Sasol Scouting US for Locations for $5-Billion Coal-to-Liquids Plant, Considering China Too
15 September 2005
|Sasol global FT activities. Click to enlarge.|
Executives from Sasol, the South African energy company and the world’s largest producer of synthetic fuels, are visiting Montana this weekend as they scout for potential sites for a $5-billion Coal-to-Liquids (CTL) plant, according to Congressman Denny Rehberg (R-MT). Other potential locations include Wyoming, Illinois and Alaska.
Montana Governor Brian Schweitzer is campaigning for the use of CTL as a solution to the country’s energy needs, and will be escorting the Sasol team to examine the coalfields in southeastern Montana.
I am leading this country in this desire and demand to convert coal into gasoline, diesel and aviation fuel. We can do it in Montana for $1 per gallon. We can do it cheaper than importing oil from the sheiks, dictators, rats and crooks that we’re bringing it from right now.—Governor Schweitzer (Reuters)
According to Rehberg, Sasol’s CEO will come to Washington in a few weeks for further discussion, tax incentives and loan guarantees being a major enabler for such a project.
Sasol could also take equity stakes of up to 50% in two proposed Chinese coal-to-liquid (CTL) projects. (Business Report)
The company will decide whether to invest in the Chinese ventures based on the outcome of feasibility studies expected within two months.
The Chinese proposal is for two facilities producing 80,000 barrels of synthetics per day per site at Ningxia autonomous region and Shaanxi province, both in the coal-rich western part of China.
[Sasol CEO] Davies said both states were on a drive to stimulate industrial growth and he was confident attractive incentives would be offered to Sasol.
When asked the value of Sasol’s investment, he said: “We haven’t built a CTL plant since the late 1970s, so we’re having to obviously refine that technology. The cost numbers haven’t come in, and that’s why we must wait for the study.”
Analysts are pegging the threshold for the commercial viability of CTL technology at about US$35 per barrel of crude oil.
Sasol’s major focus is Gas-to-Liquids (GTL), and it is currently building major GTL facilities (Oryx in Qatar and Escravos in Nigeria) with plans to produce 540,000 barrels a day of synthetic fuels and chemicals by 2014.
However, the emerging market situation with crude oil is stimulating interest in countries with two of the largest coal reserves—China and the US—in CTL, and Sasol will not let that opportunity pass by.
The level of investment required in CTL projects is expected to exceed Sasol’s per barrel spending on gas-to-liquid (GTL) ventures because the coal gasification portion of the technology is more capital intensive.
Sasol, founded in 1950, has two primary Fischer-Tropsch technologies for the conversion of gassified coal or natural gas to fuel and chemicals.
The high temperature process, currently represented by the Advanced Synthol reactor, produces synthetic gasoline and light olefins. The low-temperature process, represented by the Sasol Slurry Phase reactor, produces mostly synthetic diesel.
Sasol presentation at CSFB Global Oil and Gas Conference, June 2005
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