China's growing attraction to coal-to-liquids offering
By: Terence Creamer
Published: 26 Oct 07 - 0:00
engineeringnews.co.za
Until relatively recently, the internationalisation of Sasol's coal-to-liquids (CTL) technology has played a definite second fiddle to its sister Fischer-Tropsch technology, gas-to-liquids (GTL). But over the past couple of years, the balance has shifted slightly, particularly in light of strong interest from emerging economic giants China and India, as well as the world's leading economy, the US.
Group GM Lean Strauss, who oversees Sasol's international energy cluster that includes the global deployment of both CTL and GTL, says the renewed interest in CTL has arisen mainly as a result of a desire among these coal-rich countries to diversify their transport-fuels mix away from the current heavy reliance on crude oil imports, and the need to ensure greater energy security
Together, these three countries import about 19-million barrels of oil a day, but have significant in-country coal reserves, which, if translated into barrels of oil equivalent, would exceed the known global oil-reserve base of 1 200-billion barrels. For this reason, the prospect of converting these reserves into usable transport fuels has become increasingly attractive.
Strauss tells Engineering News that China at this stage is the most advanced in embracing CTL as a concept, with the leadership in the neighbouring provinces of Shaanxi and Ningxia, in central China, having put their full weight behind the CTL feasibility studies.
HIGH-LEVEL CHINESE INTEREST
At national level, too, the support for CTL is strong, with none other than Premier Wen Jiabao having set aside one hour of a 22-hour visit to South Africa in June 2006 to pay a courtesy call on Sasol, which is the world's leading CTL producer, currently converting about 45-million tons of coal yearly into about 160 000 bbl of liquid fuels.
But Strauss insists that the interest is mutual, epitomised by the fact that Sasol CEO Pat Davies visited China again in September 2007 to consolidate the group's position in the country. Further, the South African group has had a presence in China for a full year, where it has established a 25-person office in China, including 12 South African CTL specialists.
The office is currently building on prefeasibility study work completed last year, and a two-stage feasibility study is currently under way for projects in both provinces. 'We are still busy with the first phase of the feasibility study and it is still our objective to move to the second, technical, phase as soon as possible,' Strauss reports.
Envisaged, at this stage, are two plants able to produce 80 000 bbl/d, at an estimated capital cost of $5-billion to $7-billion.
Davies said at the annual results presentation of the group that Sasol is busy with some 'fairly hard-nosed commercial negotiations', but argued that a cost/benefit analysis (covering forex savings, employ- ment creation and industrial spin- offs) for China is strongly supportive of the development proceeding.
'But it will probably be about a year before there is any real news flow from there,' Davies says.
The possible deployment of the technology is potentially strengthened further by the quality of China's coal, which Strauss describes as superior to that available in South Africa.
But both provinces are also reportedly acutely aware of the associated water demand that would arise from a CTL project and have made commitments to securing the necessary water and infrastructure development.
COAL SECURITY KEY TO UNLOCKING INDIAN PROJECT
Across the border, in India, meanwhile, support for CTL is also gathering steam. The country's Parliament has reportedly passed an amendment to its minerals legislation that enables its coal resources to be used for the production of liquid fuels, which is perceived as a major step forward.
However, Strauss says that, given restrictions on the private ownership of coal reserves, Sasol has not yet been able to secure specific coal blocks on which it could base its studies. The group's preferred operational model is to participate in the full value chain from mining to distribution.
A representative office has been established to advance the CTL cause. Technical studies would only be possible on dedicated coal reserves.
Strauss expects that water supply will also be key to unlocking any potential investment in the country, which is regarded as having the world's fourth-largest reserves of coal.
FIVE STATES TARGETED FOR CTL IN THE US
In the US, Sasol is honing in on five of that country's 17 main coal-rich States, and has started with exploratory studies in these.
Strauss believes one of the main constraints would be the capital cost of the projects in a country with a high labour and construction cost environment.
Supportive of a potential CTL investment is the current demand for greater energy diversity, as well as a political desire to have greater in-country supply security. However, there is also a rigorous debate under way about the possible quantum of incentives that could be on offer for CTL projects.
Sasol is giving increasing attention to the issue of carbon-dioxide emissions and mitigation strategies.
Strauss believes there is a real opportunity to progress with carbon-capture-and-sequestration solutions in the US, noting that there is already an established market and infrastructure for carbon dioxide trading. In fact, there are pipeline networks, which are in close proximity to some of the coal sites under review, where a CTL plant could introduce part of its emissions for use in improving production yields at nearby oilfields.
ECONOMIC AND NONECONOMIC SEQUESTRATION OPTIONS PROBED
However, he admits that such 'economic sequestration' could be limited and Sasol would also have to design for noneconomic capture-and-storage solutions as well.
'The technology for enhanced oil recovery has been proven at several sites in the US and we are convinced that we could make major strides in this area in the years ahead as CTL plants can capture a significant portion of its carbon dioxide at a relatively low cost,' Strauss enthused. He says that Sasol is already planning a pilot facility at an undisclosed site in Southern Africa.
The environmental implications of yet another CTL facility in South Africa, currently dubbed 'Project Mafutha', are also receiving serious attention, and any advances made in that project, particularly with regard to lowering emissions and reducing water intake, could be applied elsewhere. Similarly, any advances made on these issues globally could be transferred back to South Africa.
South Africa energy cluster head Benny Mokaba tells Engineering News that carbon-capture-and- sequestration techniques may even be incorporated upfront into the Project Mafutha design, with scientists evaluating the possibility of storage in deep geological formations, such as deep-saline reservoirs, and coal bed methane recovery opportunities.
'We are inundated with requests about our CTL technology. Our involvement in China was, initially on request from the Chinese government, while individual States from the US have been approaching us too. 'So there is a real pull for this technology,' Strauss reports, adding that the next objective is to reach a point where the first global CTL investment decision can be made.
'The studies take time, but I believe we will be in that position within the next two to three years, or even sooner,' he concludes.
Edited by: Creamer Media Reporter |
