Oneok Energy Services Signs Deal with Power Holdings of Illinois

Power Holdings of Illinois LLC has announced that it has executed a 20-year synthetic natural gas supply agreement with Oneok Energy Services Company, L.P., of Tulsa for synthetic natural gas that will be produced at the Southern Illinois Coal-to-SNG Facility to be located west of Rend Lake in Southern Illinois.

“With the execution of this 20-year supply agreement, Power Holdings has taken another important step forward in its development of the SNG facility planned to begin construction in 2007,” said Steve Shaw, CFO of Power Holdings. “Financing of capital intensive projects such as the Southern Illinois Coal-to-SNG Facility is only possible with long-term off-take agreements with credit-worthy customers like Oneok Energy Services Company L.P.”

The Southern Illinois SNG facility will convert approximately 4 million tons of Illinois coal into 50 BCF of pipeline-quality natural gas. This 50 BCF is approximately 5% of the annual consumption of Illinois. The plant will require 1,200 construction employees over 3 years, will ultimately employ over 200 full time plant operators, and will necessitate the opening of a new mine creating 400 coal-mining positions. “Using Illinois coal to produce synthetic natural gas is truly a new market for Illinois coal, and holds great potential for the State,” commented Rep. Dan Reitz, Chairman of the Illinois Clean Coal
Review Board.

“By making synthetic natural gas from Illinois coal, we can increase natural gas supply, lower consumer heating bills, reduce our dependence on imported sources while creating jobs and incomes for Illinois,” stated Jack Lavin, Director, Illinois Department of Commerce and Economic Opportunity. “This is exactly the kind of project envisioned by the Governor’s newly announced Energy Independence initiative.”

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