Eastman CEO: Coal Gasification Long-Term Solution for Natural Gas Crisis.

Business Editors

WASHINGTON--(BUSINESS WIRE)--July 10, 2003

J. Brian Ferguson, chairman and CEO of Eastman Chemical Company (NYSE:EMN), told a United States Senate committee today that coal gasification is one of the long-term solutions to help the U.S. overcome a growing natural gas crisis.

In written and oral testimony before the Senate's Energy and Natural Resources Committee, Ferguson said American industries are suffering from soaring natural gas prices and need both long- and short-term solutions to make them more competitive. The committee met to hear testimony on the impact of soaring natural gas prices and possible solutions.

"Short-to-medium term solutions include reducing natural gas demand and increasing natural gas production," Ferguson said. "Long-term, however, federal environmental, energy and economic policies must achieve better alignment.

"It is economically unsustainable to continue policies that drive natural gas demand while simultaneously limiting access to natural gas supplies without providing a balancing energy alternative," said Ferguson. "One of the long-term alternatives to help alleviate this natural gas crisis is tapping into America's vast coal reserves - through the use of competitive coal gasification technology - to reduce natural gas demand."

Coal gasification, which uses a chemical process to turn coal into a syngas that can be used like natural gas, promises to reduce the demands on natural gas, Ferguson said.

Ferguson explained that European chemical manufacturers derive most of their raw materials from globally traded oil feedstocks; U.S. manufacturers are tied primarily to natural gas. "As a result, the current situation threatens the entire U.S. chemical industry as we try to compete with this now disadvantageous feedstock."

He explained that coal gasification technology, similar to what Eastman has operated reliably for 20 years, is not only competitive but also environmentally superior to other clean coal technologies. The power industry, however, needs incentives from Congress before commercially adopting this technology.

"Even though Eastman believes that coal gasification is ready for further commercialization right now, some additional market incentives such as the Clean Coal Power Initiative and the proposed clean coal tax credits are useful and necessary inducements," he said.

With headquarters in Kingsport, Tenn., Eastman manufactures and markets chemicals, fibers and plastics. The company has approximately 15,800 employees in more than 30 countries and had 2002 sales of $5.3 billion.