Peabody and Rentech Enter Into Development and Coal Supply Agreements for First Commercial US Coal-to-Liquids Facility
29 May 2007
Peabody Energy has entered into agreements with Rentech, Inc. to fund up to $10 million of engineering and development costs for Rentech’s planned coal-to-liquids project in Illinois and to supply the facility with nearly 1 million tons of coal annually. As part of the agreements, Peabody has an option to acquire a 20% equity interest in the project through increased funding.
Rentech is converting its existing fertilizer production facility in East Dubuque into a coal gasification complex that would produce synthetic transportation fuels using Rentech’s patented processes that are based on Fischer-Tropsch technology. (Earlier post.)
The facility also would continue to produce nitrogen fertilizer products. Converting the plant from expensive natural gas to coal is expected to significantly reduce operating costs. The project would be the first commercial coal-to-liquids facility developed in the United States.
The Rentech plant is expected to produce approximately 400,000 barrels per year of Fischer-Tropsch fuels. It will also produce approximately 545,000 tons of nitrogen fertilizer products per year. The project is under development, and the plant conversion is scheduled to be complete by 2010.
Fischer-Tropsch fuels burn more cleanly than conventional diesel because sulfur and other oil byproducts are removed, although the production process generates large amounts of carbon dioxide. Various estimates put lifecycle CO2 emissions (well-to-wheels) of coal-to-liquids synthetic diesel without any form of carbon dioxide capture and sequestration at around double that of petroleum diesel. With carbon capture and sequestration, the WTW footprint of FT diesel is much closer to that of conventional petroleum diesel.
The Rentech facility will be carbon-capture ready, designed with a process unit that would capture pure carbon dioxide (CO2) and separate it from the gas stream. Rentech is evaluating CO2 marketing opportunities with bottling companies and sequestration opportunities including potential use for enhanced oil recovery.
Separately, Peabody has entered into a long-term agreement with Rentech to supply nearly 1 million tons of coal annually to the coal conversion facility from its Illinois operations, providing a reliable source of fuel for the project.
Development of coal-to-liquids facilities is gaining increasing bi-partisan political support, with a number of bills to be considered in Congress this summer. The Southern States Energy Board, in its 2006 American Energy Security Study, is calling for producing 5.6 million barrels of diesel per day from coal. This would require about 1 billion tons of US coal annually.
Well, their ANNUAL production should allow us to avoid importing about 1/20 of our DAILY import of oil... Obviously, it is a start, but it is incredible just how huge our energy needs are.
Posted by: ziv | 29 May 2007 at 07:39 AM
Longest journey...single step...et cetera, et cetera.
Posted by: Matthew | 29 May 2007 at 07:49 AM
Yes, that is why coherent energy policy has been needed for more than 30 years and all we seem to get is more tax breaks for oil companies.
Posted by: sjc | 29 May 2007 at 08:06 AM
I'd be a little more enthusiastic about this project if it were AEP involved instead of Peabody. AEP has a much better environmental record and is moving towards CGCC technology.
Posted by: Neil | 29 May 2007 at 08:27 AM
I doubt if CTL can match oil's decline. The well-to-tank CO2 emissions without processing carbon capture are said to be 2.3 times that of petrofuels. If I recall a plant producing just 100,000 barrels per day costs half a billion dollars to build. Add to that possible carbon taxes and negative public reaction to mountaintop removal in democratic countries. Outside of China I don't see CTL achieving several million barrels per day.
Posted by: Aussie | 29 May 2007 at 03:35 PM
SJC:
There is only one industry which is subsidized by government. It is LOCAL or DOMESTIC industry. Does not matter what country, state, government, or industry: cars in Japan or Midwest, oil in Norway or Alaska, food in France or California, BS in Brussels or DC. Local (not necessarily dominant, sometimes quite opposite, like CTL in S. Africa and 1937 Germany) as a rule of thumb is subsidized and supported. Sorry for pointing out this obvious thing.
As for US Oil&Gas, it is marked exemption. Every country in the world, including AGW-challenged like Norway, GB, Holland, Canada (with some exemptions), Russia, etc. are making everything possible to increase their domestic production and refining of oil. US for more than 30 years actively suppresses domestic oil exploration and production, oil refining, and even improvements to oil and LNG distribution and terminal facilities. Think of 85% of ocean shelf closed to oil exploration for all these years.
Well, US is democratic country, and American citizens have to blame only themselves for lack of refining capacity, feverish gasoline prices, 55% oil import, huge budget deficit, price for Persian Gulf policing in $ and lives, or any other consequences of this idiotic policy.
And yes, it was bi-partisan policy, with the exemption of current administration (but not Congress, both R or D).
Posted by: Andrey | 29 May 2007 at 04:40 PM
Not using our own oil makes sense from a Peak oil standpoint. Wait until oil is over $100.00 a barrel, then start drilling of the Florida coast.
Posted by: Mark | 29 May 2007 at 07:20 PM
Mark:
Makes sense, but does not conform to reality. If peak oil was in mind, why US policymakers strained refining capacity, killed progress in nuclear power generation, did not allow construction of new hydroelectric dams, did not proceed with CTL technology, energy conservation, fuel efficiency measures, and only recently began to promote alternative fuels, wind and PV power generation?
Looks more like “head in the sand” policy, pleasing environmentalist sentiments of the voters and postponing looming problems to next generations of politicians and, sadly, American people.
Posted by: Andrey | 29 May 2007 at 08:02 PM
Congress asked the oil companies if they were going to build any new refineries more than 5 years ago, and they said no, because it was not profitable enough.
If the people had their way, something would have been done then, but it was not. The people do not seem to like mandates put on corporations. They do not favor an oil import fee nor a windfall profits tax. Is this the people speaking or the corporate interests.
I think it is naive to think that America is a democracy in the purest sense. We have been and still are a nation of special interests, where the entities with the most money get their way.
Posted by: sjc | 31 May 2007 at 10:17 AM