined with State Rep. Kurt Granberg (D-Centralia) and company and local officials in Mt. Vernon to talk about the importance of this project to continue the revitalization of the Illinois coal industry.
“If we invest now in coal gasification and other alternative energy sources, within ten years, we’ll be able to produce enough energy from our own natural resources to cut our dependence on foreign energy in half. That means billions of our hard-earned dollars will stay here at home, in our economy creating more jobs, rather than leaving Illinois forever. We have the resources. We have the technology. We have the expertise. And if we start today, we can solve this problem in the next ten years. No other state can say that. But we can do it here in Illinois, and Power Holdings is going to help us do just that,” Gov. Blagojevich said.
Coal gasification technology converts coal from a solid to a gas that can be substituted for natural gas, diesel or electricity. Gasification is the cleanest and most efficient way to convert coal to energy with low emissions of mercury and other air pollutions and allows for the capture and underground storage of carbon dioxide, a greenhouse gas. Pipeline-quality synthesis natural gas (SNG) from coal offers our state and our nation a secure domestic source of energy that is protected from sharp up-and-down price swings for natural gas from traditional sources.
“I will continue working everyday to see this project completed for local residents. Alone, this project could help boost coal tonnage in Illinois by more than 10 percent. Putting a coal gasification plant into service in Jefferson County is the first step to developing a fleet of gasification facilities in Illinois as we put local residents to work and make this state a leader in providing new, more secure sources of energy from coal,” State Rep. Kurt Granberg (D-Centralia), who is also a member of the Illinois Clean Coal Review Board, said.
The facility projects gasifying about 4 million tons per year of coal from a new, nearby coal mine. It is being designed to produce 50 billion cubic feet a year of SNG for sale to wholesale and retail natural gas suppliers.
To support development efforts, Gov. Blagojevich signed Senate Bill 90 in 2005, which authorizes gas utilities serving Illinoisans to enter into long-term contracts to purchase SNG derived from coal. Power Holdings of Illinois LLC has already announced that it has an executed 20-year SNG supply agreement with Oneok Energy Services Company, L.P., of Tulsa, Oklahoma and 20-year supply agreements with Ameren and Nicor Gas. The facility is already 100 percent subscribed.
Power Holdings has estimated that more than 1,200 jobs will be created during the three-year construction phase of the project, slated to begin in 2007. The startup date for the facility would be 2010. The plant itself will employ more than 200 workers on an ongoing basis, and its purchases will generate about 400 coal mining jobs.
"We sincerely applaud Governor Blagojevich signing Senate Bill 90 into law, and greatly appreciate the efforts of his Office of Coal Development who have assisted in the development of this project since its inception. This plant will provide new jobs for Southern Illinois, and a new inexpensive supply of natural gas for Illinois consumers,” Bob Gilpin, President of Power Holding LLC said.
“This project has exactly the kind of synergy that makes Illinois coal a key to our energy future. Coal is an affordable, reliable and easily deliverable feedstock. We have a ready and growing market for the output. And we have easily accessible delivery channels in place to take this new product to market and put more people to work,” DCEO Director Jack Lavin said.
The Governor’s recently announced Energy Independence Plan would ensure that 25 percent of natural gas consumed in Illinois would come from Illinois coal. Coal is found under 37,000 square miles in Illinois and contains more energy than the oil reserves of Saudi Arabia and Kuwait combined. In fact, Illinois has 38 billion tons of recoverable coal, accounting for 12 percent of all coal in the U.S. The Governor’s plan would invest $775 million over the next ten years to help build up to ten new coal gasification plants across Illinois. These plants would meet 25 percent of Illinois’ diesel fuel needs, 25 percent of natural gas needs and ten percent of electricity needs by 2017.
An investment of $775 million to build coal gasification plants would generate more than
$10 billion in new business investment in Illinois. These plants could create an estimated 1,000 new permanent jobs, 2,500 new mining jobs and 10,000 construction jobs in Central and Southern Illinois.
The Governor’s plan also calls for partnering with utility companies to purchase electricity and natural gas from coal gasification plants under long-term contracts that will help stabilize energy prices for consumers for years to come.
The Governor’s plan will also make coal gasification plants even more environmentally friendly by capturing carbon dioxide and safely storing it underground, instead of emitting it into the air. The Governor proposes building a pipeline from gasification facilities in Central and Southern Illinois to Illinois Basin oilfields in Southeastern Illinois. Illinois’ oil reserves hold more than one billion recoverable barrels of oil. Because the fields are mature, production cannot increase without using advanced recovery techniques. “Enhanced Oil Recovery,” which uses carbon dioxide to extract more oil from existing reserves, could nearly double the amount of petroleum produced by Illinois annually. The 100-mile pipeline would transport the carbon dioxide captured by the coal gasification plants to oilfields and use the pressurized carbon dioxide to extract more oil and gas.
Additionally, the carbon dioxide transported by the pipeline could extract methane from Illinois coal reserves. Illinois coal reserves hold enough methane, a fuel similar to natural gas, to meet all of the state’s natural gas needs for seven years.
The pipeline would cost about $100 million to build and would generate an estimated $12 million in annual revenue. The royalties from the recovered oil and gas would subsidize the costs of sequestering the carbon dioxide.