Consol’s Terra Firma Company division and SES will become known as Northern Appalachia Fuel to develop the mine-mouth project in Benwood, West Virginia.

The plant will be supplied by Consol’s Shoemaker mine to produce gasoline and methanol.

“The feedstock will be a blend of run of mine coal and coal otherwise not recovered in the normal preparation process,” the two said in a statement.

The project will include a river terminal facility where the output will be tank-stored for delivery by barge. Coal will be converted to syngas using SES' proprietary U-GAS technology.

The two estimated the syngas will be used to produce about 720,000 tonnes of methanol annually that can be used as chemical feedstock.

The project will also be capable of converting methanol production to 100 million gallons per year of 87-octane gasoline.

The combined entity NAF is negotiating with ExxonMobil Research and Engineering to license the technology.

Meanwhile, both companies’ board of directors have approved funding for the project’s front-end engineering design by Aker Solutions, with each organisation contributing an equal amount to that phase.

Included in the FEED will be a carbon management strategy that will look at carbon sequestration in a deep saline aquifer.

MOU to impact state economy

A memorandum of understanding has also been signed between Consol and SES and the state of West Virginia along with its partner, the Regional Economic Development Partnership.

Under the agreement, RED and the state will finance and provide tax incentives to the project for the next decade.

"This project has the potential to transform West Virginia from a major coal producing state to a national energy center as well," Consol president Brett Harvey said.

"By converting some of our region's abundant, high-Btu coal into gases and liquids, not only will we create economic value for the state, but we will help West Virginia become the linchpin of American energy security."

He said his discussions with state governor Joe Manchin over recent years has focused on leverage methods that could help bring West Virginia’s coal position to one of national energy leadership.

"His vision is sound. With West Virginia's help, our success with this plant will make the vision a reality."

Manchin said the Bentwood facility will lead to more ways of using coal in a more environmentally-friendly manner.

“I am committed to making West Virginia the leader in clean coal technology and the construction of clean coal power and fuel liquefaction plants. We have the resources and expertise to realise our goal," he said.