HIGHLIGHTS
PROCESSES AND TECHNOLOGY STATUS
The final products of the coal and gas liquefaction process are transport fuels similar to diesel and gasoline, and other liquid chemical products such as methanol and dimethylether (DME). Liquid fuels from coal may be produced using two different approaches, i.e. direct and indirect coal liquefaction (DCL and ICL), which are at a different stage of development. In both DCL and ICL, the challenge is to increase the hydrogen to carbon (H/C) ratio of the final product, and to produce molecules with an appropriate boiling point at a reasonable overall cost. If (natural) gas is used as a primary feedstock instead of coal, a steam reforming process is used to convert natural gas into a synthetic gas, which is the basis for the production of synthetic liquid fuels. Coal liquefaction was first developed in 1913 in Germany, where high-pressure processes for ammonia and methanol production were applied to gasoline production from coal. In 1925, Fischer and Tropsch developed the FT process to convert syngas into intermediate wax products, which were finally converted into diesel, naphtha and kerosene using a hydro-cracking unit. During the Second World War, Germany produced large amounts of transport fuels via DCL and ICL technologies. Nowadays, the world’s largest Coal-to-Liquids (CTL) production capacity is located in South Africa, based on locally available low-cost coal. Numerous demonstration units have been built elsewhere, but only a few industrial plants are currently under construction. Gas-to-Liquids (GTL) plants with a capacity of almost 13 Mt are currently in operation in Indonesia, Malaysia, Qatar, Mexico, New Zealand, South Africa and Trinidad. Additional 9 Mt/yr GTL facilities are either under construction in Qatar (Pearl Island) or will be commissioned by 2010.
PROCESSES AND TECHNOLOGY STATUS
The final products of the coal and gas liquefaction process are transport fuels similar to diesel and gasoline, and other liquid chemical products such as methanol and dimethylether (DME). Liquid fuels from coal may be produced using two different approaches, i.e. direct and indirect coal liquefaction (DCL and ICL), which are at a different stage of development. In both DCL and ICL, the challenge is to increase the hydrogen to carbon (H/C) ratio of the final product, and to produce molecules with an appropriate boiling point at a reasonable overall cost. If (natural) gas is used as a primary feedstock instead of coal, a steam reforming process is used to convert natural gas into a synthetic gas, which is the basis for the production of synthetic liquid fuels. Coal liquefaction was first developed in 1913 in Germany, where high-pressure processes for ammonia and methanol production were applied to gasoline production from coal. In 1925, Fischer and Tropsch developed the FT process to convert syngas into intermediate wax products, which were finally converted into diesel, naphtha and kerosene using a hydro-cracking unit. During the Second World War, Germany produced large amounts of transport fuels via DCL and ICL technologies. Nowadays, the world’s largest Coal-to-Liquids (CTL) production capacity is located in South Africa, based on locally available low-cost coal. Numerous demonstration units have been built elsewhere, but only a few industrial plants are currently under construction. Gas-to-Liquids (GTL) plants with a capacity of almost 13 Mt are currently in operation in Indonesia, Malaysia, Qatar, Mexico, New Zealand, South Africa and Trinidad. Additional 9 Mt/yr GTL facilities are either under construction in Qatar (Pearl Island) or will be commissioned by 2010.
PERFORMANCE AND COSTS
Performance and costs of coal liquefaction plants have been reviewed recently, as the result of a new interest in alternative production of transport fuels driven by the 2008 oil price peak. A study on liquefaction of Illinois No. 6 bituminous coal concluded that commercial CTL plants using the US Midwestern bituminous coal offer good economic opportunities. The investment cost of a CTL plant with a production capacity of 50,000 bbl/d of diesel and gasoline is around $ 4.1 billion (US$ 2006). The coal preparation and gasification in the CTL process account for almost 50% of the total investment cost, the rest is the cost of the GTL process. The economic viability of these projects depends heavily on crude oil prices. A crude oil price of $61/bbl (2006 US$) provides a 19.8% rate of return of investment (ROI). Oil prices higher than $37/bbl and $47/bbl provide ROI greater than 10% and 15%, respectively.
Performance and costs of coal liquefaction plants have been reviewed recently, as the result of a new interest in alternative production of transport fuels driven by the 2008 oil price peak. A study on liquefaction of Illinois No. 6 bituminous coal concluded that commercial CTL plants using the US Midwestern bituminous coal offer good economic opportunities. The investment cost of a CTL plant with a production capacity of 50,000 bbl/d of diesel and gasoline is around $ 4.1 billion (US$ 2006). The coal preparation and gasification in the CTL process account for almost 50% of the total investment cost, the rest is the cost of the GTL process. The economic viability of these projects depends heavily on crude oil prices. A crude oil price of $61/bbl (2006 US$) provides a 19.8% rate of return of investment (ROI). Oil prices higher than $37/bbl and $47/bbl provide ROI greater than 10% and 15%, respectively.
POTENTIAL AND BARRIERS
In principle, GTL potential is huge because synthetic fuels might, in theory, substitute conventional transport fuels and chemical products. In practice, GTL technology is in competition with pipeline gas transportation and liquid natural gas (LNG) technology. It is likely to be chosen only if there is no other economically attractive use for natural gas. Therefore GTL plants are often located where abundant resources of natural gas - including gas associated to oil production - cannot be used for other purposes. CTL also has the potential to produce fuels and chemicals. The technology process however - whether it is DCL or ICL - is rather complex and involves considerable investment costs and risks, including oil price variations, and changes in tax and regulatory regimes, especially those related to health, safety and environmental protection, most notably the mitigation of CO2 emissions. The CO2 emissions of the CTL process are as high as the emissions arising from the final consumption of the produced fuels. The application of carbon capture and storage (CCS) technologies could reduce the CO2 emissions of the CTL process by up to 99%. However, this is only possible with additional costs and significant reduction in the efficiency of the process.
In principle, GTL potential is huge because synthetic fuels might, in theory, substitute conventional transport fuels and chemical products. In practice, GTL technology is in competition with pipeline gas transportation and liquid natural gas (LNG) technology. It is likely to be chosen only if there is no other economically attractive use for natural gas. Therefore GTL plants are often located where abundant resources of natural gas - including gas associated to oil production - cannot be used for other purposes. CTL also has the potential to produce fuels and chemicals. The technology process however - whether it is DCL or ICL - is rather complex and involves considerable investment costs and risks, including oil price variations, and changes in tax and regulatory regimes, especially those related to health, safety and environmental protection, most notably the mitigation of CO2 emissions. The CO2 emissions of the CTL process are as high as the emissions arising from the final consumption of the produced fuels. The application of carbon capture and storage (CCS) technologies could reduce the CO2 emissions of the CTL process by up to 99%. However, this is only possible with additional costs and significant reduction in the efficiency of the process.
COAL TO LIQUID (CTL) PROCESSES
Coal can be converted into liquid fuels using two different approaches, i.e. the direct and indirect coal liquefaction (DCL and ICL). In both cases, the challenge is to increase the hydrogen to carbon (H/C) ratio in the final product, and to produce molecules with appropriate boiling points at a reasonable overall cost. The two technologies are at different stages of development. Both processes are illustrated in Figure 1. The final products are transport fuels with properties similar to those of diesel and gasoline, and other liquid chemical products like methanol and dimethylether (DME).
Coal can be converted into liquid fuels using two different approaches, i.e. the direct and indirect coal liquefaction (DCL and ICL). In both cases, the challenge is to increase the hydrogen to carbon (H/C) ratio in the final product, and to produce molecules with appropriate boiling points at a reasonable overall cost. The two technologies are at different stages of development. Both processes are illustrated in Figure 1. The final products are transport fuels with properties similar to those of diesel and gasoline, and other liquid chemical products like methanol and dimethylether (DME).
The DCL process consists of the dissolution of coal in a mixture of solvents. This is followed by thermal cracking, whereby hydrogen is added as a donor solvent. There are two main DCL processes: a) The single-stage liquefaction process provides distillates via either a primary reactor or a train of reactors in series, with possibly a hydro-treating reactor to upgrade the primary distillates. The optimal operation temperature for single stage direct liquefaction is around 450°C, and the molar ratio between coal and solvent should be about 2:1; b) The two-stage liquefaction process provides distillates via two reactors or two reactor trains in series. The first stage dissolves coal (with/out low - activity catalyst) and the second one provides distillate hydro-treatment in the presence of high-activity catalysts. DCL technology is the most efficient route currently available for producing liquids from coal. Liquid yields between 60% and 70% (by weight) of the dry coal have been demonstrated. The product is quite difficult to refine due to the high share of aromatic components and the presence of nitrogen.
In the ICL process, the first step is the gasification of coal to produce a synthetic gas (syngas), which basically consists of CO and H2. The reaction takes place at high temperatures (800-1800°C) and high pressures (10-100 bar) under oxygen shortage conditions. The syngas is then reformed by using the water/gas shift reaction, in which H2O and CO react to form CO2 and H2. The syngas is purified, whereby sulphur in particular is extracted, and the CO2 may be separated and stored (see ETSAP Technology Brief S01 on coal gasification). Starting from syngas as the basic feedstock offers a number of potential advantages such as operational flexibility (syngas can be obtained from different sources such as coal, natural gas, biomass), potential for polygeneration of liquid fuels, chemicals, and power; cleanliness of products (no sulphur and aromatics); and potential production of CO2 ready for capture and subsequent storage.
In the ICL process, the first step is the gasification of coal to produce a synthetic gas (syngas), which basically consists of CO and H2. The reaction takes place at high temperatures (800-1800°C) and high pressures (10-100 bar) under oxygen shortage conditions. The syngas is then reformed by using the water/gas shift reaction, in which H2O and CO react to form CO2 and H2. The syngas is purified, whereby sulphur in particular is extracted, and the CO2 may be separated and stored (see ETSAP Technology Brief S01 on coal gasification). Starting from syngas as the basic feedstock offers a number of potential advantages such as operational flexibility (syngas can be obtained from different sources such as coal, natural gas, biomass), potential for polygeneration of liquid fuels, chemicals, and power; cleanliness of products (no sulphur and aromatics); and potential production of CO2 ready for capture and subsequent storage.
GAS TO LIQUID (GTL) PROCESSES
If natural gas is used as a primary feedstock, no gasification step is necessary. Instead, the gas is converted into syngas by a steam reforming process and the syngas is the basis for the subsequent production of synthetic fuels. The production of liquid transport fuels, i.e. diesel and gasoline type fuels, is based on two technologies, the Fischer-Tropsch synthesis (FT) that produces both primary diesel and gasoline, and the Methanol synthesis, where the main product fuel is gasoline. The FT technology, in turn, is based on two approaches, the low temperature FT and the high temperature FT. The low temperature FT process operates in the temperature range of 200-250°C and maximises the production of diesel while the high temperature FT process operates at 300-350°C and produces mainly fractions with lighter molecular weight, thus maximising the gasoline fraction. The methanol synthesis has a slightly higher efficiency rate than the FT process. However, as methanol is not used directly as a transport fuel for various reasons, an additional conversion step of methanol into gasoline is required.
If natural gas is used as a primary feedstock, no gasification step is necessary. Instead, the gas is converted into syngas by a steam reforming process and the syngas is the basis for the subsequent production of synthetic fuels. The production of liquid transport fuels, i.e. diesel and gasoline type fuels, is based on two technologies, the Fischer-Tropsch synthesis (FT) that produces both primary diesel and gasoline, and the Methanol synthesis, where the main product fuel is gasoline. The FT technology, in turn, is based on two approaches, the low temperature FT and the high temperature FT. The low temperature FT process operates in the temperature range of 200-250°C and maximises the production of diesel while the high temperature FT process operates at 300-350°C and produces mainly fractions with lighter molecular weight, thus maximising the gasoline fraction. The methanol synthesis has a slightly higher efficiency rate than the FT process. However, as methanol is not used directly as a transport fuel for various reasons, an additional conversion step of methanol into gasoline is required.
TECHNOLOGY STATUS
Coal liquefaction was first developed in 1913 in Germany, where high pressure processes for ammonia and methanol synthesis were modified to produce gasoline from coal. In 1925, the German scientists Fischer and Tropsch developed the FT process to convert syngas from coal into intermediate wax products, which were finally converted into diesel, naphtha and kerosene using a hydro-cracking unit. During the Second World War, huge amounts of transport fuels were produced in Germany from coal via both technologies – DCL and ICL. Nowadays, the world’s coal-to-liquids production capacity (some 15 GWth)
Coal liquefaction was first developed in 1913 in Germany, where high pressure processes for ammonia and methanol synthesis were modified to produce gasoline from coal. In 1925, the German scientists Fischer and Tropsch developed the FT process to convert syngas from coal into intermediate wax products, which were finally converted into diesel, naphtha and kerosene using a hydro-cracking unit. During the Second World War, huge amounts of transport fuels were produced in Germany from coal via both technologies – DCL and ICL. Nowadays, the world’s coal-to-liquids production capacity (some 15 GWth)
Fig. 1 – Processes for producing liquid fuels from coal
is almost entirely located in South Africa and based on locally available low-cost coal (NETL, 2007). Production plants developed by Sasol use ICL with moving bed gasifiers (see ETSAP TB S01) producing a syngas which is fed into FT reactors. While there have been a number of significant advances in downstream syngas processing, the basic plants were constructed in the 1980s and, to a great extent, have now been depreciated. In addition to this, at that time environmental concerns were not as stringent as they are today. New plants should be built based on different environmental criteria and impact. After the 1980s, a number of demonstration CTL units were built worldwide, with extensive work in Japan and in the US using a wide range of coal types. Development work was also carried out in Germany and the UK, mostly based on various DCL processes. Much of this work was stopped in the 1990s because of the relatively low oil price. Over the past years, with the increase of oil prices, coal liquefaction has been reconsidered and several units are now under construction or being planned in various countries. The most ambitious program has been launched in China. It includes: the Shenhua DCL plant with a capacity of 6 kt coal per day (1.4 GWth) producing 1 Mt/y of liquid products (operation tests completed in 2008); the Yitai ICL plant (0,22 GWth) producing 160.000 t/y of liquid products (operation tests in April 2009); and several additional ICL plants are being planned or built. In the US, the market for coal liquefaction will depend entirely on future policies for CO2 emissions mitigation. Facilities without CO2 capture and storage (CCS) are less likely to be commissioned, albeit highly desired for improving supply security for transport fuels and reducing oil import dependence. A large CTL plant that was supposed to be operational by 2011 for producing fuels for the US army was recently cancelled due to safety and environmental reasons (The Guardian, 2009). While ongoing research is trying to increase yields, reduce operational costs and catalyst consumption, and add CO2 capture and storage technology to reduce emissions, both DCL and ICL technologies are commercialized by a number of industrial companies.
Several countries with large natural gas resources and limited domestic gas demand have embarked upon gas-to- liquids (GTL) development programs. In these countries, natural gas - mostly produced in association with oil extraction - is converted into high-value fuels or methanol in FT facilities next to the oil and gas fields. GTL plants with a capacity of almost 13 Mt (19 GWth) are in operation in Indonesia, Malaysia, Qatar, Mexico, New Zealand, South Africa and Trinidad. Additional 9 Mt (11 GWth) GTL facilities are either under construction on Pearl Island in Qatar or will be commissioned by 2010.
PERFORMANCE AND COSTS
CTL plants are large industrial undertakings using huge amounts of coal. They are often built at the mine-mouth with adjacent reservoirs of at least 500 Mt of coal depending on the plant capacity. The ICL process offers more flexibility in terms of variety of feedstock and products, and more potential for CO2 emission abatement. The DCL technology is more efficient, with liquid yields between 60% and 70% by weight of the dry coal. In general, the yield is approximately 500 l/t using bituminous coal and a little less using sub-bituminous coal (Couch, 2008). Performance and cost figures for coal liquefaction plants have recently been reassessed as a result of the high interest in alternative sources for transport fuels production. A study on liquefaction of Illinois No. 6 bituminous coal concluded that commercial-scale CTL plants using US Midwest bituminous coal offer promising economic opportunities. Table 1 summarizes performance and capital cost figures for the plant. Based on a specific plant configuration, the financial analysis projected a nearly 20% return on investment, a net present value of more than $1.5 billion, and a payback period of 5 years (NETL, 2007). The capital cost of a CTL plant producing 50,000 bbl/d diesel or gasoline is about $ 4.1 billion (2006 US$). The cost of a GTL plant would be approximately half that amount as the coal preparation and gasification account for almost 50% of the total investment cost. In developing countries capital costs are typically much lower, anywhere from 60% to 90% of those in the OECD. Labour cost is also about 20% to 40% of the OECD labour cost (Couch, 2008). The NETL study was based upon a coal price of $37/ton. Sensitivity analysis with a coal price ranging between $27/ton and $46/ton provides higher or lower return of investment (ROI). From the economic point of view, the project viability depends heavily on crude oil price scenarios. The base case, with a crude oil price of $61/bbl, provides a 19.8% ROI. At crude oil prices greater than $37/bbl, the project would achieve ROI greater than 10%. A 15% ROI can be achieved at crude oil prices greater than $47/bbl. In any case, the economics of CTL plants will be strongly influenced by the future demand for CO2 capture and storage. Therefore, a plant location close to places where CO2 can be readily stored (e.g. depleted oil wells, enhanced oil recovery sites, exhausted natural gas reservoirs) can result in synergies and cost reduction.
CTL plants are large industrial undertakings using huge amounts of coal. They are often built at the mine-mouth with adjacent reservoirs of at least 500 Mt of coal depending on the plant capacity. The ICL process offers more flexibility in terms of variety of feedstock and products, and more potential for CO2 emission abatement. The DCL technology is more efficient, with liquid yields between 60% and 70% by weight of the dry coal. In general, the yield is approximately 500 l/t using bituminous coal and a little less using sub-bituminous coal (Couch, 2008). Performance and cost figures for coal liquefaction plants have recently been reassessed as a result of the high interest in alternative sources for transport fuels production. A study on liquefaction of Illinois No. 6 bituminous coal concluded that commercial-scale CTL plants using US Midwest bituminous coal offer promising economic opportunities. Table 1 summarizes performance and capital cost figures for the plant. Based on a specific plant configuration, the financial analysis projected a nearly 20% return on investment, a net present value of more than $1.5 billion, and a payback period of 5 years (NETL, 2007). The capital cost of a CTL plant producing 50,000 bbl/d diesel or gasoline is about $ 4.1 billion (2006 US$). The cost of a GTL plant would be approximately half that amount as the coal preparation and gasification account for almost 50% of the total investment cost. In developing countries capital costs are typically much lower, anywhere from 60% to 90% of those in the OECD. Labour cost is also about 20% to 40% of the OECD labour cost (Couch, 2008). The NETL study was based upon a coal price of $37/ton. Sensitivity analysis with a coal price ranging between $27/ton and $46/ton provides higher or lower return of investment (ROI). From the economic point of view, the project viability depends heavily on crude oil price scenarios. The base case, with a crude oil price of $61/bbl, provides a 19.8% ROI. At crude oil prices greater than $37/bbl, the project would achieve ROI greater than 10%. A 15% ROI can be achieved at crude oil prices greater than $47/bbl. In any case, the economics of CTL plants will be strongly influenced by the future demand for CO2 capture and storage. Therefore, a plant location close to places where CO2 can be readily stored (e.g. depleted oil wells, enhanced oil recovery sites, exhausted natural gas reservoirs) can result in synergies and cost reduction.
POTENTIAL AND BARRIERS
In principle, the possible long-term potential of GTL is huge, as synthetic fuels may in theory substitute conventional transport fuels and chemical products. However, the liquefied natural gas (LNG) technology and the pipeline natural gas transportation compete directly with the GTL technology. As most of today’s natural gas is marketed under long- term contracts (e.g. pipeline gas normally for 20-30 years, LNG for about 10 years) and huge investments in existing infrastructure have to be repaid, GTL gas is likely to gain market share only in the case of new resources discoveries at remote locations where neither local use is possible nor is infrastructure for transportation over long distances available or economically affordable to build.
CTL also has the potential for substituting conventional transport fuels and chemical products. The technology, however, either DCL or ICL, is rather complex and involves large capital investment and operational costs. The only major commercial CTL facilities in operation are the Sasol plants in South Africa. China has installed a large DCL plant and a smaller ICL plant and both have started operation test phases. All other CTL plants listed in worldwide overviews are under construction or are demonstration plants. A lot of risk is involved in CTL investment, including variable oil price, competition from alternative technologies for producing transport fuels, changes in tax and regulatory regime, especially those related to health and safety, and environmental protection. The long-term development of the CTL process also depends on the relative prices and costs of raw materials (coal and catalyst), energy and electricity, water, transport fuels and chemicals (for polygeneration projects). Additional uncertainties relate to local regulations for pollutants and emissions and global policies for reducing CO2 emissions.
In principle, the possible long-term potential of GTL is huge, as synthetic fuels may in theory substitute conventional transport fuels and chemical products. However, the liquefied natural gas (LNG) technology and the pipeline natural gas transportation compete directly with the GTL technology. As most of today’s natural gas is marketed under long- term contracts (e.g. pipeline gas normally for 20-30 years, LNG for about 10 years) and huge investments in existing infrastructure have to be repaid, GTL gas is likely to gain market share only in the case of new resources discoveries at remote locations where neither local use is possible nor is infrastructure for transportation over long distances available or economically affordable to build.
CTL also has the potential for substituting conventional transport fuels and chemical products. The technology, however, either DCL or ICL, is rather complex and involves large capital investment and operational costs. The only major commercial CTL facilities in operation are the Sasol plants in South Africa. China has installed a large DCL plant and a smaller ICL plant and both have started operation test phases. All other CTL plants listed in worldwide overviews are under construction or are demonstration plants. A lot of risk is involved in CTL investment, including variable oil price, competition from alternative technologies for producing transport fuels, changes in tax and regulatory regime, especially those related to health and safety, and environmental protection. The long-term development of the CTL process also depends on the relative prices and costs of raw materials (coal and catalyst), energy and electricity, water, transport fuels and chemicals (for polygeneration projects). Additional uncertainties relate to local regulations for pollutants and emissions and global policies for reducing CO2 emissions.
Table 2 – Summary Table: Key Data and Figures for Coal and Gas Liquefaction
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