Cairo's advantage

CAIRO, Ill. -- Southern Alexander County has one abundant resource vital to the success of a proposed $3 billion coal-to-diesel plant -- water.

Huge volumes of water will be needed to cool gases extracted from the coal, a spokesman for the plant's developers said. And on land bounded by the Mississippi River on the west and its biggest tributary, the Ohio River, on the east, there's never a water shortage.

The rivers give the site other advantages.

Large portions of the plant's structure can be prefabricated at another site and moved via barge to the plant's proposed location just north of Cairo, said Bill Capie, a former Southern Illinois University vice chancellor who speaks for the developers.

Barges can also deliver the plant's products, up to 50,000 barrels of low-sulfur diesel fuel per day at first, to customers.

"The water is there for us to use," Capie said.

Water was the issue that made Alexander County attractive to the developers, Clean Coal Power Resources of Louisville, Ky. The company originally considered a site near Vandalia, Ill., 140 miles to the north, with plentiful coal supplies. But the lack of water forced the move, said Bill Hoback, bureau chief for the Illinois Office of Coal Development.

"When you get a project of that size, a lot of things have to fall into place," Hoback said. "You have to have huge amounts of water, huge amounts of land and huge amounts of coal. When you get up in the center of the state, the river is not something you can always have."

Deals for the land, from 1,500 to 2,000 acres, are beginning to fall into place. The Cairo Regional Airport Board has agreed to sell 467 acres to the plant developers, board member Jack Guetterman said. The deal requires Clean Coal Power Resources to settle about $3.5 million in claims the federal government could pursue because of various grants to the airport over the past 20 years, he said.

Construction of the refinery would shut the airport down because it will obstruct the runways, Guetterman said. The airport is used mainly by a few private pilots, he said.

The airport land will be sold for an amount that will be negotiated after the size of federal claims are known, Guetterman said. But the decision to close the airport to make way for a major industrial development wasn't a difficult one, he said. The prospect of up to 1,000 jobs is too attractive, he said.

"If this thing works out, it is the greatest thing that ever happened for Cairo," Guetterman said. "It also means big things for Cape Girardeau and the whole area, Cape, Cairo and western Kentucky, if it comes to pass."

Clean Coal Power Resources has sought to keep its identity as the developer of the plant a secret. On its Internet site, www.cleancoalpower.com, it still presents the Fayette County, Ill., project near Vandalia as its goal, but has not updated the information about the plant since 2002, when the site was first chosen.

The Fayette County project was designed to have the plant using the coal near the mouth of a new coal mine. While that has proved unworkable, the mine project is going forward and the chairman of the Fayette County Board, Dean Black, is philosophical about losing the gasification plant.

"We don't have any hard feelings towards them because the coal gasification plant is leaving," Black said. "We are going to benefit big time from having the coal mine that will be in this area."

Clean Coal Power Resources has the ability to make the plant happen, Black said. "I think they have the support and they have the backing to be able to do it," he said. "I think there will be something done in the Cairo area."

The company is trying to be as quiet as possible because it wants to have everything in place before making formal announcements, Capie said. "It got out too early as it is," he said. "We want to avoid the hysteria that is created by these announcements. People expect things to happen instantly."

Illinois is an attractive state for such a plant because it has vast coal reserves -- the second- or third-largest in the nation, depending on which statistics are used. But the high sulfur content makes Illinois coal unattractive for many power plants.

To spur coal production, Illinois offers big incentives to new users who locate within the state. The program will provide up to $100 million annual in rebates to coal consumers, Hoback said. For every 1 million tons used, the rebate could be about half the cost of the coal, or about $14 million at current coal prices, he said.

The state is focusing on coal gasification because it can use the coal in an environmentally safe way, Hoback said. Including the Alexander County proposal, five plants are in various stages of development across the state, he said.

"This is an environmentally friendly use of Illinois coal," Hoback said. "Improving the Illinois coal miners' opportunity for work goes hand in hand with improving the environment by using Illinois coal."

The methods for producing diesel fuel at the proposed Alexander County plant aren't new technology. In South Africa, much of the diesel fuel is made from coal, a legacy of the time when the apartheid system left that nation economically isolated.

Now the high price of oil is making that technology attractive in the United States, Hoback said.

The fuel produced at the proposed Alexander County plant will need to be mixed with soybean oil to make a usable fuel, Hoback said.

"It will be good for helping out the farmer and the coal miner," he said. "My goal is to clean the air in Chicago using coal and soybeans."

rkeller@semissourian.com

335-6611, extension 126