Meanwhile, Perlman says he is searching for a coal mine or refinery in the western United States to site Great Point's first plants. The idea is to produce natural gas close to oil producers who need the synthetic-gas plant's largest byproduct: carbon dioxide. Dakota Gasification has blazed this trail. Its synthetic-gas plant converts 18,000 tons of lignite coal into 170 million cubic feet of synthetic natural gas per day--enough to heat 2,500 homes for a year. But it also sells its CO₂ to the aging oil fields of southeastern Saskatchewan, in the process burying more CO₂ in a year than 100,000 cars release in their operational lifetime. (See "Carbon Dioxide for Sale.") "Our CO₂, instead of being a liability, is actually a saleable byproduct," says Perlman, who estimates that oil producers in the west are willing to pay $20 to $40 per ton of CO₂. That said, Perlman has not factored revenue from CO₂ into his business plan. What is clear is the potential for coal. "The U.S. has 3 percent of the world's natural gas but 26 percent of the coal," he says. "Wyoming's coal could supply U.S. natural-gas needs for 100 years."

And natural-gas distributors are eager for the gas. Evansville, IN-based utility Vectren, which supplies gas and power to more than one million customers in Indiana and Ohio, has signed a 30-year deal to pay roughly $5 to $6 per million BTUs for synthetic gas from the $1.5 billion plant that GE hopes to build in Indiana. Vectren spokesman Mike Roeder acknowledges that there is a risk that the gas price could fall in the future, but he says the security of supply is worth it. "Reasonably priced gas has not been an option for our customers for at least the past five years," he says. "So we have a very strong interest in the project moving forward."

The attraction is clear: gasification of coal offers a fixed-price alternative to the volatility of natural-gas markets. Indiana officials note that natural gas from GE's plant at $5 to $6 per million BTUs would be well below the current price of $7.50 to $8.50 per million BTUs. Projecting that natural-gas prices will remain high, the officials estimate that GE's plant would save consumers more than $3.7 billion over the next 30 years. Therein lies the challenge in financing these plants: no one wants to be left on the hook if the natural-gas price crashes, as it did in the 1980s and '90s. Great Point Energy's simpler conversion process offers a safer bet, says Perlman, because it should deliver pipeline-quality gas from coal for less than $3 per million BTUs.