Peabody and Rentech Partner to Develop Major Coal-to-Liquids Projects in the US
18 July 2006
Peabody Energy and Rentech, Inc. have entered into a joint development agreement to evaluate sites in the Midwest and Montana for coal-to-liquids projects that would transform coal into diesel and jet fuel. Projects would be sited where Peabody has large reserves and would be designed using Rentech’s proprietary Fischer-Tropsch coal-to-liquids process.
The plants could range in size from producing 10,000 to 30,000 barrels of fuel per day (bpd). A 10,000 bpd plant would use 2 to 3 million tons of coal annually, and a 30,000 bpd plant would use 6 to 9 million tons of coal annually, based on the quality of coal.
With more than 9.8 billion tons of reserves, Peabody has dozens of sites in the United States that it is evaluating for Btu Conversion projects.
We’re seeing an overwhelming need for coal-to-liquids developments in the United States to offset reliance on expensive imported oil, and projects like these represent a major part of our energy solutions. Because of Peabody’s leading reserves, we are uniquely positioned to capitalize on this significant emerging market for coal.—Gregory Boyce, Peabody President and CEO
Peabody Energy is the world’s largest private-sector coal company, with 2005 sales of 240 million tons of coal and $4.6 billion in revenues. Its coal products fuel more than 10% of all U.S. electricity generation and 3% of worldwide electricity.
In April 2006, a Study Group turned in the first volume of a report for Energy Secretary Samuel Bodman that identified the challenges and opportunities for more fully exploiting US domestic coal resources. Boyce, who chaired the Study Group, has become a vocal advocate of the eight-point aggressive expansion of the use of coal via “BTU conversion” for transportation and energy needs. (Earlier post.)
The number-one recommendation from the report is the massive expansion of Coal-to-Liquids Processing to produce 2.6 million barrels of coal liquids (fuels and chemicals) per day. Production at that level would meet approximately 10% of US petroleum demand and consume an additional 475 million tons of coal per year.
To achieve that level of production would, according to Peabody, require the construction of 33 large coal-to-liquids plants. Each plant—with an estimated cost of $6.4 billion—would consume 14.4 million tons of coal per year to produce 80,000 barrels per day of liquid fuel. Delivering that amount of coal would required expanding coal mining 43% above today’s level.
The CTL proposal represents largest single use of expanded coal production of any of the proposals.
Peabody is a member of the FutureGen Alliance—a project intended to establish the technical feasibility, economic viability and broad acceptance of co-producing electricity and hydrogen from coal with essentially zero emissions, including carbon dioxide (sequestration). (Earlier post.)
As described in a New York Times article in March 2006, however, Peabody is not a big believer in the rapid implementation of carbon capture and sequestration technologies—and coal-to-liquids processes generate a very large amount of carbon dioxide.
A recent European Well-to-Wheels (WTW) analysis of a broad range of fuels and powertrains (earlier post) determined that coal-to-liquids processes were the most greenhouse-gas intensive of all the synthetic diesel fuel pathways, resulting in total WTW emissions of about 350 g/km CO2equivalent (e). By contrast, current conventional petroleum diesel generates about 150 g/km CO2e on a WTW basis.
The same report determined that even with the use of carbon capture and sequestration (CCS) technologies, CTL processes would generate close to 200 g/km CO2e—still more than current conventional petroleum diesel.
“2 Industry Leaders Bet on Coal but Split on Cleaner Approach”; Simon Romero; New York Times, 28 May 2006, Section 1, Page 1, Column 2
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