The two companies on Friday signed a non-binding letter of intent which could lead to the development of a coal gasification plant that would turn 600,000 tonnes of Illinois coal a year into syngas.

Under the deal, Secure Energy has the right to purchase property and equipment located at Caterpillar's manufacturing facility in Decatur, Illinois. The equipment includes a coal-powered boiler constructed on the Caterpillar grounds in 1980 that was never put into operation.

Secure Energy plans to utilise the boiler building and several pieces of existing equipment at the Caterpillar site as part of a new coal-to-syngas plant that would supply the Decatur area.

“This technology can provide a stable domestic supply of natural gas using the abundant supply of high-sulfur Illinois coal in an extremely low-emissions process," Secure Energy co-managing member Lars Scott said.

In past decades, coal was primarily used as an energy source for the Decatur region, but because of emissions concerns and the cost of natural gas, many facilities switched to natural gas as a power source.

Now with supply concerns for natural gas, coal gasification technology is seen as a potential new and sustainable use for Illinois coal.

The letter of intent will allow Secure Energy to begin the permitting process for the proposed facility with the goal of being in operation by the end of 2008.