SLURRY PROPOSALS TREADING WATER

SLURRY PROPOSALS TREADING WATER

Depressed oil and gas prices have nearly halted efforts to develop coal slurry pipelines and coal-powered locomotives, considered promising energy alternatives when other fuel costs were sky high.

"The emphasis is off pipelines. The technology is terrific, it makes sense, but with the price of oil and natural gas what it is, there are no companies with long distance coal slurry pipeline plans," said Stuart D. Serkin, executive director of the Coal & Slurry Technology Association, a Washington, D.C.-based trade group which has been a major proponent of the pipelines.Development of the technology will remain at a standstill, "unless natural gas prices go up," agreed Henry J. Brolick, executive vice president of Williams Technologies Inc. of Tulsa, Okla. Williams Technologies is operator, manager and part owner of the only operating coal slurry pipeline in the United States - the 273-mile Black Mesa pipeline extending from Black Mesa, Ariz., to Laughlin, Nev.

Mr. Brolick says natural gas prices will have to climb to $2.50 to $3 per 1 million Btus for coal slurry to enjoy a resurgence in this country. They are currently $1.60 to $2 per 1 million Btus.

While Mr. Serkin and Mr. Brolick see oil and natural gas prices as the chief culprits for the stagnation in the development of pipelines, Merry K. Pantano, public relations manager for Snamprogetti, an Italian petrochemical engineering company, says undying railroad opposition to the establishment of federal eminent domain rights for the pipelines is the major obstacle.

Her company has developed what is considered the current generation of coal slurry technology, known as coal water fuel. That technology uses a 50-50 mixture of coal and water that is used as a fuel, without dewatering. The previous generation of coal slurry technology - used in the Black Mesa project - is a 70 percent coal/ 30 percent water mixture which has to be returned to a solid form to use for fuel.

While Ms. Pantano says the technology is substantially cheaper than coal slurry, she declined to disclose its cost and whether it is competitive with other fuels.

The first coal slurry pipeline in the United States was built in 1957 in Ohio - a 106-mile line developed by Consolidation Coal Co. in response to increased rates for rail coal shipment. But the project was mothballed six years later after the railroad undercut it by slashing rates. The Black Mesa line, constructed by Southern Pacific Railroad Co., is the second, and only other, project that has been completed.

Driven by the energy crisis, interest in the alternative energy source heightened through the 1970s. Eleven projects were proposed when the technology peaked in favor, between 1973 and the mid-1980s.

Corresponding with the period of most intense project development activity, proponents pushed Congress to grant federal eminent domain rights for the pipelines. The powers were needed so pipelines could be constructed under existing railroads, on federal lands and across state lines. Legislation, however, was repeatedly voted down.

Enthusiasm virtually died out after 1985, when the most ambitious of the proposed projects was abandoned because opposition from the railroads. Although the developer, a consortium called Energy Transportation System Inc., was able to negotiate rights of way under railroads for a 1,387-mile proposed pipeline, it was unable to obtain sufficient commitments from utilities to buy its fuel.

While advocates, such as the Coal & Slurry Technology Association, have not given up hope of winning eminent domain rights, they say low competing fuel costs make it a bad time to wage the battle.

"We still support and endorse (the technology) if we had the legislation to let us build (it)," said Mr. Serkin. "But right now, it's just not worth the fight."

But, even as coal slurry pipeline development is dormant domestically, advocates see, and are pursuing, ample opportunities overseas.

Snamprogetti is starting up the first major coal pipeline project anywhere since Black Mesa. That 160-mile pipeline extends from Belovo to Novosibirsk in the former Soviet Union and uses the company's coal water fuel process. Snamprogetti and Williams Technologies say they are negotiating with the former Soviet republics and China for other projects.

Also looking abroad to keep the coal slurry pipeline alive, the Coal & Slurry Technology Association is recruiting new international members, particularly Japanese companies that are weighing collaborations to build pipelines in China, said Mr. Serkin.

China, the former Soviet republics and India are prime targets for pipeline development because of limited rail capacity, Mr. Brolick said.

The Chinese rail system, "is overloaded with coal. China desperately needs to get coal off its railroads," he said.

While pipeline advocates are looking overseas in the absence of domestic activity, developers of coal slurry to drive locomotives do not see such a promising outlet. After four years, the Department of Energy has curtailed support for what was to be a five-year project to develop the technology.

Having successfully run a 12-cylinder diesel engine with coal slurry for the first time this fall, the DOE contractors - GE Transportation Systems of Erie, Pa. - are dismantling the prototype engine.

"Because of the glut of oil now and the cost of fuel, there is no big interest in (the technology)," said Martin Hapeman, chief engineer for GE Transportation Systems. Mr. Hapeman estimates that diesel fuel would probably have to rise to at least 85 cents per gallon to make coal slurry an attractive alternative. It is now at about 55 cents per gallon.

"GE feels the technology is ready if oil prices (rise)," said Rita Bajura, director of Coal Projects Management at the DOE's Morgantown Energy Technology center in Morgantown, W. Va. "It does not do the taxpayers any good to say (what technologies to commercialize). We have to let the private sector decide what technologies to pursue."

Mr. Hapeman said China - a coal rich/oil poor country - has shown some interest in the coal-powered locomotive. But he does not expect that interest to be strong enough to warrant GE's continued work on the technology.

TEN OTHER PIPELINE PROJECTS PROPOSED AND STALLED OR CANCELLED IN THIS TIME PERIOD

*Allen-Warner Valley Energy System

*Virginia Coal Associates

*Coalstream

*San Marco

*West Virginia/Baltimore Gas & Electric

*Pacific Bulk

*Northwest Integrated Coal Energy System

*Texas Eastern

*Powder River

*Aquatrain