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Altona Resources Signs MOU with CNOOC on Arckaringa CTL Project in South Australia

Arckaringa
The Arckaringa CTL and cogen project is situated close to a major rail line and highway, and is targeting exports to Asia as well as domestic use. Click to enlarge.

Altona Resources Plc, an Australia-based energy company, has signed a Memorandum of Understanding (MOU) with CNOOC (Beijing) Energy Investment Co., Ltd, a subsidiary of China National Offshore Oil Corporation, towards the development of the 10 million barrel per year (30,000 barrels per day) coal-to-liquids (CTL) and 560 MW co-generation Arckaringa Project in South Australia. CNOOC is one of the three largest State-owned oil companies in China.

Altona envisions a future expansion of the more than A$3 billion (US$2.6 billion) Arckaringa project to increase production to 45,000 barrels per day and 840 MW of export power as markets develop.

We have always recognized that Altona would need a partner of major stature, given the size of the Arckaringa Project, and we are therefore delighted to have the support and interest of CNOOC Energy. With their immense resources and capabilities, CNOOC Energy is an ideal partner for Altona to work closely with in evaluating technology, off-take, financing and construction opportunities.

—Altona Chairman Chris Lambert

Arckaringa holds a 100% interest in three exploration licences covering 2,500 sq. kms in the northern portion of the Permian Arckaringa Basin in South Australia. These include three coal deposits containing more than 7.5 billion tonnes of coal: Westfield, Wintinna and Murloocoppie. All three lie close to the Adelaide to Darwin railway and the Stuart Highway.

Altonactl
The Arckaringa process. Click to enlarge.

The Arckaringa CTL project is preparing to begin with open cut mining of the Wintinna resource. The base case production of 10 million barrels per year of liquids will require 10 million tonnes of coal per year. The current projected CTL plant design is based on the use of:

  • ConocoPhillips (CoP) Technology for Gasification;

  • Rentech Technology for FT Synthesis; and

  • UOP Hydro treating and Hydro cracking Technology for Product Upgrade.

Power generation will be done with a Combined Cycle Gas Turbine.

Total project expenditure per barrel is expected to be US$35 after a power sales revenue credit, according to a Royal Bank of Scotland project financial model. Operating expenses per barrel will be US$20, according to Altona. Those figures decrease with the proposed future expansion.

The CTL plant will get all its process water from the coal, which has a high moisture content. Altona says that the operation will be a net supplier of clean water. Groundwater management strategies are still under development as part of current prefeasibility studies. Altona has developed a strategy for carbon capture and storage, and has identified a site in the East Officer Basin (~100 km away) for geo-sequestration of CO2.

Resources

Comments

Alain

So they transform 1 ton of coal to 1 barrel of liquids.
All the carbon will eventually be transformed to CO2.
As there is also a lot of slag, water and other stuff, let's say 1 ton of coal transforms to 2 tons of CO2.
At a (speculative) cost for CO2 removal of 20$/ton via forest plantations and agrichar production, that would add 40$ to each barrel.

Still very competitive and truely green.
(Uranium in the slag could be used in next generation nuclear plants for hydrogen production and enhanced transformation of CTL)

Aussie

This sounds kinda weird. There are much better and easier coal deposits to work than Arckaringa. Australia is supposed to be under a strict carbon cap starting 2010. The nearby Adelaide to Darwin railway carries yellowcake from the Olympic Dam mine (see map) for ocean shipment from Darwin. If that mine can get enough water and energy to expand it will become the world's single largest producer of uranium. It would be strange if coal gets the go ahead while nuclear is held back.

Frankie

The Aussies want to focus on the development of coalbed methane so there are problems getting a project like this located on any of the more accessible coal deposits.

ESabre

How could 1 ton of coal make 2 tons of CO2.

Henry Gibson

If countries that produce and export hydrocarbon fuels were billed for the carbon tax instead of the users, then Australia would have a different view of their own use of coal. They might also be required by international law to take back the uranium and its byproducts after being used in a foreign reactor. Somehow selling a problematic product abroad is ok if you don't use much of it at home.

Actually, the massive construction of nuclear reactors world wide, and the building of many CTL conversion projects should be combined and encouraged. A nuclear powerplant at every CTL plant could provide all of the process heat needed and much electricity to sell elsewhere or used to produce hydrogen or aluminium. Eventually, I will take the numbers from the NUCLEAR FAQ website and calculate if hydrogen from ordinary electrolysis at a nuclear power plant would cost less per unit energy than crude oil.

Nuclear heat is the cheapest heat that can be bought. High pressure steam in the reactors and turbines is what makes nuclear power plants expensive and is what caused the explosion at Chernobyl and the meltdown at Three-Mile-Island. A CANDU 600 reactor modified to just boil low pressure water for tar extraction would be quite cheap. The natural gas now used for heating could be used at very high efficiencies and low capital cost for power generation. Several small geothermal type power plants could provide much more than enough power to operate the reactor from the massive amounts of 100 degree celsius water available. ..HG..

Have they factored in the cost of geo-sequestration of CO2 ?

Aussie

To answer some points raised I agree CTL (eg for jet fuel) when oil is on the downslope is no problem if it all stays under a carbon cap. The operators are talking about pumping captured CO2 to a nearby gas basin but that may just be talk to get political approval. Any nuke plant would most likely be co-located with desalination on the coastline. The logistics and the heat draw for desal may preclude any use of nuclear heat in coal gasification. In any case the Australian government is effectively anti-nuclear.

This may sound like conspiracy theory but I think the Chinese probably couldn't give a damn about outback coal they really want the yellowcake shipments to keep heading north.

In Australia the official line is that 1 tonne of coal generates 2.4 tonnes of CO2, markedly less than the ratio of molecular weight of CO2 relative to C.

kristian

Given that the project timeline provided is aiming for plant start-up in 2013, how will they implement CCS in support given the current outlook for production readiness of the technology?
And if there's no CCS, how does this affect the lifecycle CO2 emissions?
Lifecycle analysis of Aust GTL production pathways indicates it to be more carbon-intensive than conventional fossil fuels (ref CSIRO report, http://www.environment.gov.au/settlements/transport/comparison/pubs/2ch3.pdf) - I would therefore question the suggestion that this project is "environmentally clean".

Pradeep

@Henry Gibson:
I am inclined to partially agree with you. For one, natural gas now used for supplying process heat to oil sands (for steam assisted gravity drainage-SAGD) can be used for something else. However, getting a permit to construct one in proximity to the oil sands project might be an issue.

However, this being a CTL post, I don't see how the same idea applies to coal gasification.

I think it is significant that Altona has already identified a site for CO2 sequestration.

Axil

Part 1

With carbon sequestration, it would take 127 days for a pebble bed reactor to pay for itself. It would also save 83.5% of the coal used. The coal deposit will last over 4 times longer if a reactor is used to produce heat.

Assumptions:

Reference.

http://web.mit.edu/coal/The_Future_of_Coal_Summary_Report.pdf

Excerpt:

CO2 capture and pressurization (about $25/tonne) and CO2 transportation and storage
(about $5/tonne)..

Carbon sequestration cost = $30/ton of CO2

Reference.


http://www.eia.doe.gov/cneaf/coal/quarterly/co2_article/co2.html

Excerpt:

Complete combustion of 1 short ton (2,000 pounds) of this coal will generate about 5,720 pounds (2.86 short tons) of carbon dioxide.

Reference:

http://www.eia.doe.gov/cneaf/coal/quarterly/co2_article/co2.html

Axil

Part 2

Assuming Sub-bituminous coal at the best case 204.3 pounds of carbon dioxide per million Btu


Reference.


http://www.epa.gov/OTAQ/climate/420f05001.htm

Excerpt:


Diesel carbon content per gallon: 2,778 grams

CO2 emissions from a gallon of diesel = 2,778 grams x 0.99 x (44/12) = 10,084 grams =

10.1 kg/gallon = 22.2 pounds/gallon

Coal consumption = 30,000 tons per day

Diesel Production = 30,000 barrels day

Reference:

http://web.mit.edu/pebble-bed/papers1_files/OilSands.pdf

$820,000,000 total reactor cost for process heat production

Axil

Part 3

Tons of CO2 per day for diesel

(30,000 barrels/day) x (42 gallons/barrel) = (1,260,000 gallons/day) x (22.2 lbs CO2 /gallon) = (27,972,000 lbs/2000 lbs/ton) = 13,986 tons CO2 per day

(30,000 tons/day) x (2.86 short tons CO2) = (85,800 tons/day CO2) - 13986 tons CO2 per day for Diesel = 71,814 tons/day CO2 = x ($85.5/ton CO2) = $6,140,097 /day sequestration coast for CO2

$820,000,000 total cost of reactor/ $6,140,097 per day sequestration cost for CO2 = 133.55 days pay down

Coal waste calculation

(1,260,000 gallons) (2.778 / carbon / gallon) (2.20462262 lbs/kg) = 7,716,796.46 lbs carbon in Diesel

/ 30000 tons(.78/ ton carbon) (2000 lbs/ton)= (46,800,000 lbs carbon in coal) =

7,716,796.46 lbs/ 46,800,000 = 16.5% of the carbon in coal is used in Diesel

83.5 % of coal is wasted in heat production.

Axil

Part 4

(30,000 tons/day) x (.835 coal is wasted in heat production) ($12.5 ton spot price) = $313,125 day wasted coal cost

($6,140,097 /day sequestration coast for CO2) + ($313,125 day wasted coal cost) = ($6,453,935 Total wasted coal cost)

($820,000,000 total cost of reactor) / ($6,453,935 Total wasted coal cost) = 127 days pay down

Total coal cost including sequestration = $6,453,935 + (30,000 tons per day) x (.165 Diesel effective factor) (12.5 ton spot price) = $61,875 = $6,515,810

Cost of Diesel per gallon without reactor = $6,515,810 / 1,260,000 gallons = $5.17 per gallon


Summary

Reactor pay down period with coal price included is = 127 days

Total Diesel cost including sequestration without reactor = $5.17 per gallon

Axil

Part 5

Conclusions from the aforementioned analysis as follows:

Carbon sequestration will not happen because it adds too much to the price of Diesel without a reactor.

To eliminate CO2 emissions a reactor is required.

Henrik

The spot price of a ton of coal is currently between $150 to $200 (see http://www.globalcoal.com/). They need one ton per barrel. They need $35 per barrel to process one ton of coal and they may need another $20 per ton of coal for geo-sequestration of the resulting 2.4 tons of CO2. That is possible $205 to $255 per barrel of oil from coal.

Dream on.

Paul F. Dietz

How could 1 ton of coal make 2 tons of CO2.

The oxygen has mass, and most of it comes from the atmosphere, not the coal.

@Henrik Paul F. Dietz

Gentlemen, the calculations are fully referenced. I did it quickly and would be honored to have it checked. It is hard to believe. The coal price is for power river coal, but that price is not a major factor; it is the cost of CO2 sequestration that is the big cost factor.

Axil

@Henrik Paul F. Dietz

Gentlemen, the calculations are fully referenced. I did it quickly and would be honored to have it checked. It is hard to believe. The coal price is for power river coal, but that price is not a major factor; it is the cost of CO2 sequestration that is the big cost factor.

Pradeep

@Axil:
Excellent detailed analysis. It is a chemical engineer's dream to get these kinds of numbers.

I agree that CTL technologies will result in most (~80%) of the carbon in coal being emitted as CO2. Indeed the Sasol plant in Secunda (South Africa) is the single largest point source CO2 emitter in the world. However, the Altona plant will have a 560 MW cogeneration unit. Assuming that the cogen unit feeds off the hot gases from the CTL process, did you discount the electricity produced from this unit for your calculation? (This scenario can be considered as not mining extra coal to produce the power; 1 T coal approximately produces 2500 kWh electricity; if I did my math right, it would "save" an additional ~5376 T coal/day from being mined for electricity).

Two more quick questions:
1. Earlier in the calculation, you assumed a price of 35 $/T CO2 for CCS, whereas in the actual calculation, you used 85 $/T. I just want to make sure that the first price is not a typo.

2.How much power does a PBR (costing 820 million $) produce? In your PBR analysis, I do not think that the results will change drastically if you included the CO2 emissions from fuel processing etc., but how much nuclear waste/day is generated from a PBR and typically how much does a nuclear plant have to pay to get rid of this waste?

Axil

@ Pradeep

1. Earlier in the calculation, you assumed a price of 35 $/T CO2 for CCS, whereas in the actual calculation, you used 85 $/T. I just want to make sure that the first price is not a typo.


Carbon sequestration cost = $30/ton of CO2

Complete combustion of 1 short ton (2,000 pounds) of this coal will generate about 5,720 pounds (2.86 short tons) of carbon dioxide.

Carbon sequestration cost for a ton of coal =
(1 ton of coal) = (2.86 short tons) of carbon dioxide) X $30/ton of CO2 = $85.6/ton of coal

2.How much power does a PBR (costing 820 million $) produce? In your PBR analysis, I do not think that the results will change drastically if you included the CO2 emissions from fuel processing etc., but how much nuclear waste/day is generated from a PBR and typically how much does a nuclear plant have to pay to get rid of this waste?

From http://web.mit.edu/pebble-bed/papers1_files/OilSands.pdf
Page 7 table 5

Nuclear fuel coat is 225.3 million. 10% of that is for waste storage/disposal and is included in the total amount.

Assuming that the cogen unit feeds off the hot gases from the CTL process, did you discount the electricity produced from this unit for your calculation? (This scenario can be considered as not mining extra coal to produce the power; 1 T coal approximately produces 2500 kWh electricity; if I did my math right, it would "save" an additional ~5376 T coal/day from being mined for electricity).

I discounted electricity since reactor process heat could also be used to produce the same electric power in the same way.

Furthermore, the Pebble Bed Modular Reactor can produce hydrogen simultaneous with electric and process heat. If this approach is used no CO2 from steam decomposition would result. Then I would be comparing apples and pears, but here it is as follows:

Reactor cost = 2817 million.

Payback time = $2,817,000,000/($6,453,935 Total wasted coal cost)= 436.48 days

As in my original calculation, this is for a 300 megawatt reactor but now with 10% used for hydrogen production. Electrical generation is adjustable depending on how much power can be salvaged form waste heat.

This is an overestimate since the coal to liquid plant would be greatly smaller and simplified and therefore cheaper is price.


Pradeep

@Axil,
Thanks for the clarification.
Just out of curiosity, did you think of publishing/writing this as an article?

Axil

My Guru Charles Barton has written this in the current Economist.com debate as follows:

Reference:

http://www.economist.com/members/persona.cfm?econUId=3031249

Ercerpt:

We ought to look at Joe Romm’s future energy scenario carefully. For example Joe describes a future in which 800 huge coal fired plants are pumping CO2 into the ground at a furious rate. Each plant would pump millions of tons of CO2 into there earth every year. This whole scenario ought to be examined carefully. There are at least two issues here. First, there is the question of energy returned on energy invested. Mining and transporting coal requires energy. Capturing CO2 from the stack of a coal fired power plant takes 25% of the energy produced. Transporting it to the spot where it is to be sequestered, compressing it and pumping it into the ground takes another 20% of the energy produced. Stripping combustion gases of nitrous oxides and toxic heavy metals consumes another 12% to 25% of the electricity produced in the plant. Thus from the viewpoint of EROEI over carbon capture and sequestration would appear to be very problematic. At best over 57 percent of the energy produced would be used to mine, transport, clean noxious materials from combustion gases and capture and sequester CO2, and this is by no means a complete energy account. A second problem has to do with what would happen to the CO2 underground. The usual scheme involves dissolving the sequestered CO2 in underground water, like CO2 is dissolved in soda water. CO2 dissolved in water forms Carbonic acid. And guess what, carbonic acid causes erosion underground. Erosion by Carbonic acid is responsible for the formation of caves. . Carbonic acid attacks feldspar, calcite, augite, biotite, and dissolves out of elements such as K, Na, Mg, and Ca. Thus far from staying put when sequestered, CO2 in the form of carbolic acid, opens up migration channels in rock, that can either put the acidic and heavily mineralized water into aquifers, or alternatively opens up migration routes for heavily pressurized CO2 to return to the surface. Either case would be highly undesirable.


IMHO, carbon capture and sequestration (CCS) is the key fraud in the global warming debate. It will not work. All these big CTL projects say that they will execute CCS but they won’t. CCS is green washing of the first order. It is a ploy by big energy to keep building coal plants and stop nuclear power.

Just out of curiosity, did you think of publishing/writing this as an article?

You write the article and I will do some research for you. I have the PBMR material under control.


OC

The chances of a 30,000 barrel per day plant being built in the area they envisage for US$2.6bn ($86,667 per barrel of daily capacity) is ZERO. Sasol's 34,000 barrel per day GTL plant in Nigeria is costing US$6bn ($176,470 per barrel of daily capacity) without the additional cost of the coal gasification plant, the 560MW power plant or the pre-strip needed when mining an open cut coal deposit. Steel prices are a multiple of what they were when the Nigerian project started and skilled labour costs in Australia are higher than Nigeria. In addition one has to remember that they are proposing to build their plant at the same time as the expansion of BHP's massive Olympic Dam copper/gold/uranium mine which will cost more than $US5bn and suck up the vast majority of South Australia's skilled workforce.
All of these factors suggest they are dreaming...

Pacmanus

OC

I wonder why CNOOC or BP signed MOU`s with Altona, if they are dreaming. That is fact. For sure they wont have a problem paying some additional $bn or provide their own labour. Altona is valued only a few million dollar on LSE, a very attractive speculation.

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