'Liquid gold' prospects high with Harmarville studies
By Rick Stouffer
TRIBUNE-REVIEW
Sunday, July 1, 2007
At U-PARC in Harmarville, scientists are running experiments to perfect a way to convert coal into high-quality jet and diesel fuel.
Independent testing company Intertek Inc. is working under contract with the U.S. Air Force to produce the fuels at the former research-and-development complex of Gulf Oil Corp., now the University of Pittsburgh Applied Research Center on Gulf Lab Road.
"We've been focused on producing jet fuel from coal, but it's just as much the same process to convert coal to diesel," said Geoff Wilson, an Englishman who's been involved with oil refinery processes and catalysts for four decades.
Wilson and Penn State University Fuel Science Professor Harold Schobert are working together on coal-to-liquids, Schobert trying to integrate coal-to-liquid equipment and processes into an operating oil refinery.
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"There currently is a lot of interest in coal-to-liquid technology on Capitol Hill, and it has to do with energy security," said Gerry Keenan, a consultant in Chicago with the business advisory firm FTI Consulting.
The U.S. armed forces, particularly the Air Force, is extremely interested in coal-to-liquid, Keenan said. The Air Force in 2006 consumed 2.6 billion gallons of jet fuel, and coal-to-liquid proponents are hoping by 2025 that 1.8 billion of that total could be converted from coal in the United States.
Today, scientists are busy in laboratories locally and nationwide converting coal, America's most abundant carbon-based fuel, into "black gold," a crude oil substitute that produces fuels much cleaner than products made from petroleum.
Reasons for this most recent push to convert coal into ultra-clean liquid fuels, according to proponents, are to take advantage of 250 years worth of coal deposits on or under American soil and to reduce the country's dependence on foreign oil.
Opponents of coal-to-liquid conversion counter that the processes emit more carbon dioxide into the atmosphere than petroleum refineries, that the final product isn't worth the cost and that the processes use excessive amounts of water.
"Our big concerns are the carbon dioxide and greenhouse gas impact of coal-to-liquids," said Deron Lovass, an energy analyst with the National Resources Defense Council in Washington.
Converting coal into diesel, jet fuel and other fuels isn't new. The basic methods known as direct and indirect liquefaction were invented in Germany in the 1920s. In South Africa since the mid-1950s, Sasol Ltd. built and still operates plants that produce 160,000 barrels per day of coal-to-liquids, about 30 percent of the country's needs.
Providing incentives to develop the coal-to-liquids process in the States has been tried three times before. All three programs failed, with the most recent coming in reaction to the 1973 Arab oil embargo and the 1979 oil-price shock.
Congress passed the Energy Security Act of 1980, which authorized spending $17 billion for the public-private Synthetic Fuels Corp., which was charged with producing 500,000 barrels of synthetic fuel per day by 1987. Cost overruns and technical problems shut it down in 1985.
With crude now selling in the $69-a-barrel range, coal-to-liquids is making its fourth U.S. appearance.
"Right now, there are projects proposed in 15 or 16 states," said John Ward, spokesman for Headwaters Inc., a company in South Jordan, Utah, that is heavily involved in coal liquefaction processes.
In February, Headquarters signed a deal with Consol Energy Inc. and is assessing the Upper St. Clair coal producer's coal and land holdings, including in Western Pennsylvania, for construction of a coal-to-liquids plant.
"We're very much in favor of a coal-to-liquids industry," Consol spokesman Thomas Hoffman said. "We would be a feedstock provider, perhaps provide the land for a facility, and we wouldn't rule out being an equity partner."
A huge negative for the coal-to-liquid process is cost. The only commercial-size coal-to-liquids plants currently operating are those in South Africa, so today's costs only are educated guesses. Estimated construction cost per barrel of product ranges from $50,000 to $100,000, or $2.5 billion to $5 billion for a 50,000-barrel-per-day facility.
Experts estimate that for today's coal-to-liquid plants to be profitable, a barrel of crude must sell for more than $40, which is one reason proponents hope the federal government will get involved.
A Senate bill was introduced in January that would assist coal-to-liquids development. However, in the current version, two amendments that would have put billions of dollars into the efforts were defeated by fairly wide margins.
Some 40 miles west of Pittsburgh, on the Ohio River at Wellsville, Ohio, Baard Energy CEO John Baardson, of Vancouver, Wash., is on track to construct a 50,000-barrels-per-day coal-to-liquid plant. The plant would produce jet and diesel fuels along with naphtha, a chemical feedstock for the plastics industry.
Baard Energy's process is a hybrid, using 70 percent coal and 30 percent biomass, five million tons annually and two million tons annually, respectively. The Ohio Air Quality Development Authority already has adopted a $4 billion bond resolution for the Baard project.
"We passed the inducement for up to $4 billion in late 2006," said Mark R. Shanahan, the authority's executive director. "It uses Ohio coal, and the process gets around environmental challenges and thus allows the use of Ohio coal."
"We need a good coal supply, which we have in the Wellsville area, and a key at Wellsville is the fact that we could take control of some old oil wells, allowing us to inject the carbon dioxide (generated by the process) into the wells and allow enhanced oil recovery," Baardson said. "The carbon dioxide is expected to enhance recovery of the oil remaining in the abandoned wells."
In addition to producing ultraclean diesel and crude oil from abandoned wells, Baard would produce up to 200 megawatts of electricity that will be sold into the power grid.
Baardson is confident the Air Quality Development Authority bond will be purchased by "a large international bank," with a group of large Wall Street banks already agreeing to purchase the fuel produced. He's hoping to make it on a list of projects eligible for a federal loan guarantee.
"We expect to have our financing in place by the summer of 2008, with construction to begin in 2009, and the project to be completed in three years," Baardson said.
Rick Stouffer can be reached at rstouffer@tribweb.com or 412-320-7853.
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