Jun 15, 2006 State of Louisiana

Governor announces coal gasification plant in Ascension Parish
Total capital investment $5 billion, 1200 permanent jobs in South and North Louisiana

Governor Kathleen Babineaux Blanco today announced that Synfuel, Inc. is proposing to build a major coal gasification plant in Ascension Parish. The proposed new facility will use lignite 褐炭 from north Louisiana as a primary raw material to produce gasoline, ethanol, synthetic gas, electricity, steam and methanol. Synfuel's total capital investment once the project is complete is expected to be more than $5 billion.

The proposed project is expected to create up to 900 permanent jobs at the Ascension Parish facility and another 300 permanent jobs in the four-parish mining area of north Louisiana.

"This is an exciting project that will help stabilize feedstock costs for existing petrochemical facilities in the area that have been struggling in recent years with high natural gas prices," said Governor Blanco. "The facility, when permitted, will help protect existing jobs within the petrochemical industry and create new and excitin! g economic growth opportunities in Louisiana."

Construction of the proposed project would begin when the appropriate regulatory permits are obtained and is expected to take four years to complete. When operational, the plant will process 20 million tons annually of lignite from Bienville, DeSoto, Natchitoches and Red River parishes to produce gasoline, LPG, synthetic gas, methanol, ethanol, sulfuric acid and agglomerate, a road construction material. The facility will also produce steam and electricity for co-generation opportunities. Chemtura, BASF, Rubicon and other Ascension Parish manufacturing facilities have expressed interest in purchasing feedstocks and power from the proposed new plant.

"In the first 10 years of operation, this project will generate more than $3 billion in purchases of goods and services in Louisiana and nearly $300 million in state and local taxes," said Mike Olivier, Secretary of Louisiana Economic Development (LED). "Th! e anticipated economic impact is enormous."

According to a preliminary analysis by LED, in addition to the direct jobs, the gasification plant in Ascension Parish will generate more than 2,500 indirect jobs. Similarly, lignite mining in north Louisiana will create more than 800 indirect jobs. Adding direct and indirect employment impacts, some 3,300 jobs can be attributed to the proposed project.

"The processes and technologies we will use are being introduced in Louisiana for the first time," said Dr. Paul Liu of Synfuel, Inc.

Dr. Liu noted that the technology and engineering team with project development responsibility includes the elite among energy and mining companies. For example, the project's gasification and syngas purification systems will be provided by GE Energy. The technology for methanol synthesis and sulfuric acid will come from Haldor Topsoe, and ExxonMobil will provide the methanol to gasoline know-how. North American Coal Company will conduct the lignite reserve study and develop the mining plan.

Dr. Liu added that Synfuel considers environmental protection a top priority and will work closely with federal, state and local authorities to ensure compliance with all regulatory requirements. He noted that thorough front-end project engineering and design work and environmental analyses will help ensure optimal safety and operational performance.

"Today's public announcement is the first step in a long but exciting process," concluded Blanco. "I am encouraging Synfuel to work closely with the affected communities in north and south Louisiana to make this proposed project a reality."

2006/6/16 The Times-Picayune

$5 billion energy plant unveiled
Ambitious project slated for Louisiana

In one of the world's largest industrial initiatives this year, state and industry officials on Thursday announced a monumental $5 billion energy plant employing 900 people near Geismar that would turn north Louisiana lignite into natural gas, gasoline and other products beginning in 2009.

A new company called Synfuel Inc. with a future headquarters in Baton Rouge is seeking environmental permits and financial agreements to build the coal gasification plant, whose main customer base of chemical plants and refineries is already based in the region.

Major investors, plant component manufacturers and fuel buyers are supporting the project, which will be eligible for a standard package of state and local incentives.

"This is an awesome, awesome deal," Secretary of Economic Development Michael Olivier said. "The anticipated economic impact is enormous."

He said it will reinforce the image that "Louisiana is an energy state, we are important to the nation."

Gov. Kathleen Blanco made the announcement with Synfuel chief "Paul" Hsin Liu, an American plasma physics expert with Chinese business connections who in the past year has pulled together an international group of companies to shape the ambitious project. With natural gas and other fuel prices soaring, coal can be turned into gas and fuel products at a competitive price that will appeal to major chemical companies for feedstocks and power generation, according to Liu's plan.

"This is an exciting project that will help stabilize feedstock costs for existing petrochemical facilities in the area that have been struggling in recent years with high natural gas prices," Blanco said. "The facility, when permitted, will help protect existing jobs within the petrochemical industry and create new and exciting economic growth opportunities in Louisiana."

Liu said if permits come through as expected, the plant will break ground in June 2007. It would begin operation in the third quarter of 2009 and reach full capacity in the third quarter of 2010.

Drawing interest
Mike Cohen, general manager for the chemical maker BASF in Geismar, said his company and other potential customers for Synfuel have been in discussions about the project and are keenly interested because of the potential cost savings compared with the product prices now on the market. Synfuel's presence could draw petrochemical companies to build plants in the area, Cohen said.

The plant would consume about 20 million tons annually of lignite from De Soto, Bienville, Red River and Natchitoches parishes, an area that state Sen. Robert Adley, D-Benton, described as "the land of milk and honey, and lignite." Adley said the area is so rich in lignite it could serve the plant for a century.

The plant would employ about 900 people with average salaries of more than $60,000, company officials said. About 300 people would be employed in the north Louisiana coal mining area. The Baton Rouge headquarters would employ about 55.

The coal would be shipped by water to the Geismar facility. Several locations in the area are under consideration for the plant site.

The company considered several other states for the plant. Olivier said Louisiana's unique combination of rich coal reserves, water transportation and nearby suppliers and customers made the state a natural choice.

'World scale'
Jim Childress, executive director of the Gasification Technologies Council, a trade association, said the Synfuel project is on a "world scale" in terms of investment dollars and equipment. The key to get the plant going will be for Synfuel to get long-term agreements with its future customers, Childress said.

The technology for producing gas and other products out of coal is well known, but the problem has been that its product prices were not competitive, Childress said. That has changed with rocketing prices for oil and natural gas, he said.

There are only about 20 plants in the country that gasify coal, petroleum coke or like products. The only lignite gasification plant in the country on this scale is a North Dakota facility that was built in the 1980s.

Liu repeatedly emphasized to Blanco the need for his plant to get the state environmental permits necessary to begin construction. While obstacles still remain that could derail the project, Liu has pulled together a formidable stable of corporations to assist his endeavor.

The investors include UBS, Citigroup and JPMorgan, some of the biggest names in industrial finance. Louisiana institutions are also among the investors, but Liu would not identify them.

Some of the plant's manufacturing components would be shipped from China, which has been building gasification plants at a booming pace. The project also will use technology and engineering provided by GE Energy, Exxon Mobil and Haldor Topsoe. Synfuel said it has been in discussions with potential customers BASF, Chemtura and Rubicon.

Tax incentives
Synfuel can draw on a number of tax incentives. The leading incentive is a Quality Jobs program in which the state will give cash rebates to the company according to the number of jobs created as long as those jobs are paid at certain levels with benefits. Olivier estimated the company will pay nearly $300 million in state and local taxes in its first 10 years.

The Louisiana deal was hatched when a state business leadership group called the Committee of 100 met at the Metropolitan Club in New York this year. Liu had been pursuing the project behind the scenes and anonymously contacted state officials through third parties. Liu and his intentions came to the attention of Olivier and others at that meeting, and the state pursued the project.

Olivier said the project is likely to be the biggest or at least among the biggest industrial announcements in the country this year and will rank among the top worldwide as well.

Synfuel is incorporated in Delaware.