In the gentle hills and foggy hollows of Appalachia, where steady work can be as changeable as the upland weather, there is optimism -- and some concern -- about the coming new market for coal.

A litmus test is being conducted in Morgantown, where a $1.4 billion coal liquefaction plant is due to be built along the banks of the Monongahela River. When opened in 1984, the solvent-refined coal II (SRC-II) facility will convert 6,000 tons of Appalachian coal each day into synthetic fuel equivalent to 20,000 barrels of oil.

Coal to feed the liquefaction plant originally would come from southeastern Ohio and the northern panhandle of West Virginia. If the operation is successful, one energy expert estimates, five large mines in the region would be needed to supply coal. This could eliminate much of the current slack in the coal market and eventually employ thousands of miners.

The coming economic surge in rural West Virginia and elsewhere is not necessarily being greeted by universal boosterism, but there seems to be agreement that the energy cause is right, that the environmental side effects are relatively benign, and that the area's state of living could stand improvement. But well before the coal boom comes, many are calling for cautious planning.

"I grew up in Lake Charles, La., when it was just a small town," says Morgantown resident Charlotte Costello. "Now, it's a petrochemical maze. It's possible that the same scenario could occur in the Monongahela Valley."

Mrs. Costello, an official with the local League of Women Voters, worries about whether the mostly rural region will be able to cope with the new activity. But she says her concern in no way means she opposes the plant.

"I don't think the argument about energy independence is lost on environmentalists," she says. "It's important that we are able to cope with it, but people do understand that the bottom line is decreasing the flow of imported oil."

SRC-II -- sponsored by the US Department of Energy (DOE) in partnership with Gulf Oil, the Federal Republic of Germany, and possibly the Mitsui Company of Japan -- is one of the country's most ambitious synthetic energy undertakings. The single "demonstration" plant to be built in Morgantown will be larger than the largest synthetic-fuel plants built by Nazi Germany during World War II.

If it is expanded to full size, as planned by the late 1980s, the SRC-II plant could process 30,000 tons of coal a day, the equivalent of 100,000 barrels of oil. This would be more than Germany produced during its entire war effort, according to the DOE.

SRC-II would be the technological jumping-off point, says DOE fossil-energy chief George Fumich, for construction of "at least 10 to 20 of these plants by the start of the 1990s." These would be served by a 25 percent increase in national coal production. When that is added to the coal needed to carry out the federally required conversion of US power plants from natural gas by 1990, the result looks like a coal boom.

Of immediate concern to West Virginians is the ability of the towns to cope with the population increases that may be caused by the liquefaction plants as well as the stepped-up mining activitym . State roads already suffer from notoriously poor maintenance. School and city public-works projects, say Morgantown officials, are limited by a cap on property tax rates that has been in effect since 1932.

The Morgantown liquefaction plant will employ 460 workers. The initial demand for coal may not give dramatic assistance to the 20,000 miners currently out of work, but it will help the regional construction trade. A "significant ripple effect" could be expected in other employment areas, he says.

In the SRC process, raw coal is pulverize and mixed with a coal-based solvent , such as light oil, at a temperature of about 850 deggrees F. and a pressure of almost 2,000 pounds per square inch. When the coal dissolves, the ash and much of the sulfur can be separated from it. This yields either a tar-like solid or a liquid that can be burned in many fuel-oil boilers. A demonstration plant being built at Owensboro, Ky., will follow the first process.

The slag from the process is relatively harmless, according to Robert E. Martin, an environmental engineer under contract to the DOE. A commercial market for the byproducts also may be found.

A more serious environmental problem, as with all coal, is the carbon dioxide that will be emitted by burning the synthetic fuel product. Because more coal is needed to produce the synthetic fuel burned in boilers, carbon dioxide emissions could be troublesome. This could add to world concern over carbon dioxide buildup.

Conversion of coal to synthetic fuel has been feasible since before World War II, but the periodic discovery of cheap oil, first in east Texas and later in the Middle East, caused interest to slip. With the world price of a barrel of oil now exceeding $30, the DOE says synthetic fuel can compete in the marketplace.

"If we can get a synthetic fuel industry operational by 1990," Mr. Fumich predicts, "it could place a ceiling on oil prices. Coal is the one fuel we have plenty of, and the industry's capacity to produce it is as much as 20 percent under-utilized. We can develop it quickly and with modern-day technology, we can develop it cleanly."

Both the coal operators and the United Mine Workers Union seem pleased with the prospect of vastly increased production that a string of these liquefaction plants would prompt.

"I think both producers and the miners realize that this is finally a solid opportunity for us to take our place in the energy business," says L. M. Thomas, vice-president of Carbon Industries coal company of Charleston, W. Va. "In the last 24 months, we've had a peace [in labor-management relations] that has been unusual since the late '60s."

The durability of that peace will be tested this fall when negotiations open on a new miners' contract. One observer says he is encouraged by union moves to negotiate well before the strike deadline (March 27, 1981).

Next: How coal boom will affect labor-management relations and quality of life.

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