Copyright 2007 by E-MetaVenture, Inc. All Rights Reserved. Coal-to-Liquids: Technology,...

Copyright 2007 by E-MetaVenture, Inc. All Rights Reserved.

Coal-to-Liquids: Technology, Coal-to-Liquids: Technology, Commercialization, and Potential Commercialization, and Potential Contribution to US and Global Contribution to US and Global Energy PoolEnergy Pool

27th USAEE/IAEE North American ConferenceHouston, TexasSeptember 2007

Iraj Isaac Rahmim, Ph.D.E-MetaVenture, Inc.Houston, Texas

E-MetaVenture, Inc. 2

IntroductionIntroduction

Significant recent interest in non-petroleum-based sources of energy– GTL, CTL, BTL

CTL of particular interest in US, China, Russia, India, Australia,…– Governments, inter-governmental bodies, private sector,

environmental organizations– Sense that things are picking up in speed

Much of the technology is old but specific applications are considered– Require working-out various synergies and technical elements– Require careful evaluation of economics, environmental

implications, strategic impacts


Key TopicsKey Topics

CTL technology

Interested parties and drivers

CTL implementation status and projections

Likely impacts of CTL commercialization

CTL economics and the issue of CO2 recovery and sequestration


CTL BlocksCTL Blocks

Gasification involves pyrolysis, combustion, and gasification chemistries:2 C-H + 3/2 O2 2CO + H2O + HeatC-H + H2O CO + 1.5 H2

Also, some Water-Gas Shift: CO + H2O CO2 + H2

F-T converts SynGas to hydrocarbons:CO + ? H2 —CH2— + CO2 + H2O + Heat

(long chain)


CTL ProductsCTL Products Product Upgrading can involve a number of activities:

– Primarily hydrocracking of wax to lighter diesel and naphtha

Sample product slate for 50 MBD facility

No HC With HC Comments

LPG 1 2 Similar to other plant (LNG, refinery) LPG

Can be co-processed and marketed with them

Naphtha 9 13 Straight chain paraffinic Near zero sulfur

Preferred use: steam cracker feed

Diesel 25 35 High cetane Near zero sulfur

Low density Low aromatics

Lubes 15 <1 High grade Low volatility Low pour point

Low viscosity Low sulfur

Wax 5 <1 High quality


Interested PartiesInterested Parties


CTL DriversCTL Drivers

Large coal reserves exist with over 140 years remaining at current production

Demand for oil and natural gas is to continue rapid growth The majority of coal reserves in the world are located outside the

Middle East (e.g., US, Russia, China, India, Australia) resource security

The demand for transportation fuels, particularly diesel and other distillates, is projected to grow rapidly into the foreseeable future

If this demand is to be met using crude oil, a significant “refinery gap” must be filled

Significant technological improvements in CTL components during the past two decades improved process economics


Driver: Energy and Product DemandDriver: Energy and Product DemandGlobal ReservesGlobal Reserves

ResourceOil

(incl. CanadianOil Sands)

Natural GasCoal

(4 Grades)

Proved Reserves1,372 X 109 Bbl191 X 109 Tons

6,405 TCF 479 X 109 Tons

Energy Basis (quadrillion Btu) 7,600 6,600 8,500

MTOE Basis(million tons oil equivalent)

191,000 165,000 213,000

Years Remaining (at current production)

41 63 147

BP Statistical Survey or World Energy (2007)


Driver: Energy and Product DemandDriver: Energy and Product DemandGlobal Resource Demand ProjectionsGlobal Resource Demand Projections

© OECD/IEA, 2007, Key World Energy Statistics.


Driver: Resource Availability/StrategyDriver: Resource Availability/StrategyGlobal Distribution of Coal ResourcesGlobal Distribution of Coal ResourcesMillion Tons of Proved Reserves (2006)Million Tons of Proved Reserves (2006)

BP Statistical Survey of World Energy.

254,43228%

19,8932%

287,09532%

50,7556%

296,88932%

North America

S. & Cent. America

Europe & Eurasia

Africa & Middle East

Asia Pacific

246,643

157,010

114,500

92,445

78,500

USA

Russian Federation

China

India

Australia


Driver: Resource Availability/StrategyDriver: Resource Availability/StrategyDistribution of Coal Resources—USADistribution of Coal Resources—USA

US Geological Survey Open-File Report OF 96-92.

Anthracite, Semi-Anthracite, Meta-Anthracite

Coking CoalMedium and High-Volatile Bituminous

Low-Volatile Bituminous Lignite

Sub-Bituminous


Driver: Energy and Product DemandDriver: Energy and Product DemandGlobal Distillate Demand ProjectionsGlobal Distillate Demand Projections

-

5 , 000

10 , 000

15 , 000

20 , 000

25 , 000

30 , 000

35 , 000

40 , 000

45 , 000

1977 1987 1995 2000 2005 2010 2015 2020

Mid

dle

Dis

tilla

te C

on

sum

pti

on

(M

BD

)

Projected Total at 3 %growth

Rest of World ( Excl FSU )

Asia Pacific

Europe

North America

“Refinery Gap”


Driver: TechnologyDriver: Technology

Individual CTL process elements have been around for many decades

Significant technical improvements during the past two decades:– Fischer-Tropsch– Hydroprocessing

Evolutionary advancements in gasification, gas treating, power generation,…

CO2 capture, compression, transportation, sequestration

Impact on Process

Economics

Environmental Concerns Later


CTL Facilities and ProjectsCTL Facilities and ProjectsExistingExisting

Company Location Size (BPD) Comments

Sasol I Sasolburg, South Africa 5,600 1955; Sasol technology

Sasol II/III Secunda, South Africa 124,000

1955/1980; Light olefins and gasoline; Sasol technology

Petro SA (formerly Mossgas)

Mossel Bay, South Africa 22,500 1991; Gasoline and diesel;

Sasol technology

Converted to GTL—using NG from Mozambique (circa 2004)?

A number of operational pilot plants. Examples: Rentech (15 BPD), Headwaters (30 BPD). Also two commercial GTL units operational.


CTL Facilities and ProjectsCTL Facilities and ProjectsIn the Works (USA)In the Works (USA)

Project Lead Project Partners Location Feedstock Status Capacity (BPD) Cost (US$ million)

American Clean Coal Fuels None cited Oakland, IL Bituminous,

Biomass Feasibility 25,000 N/A

Synfuels, Inc.GE, Haldor-Topsoe, NACC, ExxonMobil

Ascension Parish, LA Lignite Feasibility N/A 5,000

DKRW Advanced Fuels Rentech, GE Medicine Bow, WY Bituminous Design

(2011) 13,000 1,400

DKRW Advanced Fuels

Rentech, GE, Bull Mountain Land Co.

Roundtop, MT Sub-bituminous, Lignite Feasibility 22,000 1,000-5,000

AIDEA ANTRL, CPC Cook Inlet, AK Sub-bituminous Feasibility 80,000 5,000-8,000

Mingo County Rentech WV Bituminous Feasibility 20,000 2,000

WMPI Sasol, Shell, DOE Gilberton, PA Anthracite Culm Design 5,000 612

Rentech/Peabody N/A MT Sub-bituminous, Lignite Feasibility 10,000-30,000 N/A

Rentech/Peabody N/A Southern IL, SW IN, Western KY Bituminous Feasibility 10,000-30,000 N/A

RentechKiewit Energy Co., WorleyParsons

East Dubuque, IL Bituminous Construction (2010) 1,800 800

Baard Energy AMEC Paragon Wellsvile, OH Sub-bituminous, Lignite Feasibility 35,000 4,000

Headwaters Hopi Tribe AZ Bituminous Feasibility 10,000-50,000 N/A

Headwaters NACC, GRE, Falkirk ND Lignite Feasibility 40,000 3,600

DOE/Office of Fossil Energy—DOE/FE-0509, Green Car Congress


CTL Facilities and ProjectsCTL Facilities and ProjectsIn the Works (Non-US)—PartialIn the Works (Non-US)—Partial

Project Lead Location Status Capacity (BPD)

Shenhua Ordos City, Inner Mongolia, PRC Construction 20,000

Lu’an PRC Construction? 3,000-4,000

Yankuang PRC Construction? 40,000-180,000

Sasol JV PRC Planning 80,000

Shell/Shenhua PRC Planning 70,000-80,000

Headwaters/UK Race Investments PRC Planning 70,000-80,000

Pertamina/Accelon Indonesia Construction? 76,000

Headwaters Philippines Planning 50,000

Alton Resources plc, Jacobs Consultancy, MineConsult Australia Feasibility 45,000

Anglo American (Monash), Shell Victoria, Australia Feasibility 60,000

L&M Group New Zealand Planning 50,000

DOE/Office of Fossil Energy—DOE/FE-0509, Green Car Congress

Also, a number of related projects world-wide: gasification, CCS, direct coal-to-liquids, coal-to-chemicals,…


CTL Facilities and ProjectsCTL Facilities and ProjectsEIA Projection to 2030: Coal used in CTL (USA)EIA Projection to 2030: Coal used in CTL (USA)

As % Total Consumption:

2015: 1.2

2020: 1.9

2025: 5.2

2030: 6.3

0

50,000

100,000

150,000

200,000

250,000

300,000

350,000

2004 2009 2014 2019 2024 2029

Year

Pro

ject

ed U

S C

oal

to

CT

L (

lon

g-T

on

s/D

ay)


CTL Facilities and ProjectsCTL Facilities and ProjectsEIA Projection to 2030: Liquid Fuels from CTL (USA)EIA Projection to 2030: Liquid Fuels from CTL (USA)

As % Total Jet+Distillate Consumption:

2015: 1.3

2020: 1.9

2025: 5.6

2030: 6.2

0

100,000

200,000

300,000

400,000

500,000

600,000

2004 2009 2014 2019 2024 2029

Year

Pro

ject

ed U

S L

iqu

id F

uel

s fr

om

CT

L (

Bar

rels

/Day

)


A Word on GTL Diesel Supply A Word on GTL Diesel Supply ProjectionsProjections

A large number of potential projects; only a small fraction likely to be built

Qatar: self-described GTL capital– Oryx I: 2006 start up; March 2007 upgrader on line, May 2007 1st product lift– Shell Pearl: 2009 (cost issues: $18 billion)– ExxonMobil: 2011 (canceled Feb. 2007)– Marathon, ConcoPhillips on hold per Qatar government temporary moratorium—

likely to hold at least until 2009

Nigeria: – Escravos (Sasol/Chevron): under construction (delays and cost increase)

California Energy Commission estimate (early 2000s):– 2010: 75 MBD global GTL diesel capacity– 2015: 388 MBD– 2020: 800 MBD

Sasol Chevron estimate: 600 MBD by 2016-2019


More on CTL Diesel ProjectionsMore on CTL Diesel ProjectionsGlobalGlobal

US (Baker and O’Brien study):– 2017-2022: 4-6 large-scale (>40 MBD) CTL in Western US– Some smaller plants under consideration in the Eastern US

Potential: 250 MBD of middle distillates

PRC :– A number of projects under study/planning/construction

Example: 20 MBD plant in Inner Mongolia– CTL considered a key component of the PRCs overall, long-term energy strategy– A new key issue: recent environmental concerns of the PRC government– Projected (Robinson and Tatterson, OGJ Feb 2007 study): as much as 160 MBD

liquid fuels

Others: various projects under study/planning

2020 Hand-waving estimate (global): 300-500 MBD 2030: 600-1,000 MBD—many unknown factors


What Impact will CTL have on…What Impact will CTL have on…

Coal market? Proved reserves, production, production increase capability

Liquid fuels market? Supply/demand, change in other sources– Diesel– Jet– Naphtha (for cracking or blending)

US v. worldwide Regional markets

A word on specialty products: lubes and waxes

Environmental impact

Some factors affecting CTL growth:

- Petroleum prices

-Capital availability

- E&C resources

- Technology

- Movement on CCS

- Incentives and regulations


Policy Action (1)Policy Action (1)Regulations and Incentives—Key FactorRegulations and Incentives—Key Factor

Multiple forms of incentives under consideration (or in effect) in various jurisdictions. Include:

– Direct subsidies or price guarantees Example: 2005 Federal Transportation Bill—$0.50/gallon of FT naphtha and diesel.

– Loan guarantees Example: EPAct 2005—loan guarantees for gasification projects with < 65% output as

electricity.

– Investment tax credit EPAct 2005—20% credit applied to first $650MM investment during first year of operation


Policy Action (2)Policy Action (2)Regulations and Incentives—Key FactorRegulations and Incentives—Key Factor

Other incentives:

– USAF Synthetic Fuel Initiative: successfully tested 50/50 Syntroleum FT fuel; targeting 50% synfuel use (domestic) by 2016; awarded 7,500 Bbl FT jet fuel for 2007.

– Government funding of R&D and demonstration units

Environmental regulations/incentives: – Multiple on emissions from plant and fuel– Multiple on fuel quality– EU: Emissions Trading Scheme– Voluntary emissions trading markets (e.g., Chicago Climate Exchange)– US State initiatives (e.g., California, several NE States)

In flux. Subject to lobbying by interest groups on all sides.


Typical Overall CTL BalanceTypical Overall CTL BalanceTwo Recent StudiesTwo Recent Studies

* NETL study for DOD/Air Force (August 2007)** NETL/DOE study (April 2007)*** Not verified. Does not include all energy recovered in process.

Total Liquid Product Capacity 11,000 BPD* 50,000 BPD**

Coal (Illinois #6, bituminous)—TPD 4,891 24,533

Other feeds: air, water, …

Diesel—BPD 7,500 27,819

Naphtha—BPD 3,509 22,173

CO2—TPD 6,035 32,481

Net Power—MW 9.7 124.3

Other products: S, slag, fuel gas,…

Bbl Liquid/Ton Coal 2.25 2.04

Ton CO2/Ton Coal (carbon/carbon) 0.53 0.57

Ton CO2/Ton Coal 1.23 1.32

Overall Thermal Efficiency—% HHV 51*** 47***


Typical CTL EconomicsTypical CTL Economics50,000 BPD50,000 BPD**

CAPITAL COST**

Coal and Slurry Prep $ 425 MM

Gasification $ 1,150 MM

Air Separation Unit $ 425 MM

SynGas Clean-Up $ 850 MM

WGS + FT $ 510 MM

Product Upgrading $ 210 MM

Power Generation $ 255 MM

Other $ 425 MM

TIC $ 4,250 MM

OPERATING COST*(annual, 1st year basis)

Fixed $ 230 MM

Variable (net) $ -20 MM

Purchased Feed $ 300 MM

TOC $ 510 MM

• * One scenario. For discussion purposes only. Results depend on a number of variables and parameters including: product prices, plant availability, EPC cost, % debt financing,…

** Excludes CO2 compression, transportation, sequestration costs.

ROI 16.8 %

Simple Payout 6 years

67%

12%

5%

16%


Driver: Environmental Concerns (1)Driver: Environmental Concerns (1)

As we go from lighter hydrocarbon resources (Natural Gas) to heavier (Crude Oils) to heaviest (Coal)– C/H increases– More CO2 made during conversion to useable fuels

KEY POINT: every single coal carbon molecule, when converted to fuel, will eventually end up in CO2

– Question is NOT whether we make CO2

– Rather, it IS where we make CO2 and what we do with it– (Same applies to natural gas and crude oil)

Key: Capture, Compress, Transport (pipeline), Sequester (“CCS”)– Multiple sequestration options under consideration


Driver: Environmental Concerns (2)Driver: Environmental Concerns (2)

Concern: All agree that CCS is necessary for CTL but major parties do not incorporate the cost of CCS in their economics

Concern: Though CTL+CCS compare well with oil refining in terms of CO2 emissions, there are other options (e.g., BTL, nuclear, wind) with significantly lower CO2 emissions

(Concern: Some sequestration options are technically unproven or risky)


COCO22 from CTL from CTL

Given production of a typical 0.65 ton CO2 per Bbl of liquid products

– 50,000 BPD plant: 11.3 million tons CO2/year

Question:

– Is this significant?

– How important is it to capture, compress, transport, and sequester (CCS)?


Worldwide Large Stationary COWorldwide Large Stationary CO22 Sources Sources

Process Number of SourcesEmissions

(million tons CO2/year)

Power 4,942 10,539

Cement Production 1,175 932

Refineries 638 798

Iron and Steel Industry 269 646

Petrochemicals Industry 470 379

Oil and Gas Processing Not Available 50

Other Fossil Fuels 90 33

Bioethanol and Bioenergy 303 91

TOTAL 7,887 13,466

Intergovernmental Panel on Climate Change (2005)


COCO22 Emission Projections from CTL Emission Projections from CTL

Typical CCS in the context of CTL: 80-90% CO2 emission reduction– Recovers as much as 95% of the CO2

– However, CCS uses energy lower net reduction

CTL with no CCS: emissions worse than refineries, better than coal-fired power plants

CTL with CCS: emissions on par with refineries

Consider earlier EIA US CTL projections:

Projected Emissions from CTL

(million tons CO2/years)without CCS with CCS

2015 10-41 1-8

2020 28-61 3-12

2030 175-230 17-46

2030 CTL Emissions as % 2005 Global Stationary Sources 1.3-1.7 0.1-0.3


COCO22 Capture, Compression, Transport, Capture, Compression, Transport,

Sequestration (CCS) (1)Sequestration (CCS) (1) Capture includes separation/concentration, treating (e.g., dehydration), etc.

– Mature technology used extensively in gas plants and refineries worldwide

Compression: to pressure acceptable to pipeline

Transport—a number of factors– Distance– Tons per year– <1000 km + >millions of tons per year: pipeline most economical– >1000 km + <millions of tons per year: tankers– Mature technology (e.g., >2,500 km pipelines transporting > 40 million

tons of CO2 per year in the US


COCO22 Capture, Compression, Transport, Capture, Compression, Transport,

Sequestration (CCS) (2)Sequestration (CCS) (2) Sequestration can involve

– Use in enhanced oil recovery (EOR) Example: currently, in US, 30 millions tons per year CO2 is injected for EOR

applications

– Injection in depleted oil/gas fields or other suitable geologic formations Most likely option (largest capacity, location, stability/leak) Current example: 1 million tons per year CO2 from Sleipner gas field is injected into

saline aquifer under North Sea

– Ocean storage In R&D; Technical issues

– Conversion to inorganic carbonates or direct industrial use Small

In essence: every one of the elements in the CCS chain is tested/run-commercially. However, not all together in one chain.

– Very active area: R&D as well as commercial testing– Very high likelihood of technical success– QUESTION: impact on economics?


Economics of CTL + CCSEconomics of CTL + CCS CCS economics vary wildly, depending on factors such as capture process specifics,

pipeline length, injection reservoir type and depth, etc.

One study (IPCC 2005) (incl. amortized add’l capital):– Capture from power plant: $15-75/ton CO2

– Transport (250 km): $1-8– Geological storage (excl. remediation/liability): $0.5-8

Another study (MIT 2007):– Capture/compression: $25/ton CO2

– Transportation/storage: $5

A third study (Australia 2006) (capital cost for 0.5 million TPY CO2, equiv. to approx. 2,200 BPD with 50 km pipeline):

– Capture: $25 MM– Compression: $8 MM– Pipeline: $15 MM– Sequestration: $3 MM– Net operating cost: $24/ton CO2 captured (incl. amortized capital)


Rough CTL+CCS EconomicsRough CTL+CCS Economics50,000 BPD*50,000 BPD*

Consider 50,000 BPD CTL

Addition of CCS (incl. 50 km pipeline): – $300 MM extra to TIC– Or $230 MM/year to operating costs (including amortized

TIC addition)

Case CTL CTL+CCS

ROI 16.8 % 11.3 %

Simple Payout 6 years 9 years

* One scenario. For discussion purposes only. Results depend on a number of variables and parameters.


SummarySummary

Significant new interest in CTL

Many parties—pro and con—in a number of countries– Energy security and strategy, environmental impact, product quality

Mature technology; many variable affecting economics

Large number of projects—mostly in study; a few in design or construction

Projection for CTL diesel suggests 1-2% of demand by 2020, 6-7% by 2030

Capital intensive but multiple studies show potential for reasonable economics

Environmental impact key—CO2 capture, compression, transmission, sequestration


Contact InformationContact Information

Iraj Isaac Rahmim, PhDE-MetaVenture, Inc.P. O. Box 271522Houston, Texas 77277-1522USATelephone: USA (713) 446-8867Email: [email protected]

Copyright 2007 by E-MetaVenture, Inc. All Rights Reserved. Coal-to-Liquids: Technology,...

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Transcript of Copyright 2007 by E-MetaVenture, Inc. All Rights Reserved. Coal-to-Liquids: Technology,...