Necessary Roughness

CNet News.com reports that a company will produce industrial fuel from low-grade coal at about $40/bbl initially. After economies of scale kick in, that cost drops to $15/bbl.

The key to the process is that almost no one wants low-grade brown coal, which is about half water. Instead, coal miners and consumers concentrate on anthracite coal, which contains only about 3 percent water.

And there is a lot of coal out there. In the U.S. alone, the existing coal reserves hold enough coal to produce liquid fuel that would be the equivalent of 800 billion barrels of oil, according to a report earlier this year from Dave Edwards at ThinkEquity Partners.

This may sound like bad news for HAL, because less demand for oil means less demand for HAL’s premium services. One has to like, though, natural economic forces driving innovation. Maybe our pump manufacturing centers can sell them some slurry pumps.