Coal to Liquids

Alaska is quickly becoming a major player in the Coal-To-Liquids (CTL) projects market as soaring energy prices’ are leading consumer demand for lower priced transportation and home heating fuels.  The Fairbanks Economic Development Corporation and the Fairbanks North Star Borough have recently announced plans to pursue a coal-to-liquids plant and The Alaska Natural Resources to Liquids LLC. is partnered with Alaska Industrial Development and Export Authority (AIDEA) as they continue to promote their plans for an 80,000 bpd CTL plant near the Beluga Coal fields on the west side of Cook Inlet near the communities of Tyonek and Beluga.

This spring the Legislature passed House Bill 152, The Renewable Energy Grant Fund, and on May 22^nd Governor Palin signed it into law, this legislation creates a five-year, $250 million renewable energy program leading Alaska to a promising future of clean energy combined with a healthy environment and secure jobs.  However, a yet-to-be introduced bill marked “work draft” intends to add “alternative” fuels to the just passed Renewable Energy Grant Fund providing $20.75 billion for coal-to-liquids/synthetic fuel plants returning us to the main power source of the 19^th century.

Alaska CTL Plants Currently Under Consideration

Fairbanks CTL: 20,000 – 40,000 barrel daily production.

Fairbanks area officials are looking for a plant that could produce enough fuel to meet transportation and heating needs across Fairbanks ‘while reducing community-wide emissions of CO₂ and “particulate” air pollution’.  The Alaska Legislature and the Fairbanks North Star Borough will split the cost of a study just commissioned to Hatch Ltd., a Toronto-based consulting and engineering firm. A $300,000 capital budget appropriation and $250,000 from the Fairbanks North star Borough will pay for the study.  The gasification project came out of an energy task force chaired by Steve Haagenson, long time GVEA President and CEO, and now the state’s energy coordinator.

Addressing the Energy Summit in Fairbanks William L. E. Davey the Group leader for Gasification/CTL of Hatch Ltd. said the proposed Fairbanks CTL project would require a 500 megawatt traditional coal fired power plant to generate the necessary energy for the proposed CTL plant.

Beluga CTL

Alaska Natural Resources to Liquids (ANRTL) recently completed a $1.5 million preliminary feasibility study with the help of The Alaska Industrial Development and Export Authority (AIDEA) (see www.aidea.org/PDF%20files/BelugaCTLoverview9-20-06.pdf ).   Plans call for using coal from the Beluga Coal fields to produce 80,000 barrels per day of diesel and naphtha for U. S. west Coast markets in addition to jet fuel and petrochemical feedstocks.

http://www.angtl.com/

Economics

The capital costs are extremely high, best estimates for lower 48 plants are $70-120K per daily barrel[1].  The CTL plant being studied by the Fairbanks Economic Development Corporation (FEDC) is expected to run between 20,000 and 40,000 barrels of liquid fuel per day.  So at the low production end of 20,000 barrels per day the plant would cost an estimated $1.4 – 2.8 Billion, and at the higher production rate of 40,000 the plant cost estimates would run from $2.4 - 4.8 Billion.  However, these cost estimates are very conservative when considering construction costs in Alaska are notoriously higher than the lower 48.  According to the Department of Energy there will be higher unit investment costs for pioneer demonstration plants (10,000- to 20,000-bpd plants) and it is difficult to accurately estimate costs since no plants have been built worldwide since the 1980’s.[2]

http://www.nrdc.org/energy/dirtyfuels_coal.asp

Proponents of coal-derived liquids claim they are “clean” because the fuel produced is lower in sulfur than fuels produced from crude oil, but there are two CO₂ streams created in Coal-to-liquids.  The first stream is in the conversion process, then when the fuel is burned as a transportation or home heating fuel it creates a second stream of CO2.  The emissions from coal-to-liquids production plants are much higher than those from producing and refining crude oil to produce gasoline, diesel, and other transportation fuels. ^[3]

A recent study by the Department of Energy’s Center for Transportation Research and the Argonne National Laboratory found that every gallon of liquid fuels derived from coal produces up to 2.5 times more well to wheel global warming emissions than gasoline or diesel fuel from crude oil.[4]

Capturing the complete stream of CO2 from coal-to-liquids plants instead of releasing them into the atmosphere would help reduced the total emissions, but even with Carbon Capture and Sequestration (CCS) the Green House Gas (GHG) emission rate for Fisher-Tropsch (F-T) fuels are higher than for crude oil-derived hydrocarbon fuels.

Currently there are no commercially operating power plants that capture and permanently sequester CO2 emissions in the U.S. In fact even in the best case, Carbon Capture & Sequestration is at least two decades away from large scale deployment.[5] And according to the Department of Energy “As a technology and a research discipline, carbon sequestration is in its infancy”[6]

The amount of carbon in fuels per unit of energy varies by fuel type; coal contains the highest amount of carbon per unit of energy (and thus the highest amount of CO₂ emissions), while petroleum and natural gas have about 25% and 45% less carbon than coal, respectively.[7] Turning to coal as a transportation fuel would greatly increase carbon emissions at a time when we need to greatly reduce our CO₂ emissions to ward off global climate change.

Slide from Robert H. Williams, Princeton Environmental Institute, PowerPoint presentation to NREL, Golden CO, 3 January 2007 showing Coal-to-liquids plants with CCS having higher GHG emissions than those of fuels produced from crude oil w/o CCS.

The U. S. would need to build 30 CTL plants equivalent to the size proposed for Fairbanks to displace 11% of net crude oil imports (based on year 2000) at a cost of over $66 Billion dollars.  The potential results would be a slight decease on our dependence on foreign oil but would probably have little to no impact on the price of gasoline or diesel.

Developing the CTL plants required to offset transportation fuels would require a drastic increase in the inherently destructive practice of coal mining resulting in significant loss of fish streams and wildlife habitat.

Proposed Legislation

Sen. Domenici (N. M.) introduced a bill this spring ‘The American Energy Production Act (S.2958) that develops CTL as well as oil shale and offshore Alaska resources.  The bill mandates 6 Billion gallons of CTL produced by 2022, allows the DOD to negotiate 25 year contracts ( 5 is the current limit), and repeals section 526 of the Energy Independence and Security Act which prohibits federal agencies from using alternative fuels with lifecycle greenhouse gas emissions greater than those associated with conventional fuels.

H. R. 2208 Coal Liquid Fuel Act – Introduced in May 2007Amends the Energy Policy Act of 2005 to authorize the Secretary of Energy to enter into: (1) standby loan agreements with up to six qualifying CTL projects, at least one of which shall be owned by two or more small coal producers; and (2) a profit-sharing agreement with the project at the time the standby loan agreement is executed. [8]

CTL Plants Under Consideration in the US [9]

International CTL Plant & Projects

[1] C. Lowell Miller, Coal Conversion Technology PowerPoint Congressional Briefing, April 24, 2008

[2] C. Lowell Miller

[3] See http://www.nrdc.org/globalwarming/coal/liquids

[4] Wang et. al. 2007: Life-Cycle Energy and Greenhouse Gas Results of Fischer-Tropsch Diesel Produced from Natural Gas, Coal, and Biomass  Michael Wang, May Wu, and Hong Huo, Center for Transportation Research, Argonne National Laboratory

[5] Cambridge Energy Research Associates

[6] U. S. Department of Energy - Office of Fossil Energy, National   Energy Technology Laboratory , Carbon Sequestration Technology and Roadmap Program Plan 2007

[7] Trends in Greenhouse Gas Emissions

[8] GovTrack.us. H.R. 2208--110th Congress (2007): Coal Liquid Fuel Act, GovTrack.us (database of federal legislation)

[9] C. Lowell Miller, Director Office of Sequestration, Hydrogen, and Clean Coal Fuels, Office of Fossil Energy, US DOE, 2007 EIA Energy Outlook Modeling and Data Conference, March 28, 2007