Gasoline from coal
By CHRIS MERRILL
Star-Tribune staff writer Sunday, January 04, 2009
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Construction of a facility that will turn coal into regular gasoline should begin in Carbon County in 2010, and will take about three years to complete.
DKRW Advanced Fuels LLC plans to build the plant between Elk Mountain and Medicine Bow, and it will be a combination coal mine and coal gasification facility that will produce 18,000 to 20,000 barrels of market-ready gasoline per day.
The gasoline would be piped directly to market in Denver, a company official said.
The process will also produce carbon dioxide, which the company plans to sell for enhanced oil field development projects, where the CO2 is injected into old oil wells to rejuvenate production.
The process effectively captures CO2 from the coal and sequesters it underground.
"We expect construction financing in the fourth quarter of 2009, and we're planning to be in operation in 2013," said Robert Kelly, chairman of DKRW Advanced Fuels.
The plan
The plant will be located at the mouth of the new coal mine, where DKRW's partner, Arch Coal Inc., will operate the mine producing 3 million tons of coal per year, Kelly said.
The coal will be turned into a gas, which will then be refined into market-ready gasoline using GE Energy "gasifiers," as well as Exxon Mobil Corp. methanol-to-gasoline technology.
The operation will also produce sulfur that will be sold for chemical uses.
"The final product of the process is water and regular 87-octane gasoline," Kelly said.
By company calculations, the plant will yield fuel competitive with oil-based gasoline, as long as oil is priced at least $40 to $50 per barrel, Kelly said.
Crude oil has had an average price above $50 per barrel since 2005, and the average price so far this year has been nearly $100 per barrel, according to InflationData.com.
"It produces gasoline at competitive prices compared with a refinery, assuming oil remains above ($40 to $50) per barrel," Kelly said. "At 70 bucks a barrel we're very, very competitive. In those ranges we're effectively one of the most competitive refineries in the U.S."
Getting there
Construction of the plant, along with the gasoline and CO2 pipelines, is expected to cost between $2 billion and $3 billion, Kelly said, and will create up to 500 new, permanent, full-time jobs.
The recent credit crisis will likely not affect financing for the project, Kelly said, because DKRW will not be entering the large capital market until the fourth quarter of 2009.
"We're assuming everything the government's been doing will get the credit markets going again. And it's a pretty understandable deal in terms of funding and financing. We're in a good position to get capital," Kelly said.
All told, the Medicine Bow project should produce an amount of gasoline equivalent to that produced from 360 million barrels of oil annually, he said.
"It's gasoline produced in the U.S., and it stays right here," Kelly said. "We get two barrels of gasoline for every ton of coal. It's a pretty efficient process."
Before the 2008 presidential election, Kelly said he wasn't concerned about who the next president would be, because both the Republican and Democratic candidates had repeatedly expressed support for "clean coal" technologies.
Although CO2 sequestration has drawn praise as a net positive in the fight against human-caused climate change, the Medicine Bow project also has elicited concerns from environmental groups, because it will likely emit just under 200 tons of "particulate matter," or dust, each year.
Factor for dust from the associated coal mining, and the project could consume an estimated 85 percent of the allowable incremental increase for particulate matter the size of 10 microns per cubic meter, according to the Wyoming Outdoor Council.
The Wyoming Department of Environmental Quality's Air Quality Division reviewed the company's application for pollutant emissions and determined that the proposal meets all of the state's air quality standards. |
