Firm plans to convert coal into fuel.

As oil prices approach $100 per barrel, Silverado Green Fuel claims it will soon be able to transform plentiful low-grade coal into an equivalent fuel that will cost a mere $15. Construction has started on a $26 million demonstration plant in Mississippi; completion is set for 2010. Silverado’s green fuel will be made from low-rank coal, which makes up half of the coal reserves in the United States; North American supplies could feed plants for centuries, Silverado says.

The conversion of low-rank coal into green fuel emits no carbon dioxide or other harmful particles and releases no toxic by-products, according to Silverado. Most of the water used in the processing is extracted from the coal itself and reused. The fuel will be able to be used directly in advanced combustors such as boilers. However, Silverado believes that the fuel will be used as a base material for further processing into auto and aviation gasoline, fertilizers, ammonia, lubricants and even pure hydrogen for power cells.

Silverado Green Fuel is a subsidiary of British Columbia–based Silverado Gold Mines (OTCBB: SLGLF).