A Vancouver mining company with an eye to the future recently broke ground for a major demonstration project in Mississippi where the vast amounts of low-grade coal available in the southern U.S. will be turned into a low-cost and environmentally friendly fuel.

Silverado Green Fuel Inc. is working towards a process by which low-grade coal will be hydrothermically converted into a liquid fuel that is similar to oil but far less expensive per barrel of energy. With the groundbreaking on its proposed $26 million U.S. demonstration facility in the Red Hills Ecoplex, Ackerman, MS, the company, wholly owned by Silverado Gold Mines Ltd., is hoping to start producing up to 110,000 barrels of green fuel yearly within eighteen months and have a commercial plant running by 2011.

Commercializing the project could follow on the demonstration work and provide a new feed source for everything from diesel to jet fuel, according to Silverado Chairman and CEO Garry Anselmo.

Conversion of coal to fuel is not a new idea; several methods were developed through the 20th Century. Large amounts of coal-based fuels provided power for German armies in the latter parts of World War II, for example. The problem, though, is that coal-to-fuel processes generate far more carbon dioxide than the equivalent refining of petroleum products. Many require gasification and condensation to produce the fuel, and when burned, high levels of fly ash and other contaminants are produced.

Silverado’s process, based on a fuel first developed in Italy and using technology developed by Dr. Warrack Wilson, avoids gasification in favour of a hydrothermal process. “The process we use is to take low-rank coal, crush and grind it, and pressure cook it, for lack of a better term,” Anselmo explained. “In doing so, the particle dehydrates and sweats all the water out; the natural waxes and resins then, on cooling, seal the particle and don’t let the water back in. Those particles are screened off, and the waters captured for their hydrocarbons… we take out 15 percent of the carbon dioxide, then mix water back with the particles to bring it to shipping grade.” Doing these steps in a closed environment using oxygen means no nitrogen oxides are being produced in the process. Carbon dioxide is captured for sale to the oil industry, and hydrogen is also produced. Heavy metals are removed by the process as well.

The resulting fuel is similar to oil in its look and viscosity, Anselmo said, and would ship similarly to oil. Through spray injection into a boiler or gasification circuit, the product burns with a hot, stable flame and complete burn of carbon, he noted. Some fly ash is produced, but less than with other fuels, Anselmo noted. The product is sulphur, metal and particle free.

Some companies have worked with similar projects using high-quality bituminous coal, and gasification of high quality coal is becoming a more popular target for fuel creation, but Silverado’s process uses low-rank lignite. “High rank coals are three percent water and high energy. Low-rank coal is 50 to 55 percent water and low energy, so the coal industry has pretty much left it alone,” Anselmo said. “We need the high water content coal for our process to work.” The resulting product has a higher energy level than the original coal, and 2.5 barrels of green fuel are the equivalent of one barrel of oil. The difference is the price of producing those barrels. “The cost is $15 to produce two barrels of our fuel, or a barrel of oil equivalent (BOE),” Anselmo said. One ton of coal can make two barrels of green fuel.

While the product can be burned through spray injection as it emerges from the process, further refining afterwards will make it a feed stock for a list of products including rocket fuel, jet fuel, diesel, gasoline, plastics, explosives, urea and others. “Once we gasify and liquefy the product, that becomes a feed stock for making all the things that oil makes. We have the ability to make those products without heavy metals and sulphur, and because we can do that, the next step will be for us or, more likely, those already in the refining business to join us and make more refined, down the line products,” Anselmo said.

The amount of low-rank coal in North America – U.S. deposits make up fully a quarter of the world’s stock – means that using the company’s technique, dependence on foreign oil could be cut back dramatically. “Green fuel made from low-rank coal is a strategic fuel that can help our countries be less dependent on foreign oil and severely lessen the cost of energy,” he said. “America has enough coal to run its energy needs for 300 years.” Government in the U.S. has come on side with the development of the demonstration facility; state and federal funds are being pitched in to the project, and numerous officials were on hand for the groundbreaking in April. “What we need in America to have energy security is more energy,” stated Mississippi Governor Haley Barbour. “It is a phenomenon of technology that this company, Silverado, has pursued aggressively, and it is a great part of trying to show America how to become energy independent.” Silverado has dismantled and is planning to ship a mothballed goldmill from its mining sites in Alaska to form a portion of the demonstration plant.

Development of a commercial site is expected to start approximately a year after the demonstration plant begins operations. Within four years, Anselmo said, the plant could be producing up to 4.5 million barrels of fuel annually.

Production of green fuel from coal could provide the answer to energy concerns as the world moves towards new energy sources. “I think the ultimate energy will be solar power, but between now and then, conversion from a rapidly depleting supply of oil to solar is going to be a long time,” Anselmo said. “The best we can do in that period… is create fuels as environmentally friendly as possible and as low cost as possible.” – LT