According to Bloomberg, coal giant Peabody Energy and the big oil trading house Vitol are working with a U.K. startup called Arq that has a process to “pulverize coal, remove impurities and pollutants, and blend it with crude or fuels for use by refineries and other customers.”
The companies have teamed with a U.K. startup that’s developed a process to pulverize coal, remove impurities and pollutants, and blend it with crude or fuels for use by refineries and other customers. While unproven on an industrial scale, the technique has the potential to revive an industry that has stumbled as the world shuns coal for cleaner natural gas and renewables.
“The coal industry needs this because we are able to upgrade their material into higher-value, lower-emission products,” Julian McIntyre, founder and chief executive officer of startup Arq Ltd., said in an interview. “The oil industry needs this as the energy industry becomes more diversified and competitive with renewables.”
Arq is building a plant in Corbin, Kentucky, to process coal from a nearby Peabody mine, and Vitol has agreed to blend and market the resulting output. Production costs less than $10 an equivalent barrel, according to London-based Arq.
“We need lower-cost hydrocarbons and that’s exactly what we deliver,” McIntyre said.
Methods of transforming coal into oil liquids or other hydrocarbons have been tried for about a century with varying degrees of success. Arq’s process has so far worked well in a laboratory setting, according to the company.
Under deals announced Wednesday, Vitol and Peabody will each invest $10 million in Arq, with the potential to inject more cash over the next three years.
The partnership could allow Peabody to add value to its coal, reduce its environmental footprint and expand the market for its products, Charles Meintjes, executive vice president and chief commercial officer for the St. Louis-based company, said in a statement.
The venture may also allow refiners and fuel customers to diversify sources of supply, Mike Muller, the former head of crude trading at Royal Dutch Shell Plc who recently joined Vitol, said in a separate statement.