CTL Producer Enters into Long-Term Contract for Fischer-Tropsch Diesel Sales with Sinclair Oil
12 January 2007
Medicine Bow Fuel & Power LLC, a subsidiary of DKRW Advanced Fuels LLC, has entered into a long-term contract to sell 100% of the ultra-low-sulfur diesel fuel from its planned coal-to-liquids (CTL) facility in Medicine Bow, Wyoming, to Sinclair Oil Corporation, which will market the fuel in the Rocky Mountain region.
The planned Medicine Bow project, which includes a coal mine and adjacent CTL facility, will use GE’s coal gasification technology to produce syngas, which is then scrubbed of substantially all of the sulfur and carbon dioxide.
The syngas will then be liquefied using Fischer-Tropsch technology licensed from Rentech, Inc. A further refining process will produce the ultra-low-sulfur diesel product that is expected to exceed current environmental emission standards in the region. (Earlier post.)
Steam, tailgas and power produced from the CTL process will provide the necessary energy for internal CTL facility use with some surplus power sold to the utility grid.
The first phase of the Medicine Bow project is designed to produce approximately 13,000 bpd of refined liquids—primarily ultra-low-sulfur diesel and naphtha, which will be sold into the market. In addition to liquid fuels, a number of byproducts of the liquefaction process, including carbon dioxide and chemicals, are expected to be sold for use in the region. Carbon dioxide from the coal can be dried, liquefied and shipped via pipeline, and plans are to sell it to the enhanced oil recovery market in Wyoming with an initial target in the Powder River Basin.
We believe this agreement for the long-term supply of a Fischer-Tropsch, ultra-low-sulfur diesel product is the first of its kind. This contract is another important milestone in Advanced Fuels’ strategy to complete the financing and construction of our flagship project.—Jon Doyle, DKRW Advanced Fuels’ chief operating officer
Construction of the CTL facility is scheduled to start in late 2007, with an expected in-service date in the fourth quarter of 2010.
DKRW Advanced Fuels is a development-stage hydrocarbon conversion company focused on the commercial development, construction, ownership and operation of facilities designed to convert lower-value hydrocarbons into products that traditionally have been produced from crude oil.
In addition to Medicine Bow, the company is pursuing projects in other parts of the US and exploring international opportunities. Shareholders include Arch Coal, the second-largest coal producer in the US, and Och-Ziff Capital Management, a New York-based private equity firm.
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