# Presentation: 329611

## Coal Conversion – Pathwayto Alternate Fuels

**C. Lowell Miller**
**Director, Office of Sequestration, Hydrogen, ****and Clean Coal Fuels**
**Office of Fossil Energy ****U.S. Department of Energy**

- 2007 EIA Energy Outlook Modeling and Data Conference
- Washington, DC
- March 28, 2007

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## Overview

- DOE and Coal Liquefaction RD&D
- Coal – A Significant Source of Energy
- Coal Liquefaction Technology and Status
- Current and Growing Interest in Liquefaction

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## Components of Earlier DOE RD&D Coal Liquefaction Program

- Technology Screening – Bench and pilot plant projects (1964–1976)
- Component I (1976–1982)
- Large-scale demos of Phase I processes
- Thermal and catalytic hydrogenation processes
- Component II (1976–1999)
- Research program
- Pursue improvements and alternatives based on better scientific understanding
- Component III (1980–1998)
- Bench-scale development of Phase II processes
- Overcome techno-economic limitations of Phase I processes
- Catalytic hydrogenation processes

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## Coal Conversion Processes

- Carbonization and Pyrolysis
- Low severity (mild gasification)
- High temperature
- Direct Liquefaction
- One-stage reactor technology
- Two-stage reactor technology
- Co-processing
- Hybrid
- Indirect Liquefaction
- Gas reactors
- Slurry reactors

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## Coal Liquefaction Technologies

*Source: “Coal Conversion – A Rising Star,” 23**rd** Int’l Pittsburgh Coal Conference, September 25-28, 2006.*

| Mild Pyrolysis | Single-Stage Direct Liquefaction | Two-Stage Direct Liquefaction | Co-Processing and Dry Hydrogenation | Indirect Liquefaction |
| --- | --- | --- | --- | --- |
| Liquids from Coal (LFC) Process – Encoal
Coal Technology Corporation 
Univ. of North Dakota Energy and Environmental Center (EERC)/AMAX R&D Process
Institute of Gas Technology
Char, Oil Energy Development (COED) | Solvent Refined Coal Processes (SRC-I and SRC-II) – Gulf Oil
Exxon Donor Solvent (EDS) Process
H-Coal Process – HRI
Imhausen High-Pressure Process
Conoco Zinc Chloride Process
Kohleoel Process – Ruhrkohle
NEDO Process | Consol Synthetic Fuel (CSF) Process
Lummus ITSL Process
Chevron Coal Liquefaction Process (CCLP)
Kerr-McGee ITSL Work
Mitsubishi Solvolysis Process
Pyrosol Process – Saarbergwerke
Catalytic Two-Stage Liquefaction Process – DOE and HRI
Liquid Solvent Extraction (LSE) Process – British Coal
Brown Coal Liquefaction (BCL) Process – NEDO
Amoco CC-TSL Process
Supercritical Gas Extraction (SGE) Process – British Coal | MITI Mark I and Mark II Co-Processing
Cherry P Process – Osaka Gas Co.
Solvolysis Co-Processing – Mitsubishi
Mobil Co-Processing
Pyrosol Co-Processing – Saabergwerke
Chevron Co-Processing
Lummus Crest Co-Processing
Alberta Research Council Co-Processing
CANMET Co-Processing
Rheinbraun Co-Processing
TUC Co-Processing
UOP Slurry-Catalysed Co-Processing
HTI Co-Processing | Sasol
Rentech
Syntroleum
Mobil Methanol-to-Gasoline (MTG) Process
Mobil Methanol-to-Olefins (MTO) Process
Shell Middle Distillate Synthesis (SMOS) |

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## Why Coal-To-Liquids (CTL)?

- Energy Security
- Size of coal resources
- Distribution of resources
- Environment
- Utilization of clean coal technology
- Sequestration technology expected
- Flexibility
- Advanced technology
- Co-production capability
- Economics
- Competitive with alternatives
- World oil price volatility

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## Global Supplies

- World oil demand will grow by 40% to 50% by 2030
- Coincidentally, crude supplies increasingly concentrated in OPEC/ politically unstable geographies
- Coal offers opportunity to diversify worldwide liquid fuel supplies

- Comparison of World Oil and Coal Reserves

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## Coal-to-Liquids – Part of an Unconventional Fuels Portfolio

- Growing consensus on need to diversify transportation fuel sector
- Long term: hydrogen
- Intermediate term: liquids from coal, oil shale, liquids from biomass, increased domestic petroleum production, efficiency
- Advantages of Coal and CTL Technology
- U.S. coal reserves amount to 250-year supply at current rates of consumption
- Coal resources are dispersed (proven reserves in 26 states)
- 1 ton of coal can be processed into 2 barrels of high-quality liquid fuels
- Offers opportunity to pre-invest in eventual hydrogen-from-coal production facility

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## The U.S. Leads in Coal Reserves

*Source:  Energy Information Administration, World Recoverable Coal Reserves*

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## Delineation of U.S. Coal Reserves and Resources 

**RESERVES – quantities of coal anticipated to be commercially recoverable from known accumulations from a given date forward under defined conditions**.
**RESOURCES – quantities of coal estimated, as of a given date, to be potentially recoverable from known accumulations, but which are not currently considered commercially recoverable. **
**There is sufficient reserve to meet projected demand for electricity and up to 4MM bpd CTL industry for over 100 years**

***Source: EIA Coal Reserves Data 1997***

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**Notes:**
Based on current annual production of nearly 1.1 billion short tons, the United States has an approximate 250-year coal supply; but
 EIA projects a steady rise in coal consumption to 1.78 billion short tons by 2030 in its reference economic growth case... largely due to the need for new coal-fired power generating capacity; however:
the EIA estimates the “demonstrated coal reserve base”*(DRB) at 508 billion short tons, which should provide an ample cushion to counter any additional increase required for CTL production 
4MM bpd @ 2 barrels per ton requires 2MM tpd coal x 365 = 730 MMtpy which would consume over a 100 year period about 15% of the DRB

*” resources that meet specified minimum physical and chemical criteria related to current mining and production practices.” 

## U.S. Coal Reserves Distribution

**U.S. Coal Reserves Distribution**

- Greater
- Green River
- Coal Region

- Powder River

- Uinta

- Piceance

- San Juan

- Raton

- Arkoma

- Cherokee

- Black Warrior

- Northern
- Appalachian

- CentralAppalachian

**Rank**

**Small Field****or Isolated**
**Occurrence**

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## Direct Coal Liquefaction Process

**Direct Coal Liquefaction Process**

- Make-Up H2

- Recycle H2

- Coal + Catalyst

- Slurry

- H-Donor

- Slurry

- DAO

- H2S, NH3, COx

- C1 – C2

- LPG

- Gasoline

- Diesel Fuel

- HVGO

- Ash Reject

- Gas Recovery
- Treatment

- Refining

- Fractionation

- Solvent
- De-ashing

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## Hybrid DCL/ICL Plant Concept

- Raw ICL Products

- Raw DCL Products

- H2

- H2

- F-T Tail Gas

- Final Products

- Coal
- Gasification

- Indirect Coal
- Liquefaction (F-T)

- Product Blending and Refining

- Hydrogen
- Recovery

- Direct Coal Liquefaction

**Hybrid DCL/ICL Plant Concept**

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## Shenhua DCL Process

**Light Gases**

**Gasoline**

**Jet Fuel**

**Diesel**

**Catalyst**

**N****2**

**Air**

**Recycle Solvent**

**Residue**

**O****2**

**H****2**

**Coal Prep**

**Slurry Mixing**

**Liquefaction**

**Separation**

**Upgrading**

**Fractionation**

**Air Separation**

**Gasification**

**Purification**

**First Train: 1 MT/a Liquefaction Oil**

**Coal**

**Shenhua DCL Process**

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## Indirect Coal Liquefaction Overview

**Indirect Coal Liquefaction Overview**

**Natural Gas**
**Coal**
**Pet Coke**
**Biomass**
**Wastes**

**Synthesis Gas**
**Production**
** ****Gasification**
** ****Reforming**
** ****Steam**
** ****POX**
** ****ATR**

**Oxygen**
**Plant**

**Air**

**O****2**

**F-T**
**Liquid**
**Synthesis**
**Slurry/Fixed/**
**Fluid-Bed**

**Liquid**
**Fuels**

**Product**
**Storage**
**Naphtha/**
**Diesel**

**Tail**
**Gas**

**Power**
**Generation**

**H****2**

**Hydrogen**
**Recovery**

**Wax**
**Hydrocracking**

**Liquids**

**Wax**

**Product**
**Recovery**

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**Notes:**
For indirect liquefaction, coal is gasified with oxygen to produce a synthesis gas consisting of carbon monoxide and hydrogen.  This gas is cleaned of all impurities and the clean synthesis gas is sent to a Fischer-Tropsch (F-T) reactor where most of the clean gas is converted into zero sulfur liquid hydrocarbon fuels (6).  

## Coal-To-Liquids: Current Status

- Costs – many systems analyses ongoing; for 50,000 bpd plant:
- Capital costs estimated at $3.5–4.5 billion
- Product cost at $40/bbl
- Technology considered commercial
- DOE/industry completed program for development of direct liquefaction technology
- Sasol producing 150,000 bpd of F-T products
- Shenhua China Coal Liquefaction Corp. constructing 20,000 bpd plant; additional 180,000 bpd planned
- Shenhua supports feasibility studies for two 80,000 bpd coal-to-liquid plants
- Improved processes, catalysts, and slurry reactors available
- Bench and pilot facilities at Rentech, Headwaters, Syntroleum, and ConocoPhillips

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## Location of Proposed CTL Projects in the United States 

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## Coal-to-Liquids Plants Under Consideration in the United States 

| Project Lead | Project Partners | Location | Feedstock | Status | Capacity | Cost |
| --- | --- | --- | --- | --- | --- | --- |
| American Clean Coal Fuels | None cited | Oakland, IL | Bituminous | Feasibility | 25,000 | N/A |
| Synfuels Inc. | GE, Haldor-Topsoe, NACC, ExxonMobil | Ascension Parish, LA | Lignite | Feasibility | N/A | $5 billion |
| DKRW Advanced Fuels | Rentech, GE | Medicine Bow, WY  | Bituminous  | Design (2011) | 13,000 bpd | $1.4 billion |
| DKRW Advanced Fuels | Rentech, GE, Bull Mountain Land Company | Roundup, MT | Sub-bituminous/ Lignite  | Feasibility | 22,000 bpd | $1–1.5 billion |
| AIDEA | ANRTL, CPC | Cook Inlet, AK | Sub-bituminous  | Feasibility | 80,000 bpd | $5–8 billion |
| Mingo County | Rentech | WV | Bituminous  | Feasibility | 20,000 bpd | $2 billion |
| WMPI | Sasol, Shell, DOE | Gilberton, PA | Anthracite  | Design | 5,000 bpd | $612 million |
| Rentech/Peabody | N/A | MT | Sub-bituminous/ lignite | Feasibility | 10,000–30,000 bpd | N/A |
| Rentech/Peabody | N/A | Southern IL, Southwest IN, Western KY | Bituminous | Feasibility | 10,000–30,000 bpd | N/A |
| Rentech* | Kiewit Energy Company, WorleyParsons | East Dubuque, IL | Bituminous  | Construction
(2010) | 1,800 bpd* | $800 million |
| Rentech | Adams County | Natchez, MS | Coal/Petcoke | Feasibility | 10,000 bpd | $650–750 million |
| Rentech | Baard Energy | Wellsville, OH | Sub-bituminous  | Feasibility | 35,000 bpd | $4 billion |
| Headwaters | Hopi Tribe | AZ | Bituminous | Feasibility | 10,000–50,000 bpd | N/A |
| Headwaters | NACC, GRE, Falkirk | ND | Lignite  | Feasibility | 40,000 bpd | $3.6 billion |

- *Co-producing fertilizer

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## CTL Projects Worldwide

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## International CTL Plants and Projects 

| Country | Owner/Developer | Capacity (bpd) | Status |
| --- | --- | --- | --- |
| South Africa | Sasol | 150,000 | Operational |
| China | Shenhua | 20,000 (initially) | Construction
Operational in
2007–2008 |
| China | Lu’an Group | ~3,000–4,000 | Construction |
| China | Yankuang | 40,000 (initially)
180,000 planned | Construction |
| China | Sasol JV (2 studies) | 80,000 (each plant) | Planning |
| China | Shell/Shenhua | 70,000–80,000 | Planning |
| China | Headwaters/UK Race Investment | Two 700-bpd
demo plants | Planning |
| Indonesia | Pertamina/Accelon | ~76,000 | Construction |
| Australia | Anglo American/Shell | 60,000 | Planning |
| Australia | Altona Resources plc, Jacobs Consultancy, MineConsult | 45,000 | Planning |
| Philippines | Headwaters | 50,000 | Planning |
| New Zealand | L&M Group | 50,000 | Planning |

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## Congressional Interest in CTL

- Previous Congress (109th)
- H.R. 4761 – Deep Ocean Energy Resources Act of 2006
- H.R. 5965 – Progress Act
- H.R. 5653 – Investment in American Energy Independence Act of 2006
- H.R. 5890 – American-Made Energy Trust Fund Bill
- S. 1920 – Renewable Diesel Standard Act of 2005
- S. 2446 – American Fuels Act of 2006
- S. 3325 – Coal-to-Liquid Fuel Promotion Act of 2006
- Current Congress (110th)
- S. 154
- S. 155        Coal-to-Liquid Fuel Promotion Act of 2007
- H.R. 370

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## Reports and Studies – CTL Processes

- Department of Defense
- OSD Assured Fuels Initiative
- Flight Test of F-T Jet Fuel Blend
- Air Force Energy Industry Forum
- Mitretek
- Techno-Economic Analysis of Wyoming Located CTL Plant
- Gasification of Kemmerer Coal at the Mine Mouth in Wyoming for Production of Zero Sulfur Liquid Transportation Fuels and Electric Power:  A Feasibility Study
- Clean Transportation Fuels from Domestic Coal
- National Coal Council
- America’s Energy Future
- Southern States Energy Board
- American Energy Security Study
- Scully Capital Services, Inc.
- The Business Case for Coal Gasification with Co-Production

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## Reports and Studies – CTL Processes(continued)

- Conference Report 109-360 - National Defense Authorization Act for Fiscal Year 2006
- A Development Plan for a Coal-to-Liquid Fuel Program
- Energy Policy Act - 2005, Section 369
- Commercialization of America’s Strategic Unconventional Fuels: Oil Shale • Tar Sands • Coal Derived Liquids • Heavy Oil • CO2 Enhanced Recovery and Storage
- Rand Corporation
- Unconventional Fuels:  Strategic and Program Options
- World Coal Institute
- Coal:  Liquid Fuels

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## CTL Technology – Economics Remain Key Issue

- Conceptual plant designs estimate $3.5–4.5 billion  required for initial 50,000-bpd plants (Capital cost = $70–90K/daily barrel)
- Plants may be profitable with crude oil price between $45–60/bbl with carbon storage (carbon storage estimated to account for $4/barrel of the required selling price)
- Higher unit investment costs for pioneer demonstration plants (10,000- to 20,000-bpd plants)
- Difficult to accurately estimate costs since no plants have been built worldwide since the 1980s** **

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## Potential Impacts on Cost

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## Barriers to Coal-To-Liquids 

- Technical
- Integrated operations of advanced CTL technologies have never been demonstrated
- Economic
- Uncertainties about future world oil production
- High capital and operations costs
- Investment risks
- Energy price volatility
- Environmental
- CO2 and criteria pollutant emissions
- Expansion of coal production and requisite infrastructure (railroads, railcars, etc.)
- Water use
- Commercial Deployment
- Competition for critical process equipment, engineering, and skilled labor
- Who would take the lead in commercial deployment? Part power part liquid fuels
- Social
- NIMBY and public resistance to coal use

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**Notes:**
     These barriers can be classified as technical, economic, environmental, commercial, and social.  Under technical barriers, the integration of advanced entrained coal gasification and advanced slurry phase F-T synthesis technologies has never been attempted.  This poses moderate-to-high technical risks that may be an impediment to potential process developers on a risk – reward basis even with today’s high WOP.
     In addition, the uncertainties about future oil prices and the high capital expenditures needed for large scale CTL plants are significant economic barriers,   
    It is anticipated that the capital for large (greater than 50,000 BPD) CTL plants will be between $55,000 and $50,000 per daily barrel.  Therefore, a 50,000 BPD plant will cost about $2.75 billion.  The investment risk for such a large sum is considerable and could impede third party financing.