AIDEA tentatively in on coal-to-liquids project
By Tim Bradner
Alaska Journal of Commerce
Web posted Sunday, February 19, 2006
alaskajournal.com
The Alaska Industrial Development and Export Authority's board has approved a $500,000 participation in a $1.5 million feasibility study of a proposed coal-to-liquids alternative fuels plant in the Beluga River coal fields 50 miles west of Anchorage.
The funding is contingent on private partners in the study completing their financing of the remaining $1 million needed for the study, the board agreed in a Jan. 27 meeting.
The project is being proposed by Alaska Natural Resources-to-Liquids LLC, an Alaska company that could act as developer. The company is in discussions with Sasol, a South African energy company, and Shell Oil regarding participation by one or both companies in a Beluga plant, according to Richard Peterson, president of ANRTL.
Sasol has extensive experience with large plants making liquid products from coal using the Fischer-Tropsch process. Shell operates a Fischer-Tropsch plant in Malaysia that manufactures an ultra-clean diesel and petrochemical feedstock from natural gas for markets in Asia and the United States. Both companies are also engaged in building new Fischer-Tropsch plants in Qatar, based on gas, and both have projects in development in China to make liquid products from coal.
Under the agreement, AIDEA could have a small equity stake in the project but would have no further financial obligation. The authority could participate in commercial financing, however.
Although ANRTL must finalize the participation of other investors, AIDEA has agreed to contribute $100,000 of its $500,000 share of the feasibility study to participate in an ongoing study of Beluga-area coal resources.
Peterson said the extent of the coal resources are not well enough established to determine if a large coal-to-liquids plant can be supplied. The coal-to-liquids project would require approximately 17 million tons of coal a year for 40 years, he said.
If the project is feasible, the plant could require an investment of $5 billion and would produce about 80,000 barrels per day of clean diesel and other products for U.S. markets. "Sasol and Shell are involved in the project, as only these two technology companies have the expertise and experience to handle projects of this type and scale," Peterson said.
The Fischer-Tropsch chemical process to convert coal and other carbon material to liquids has long been known. The chemical reaction, developed in the 1920s by German scientists, has been used to develop commercial scale coal-to-liquids and gas-to-liquids projects in South Africa and Malaysia, and now in Qatar and China. Exxon Mobil Corp. and ConocoPhillips are also developing Fischer-Tropsch projects in Qatar.
Because the United States has large coal resources, there is now interest in the process by the federal government as a way of reducing reliance on imported oil. The new federal energy and transportation bills have incentives for coal-to-liquids plants.
"An advantage with the process is that it makes an ultra-clean diesel free of sulfur and aromatics that will be in high demand in markets with strict air emissions rules, like California," Peterson said. "Another advantage with a coal-to-liquids project is that it generates an enormous amount of waste heat that could be used to produce low-cost electric power, which is something that everyone in the Anchorage/Cook Inlet area should be interested in."
The proposed plant would also be located 12 miles from an existing Chugach Electric Association power plant and its infrastructure.
Estimates are that a large coal-to-liquids plant in Beluga would have waste heat sufficient to generate 300 megawatts of electricity, Peterson said. Generation of electricity with waste heat would reduce the need for natural gas now burned in the boilers of the power plants.
The coal-to liquids project would also produce a concentrated stream of carbon dioxide that could be used in enhanced oil recovery in aging Cook Inlet oil fields. A U.S. Department of Energy study has estimated that hundreds of millions of additional barrels of oil could be recovered from Cook Inlet fields with injection of carbon dioxide.
Tim Bradner can be reached at
tim.bradner@alaskajournal.com. |
