The company is preparing to start seeking permits this summer for the proposed plant that would convert coal to liquids, including ultra-clean diesel fuel, the Jackson Hole Star-Tribune reported.

The coal supply will come from a large 180 million tonne undeveloped coal reserve over which DKRW Energy, through subsidiary Medicine Bow Fuel & Power, has an option agreement with Arch Coal.

The option gives DKRW the right to purchase the high-Btu, low-sulfur Carbon Basin Coal Reserve from Arch, which would operate a mine next to the proposed plant.

The first phase of the Medicine Bow project is designed to produce approximately 11,000 barrels per day of Fischer-Tropsch diesel and other fuels from Carbon Basin coal. Plant construction could begin as early as the end of 2007 and could take 2000 workers two to four years to build the plant. An investment of $US1-1.5 billion is required.

DKRW plans to use Rentech’s Fischer-Tropsch coal-to-liquids technology in the plant. A deal was signed with General Electric in March to provide the technology to convert coal to syngas. This will then be converted to hydrogen-enriched syngas to feed the Fischer-Tropsch process to produce diesel fuel.

“We chose GE because of its leadership in the coal gasification technology industry,” DKRW chief Robert Kelly said in March at the time the deal was signed.

“We believe that utilising US-based technology, such as GE’s, is an important step in making the US less dependent on foreign energy sources while improving its technology for the future. This agreement completes a major set of feedstock and technology agreements needed to move forward with the Medicine Bow Project.”

While GE’s gasification technology is being used for a variety of applications in over 60 plants around the world, this will be the first application of the technology for making transportation fuel from coal.