Coal: May worth you investing into

Coal: What a Gas!

Mingo County, West Virginia hardly sounds like a place that could help end our
dependence on oil from the Middle East. The entire county has only 27,000
residents. The median household income is under $28,000. And 25% of its
residents are under the poverty line.

Hell, it doesn't even have oil reserves. It's deep in the heart of coal country,
after all.

So how can a new $4 billion plant in Mingo County affect our dependence on
foreign oil?

The plant will take coal and put it through "gasification." The end product will
be gasoline.

Yes, coal into gasoline. Sounds crazy, right?

It is done through a coal-to-liquids (CTL) process called coal liquefaction. No
need to dive into the nitty-gritty science of it here. All you need to know is
that it works.

South Africa has been using CTL since 1955. It not only provides gas for cars
and other vehicles, but also fuel for commercial jets. Right now, the country
meets 30% of its gas and diesel needs through CTL technology.

And for the first time ever, the technology will be in place here in the US.
Construction of the plant in Mingo County is expected to take four years. But
when it is up and running, it is estimated that it will produce 756,000 gallons
of gas per day. That is roughly 18,000 barrels a day, or 2% of the amount we
import.

The allure is clear: The US has the largest coal reserves on the planet. Using
some of that coal to end some of our foreign oil dependency makes sense. (Plus,
with oil prices headed higher over time, and CTL production costs expected to
come down, the benefits of the technology will only increase.)

Turning coal into gasoline is just another aspect of the current "super cycle"
in coal.

China and India are racing to build coal-fired power plants to try and meet
their growing demand for electricity. But that's not all they plan on doing with
coal.

China has a CTL plant in Inner Mongolia that is run by the state-owned Shenhua
Group. And just last week, northwestern China's largest steel company announced
plans to build a $3.3 billion plant in Gansu province. Numerous other plants are
in the planning and approval stages.

And in India, a decision is expected that would allow Tata Steel to partner with
Sasol (the South African company with decades of CTL experience) to build the
country's first CTL plant.

To see how popular coal has become, look no further than reality TV. Spike has a
new show simply called "Coal." It follows a small group of coal miners in West
Virginia. (Just try watching it and not be grateful for the clean air you
breathe.)

The increasing demand for coal (for all purposes) is likely to continue for
years and years. With global uncertainty over nuclear, coal becomes a much safer
(albeit dirtier) solution. And now that CTL technology has gained a foothold
here in some of the world's largest energy markets, expect the coal resurgence
to keep growing.

If you are looking to diversify your energy holdings beyond oil companies, you
should take a long look at coal.

Extracted from Early to Rise Investors-Edition