Headwaters in MOUs to Develop Two Major Coal-to-Liquids Projects
9 August 2005
|Conceptual IGCC CTL Process. Click to enlarge.|
Headwaters Inc. has entered into two non-binding Memoranda of Understanding (MOUs) to develop coal-to-liquids (CTL) projects in Arizona and North Dakota.
Headwaters will act as the principal developer of two separate indirect coal liquefaction plants that will produce approximately 10,000 barrels per day of synthetic diesel and other liquid fuels, as well as electricity from an Integrated Gasification Combined Cycle (IGCC) power station. Plant expansions could increase output up to 50,000 barrels per day of liquid fuel production.
The other parties to the MOUs will participate as equity partners in the project development and will contribute coal resources sufficient to serve the lives of the respective plants.
Parties to the Arizona project include Headwaters and the Hopi Tribe. Parties to the North Dakota project include Headwaters, Great River Energy, North American Coal Corp. and Falkirk Mining Co.
Development of each project is subject to negotiation of definitive agreements, permitting, boards of directors’ approvals, project financing and other conditions. Headwaters estimates that design and construction of a facility, including the permitting, will take between five and seven years.
An indirect coal liquefaction process first gasifies coal and then converts the coal-derived syngas into fuels and petrochemicals using Fischer-Tropsch technology. There are several alternatives for this type of approach to coal-to-liquids projects.
Headwaters has also developed direct coal liquefaction technology that is currently being deployed or studied for deployment in China, India and the Philippines. (Headwaters is also active in the traditional oil refining industry in the heavy oil sector—i.e., using its technology to upgrade heavy oil to a more useable crude.)
As to the relative merits of the two types of approaches, an analysis done by Robert H. Williams and Eric D. Larson of the Princeton Environmental Institute, Princeton University on different methods of coal liquefaction, found that:
...although direct liquefaction conversion processes might be more energy efficient, overall system efficiencies for direct and indirect liquefaction are typically comparable if end-use as well as production efficiencies are taken into account.
It is shown that some synfuels derived via indirect liquefaction can outperform fuels derived from crude oil with regard to both air-pollutant and greenhouse-gas emissions, but direct liquefaction-derived synfuels cannot.
Deployment now of some indirect liquefaction technologies could put coal on a track consistent with later addressing severe climate and other environmental constraints without having to abandon coal for energy, but deploying direct liquefaction technologies cannot.
And finally, there are much stronger supporting technological infrastructures for indirect than for direct liquefaction technologies.
[...] Especially promising is the outlook for the indirect liquefaction product dimethyl ether, a versatile and clean fuel that could probably be produced in China at costs competitive with crude oil-derived liquid fuels. An important finding is the potential for realizing, in the case of dimethyl ether, significant reductions in greenhouse gas emissions relative to crude oil-derived hydrocarbon fuels, even in the absence of an explicit climate change mitigation policy, when this fuel is co-produced with electricity.
Although Headwaters has expertise in both direct and indirect coal liquefaction, it expects the initial coal-to-liquids facilities in the US to be indirect, primarily because of capital cost considerations.
Headwaters is also developing a 50-million-gallon-per-year ethanol production facility in North Dakota. Development of that facility, to be located on land adjacent to Great River Energy’s Coal Creek power plant, is continuing in partnership with Great River Energy. The facility—Blue Flint Ethanol—will be designed to access its steam, water and other ancillary services from the adjacent coal-fueled power plant.
The recently signed Energy Policy Act of 2005 (EPAct 2005) contains generous financial incentives for gasification-based projects under a variety of programs.
A $1.8 billion extension of the Clean Coal Power Initiative with a minimum of 70% of that amount set aside for gasification.
A Clean Power Projects title that earmarks a number of specific projects and project classes for loans and loan guarantees;
A Clean Air Coal Program which provides up to $1.3 billion in assistance for projects aimed at improving air quality, including IGCC.
Up to $800 million in investment tax credits for IGCC projects and $350 million in ITCs for manufacturing-based plants.
An “Incentives for Innovative Technologies” program is authorized to provide loan guarantees for gasification-based projects, including power, industrial and fuels manufacture.
A comparison of direct and indirect liquefaction technologies for making fluid fuels from coal. Williams, Robert H. and Larson, Eric D. Energy for Sustainable Development VII, December 2003, 103-129
TrackBack URL for this entry:
Listed below are links to weblogs that reference Headwaters in MOUs to Develop Two Major Coal-to-Liquids Projects: