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Coal-to-Liquids: Technology, Commercialization, and Potential Contribution to US and Global Energy Pool
27th USAEE/IAEE North American ConferenceHouston, TexasSeptember 2007
Iraj Isaac Rahmim, Ph.D.E-MetaVenture, Inc.Houston, Texas
Presenter
Presentation Notes
Don’t forget low olefin For 45 minute paper, APEC has diesel info Give all references
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Introduction
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
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Key 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
F-T converts SynGas to hydrocarbons:CO + ? H2 —CH2— + CO2 + H2O + Heat
(long chain)
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CTL ProductsProduct 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 paraffinicNear zero sulfur
Preferred use: steam cracker feed
Diesel 25 35 High cetaneNear zero sulfur
Low densityLow aromatics
Lubes 15 <1High gradeLow volatilityLow pour point
Low viscosityLow sulfur
Wax 5 <1 High quality
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Interested Parties
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CTL Drivers
Large coal reserves exist with over 140 years remaining at current productionDemand for oil and natural gas is to continue rapid growthThe 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 futureIf 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
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Driver: Energy and Product DemandGlobal 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)
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Driver: Energy and Product DemandGlobal Resource Demand Projections
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,…
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CTL Facilities and ProjectsEIA 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 2029Year
Proj
ecte
d U
S C
oal t
o C
TL (l
ong-
Tons
/Day
)
Presenter
Presentation Notes
Note: per EIA, about ½ coal to liquid fuels, other ½ captured as heat and electricity
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CTL Facilities and ProjectsEIA 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 2029Year
Proj
ecte
d U
S Li
quid
Fue
ls fr
om C
TL (B
arre
ls/D
ay)
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A Word on GTL Diesel Supply Projections
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
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More on CTL Diesel ProjectionsGlobal
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
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. worldwideRegional 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
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Policy Action (1)Regulations and Incentives—Key Factor
Multiple forms of incentives under consideration (or in effect) in various jurisdictions. Include:
– Direct subsidies or price guaranteesExample: 2005 Federal Transportation Bill—$0.50/gallon of FT naphtha and diesel.
– Loan guaranteesExample: EPAct 2005—loan guarantees for gasification projects with < 65% output as electricity.
– Investment tax creditEPAct 2005—20% credit applied to first $650MM investment during first year of operation
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Policy Action (2)Regulations 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.
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Typical Overall CTL BalanceTwo 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.
Notes: discuss coal quality/water content/regionality, plant structure and objectives (prod., electricity, H2,…), typical B liq/ton coal (1.7-2.2 depending on coal type and process), the amount of C in coal which ends up in CO2 (how all will eventually end up in CO2, so here it is less energy efficient—50% or so.
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Typical CTL Economics50,000 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%
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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
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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)
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CO2 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)?
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Worldwide Large Stationary CO2 SourcesProcess Number of Sources
Emissions(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)
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CO2 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 plantsCTL 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 1-82020 28-61 3-122030 175-230 17-46
2030 CTL Emissions as % 2005 Global Stationary Sources 1.3-1.7 0.1-0.3
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CO2 Capture, Compression, Transport, 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
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CO2 Capture, Compression, Transport, 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 formationsMost 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 storageIn R&D; Technical issues
– Conversion to inorganic carbonates or direct industrial useSmall
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?
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Economics of CTL + CCSCCS 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):