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Wednesday, 12/19/2012 11:26:12 PM

Wednesday, December 19, 2012 11:26:12 PM

Post# of 30354
****New info on permits up on website, great news on this front, answers lots of the questions that have come up. Also info on increased output with Emery's process.

http://usfuelcorporation.com/?page_id=1259

Facility Permitting Update – December 20, 2012

While US Fuel has no guarantee of receiving an air quality permit, we are confident of obtaining required air permits in a timely manner for several reasons.

A. Other Issued Coal-to-Liquid Facility Air Quality Permits

In 2011, the Kentucky Department of Environmental Protection Division for Air Quality granted Air Quality Permits for three coal-to-liquids facilities.

On April 14, 2011, Secure Energy applied to the Kentucky Division for Air Quality (DAQ) for an air permit for a coal-to-liquids facility in West Paducah, Kentucky. The proposed Secure Energy Paducah Gasification Plant would use gasification technology to convert coal into syngas, which would then be used as feedstock to produce gasoline and liquefied petroleum gas (LPG). In July, 2011, the DAQ issued the requested Air Quality Permit.

The actual timeline for the Secure Energy facility permit is consistent with the US Fuel planned timeline. For the Secure Energy facility:

The Air Quality Permit application was submitted on April 14, 2011
The application was deemed complete on May 12, 2011
The Air Quality Permit was issued on June 29, 2011

Public documents relating to this permit can be found at https://dep.gateway.ky.gov/eSearch/Search_AI_Detail.aspx?AgencyID=111261; on the far left of the box, click the “+” next to “air” for individual documents.

On April 21, 2011, Buffalo Creek Energy, LLC applied to the Kentucky Division for Air Quality (DAQ) for an air permit for a coal-to-liquids (CTL) plant in Pike County, Kentucky. The proposed facility would use gasification technology to convert coal into syngas, which would then be used as feedstock to produce gasoline and liquefied petroleum gas (LPG). On June 28, 2011, the DAQ issued the requested Air Quality Permit.

The permitted Buffalo Creek facility is planned to process more coal per hour – 346 tons – than US Fuel plans to process in a day – 300 tons.

The actual timeline for the Buffalo Creek facility permit is consistent with the US Fuel planned timeline. For the Buffalo Creek facility:

The Air Quality Permit application was submitted on April 21, 2011
The application was deemed complete on May 17, 2011
The Air Quality Permit was issued on June 28, 2011

Online resources regarding the Buffalo Creek Air Quality Permit include the following:

The Permit Application Summary – http://www.transgasdevelopment.com/permits/KY%20Permit%20111332%20-%20c.pdf
The Permit Executive Summary – http://www.transgasdevelopment.com/permits/KY%20Permit%20111332.pdf
Comments and Response to the Draft Permit – http://www.transgasdevelopment.com/permits/KY%20Permit%20111332%20-%20d.pdf
The Permit Statement of Basis – http://www.transgasdevelopment.com/permits/KY%20Permit%20111332%20-%20b.pdf
The Buffalo Creek Air Quality Permit – http://www.transgasdevelopment.com/permits/KY%20Permit%20111332%20-%20e.pdf
On April 21, 2011, Chisolm Energy, LLC applied to the Kentucky Division for Air Quality (DAQ) for an air permit for a coal-to-liquids (CTL) plant in Pike County, Kentucky. The proposed facility would use gasification technology to convert coal into syngas, which would then be used as feedstock to produce gasoline and liquefied petroleum gas (LPG). On June 26, 2011, the DAQ issued the requested Air Quality Permit.

The permitted Chisolm Energy facility is planned to process more coal per hour – 346 tons – than US Fuel plans to process in a day – 300 tons.

The timeline for the Air Quality Permits actually issued are consistent with the US Fuel planned timeline. For the Chisolm Energy permit:

The Air Quality Permit application was submitted on April 20, 2011
The application was deemed complete on May 16, 2011
The Air Quality Permit was issued on June 28, 2011

Online resources regarding the Chisolm Energy Air Quality Permit include the following:

The Permit Application Summary – http://www.transgasdevelopment.com/permits/KY%20Permit%20111334%20-%20b.pdf
The Permit Executive Summary – http://www.transgasdevelopment.com/permits/KY%20Permit%20111334%20-%20d.pdf
Comments and Response to the Draft Permit – http://www.transgasdevelopment.com/permits/KY%20Permit%20111334%20-%20e.pdf
The Permit Statement of Basis – http://www.transgasdevelopment.com/permits/KY%20Permit%20111334.pdf
The Chisolm Energy Air Quality Permit – http://www.transgasdevelopment.com/permits/KY%20Permit%20111334%20-%20a.pdf

B. Technology Modifications

The decision to change from using pyrolysis to gasification involved more than simply better facility economics, it included permitting considerations.

Using the pyrolysis offered by Pyrolyzer, a facility processing 148 tons of coal per day would produce approximately 200 barrels of diesel fuel and 74 tons of metallurgical coke per day and cost approximately $80,000,000. The metallurgical coke market is quite unstable and the quality of that product was unknown and dependent upon the individual facility feedstock. The handling of metallurgical coke would have increased facility particulate emissions, perhaps impacting the permitting process.

Using the bubbling fluidized bed gasification process offered by Emery, a facility processing 300 tons of coal per day would produce approximately 525 barrels of liquid fuel per day (approximately 50% diesel fuel and 50% jet fuel) and cost approximately $120,000,000. In addition to the increased fuel output, the market for the jet fuel is expected t be far more stable than the market for metallurgical coke and the particulate issues associated with handling metallurgical coke are eliminated.

Under all of these circumstances, US Fuel is confident that it can engineer a 300 TPD CTL Facility that can be permitted and economically replicated in multiple locations within the general parameters of the project timeline previously announced.

A project timeline is, by definition, a forward looking statement, not a guarantee. Not all standards in effect when permits were issued in 2011 are in effect for permits to be issued in 2013. All project timelines are based upon the best information available to the US Fuel Management team and are subject to change.

The US Fuel facilities as planned are expected to be classified as a minor source of pollutants.

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