Cairo may get coal-diesel plant

Friday, January 12, 2007

CAIRO, Ill. -- Developers of a refinery capable of transforming coal into clean-burning diesel fuel -- and transforming the economy of Alexander County, Ill. -- have been promoting their idea this week in meetings with area officials.

While the names of the investors are being kept secret, they have enlisted a retired Southern Illinois University administrator as a spokesman.

The project, a $3 billion coal gasification plant that would employ up to 1,000 workers, was pitched to potential vendors, landowners, public officials and others at a meeting at Shawnee Community College in Ullin, Ill., on Tuesday, spokesman Bill Capie said. The developers have also spoken to the Cairo Regional Airport Board and private landowners but have not purchased any land or bought any options, Capie said.

Some details Capie would share Thursday include the size of the plant -- 1,500 to 2,000 acres -- capable of producing 50,000 barrels of low-sulfur diesel daily, rising to 100,000 barrels a day in the long term.

"The one thing I need to emphasize is that there are still a lot of hurdles to overcome before this becomes a reality," Capie said. "That is why we have made no public statements about it. When the project is ready to kick off and go, it will be the real deal and they will start moving dirt immediately."

Alexander County is one of the poorest counties in Illinois. Its main city, Cairo, has seen its economy slide downhill for more than 30 years. Word of the coal-to-diesel plant is the second big industrial news for the county in the past year, however, following the Bunge Ltd. announcement last summer that it intends to form a partnership with Iowa-based Renewable Energy Group to construct a biodiesel plant in Cairo.

The location of the diesel plant would be north of Cairo on unincorporated land, Capie said. Much of that property is owned by county Commissioner Angela Greenwell, who said last week she hadn't sold any property nor any options on her land.

Cairo Mayor Paul Farris in December expressed skepticism that the coal-to-diesel plant could find sufficient financing.

The Southern Illinois location has numerous advantages, Capie noted. The Mississippi and Ohio rivers converge there, and the area is well-served by rail, road and pipelines. The large quantity of coal the plant will use -- up to 7 million tons annually -- as well as the quantities of fuel produced require superior transportation, he said.

He did not specify where the coal would come from. The state does offer economic development incentives to industries using Illinois coal.

The effort to brief local officials included a realization that the project, kept mostly under wraps, would become public, Capie said. But no promises are being made and the company wants to remain nameless until it is able to announce commencement of the project.

"We don't want to create a high level of expectation and leave them waiting for the result," he said. "But we can't just be invisible."

Stacey Thomas, Alexander County economic development program manager for the Southernmost Illinois Delta Empowerment Zone, said her role in the project has been to talk to prospects. No money has changed hands yet, she said.

The private financing needed for the project must be found to move forward, Capie said, adding that it could be November before those details are complete. The plant would be built in phases, employing up to 2,000 construction workers.

The diesel fuel from the plant would burn cleaner and hotter than conventional diesel, a major selling point as manufacturers of diesel-powered trucks and other equipment are being pressured by the federal government to produce cleaner-burning vehicles.

The process for turning coal into diesel isn't new. It builds on processes used to create gas for lighting cities in the 1800s and processes used by the Nazis to fuel their tanks and trucks during World War II.

"It is old technology with a new twist," Capie said. "The new technology is clean, with no hazardous waste and no emissions."

335-6611, extension 126

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