Federal coal-to-liquids study focuses on Illinois coal basin
May 21, 2007 7:09 PM (12 hrs ago)
By DENNIS CONRAD, AP
examiner.com
WASHINGTON (Map, News) - A study done for the U.S. Department of Energy suggests it would be economically and technically feasible to operate the nation's first-ever coal-to-liquids plant in the Illinois coal basin.
"The conceptual design evaluated is technically feasible using equipment that has been demonstrated at commercial scale," the report summed up. "Commercial-scale CTL (coal-to-liquids) plants using Midwestern bituminous coal represent promising economic opportunities."
Under a scenario tested for a generic site, a plant with an estimated $3.65 billion cost could generate a greater return on investment the higher the price for crude oil reaches on the world market.
The study said with crude oil at $37 a barrel, the project would achieve at least a 10 percent return on investment. With prices $47 or higher, the yield on investment could be 15 percent.
The report's release came as retail gasoline prices climbed Monday to a national average of $3.196 a gallon for unleaded regular, while crude oil futures rose above $66 per barrel.
The 70-plus page report was prepared by Research & Development, LLC/Science Applications International Corp. under the direction of the energy department's National Energy Technology Laboratory.
Some of Illinois' leading lawmakers on the issue of coal development touted the report's findings.
"I am pleased that a real financial study by DOE has shown that a coal-to-liquid facility can be a reality. The facts are that we need additional fuel supply," said GOP Rep. John Shimkus of Collinsville, whose south-central Illinois district includes much of the state's coal.
The study acknowledged that reducing oil imports and applying downward pressure on oil prices can be done by using renewable fuels such as ethanol, and having more access to oil offshore or on federal land.
But it pointed out that production of liquid fuels from coal provides "another option."
Rep. Jerry Costello, a Belleville Democrat whose district also includes much coal, said the study would help advance coal-to-liquids as an alternative fuel, although he said further analysis still is necessary.
"The hardest part of this process is often commercializing a promising technology," he said.
Shimkus cautioned that while Illinois is a prime location for such a plant, there are other concerns that must be addressed before Americans can see real relief from high gas prices, including: the need for additional oil refining capacity, continued expansion of ethanol and biodiesel, and increased domestic oil exploration.
At 100 percent capacity, the study's conceptual coal-to-liquids plant would produce from high-sulfur bituminous coal 27,819 barrels a day of commercial-grade diesel liquid and 22,173 barrels a day of other liquids that could go for chemical feedstock or other purposes.
Under the base case scenario, crude oil would be $61 a barrel and the coal-to-liquids plant would bring in a 19.8 percent rate of return on investment. That would translate to a payback period of five years.
If the plant's capacity were reduced by 25 percent, the return on investment would dip to 15 percent, according to the study.
The study said government actions, such as a federal loan guarantee, could have a major impact on the return on investment, increasing it as much as 11 percentage points from the base case.
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Baseline Technical and Economic Assessment of a Commercial Scale Fischer-Tropsch Liquids Facility
Final Report - April 9, 2007 - 79 pages
DOE/NETL - 2007/1260
gasification.org
A study assessing the technical and economic feasibility of a commercial 50,000 barrel per day (bbl/day) coal-to-liquids (CTL) facility. The scope of the study includes conceptual design development, process analysis, component descriptions, capital and operating cost estimates, and a comparative financial analysis. |
