Chinese firm to fund coal-to-liquids study in Cook Inlet
By Tim Bradner
Alaska Journal of Commerce
Web posted Sunday, October 1, 2006
alaskajournal.com
Chinese Petroleum Corp. of Taiwan has signed an agreement with the state of Alaska and an Alaskan firm to fund a $1.5 million preliminary feasibility study for an 80,000-barrel-per-day coal-to-liquids fuels plant near the Beluga coal fields on the west side of Cook Inlet, in Southcentral Alaska.
Mike Barry, chairman of the Alaska Industrial Development and Export Authority, outlined the project Sept. 21 at the Southcentral Alaska Energy Forum held in Anchorage, and said the feasibility study will be underway soon.
AIDEA will co-fund the study along with CPC, Taiwan's state-owned petroleum company, and Alaska Natural Resources-to-Liquids LLC, an Alaska firm working on projects using the Fischer-Tropsch chemical conversion process.
"The plant would make up to 80,000 barrels per day of ultra-clean fuels for the West Coast market," Richard Peterson, president of ANRTL said in an interview. "Refiners in Asia are paying a premium for these fuels. Our plans are to sell the products to the U.S. West Coast, where there is a high demand for clean fuels." The products have no sulfur or aromatics, he said.
Peterson said the plant is planned to be located on Cook Inlet near a coal mine in development in the Beluga coal fields, which have an estimated 1 billion tons of coal resources. If built, the plant would be a major project with capital costs of $5 billion or more.
South Africa's Sasol has operated coal-to-liquids plants in that country for decades using the Fischer-Tropsch process. Using improvements in the process, Sasol is now developing advanced Fischer-Tropsch plants in China based on coal. The company is also working on a plant in Qatar, where Shell and Exxon Mobil are engaged in similar projects, that would make clean fuels from natural gas using the process. The Qatar plants are intended to serve the European clean fuels market, Peterson said.
Peterson said the Alaska project would take advantage of the latest improvements in the technology, and may involve Shell or Sasol as technology providers. Seventy-five percent of the Alaska project would be an ultra-clean diesel fuel, 20 percent would be naphtha and 6 percent would be LPGs, or liquefied petroleum gases.
The plant could also boost Cook Inlet oil recovery by making large volumes of low-cost carbon dioxide available for enhanced oil recovery in aging oil fields in the inlet.
Preliminary results from a U.S. Department of Energy study released at the symposium Sept. 21 indicate that a carbon dioxide, enhanced-oil-recovery project in Cook Inlet could result in an additional 300 million to 400 million barrels of oil from five producing fields.
"We see 12 reservoirs in Cook Inlet that are candidates for an (enhanced-oil-recover) project with (carbon dioxide), and we estimate that injecting (carbon dioxide) into six of the best candidate (reservoirs) would result in 290 million to 400 million additional barrels," said David Hite, a consulting geologist working on the DOE study.
The economic assumptions underpinning the estimate are crude oil prices ranging from $45 to $60 per barrel, and "an inexpensive source of carbon dioxide," Hite said. Earlier studies have estimated that if carbon dioxide could be supplied for about 70 cents per thousand cubic feet, an enhanced-oil-recovery project in Cook Inlet oil fields would be feasible, he said.
Besides a coal-to-liquids plant at Beluga, Hite said another possible source of low-cost carbon dioxide is an ammonia and urea fertilizer plant near Kenai that is owned and operated by Agrium Corp.
Agrium is considering a coal gasification project at the plant that would manufacture a synthesis gas for ammonia manufacturing. The plant now relies on natural gas, but is now operating at half capacity because Agrium has been unable to secure sufficient gas supplies.
Hite said that with the coal gasification project, the Agrium plant would produce about 100 million cubic feet of carbon dioxide per day. It could be a source of low-cost carbon dioxide for enhanced-oil-recovery projects in the producing oil fields, he said.
"Cook Inlet is producing about 15,000 to 16,000 barrels per day. These projects could double that production and extend the lives of these mature fields by 20 to 25 years," Hite said.
However, Cook Inlet oil producers are cautious in their views of enhanced-oil-recovery prospects with carbon dioxide. They said a carbon dioxide injection project could be more expensive than thought because additional pipelines and other infrastructure may be required. It may be difficult, for example, to use existing pipelines and wells because of the corrosive effects of carbon dioxide, according to one producing company manager.
Tim Bradner can be reached at tim.bradner@alaskajournal.com. |
