Peabody Energy, the world's largest private-sector coal company, has entered into a memorandum of understanding with ArcLight Capital Partners, LLC to advance project development of a commercial-scale coal gasification project in Illinois that would transform coal into pipeline- quality synthetic natural gas. The initial project would be designed with ConocoPhillips "E-Gas(TM)" Technology, featuring an oxygen-blown gasification system. ConocoPhillips and Fluor have begun preliminary engineering design work for the project.