April 18, 2006
Rapid Switch From Oil To Coal Possible?

Suppose we really are hitting or getting close to hitting peak oil. An obvious question comes to mind: How long would it take to scale up Coal-To-Gas (CTG) and Coal-To-Liquid (CTL) plants? The answer to that question depends on many factors. One of those factors is how rapidly plants could be built that would do CTG and CTL conversions. Turns out we have a fairly recent example of construction of a CTG plant in the form of the Great Plains Synfuels Plant near Beulah North Dakota which was built in about 3 years.

The idea was conceived during the energy crisis of the seventies by a consortium of gas pipeline companies, Great Plains Gasification Associates. Construction commenced in 1981 after President Reagan agreed to back the project with federal loan guarantees. It was completed in 1984. Barely a year later, with the crash in gas prices, the pipeline companies bailed out, defaulting on $1.5 billion in loans. The Department of Energy took possession of Great Plains when the pipeline companies walked away. In 1988, Basin Electric, the local utility that powered the plant, acquired it for $85 million in cash and a promise to share future profits with the Department of Energy.

Dakota Gas survived by becoming a recycler. Its by-products bring in more than $150,000 a day. The most lucrative by-product is carbon dioxide. In 1997, Dakota Gas signed a deal to deliver CO2 for enhanced recovery in PanCanadian’s oilfield in Weyburn, Saskatchewan. As a result, the field is now producing at 27,000 barrels per day - its highest level since the seventies. An additional benefit is that large quantities of CO2 are now safely sequestered in Weyburn’s producing formations. This year, Dakota Gas signed up another Saskatchewan oil producer for its CO2 – Apache Canadian.

Carbon dioxide might be the ticket for extracting far more oil out of old oil reservoirs. If the rosier scenarios for CO2-enhanced extraction pan out then old US oil fields could burst back into high levels of production. But cost is a problem for producing purified carbon dioxide and then transporting it to oil fields.

The Great Plains Synfuels Plant makes 125 million cubic feet of natural gas each day.

Produces 125 million cubic feet of natural gas per day, plus by-products such as phenol, anhydrous ammonia, ammonium sulfate, cresylic acid, nitrogen and krypton/xenon. Operational in 1984.

A recent futures price of natural gas has it at $7.77 per million BTU. That represents 970 cubic feet. So 1000 cubic feet currently sell for about $8. Therefore the 125 million cubic feet of natural gas produced per day has a market value of about $1 million. Though transportation costs mean the plant operators receive less than that they also sell additional by-products as mentioned above. The total sales of the plant probably run into the hundreds of millions of dollars per year.

One question: what would the cost be for building a similar plant today? On the one hand, inflation has raised costs in general since the early 1980s. On the other hand, technologies for operating chemical plants have advanced in the last couple of decades. Some researchers at Rutgers and UNC Chapel Hill have just developed an important efficiency improvement for the Fischer-Tropsch CTL process. Green Car Congres has more details. Also, see the UNC Chapel Hill press release on the same research.

The Great Plains Synfuels Plant uses 700 workers. A plant built to use newer technologies and on a larger scale would very likely need fewer workers per amount of natural gas or liquid produced.

ANG went bankrupt in 1985 and turned the plant over to the Department of Energy (DOE). Employing 700 workers, the Synfuels Plant is one of only two gasification plants in the world (the other one is in South Africa). The plant purchased its power directly from Basin Electric's Antelope Valley Station (AVS).

Time for plant construction doesn't strike me as a major obstacle for a "Peak Oil" necessitated shift away from oil toward coal. But what about price? Conflicting claims are made about the price at which CTL technologies become competitive.

"The technology is truly efficient and economical," said Claude Corkadel, Rentech's vice president of strategic programs. "But the biggest thing is, our economic analysis shows this technology is better anytime crude oil is at $40 a barrel or higher."


"Coal is a relatively inexpensive form of energy compared to petroleum, and the United States has abundant reserves of it," said Bob McCormick, a senior engineer at the National Renewable Energy Laboratory in Golden who is familiar with the coal-to-liquids technology. "There is benefit to converting coal to liquid fuels."

But McCormick doubts Rentech's economic analysis.

"I have not evaluated Rentech's technology, but $40 a barrel seems far-fetched to me," McCormick said.

The cost of substitutes will determine how high the price of oil can go. Some substitutes have well characterized costs. But the cost picture remains unclear to me for coal and similarly for oil shale.

Also see my previous post Fischer-Tropsch Coal Gas Cost Effective With Current Oil Prices?

Share |      Randall Parker, 2006 April 18 09:28 PM  Energy Fossil Fuels

Alan Njeru said at April 19, 2006 8:36 AM:


How CTL could become cost effective:

1. Standardization of plant design and processes - like the steel industry where all blast furnaces look alike and operate in a similar manner. This is followed by widespread adoption.

2. Intergration of facilities too include high economic value products like lubricants, higher alcohols and Ethers like DME - products which are not currently commodified. The price ofm lubricants is pretty stable even when oil moves up and down. Branding enhances value creation.

3. Utilization or incorporation of low economic value feedstock like refuse derived-waste fuel, refinery bottoms, tires, Municipal solid waste etc. When negative economic value substances are added to the process the plant can actually make extra money when it chrges to handle "wastes". some of these itemms like tires actually have high btu content. This is one of the ways to get rid of such nuisance.

4. Product optimization and selectivity: when diesel is in demand you produce diesel. If you controll the conditions in an FT reactor you can actually control what you want to produce. These conditions include pressure, type of catalyst, residence time, temperature, presence or absence of dilutents.

5. commercialization of by products like CO2.

The most interesting thing about fischer tropsch technology is that the ability to use a variety of feedstock actually weathers crude price volatility. The USA has an abundance of coal and waste; it makes economic sense to put these into use.


Paul Dietz said at April 19, 2006 6:05 PM:

There's even a variant of FT optimized to produce ethanol (with some higher alcohols). The catalyst, IIRC, is based on molybdenum disulfide, so the process is very tolerant of sulfur in the syngas. http://www.powerenergy.com/about_pef_system.html

A plant to convert waste to ethanol via syngas is being planned by Future Fuels Inc. and Startech Environmental Corp.:
This plant would use a plasma torch to gasify the waste. This is interesting, since the energy to power the torch replaces thermal energy that would otherwise come from partial combustion of the feedstock. enabling more of the carbon to end up in the fuel. The torch can of course be powered by non-fossil electricity sources, such as nuclear or wind.

Simonjm said at April 19, 2006 9:37 PM:

Coal-to-Diesel Breakthrough Could Cut Oil Imports

With this and a higer price that allows coalsands I don't see any worry about a shortage of fossil fuels, what this may mean for global emmissions will be a totally different matter.

Dezakin said at April 20, 2006 5:14 PM:

Whats the advantage of ethanol over diesel or methanol anyways? Why would you want to synthesize it? I though the only reason we did bio-ethanol was because it was easy, not because it was good. (I'm wondering if government price distortion enters the picture here.)

I'd favor synthetic diesel most because thats where you get the most bang for the buck. Diesel is the most volumetrically energy dense fuel I know of (outside of ridiculously toxic hydroboranes) that is in use, not to mention the general efficiency of diesel engines in general.

But the market determines what people want in the end.

Paul Dietz said at April 20, 2006 5:38 PM:

Whats the advantage of ethanol over diesel or methanol anyways?

Ethanol has higher energy density than methanol, and is more compatible with current vehicles. IIUC, methanol is more aggressive toward plastics and such.

The syngas-ethanol process appears to require less postprocessing; FT diesel requires a cracking step to convert waxes to lower molecular weight molecules. Also, as I mentioned, the catalyst for syngas->ethanol is sulfur-tolerant. The iron or cobalt catalysts for conventional FT require more thorough cleanup of the syngas.

I suspect federal subsidies for biomass ethanol also have something to do with it.

Randall Parker said at April 20, 2006 6:33 PM:

I'd expect the synthetic diesel would be excellent from an emissions standpoint since it would probably contain no sulfur, correct?

Oxides of nitrogen should still be a problem. But wouldn't particulates also be lower with synthetic diesel fuel, whether from biomass or coal?

Methanol is lower energy density because it has a lower ratio of hydrogen to oxygen. Ethanol has one more carbon and comes with 3 more hydrogens, no more oxygen. So it is more energy dense than methanol. But I would prefer diesel since it would let you fill up less often.

Diesel combined with hybrid technology would give the longest driving range.

Dezakin said at April 20, 2006 9:56 PM:

Paul I believed mentioned an engine that has a longer decompression stroke for reducing the NOx gasses and improved efficiency. What was that link again?

"Diesel combined with hybrid technology would give the longest driving range."

Well it works for trains... I know its not really fair seeing they have more a hybrid transmission instead of actual powerdrive.

Paul Dietz said at April 21, 2006 7:18 AM:

I'd expect the synthetic diesel would be excellent from an emissions standpoint since it would probably contain no sulfur, correct?

Yes, it would be extremely low in sulfur (to the ppm level). This is one reason CARB was thinking of mandating its use in California.

Paul I believed mentioned an engine that has a longer decompression stroke for reducing the NOx gasses and improved efficiency.

Atkinson-Miller cycle engines (mentioned on Wikipedia and elsewhere). The Prius has one, I believe. They reduce NOx only if they are designed with lower total compression (and hence lower peak temperature), using the longer expansion stroke to get back some of the lost efficiency. One gotcha is the exhaust gas is cooler, which can interfere with the operation of catalytic convertors. In a hybrid, this is less of a problem since the engine need not be allowed to idle.

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