Coal to liquids technology push takes economic hit
fwbusinesspress.com
BY LESLIE WIMMER
December 15, 2008
The strained U.S. credit market and recent sharp decrease in the price of oil has affected the progress of some energy projects across the country meant to develop gasoline and other fuels domestically.
Some consider coal to liquid technology, the process of turning solid coal into liquid fuel, a promising way to wean the United States away from oil dependence, but issues challenging the growth of the technology include high start-up costs and possible environmental damage.
Currently, most coal to liquids plants are located in South Africa, but should the technology pick up in the United States, Texas may become home to several plants, particularly in the Houston and Beaumont areas, said Ian Duncan, associate director of the Bureau of Economic Geology at the University of Texas at Austin.
Some Texas-based companies are already involved in several coal to liquids ventures.
Houston-based Synthesis Energy Systems Inc., an energy and technology company, announced in July of 2008 its plans to fund a West Virginia-based coal to liquids plant with CONSOL Energy Inc., a coal producer.
However, on Oct. 23, Synthesis Energy Systems scrapped the West Virginia project because of growing economic troubles in the U.S., and on the same day announced a global venture with YIMA Coal Group, a Chinese coal company, to develop a coal gasification plant in China’s Henan Province. YIMA Coal Group guaranteed the debt financing for the project.
Irving-based Exxon Mobil Corp. and Houston-based DKRW Advanced Fuels partnered in December of 2007 to plan and build a coal to liquids plant in Medicine Bow, Wyo.
The companies “were supposed to start construction this year, but that’s been pushed back to next year,” said Karen Heath, town clerk and treasurer of Medicine Bow. “The plant isn’t supposed to be operational until 2013.”
Political support to push coal to liquid projects in the United States picked up as the cost of oil rose over the last year and included efforts from U.S. Sen. John Cornyn, R-Texas, and President-elect Barack Obama. That enthusiasm has dwindled since the price of oil began to go down.
The coal to liquid process creates fuels that are normally derived from oil, such as gasoline or jet fuel, by turning solid coal into a gas, reducing the coal to its basic hydrocarbons and turning it into any of the different combinations of hydrocarbons that make up the desired liquid fuels, said Jay Dauenhauer with the Clean Coal Technology Foundation of Texas.
While the technology is promising, it is expensive, and any organization looking to open a coal to liquids plant in the United States in the current economy wouldn’t get far, said Corey Henry, spokesperson for the National Mining Association.
“The issue that’s affecting coal to liquid plants and project developments is the availability of credit,” Henry said. “Plants can cost anywhere from $1 billion to $8 billion to build. Getting that amount of financing and credit will be difficult even in the best of times.”
Despite the high cost of opening a coal to liquids plant and the recent decrease in the price of oil, the technology is still a good investment, Henry said.
“If you look at the price of oil, one can argue that yes, oil is down from the high of $153 it hit this year, but eventually the country’s going to come out of the recession, energy demand is going to grow, oil is going to go back up again and we will get back to where we were,” Henry said. “I think everyone knows that the country needs to invest in alternative fuels and coal to liquids can be a good source of alternative fuels.”
Environmentalists have raised concerns about the amount of water needed to operate a coal to liquids plant and the amount of carbon dioxide the plants emit.
Anyone considering building a plant would have to include carbon dioxide sequestration technology in its design, Duncan said, because the gas the plants emit is more than 99 percent carbon dioxide.
“CO2 sequestration is when you have a power plant that’s producing CO2, what you would do is capture that CO2 as it was coming out of the flue stack of the plant and separate it, if necessary capture it, compress it, and then inject it into a deep underground brine formation,” Duncan said. “The CO2 would end up a mile or two beneath the surface and essentially be trapped in salt water. It would be trapped on a time scale of thousands of years, perhaps longer.”
If coal to liquid technology picks up in the U.S., the technology could be a means to produce fossil fuels domestically while alternative fuels, such as solar or wind energy, are refined, Duncan said.
While some have raised concerns about the amount of water used in the coal to liquid process, the plants use about the same amount of water as coal-burning power plants, Duncan said. Water is an integral part of the process of turning solid coal into gas and of cooling the plant.
“You need steam to be a part of the process, what you’re doing is taking coal and adding hydrogen to it to make it a hydrocarbon, and those hydrogens come from water,” Duncan said. “You react steam and coal in a gasifier and you end up making carbon monoxide and hydrogen, then you react those so you can make a hydrocarbon by putting it over catalysts. It’s not a huge amount of water, most of the water would go to cooling a plant.”
If the technology picks up, industry experts say they don’t expect it to strain the coal industry the way ethanol strained agriculture.
“The coal industry in the U.S. produces about 1 billion tons of a coal a year, and the majority goes to electricity generation with a small amount going toward steel production,” Henry said. “There isn’t a single ton of coal mined to be used in coal to liquids, and you would see overall production of coal mined increase to meet those needs, you wouldn’t take coal from what’s already mined.”
Duncan agreed, adding supply and demand would not impact the coal industry the same way ethanol impacted corn growers because coal is not a food commodity.
“I don’t think comparing it to ethanol is a good comparison, the reason I say that is that because nobody is eating coal,” Duncan said. “You’re not taking a food and turning it into a fuel. When we started converting corn to ethanol, that had an impact on some of the poorest parts of the world, and that’s not going to happen if we start to gasify coal.” |
