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US Senate Committee Convenes Hearing on Coal-to-Liquids

The US Senate Committee on Energy and Natural Resources held a full-committee hearing on the economic and environmental issues associated with coal-to-liquids processing, and on the implementation of the provisions of the Energy Policy Act of 2005 addressing CTL.

Testifying at the hearing were Dr. Clarence Miller, of the Department of Energy (DOE); Dr. Arie Geertsema, University of Kentucky; Dave Hawkins, NRDC; Hunt Ramsbottom, Rentech (the only Fischer-Tropsch vendor in this session); and James Roberts, Foundation Coal Corporation.

There are two basic processes for Coal-to-Liquids production: direct and indirect. In direct liquefaction, coal is first reacted with hydrogen and process solvent at high temperature and pressure to produced a coal-derived liquid or synthetic crude oil.

The indirect process—the Fischer-Tropsch process—first breaks down the coal into a synthesis gas high in carbon monoxide and hydrogen, and passes the syngas over metallic catalysts to produce pure hydrocarbons. The process is essentially the same for Gas-to-Liquids and Biomass-to-Liquids.

Hydrocarbons produced by the Fischer-Tropsch (FT) process are excellent transportation fuels, with high cetane numbers, low aromatics and ultra low-sulfur content. Although clean-burning in terms of criteria pollutants, however, they are still hydrocarbon fuels derived from fossil resources. Use of FT fuels thus doesn’t reduce CO2 emissions relative to conventional petroleum fuels, and the production of FT fuels is, at best, equivalent in CO2 output to conventional petroleum refining and at worst is much higher.

The US Government has supported R&D on both direct and indirect liquefaction technology for more than 30 years—reaching back to the time of the first oil crisis in the 1970s.

According to Clarence Miller, the Director of the Office of Sequestration, Hydrogen, & Clean Coal Fuels Office of Fossil Energy (part of the Department of Energy), the technology is ready, but the barrier to commercialization is the market.

Technology is now in hand for producing synthetic oil, and oil products from coal. Liquid fuels from coal are clean, refined products requiring little if any additional refinery processing, are fungible with petroleum products and, therefore, can use the existing fuels distribution and end-use infrastructure.

The greatest market barrier for CTL is the volatility and uncertainty of future world oil prices.

—Clarence Miller

According to some estimates cited by Miller, initial costs for CTL from first-of-a-kind plants will be around the $45 per barrel range. That cost per barrel could drop to $35 after several initial higher cost plants are built. The $35/barrel assumes near-zero atmospheric emissions of criteria pollutants, assumes reduced water use through air coolers instead of water cooling, and assumes carbon capture and sequestration.

Miller cited a number of other impediments to deploying CTL technologies in addition to uncertainty over oil prices:

  • High capital investment for the plants;

  • Technical and economic risks associated with first-of-a-kind plants;

  • Environmental concerns associated with increased coal production and the coal to liquids industrial process, especially water demand (which will remain a key constraint in regions with limited water resources) and land impact;

  • Public attitude to increased coal use;

  • Siting and “not in my backyard” issues for new plants; and

  • Increasing the supply of coal given a supply chain that is already stretched to capacity.

The technology that underlies CTL fuel production offers the potential for low emissions of criteria and toxic air pollutants, water quality, and solid wastes. Nonetheless, this promise of high performance needs to be verified during the design and initial operations of first-of-a-kind CTL plants and costs may be prohibitively expensive.

At present, no requirements exist in the United States to manage carbon emissions from fossil fuel sources. However, in full recognition of the importance of carbon management an extensive research and development program is underway to develop technology, processes and systems to capture and store the carbon dioxide produced during the conversion process.

The carbon dioxide could be stored in deep saline formations or sold for use in enhanced oil recovery operations. It is possible that CTL plant emissions and the emissions from utilization of CTL products would be comparable to those associated with the production and consumption of petroleum-based fuels.

—Clarence Miller

Whether the technology is ready or not, and regardless of whether or not the market is ready to take a 30-year gamble on oil prices to fund the development of CTL plants, David Hawkins, Director of the NRDC’s Climate Center, proposed that such development is a bad idea.

To assess the global warming implications of a large coal-to-liquids program we need to examine the total life-cycle or well-to-wheels emissions of these new fuels. Coal is a carbon-intensive fuel, containing double the amount of carbon per unit of energy compared to natural gas and about 50% more than petroleum.

When coal is converted to liquid fuels, two streams of CO2 are produced: one at the coal-to-liquids production plant and the second from the exhausts of the vehicles that burn the fuel...with the technology in hand today and on the horizon it is difficult to see how a large coal-to-liquids program can be compatible with the low-CO2-emitting transportation system we need to design to prevent global warming.

—David Hawkins

Hawkins also cited concerns about conventional pollution (Sulfur oxides, nitrogen oxides, particulate matter, mercury and other hazardous metals and organics); the mining, processing and transporting of coal; terrestrial habitats; water pollution; and air pollution.

The impacts that a large coal-to-liquids program could have on global warming pollution, conventional air pollution and damage from expanded coal production are substantial. Before deciding whether to invest scores, perhaps hundreds of billions of dollars in a new industry like coal-to-liquids, we need a much more serious assessment of whether this is an industry that should proceed at all.

Fortunately, the US can have a robust and effective program to reduce oil dependence without rushing into an embrace of coal-to-liquids technologies. A combination of efficiency, renewable fuels and potentially, plug-in hybrid vehicles can reduce our oil consumption more quickly, more cleanly and in larger amounts than coal-to-liquids even on the massive scale...

—David Hawkins

For his part, Hunt Ramsbottom, the CEO of Fischer-Tropsch company Rentech, noted that Rentech was in the process of developing a commercial-scale CTL plant due to go online by 2010—the converted East Dubuque plant. (Earlier post.) Rentech is also exploring developing a second CTL plant (Natchez; earlier post). That plant will, according to Ramsbottom, pursue 100% carbon capture.

There, we are pursuing opportunities for 100% capture and storage of carbon. Our carbon dioxide output would be pumped into nearby older oil well fields, both helping to produce additional oil by forcing out additional supplies and trapping the carbon underground.

—Hunt Ramsbottom

Rentech just completed a $113-million financing through an offering of common stock and convertible senior notes.

Comments

Ed

Maybe the government should give this type of plant a long term contract assuming the environmental issues can be worked out. At this point we need both energy independence and sustainability. Having more choices by developing all viable alternatives is the best way to see that happen.

eric


How can they talk about carbon capture with a straight face? They are producing hydrocarbons which get burned in automobiles.

Cervus

A little less conversation, a little more action please.

Nick

Does anyone know if pumping CO2 into oil fields (where practical) provides permanent sequestration? And as mentioned above, that doesn't address the CO2 emissions of the vehicle if the fuels produced are hydrocarbons.

David Hawkins is on target--expanding coal use is an bad idea, all things considered.

t

If we stabilized our carbon emissions at the current level, the equilibrium amount of co2 in the atmosphere would be eight times what it is now. We need to reduce worldwide carbons emissions by 75% in order to achieve a one degree fahrenheit increase in temperature in a hundred years.

If coal is to be used, sequester the carbon and use the coal to produce electricity to power PHEVs and electric cars. Coal to liquids is absurd, even under the best of scenarios. As eric said, you've still got co2 emissions from burning the oil.

This doesn't even address the destructive techniques that are used to mine the coal. Goodbye, West Virginia.

Patrick

On an energy basis, mining coal puts out more radioactive material into the atmosphere than running a nuclear plant. When the nuclear plant and coal power plant are compared with an equal output of energy the coal mined actually puts out several times the amount of radioactive material. I'd rather leave coal where it is for a rainy day and put money into more nuclear power plants. Keep pumping the money into this type of research, but at this point in time we don't need to create any F-T CTL plants.

rj

Higher radiatio output over a coal plant (if this is true) over the lower risk for disaster.

Even if a coal plant explodes and burns down it does not ruin the neiborhood for the next few hundred yrs.

As for more action ... I built a solar cell in the basement of my school does that count?

Too bad it will never generate more power than it took to make it.

allen zheng

Nick: define permanent. Multiple redundant concrete plugs of various types provice a good seal. However, due to geological movements and erosion/deformation over time, leaks are bound to happen. Around Baku, Azerbaijan, oil ooze to the surface. Around the world, there are natural gas fed fires that have been there since paleolithic times.
On the side, the CO2 injections for enhanced recovery could make fields that have been out of commission for decades back onto the market. This could make New York and Pennsylvania significant oil producers again, at least locally. Also, declining fields around the world could get a new lease on life; North Sea, Cantarell field in Mexico, and the giant Gharwar field in Saudi Arabia.
PS: Algae oil production using CO2 exhaust + sun.

t

These coal plants will ruin more than the neighborhood; they will ruin the whole planet. I'd rather take the rather low risk of nuclear power, the impacts of which would be relatively local.

As for building a solar cell in the basement, this would be the non sequitur of the month.

Cervus

I am far more concerned about energy security than I am about CO2 emissions. I would rather move mountains in West Virginia than depend on oil supplies from Nigeria or Saudi Arabia.

t

Cervus.

Maybe if you lived beneath these mountain tops that are being removed and filling up the rivers and ruining communities, you would feel differently.

Cervus

t:

There's no such thing as a free lunch. I'm sorry that these people and places are being impacted. But by depending on foreign sources for energy we are merely exporting that misery instead. Nigeria is riddled with corruption and the Saudis actively fund Islamic extremists.

We can either deal with the problems that the mining causes here, a wealthy nation that can afford to clean it up. Or we can force some poor Nigerian to deal with oil contamination of his fishing creek.

For me, the choice is obvious.

Charlie

"We can either deal with the problems that the mining causes here, a wealthy nation that can afford to clean it up."
Last time I checked this "wealthy" nation (propped up by foreign investment) wants little to do with cleaning up- quite the contrary. Energy security must parallel environmental security. Don't shortchange our kids and theirs to follow...

JMartin

ri,

We have a coal fire underground here in Colorado that has been burning since 1910. In 2002 the heat reached the surface and set off a 12000 acre forest fire. What do you mean it won't ruin the neighborhood?

Rafael Seidl

IFF, as proposed, the waste CO2 from the production process itself is successfully sequestered, the net CO2 burden on the atmosphere is no higher than it would be if gasoline and diesel were produced from crude oil instead. Sequestration in depleted oil fields has been done for some time now in Norway, mostly to get more of the oil out. Depleted gas fields are another potential sink, provided they are properly sealed.

Liquid hydrocarbon fuels offer energy density several orders of magnitude greater than any battery. As such, they represent ideal fuels for motor vehicles. Sure enough, fuel economy is once again a significant factor in purchasing decisions for cars and light trucks. Various technologies, including mild hybrids, do make sense. However, the much-touted PHEVs offer very limited range and performance at a very high price.

The trouble with hydrocarbon fuels is their contribution to the greenhouse gases. Considering that China, India, Eastern Europe and other economies are booming, it is up to the industrialized world to begin the process of cutting over to biogenic fuels.

CTL or GTL share the entire infrastructure from Fischer-Tropsch through delivery at the pump with BTL, which will ultimately replace them. The only difference is in how the synthesis gas (H2 + CO) is generated. Using CTL or GTL as stepping stones to iron out the kinks reduces the R&D risk and facilitates the transition by keeping cost viable.

On the other hand, the coal industry has deep pockets with which to finance political campaigns. It already finagled subsidies for "synfuel", which at present is really just repackaged coal. Congress would presumably grant true synfuel, i.e. CTL, wthe same or even greater financial breaks. That would put paid to any plans for actually shifting the feedstock to biomass in the foreseeable future. That, rather than the other arguments presented above, suggest to me that CTL might be a bad energy strategy for the US.

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