Fairbanks EDC to conduct study on coal to liquids plant
[May 25, 2008]
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(Alaska Journal of Commerce (Anchorage) (KRT) Via Acquire Media NewsEdge)
May 25--Fairbanks Economic Development Corp. has signed a contract with a Toronto-based engineering firm to conduct a $550,000 screening study on a possible coal or biomass-to-liquids plant in Fairbanks.
The hope is that the alternative fuels plant might lower the cost of energy in Interior Alaska by manufacturing liquids fuels from sources other than crude oil, which is now selling as prices near $130 per barrel. Electricity would also be produced as a byproduct of plant operations.
"Energy is just costing too much. It is driving people and businesses away from our community. This study is the first step toward finding or creating cheaper fuel to ease the burden on our families," said Jim Dodson, president of the FEDC. "By lowering the cost of energy we can also attract new businesses to Fairbanks and grow our economy."
Whether an alternative fuels plant in Fairbanks would be able to lower costs for liquids fuels is unknown, however. The plant could require a capital investment more than $1 billion.
FEDC, a nonprofit economic development group based in Fairbanks, signed the contract with Hatch Ltd., an energy engineering firm with 8,800 employees in 80 offices around the world. Hatch will deliver its report to FEDC in October.
Jim Sarvinis, Hatch's director of energy technologies, said his company believes the goals of producing lower-cost energy in an environmentally responsible manner can be achieved, and that his company has the expertise to help the Interior community achieve its objectives. Sarvinis will be the manager of the FEDC study.
The concept for a Fairbanks alternative fuels plant using the Fischer-Tropsch chemical conversion process to manufacture 20,000 barrels to 40,000 barrels per day of fuels using coal or biomass as a carbon feedstock. The Fischer-Tropsch process was developed in the 1920s and is used on a large scale today by Sasol in South Africa to convert coal and natural gas to liquids fuels.
Shell operates a Fischer-Tropsch plant in Malaysia to make petrochemical feedstock and ultra-clean diesel fuel from natural gas. Sasol has also started operations at a new Fischer-Tropsch plant in Qatar that used natural gas as a feedstock.
Jet fuel, diesel and home heating oil would be the primary products produced in a Fairbanks plant, under the FEDC plan. The concept also involves 60 megawatts to 200 megawatts of power being produced as well as use of waste heat in local space heating.
The study will assume that coal will be the primary feedstock for the plant and that it can be purchased from the Usibelli coal mine at Healy, Dodson said.
Usibelli's mine now supplies coal to power stations in Fairbanks, at Fort Wainwright and Eielson Air Force Base as well as Clear Air Force Station south of Nenana.
Biomass will also be considered as a feedstock for the plant, however. The study will look at a case involving 1,000 tons per day of biomass supply.
The contract calls for two scenarios to be developed, one involving a plant to make liquid fuels derived from coal or biomass with the additional capability of producing power, and a second where natural gas can be added to the feedstock to maximize the conversion of carbon to useful products.
Hatch will also recommend a Fischer-Tropsch technology that minimizes the release of carbon dioxide, according to the contract.
While Fischer-Tropsch is a well-tested technology the major impediment has been the high capital cost of production plants, which has recently been in the range of $70,000 per installed barrel for large new plants, although advances in the technology by Sasol and Shell have reduced the costs for the new generation large plants in Qatar.
Assuming capital investment cost of $70,000 per barrel of daily capacity, a 20,000 barrels-per-day plant in Fairbanks would cost $1.4 billion.
Environmental groups have also criticized plants using the Fischer-Tropsch process because they release large amounts of carbon dioxide, a greenhouse gas that contributes to global warming, and because they are relatively inefficient in the conversion of energy to final products.
The energy inefficiency is substantially improved, however, when waste heat is used to produce electricity or serves other purposes. Carbon dioxide emissions are a problem, however, unless a way can be found to sequester or use the gas.
Fischer-Tropsch plants have the advantage of concentrating the carbon dioxide into a stream of gas so that it can at least be captured, as compared to conventional combustion plants where the gas is released as part of the plant emissions and is thus more difficult to capture.
Alaska Natural Resources-to-Liquids, an Anchorage-based firm, is working to develop a larger 80,000 barrels-per-day Fischer-Tropsch plant using coal at Beluga, west of Anchorage, that would manufacture liquid fuels and have the capability of generating power through waste heat.
At that location the carbon dioxide could be used in enhanced oil recovery to produce more oil from aging Cook Inlet fields.
Tim Bradner can be reached at tim.bradner@alaskajournal.com.
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Copyright (c) 2008, Alaska Journal of Commerce, Anchorage
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