Under the agreement, Consol and Headwaters will work together to perform preliminary engineering, environmental and marketing activities related to potential development of several Consol sites.

These activities would support the construction of one or more coal-based facilities to produce ultra clean liquid transportation fuels such as diesel, gasoline, LPG and jet fuel. The facilities will be carbon dioxide capture-ready and also may produce certain petrochemical feedstocks, Consol said.

With 4.3 billion tons of proven and recoverable coal reserves in the United States, Consol is the largest producer of high-Btu bituminous coal in the nation. The company operates 15 mining complexes in six states.

Headwaters has deep roots in coal-to-liquids technologies. The company's proprietary Fischer-Tropsch catalyst can be used in an indirect coal liquefaction plant to convert coal-derived syngas into ultra clean diesel and other fuels.

The company is also the owner of direct coal liquefaction technology that is currently being deployed or studied for deployment in China, India and the Philippines.

Headwaters is also a partner in a CTL project with Great River Energy and North American Coal Corporation that is in the early stages of developing a 40,000 barrels per day coal-to-liquids facility in North Dakota.