H&WB completed Step 1 (Initial Evaluation) of the Philippines Coal Hybrid Liquefaction Project and looked for strategic partners to initially invest up to US$50 million for the final feasibility study that would include a Basic Engineering Design, Front-end Engineering & Design (FEED), licensing fees and initial working capital.

Project Rationale
The Philippines has relied on imported crude oil from the Middle East to fill the gap in its domestic requirements. During the last five years (1999 to 2003), the country has been importing an average of 94% of its crude oil requirements from the Middle East. The high dependence on imported oil makes the country vulnerable to oil supply disruption.
The Philippines Energy Plan for 2005-2014 has placed a high priority on the development and implementation of projects aimed at cutting dependence on imported oil and on the development of renewable and alternative energy sources. Of particular interest are coal-to-clean-fuels technologies, considering that the Philippines have significant coal reserves with an estimated resource potential of 2.36 billion metric tons.

Project Development
A four-step plan has been developed with the aim to start the construction of the facilities in 2009.
Step 1 involves the initial evaluation of the overall plan and consists of six tasks.
These tasks are:
Task 1 – Project scoping
Task 2 – Preliminary site/coal selection
Task 3 – Process plant configuration
Task 4 – Preliminary techno-economic assessment
Task 5 – Project development plan
Task 6 – Detailed plan for Steps 2 and 3
The final report for Step 1, which summarizes findings under this initial evaluation step, is available upon request.

Products Approximately 61,200 barrels per day (BPD) of liquid fuels Over 500 metric tons per day of elemental sulfur 67-MW of power that can be exported to the grid or supplied to a dedicated off-taker. Liquid Fuels LPG - 11,100 BPD Naphtha - 27,200 BPD Distillate - 6,500 BPD Gas oil - 2,800 BPD Diesel - 13,400 BPD All CTL products have the advantage of low sulfur when compared with conventional petroleum products.

SOUTH JORDAN, UTAH – Headwaters Incorporated (NYSE:HW), announced today that its subsidiary has signed several agreements with H&WB Corporation in connection with a planned coal based liquid fuels refinery expected to use low rank coals from the Philippines.

Under these agreements Headwaters CTL, LLC will provide technology licenses, basic engineering design and technical services for the construction of a 60,000 BPD coal liquefaction facility in the Bataan Petrochemical Industrial Zone. After design and construction, this integrated plant is intended to produce ultra clean liquid petrochemical feedstocks and transportation fuels such as LPG, gasoline, diesel and jet fuels. Preliminary front-end engineering study (pre-FEED), which includes pilot scale gasification and liquefaction tests of selected Philippine coals, is scheduled to start in May and will take approximately 18 months to complete. In addition, H&WB Corporation plans to evaluate coal supply logistics, conduct a market study for products, and assess options for carbon dioxide sequestration will be assessed.

It is anticipated that this hybrid CTL plant will be self-sufficient for electric power and utilize an integrated design to take advantage of the two coal liquefaction approaches, direct and indirect, to produce 11,000 BPD of LPG, 27,200 BPD of gasoline and 22,900 BPD of diesel fuel from a projected coal feed of 11,700 short tons of coal per day.

“Headwaters is excited to sign its second coal liquefaction license agreement. Headwaters seek to apply its experience to develop an efficient coal conversion facility fully utilizing the indigenous coal resources of the Philippines,” said Ken Frailey, President of Headwaters Energy Services.

Headwaters have developed technology for processing low cost feedstocks like petroleum resin and coal. The company has proprietary catalysts for direct and indirect conversion of coal into ultra clean transportation fuels.