China Petrochemical Corp., a state-controlled company best known as Sinopec (NYSE: SNP) will build an advanced coal-to-gasoline plant near Medicine Bow, Wyoming, that is expected to produce 21,000 barrels a day of gasoline when it goes into service in 2014. The company that will own and operate the plant is DKRW Advanced Fuels, a privately held firm that includes among its owners Arch Coal Inc. (NYSE: ACI), which will supply coal to the project.

Sinopec was selected to build the plant because the company is expected to use “less pricey Chinese components and materials” to construct the plant, according to a report in The Wall Street Journal. DKRW has estimated the project cost at $2 billion.

The Chinese firm told the WSJ, “We expect to offer the U.S. energy market high technology value and high-quality engineering services for both sides to achieve a mutually beneficial win-win.”

If China is now exporting engineering and construction expertise to the U.S., this represents a big change in the relationship between the two countries. Of course converting coal to liquid fuel is not exactly rocket science any more, but the Wyoming plant is counting on capturing, liquefying, and selling its carbon dioxide emissions for use with enhanced oil recovery techniques in the state’s oil fields. This plant, if it is built, represents a major coup for Sinopec and China.

Paul Ausick

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