Newsmaker: Meet the king of coal

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When it comes to sequestration, BP and some of the oil companies favor putting it underground or while some others are talking about turning it into a solid like baking soda. What do you think is viable?
Boyce: Well, I agree with the BP folks in that. You take CO2 and you liquefy it because you can transport it under pressure. Then you put it under the ground and the same formations that held oil and gas for millions of years can hold CO2 for another million years. I mean, geologically that works, and the demonstration projects that have been going on for a number of years show that.

The other opportunity is enhanced oil recovery. When a petroleum council looks at this, they see maybe another 2 (million) to 3 million barrels of oil a day in this country from enhanced oil recovery. You take that CO2, liquid CO2, you reinject it back into the oil field and it pushes the oil that's trapped in the pores of the earth out to the surface. It (enhanced oil recovery) has been going on in West Texas for 25 years. We know how to transport CO2. We know how to pump it back in the ground and we know how to monitor it when it's in the ground.

But if you add it up for all of the power generation, it's a large amount of CO2, and that's where people say, "OK, we need to get the large-scale projects and then see what happens."

The other thing we need to do in this country is we need to develop the regulatory and the legal framework for CO2 storage. If we're going to store it in the ground we've got to come up with that whole framework and a program that'll allow that to happen, and that doesn't exist right now.

What are some of the ideas for that?
Boyce: People are just discussing that. Who owns the pore space under the ground? Is that owned by the federal government like some minerals are and coal reserves are? Is it privately owned? All of that has to be sorted out.

The European Union is also moving very quickly down the path of trying to approve some large facilities. In fact, they're also in the process of developing the legislative framework for the storage, the monitoring, and the permitting. They're actually farther along than we are. People think that the European Union is trying to do away with coal. The fact is they are farther down the path of bringing coal back into their energy mix because they have recognized that...gas is not a good thing to be exposed to in terms of the sole source of electricity.

Why did FutureGen collapse? (FutureGen was a billion-dollar-plus project to build a clean power plan in the U.S. Funding was shifted to other projects last month.)
Boyce: Well, you know, it hasn't collapsed. I mean, we are still in discussions with the Department of Energy. We are still in discussions with Congress and will have to see where all of those go. What we all agree on is we can't lose any more time to get large-scale demonstration projects in place. What the DOE has said is that they want to do multiple projects rather than just doing one project at one site. We are still under active discussions. Where it's all going to turn out I don't know, but it certainly has thrown a major delay into it, which is a disappointment.

We're also a participant in the Australian Coal 21 project for clean coal and electricity and a participant in the Midwest Carbon Sequestration programs in Missouri area. And we were the only non-Chinese company that was invited to participate in GreenGen, which is the Chinese government and utilities' new power plant of the future for electricity generation with near-zero emissions. We think our credentials both in terms of the coal that we produce as well as continuing to push the envelope for cleaner coal use are really unequaled.

By the way, a few companies have said they are looking at the Fischer-Tropsch process for making liquid fuel from coal. Could that be economically viable?
Boyce: China is building a number of these plants today because they are not arguing about it. They are just doing it because they've got an energy need they are trying to fill. The break-even-barrel-of-oil kind of numbers that we were hearing from the industry was in that $50 to $60 a barrel range. So, you know, I think it's only a matter of time.

The U.S. Air Force is a very strong component of that because they are looking at where they are going to get their liquid fuel for the next 30 years. They are saying we want to an initiative to get half of our liquid fuels from a U.S. synthetic source over that timeframe. So they are talking about participating and potentially supporting a coal-to-liquid facility in Montana.

The concept is still alive. It's just the capital costs for everything have gone up and then I think we do need to have a little more clarity in terms of our carbon management program going forward. Even the military would like it, if they build these plants, to see them supported with carbon capture and sequestration.

Lastly, how is demand?
Boyce: Coal demand has just been extremely strong. The globe is short of energy. In all coal markets, the demand is far outstripping supply. Prices have gone up over the last year in most major markets and it looks like it's going to be here for a while. China is a major consumer.

Coal has been the fastest-growing fuel of any fuel every year for the last five years and people...don't see that or recognize it. A lot of it's been outside the U.S. because of China, India, the Soviet Union, and Brazil. All of those places have coal reserves and they are using those coal reserves to feed their energy complex.