EnergyBiz - September/October 2007 - (Page 26) LEEr There’s a lot of debate on that and there’s different studies. Some studies have indicated that the total carbon footprint of the coal to liquids would be 1.8 times as much as petroleum-derived diesel fuel but not “the doubling” that you see quoted by some of the popular press. We think it is closer to one to one, on the presumption that you capture roughly half of the CO2 in the gasification stage and then sequester it in enhanced oil recovery. The diesel fuel that comes out of a coal-to-liquids plant has a higher energy content, is cleaner and has fewer other pollutants than a petroleum-derived diesel. There is the assumption that you’re not capturing any of the CO2 in the conversion process, which the DKRW plant plans on doing. The CO2 then will get pumped into enhanced oil recovery. Basically, in a depleted oil field we’ve usually recovered somewhere around 30 percent of the oil. So 70 percent remains underground and it just doesn’t flow. The CO2 remains dissolved in the oil and presumably stays there forever or certainly a long time. King coAl EnErgyBiz Long-term, do you expect to expand production and provide fuel for more than 6 percent of United States generation? LEEr Yes, over time. With almost 3 billion tons of reserves, we continue to look at adding to the reserve base. As market demand grows, which it pretty steadily does, we would anticipate that we would match our production to the market demand. EnErgyBiz Is the rail infrastructure adequate, particularly out West? LEEr Today it is. A few years ago it was not and the railroads made significant investments in capacity additions, principally in the Powder River Basin. The coal mines made additional investments in their loading abilities. PrEParing for chang E EnErgyBiz Given the unprecedented nature of the challenges both the coal and the utility industries face, is there a move to work together on solutions? LEEr Yes. I am not going to go into specific conversations, but certainly both individually and collectively and through trade associations, the railroads, the utilities and the coal companies have gotten together to try to address some of these things. EnErgyBiz According to your annual report, you provide fuel for 6 percent of the electricity generated in the United States? Who are some of your major utility customers? WE shOuLd bE prudEnt and takE stEps tO start dEvELOpinG thE CapturE and sEquEstratiOn tEChnOLOGiEs. What will be the result? The reality of it is we’re talking about significant capital investment and significant research and technology investments. The central theme is that for any of us to seriously address CO2, we have to fully back the technology development. Can we capture CO2 in pre-combustion where you gasify the coal? Yes. Can we inject it into the ground? The answer is yes. We’ve proven that with the recovery techniques that are being used in various oil fields. Have we injected it into deep aquifers? Basically no, but there are a couple of pilot plants. Once you start injecting significant quantities of CO2 into the aquifers, we need to make sure that they stay down. EnErgyBiz LEEr EnErgyBiz Are you convinced that global warming is a real problem? LEEr We can have different views of the science, and people do. But if some of the computer modeling proves to be accurate or even half accurate, we should be prudent and take steps to start developing the capture and sequestration technologies. A way to de-carbonize a big chunk of the automotive fleet is to have plug-in hybrids and then capture the CO2 at the power plants. It’s time to move on and let’s make the investments. EnErgyBiz How is Arch Coal different from the public perception of the typical coal company? LEEr We are progressive. We focus really on three core values. Arch is always leading or very near the top year in, year out on overall safety performance. The same with our environmental responsibility. I won’t go through the 25 or 50 environmental awards that we’ve won over the last five or six years. It’s part of what we call our social contract with the communities that we operate in. We also focus on our return to our shareholders and long-term shareholder value creation. We don’t think that a coal company or a natural resource company can have long-term success without being successful in all three of those arenas. EnErgyBiz LEEr AEP, Southern Companies, TXU, Ameren. You name a major generator of electricity that uses coal and we typically are a supplier. EnErgyBiz Your production dipped slightly between 2005 and 2006 from 140 million tons to 135 million tons. What was the reason for that downturn? LEEr We sold three major mines in West Virginia to another company. What is the main misconception the utility 26 E n E rgyB i z September/October 2007
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