GMA welcomes coal-to-gasoline project

President Arroyo formally welcomed yesterday a $5-million joint venture between the Philippine government and one of the biggest energy corporations in the US to conduct a pilot project for a coal-to-gasoline conversion plant in the country.

In rites held at Malacañang Palace, President Arroyo gave her go-signal to a joint undertaking by the Department of Energy (DOE) and Headwaters Inc., billed by Forbes Magazine as the 2nd best corporation in the US.

President Arroyo, assisted by outgoing Energy Secretary Vicente Perez, stood witness to the signing of memorandum of understanding (MOU) signing between DOE Undersecretary Peter Anthony A. Abaya and Craig Hickman, president of Headwaters Inc.

Under the MOU, Headwaters will establish in the country a pilot plant that will produce 25 kilograms a day as part of a study to determine the feasibility of using the country’s indigenous coal.

If found feasible, the MOU provides that both parties will move towards commercial operations by establishing a plant that can produce 50-70,000 barrels per day for domestic use with a limited portion for export.

The MOU targets to position the Philippines as Southeast Asia’s hub for coal-to-gasoline conversion given the proximity of the country to coal shipping routes and coal sources.

Perez told Palace reporters that Headwaters which trades in the Nasdaq with a market capitalization of about $500 million, would bring in a new technology that will tap fully the huge coal deposits all over the country and convert them into liquid fuel such as gasoline.

"So this project will boost energy independence in our country using our own coal resources that can be converted and possibly be used as gasoline or diesel," Perez pointed out.

The major business activities of Headwaters revolve around converting coal into clean alternative fuels and making use of coal by-products. In 2002, Headwaters entered into a multi-year $2-billion agreement with the Shenhua Group, China’s largest coal company, that started using Headwaters’ proprietary technology to convert their coals into ultra-clean hydrocarbons and refined into gasoline and jet fuel.