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Copyright  2007 by E-MetaVenture, Inc. All Rights Reserved. Coal-to-Liquids: Technology, Commercialization, and Potential Contribution to US and Global.

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Presentation on theme: "Copyright  2007 by E-MetaVenture, Inc. All Rights Reserved. Coal-to-Liquids: Technology, Commercialization, and Potential Contribution to US and Global."— Presentation transcript:

1 Copyright  2007 by E-MetaVenture, Inc. All Rights Reserved. Coal-to-Liquids: Technology, Commercialization, and Potential Contribution to US and Global Energy Pool 27 th USAEE/IAEE North American Conference Houston, Texas September 2007 Iraj Isaac Rahmim, Ph.D. E-MetaVenture, Inc. Houston, Texas

2 E-MetaVenture, Inc. 2 Introduction Significant recent interest in non-petroleum-based sources of energy –GTL, CTL, BTL CTL of particular interest in US, China, Russia, India, Australia,… –Governments, inter-governmental bodies, private sector, environmental organizations –Sense that things are picking up in speed Much of the technology is old but specific applications are considered –Require working-out various synergies and technical elements –Require careful evaluation of economics, environmental implications, strategic impacts

3 E-MetaVenture, Inc. 3 Key Topics CTL technology Interested parties and drivers CTL implementation status and projections Likely impacts of CTL commercialization CTL economics and the issue of CO 2 recovery and sequestration

4 E-MetaVenture, Inc. 4 CTL Blocks Gasification involves pyrolysis, combustion, and gasification chemistries: 2 C-H + 3/2 O2  2CO + H 2 O + Heat C-H + H 2 O  CO + 1.5 H 2 Also, some Water-Gas Shift: CO + H 2 O  CO 2 + H 2 F-T converts SynGas to hydrocarbons: CO + ? H 2  —CH 2 — + CO 2 + H 2 O + Heat (long chain)

5 E-MetaVenture, Inc. 5 CTL Products Product Upgrading can involve a number of activities: –Primarily hydrocracking of wax to lighter diesel and naphtha Sample product slate for 50 MBD facility No HCWith HCComments LPG12 Similar to other plant (LNG, refinery) LPG Can be co-processed and marketed with them Naphtha913 Straight chain paraffinic Near zero sulfur Preferred use: steam cracker feed Diesel2535 High cetane Near zero sulfur Low density Low aromatics Lubes15<1 High grade Low volatility Low pour point Low viscosity Low sulfur Wax5<1 High quality

6 E-MetaVenture, Inc. 6 Interested Parties

7 E-MetaVenture, Inc. 7 CTL Drivers Large coal reserves exist with over 140 years remaining at current production Demand for oil and natural gas is to continue rapid growth The majority of coal reserves in the world are located outside the Middle East (e.g., US, Russia, China, India, Australia)  resource security The demand for transportation fuels, particularly diesel and other distillates, is projected to grow rapidly into the foreseeable future If this demand is to be met using crude oil, a significant “refinery gap” must be filled Significant technological improvements in CTL components during the past two decades  improved process economics

8 E-MetaVenture, Inc. 8 Driver: Energy and Product Demand Global Reserves Resource Oil (incl. Canadian Oil Sands) Natural Gas Coal (4 Grades) Proved Reserves 1,372 X 10 9 Bbl 191 X 10 9 Tons 6,405 TCF479 X 10 9 Tons Energy Basis (quadrillion Btu) 7,6006,6008,500 MTOE Basis (million tons oil equivalent) 191,000165,000213,000 Years Remaining (at current production) 4163147 BP Statistical Survey or World Energy (2007)

9 E-MetaVenture, Inc. 9 Driver: Energy and Product Demand Global Resource Demand Projections © OECD/IEA, 2007, Key World Energy Statistics.

10 E-MetaVenture, Inc. 10 Driver: Resource Availability/Strategy Global Distribution of Coal Resources Million Tons of Proved Reserves (2006) BP Statistical Survey of World Energy.

11 E-MetaVenture, Inc. 11 Driver: Resource Availability/Strategy Distribution of Coal Resources—USA US Geological Survey Open-File Report OF 96-92. Anthracite, Semi-Anthracite, Meta-Anthracite Coking CoalMedium and High-Volatile Bituminous Low-Volatile Bituminous Lignite Sub-Bituminous

12 E-MetaVenture, Inc. 12 Driver: Energy and Product Demand Global Distillate Demand Projections - 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 19771987199520002005201020152020 Middle Distillate Consumption (MBD) Projected Total at3% growth Rest of World(Excl FSU) Asia Pacific Europe North America “Refinery Gap”

13 E-MetaVenture, Inc. 13 Driver: Technology Individual CTL process elements have been around for many decades Significant technical improvements during the past two decades: –Fischer-Tropsch –Hydroprocessing Evolutionary advancements in gasification, gas treating, power generation,… CO 2 capture, compression, transportation, sequestration Impact on Process Economics Environmental Concerns  Later

14 E-MetaVenture, Inc. 14 CTL Facilities and Projects Existing CompanyLocation Size (BPD) Comments Sasol I Sasolburg, South Africa 5,6001955; Sasol technology Sasol II/III Secunda, South Africa 124,000 1955/1980; Light olefins and gasoline; Sasol technology Petro SA (formerly Mossgas) Mossel Bay, South Africa 22,500 1991; Gasoline and diesel; Sasol technology Converted to GTL—using NG from Mozambique (circa 2004)? A number of operational pilot plants. Examples: Rentech (15 BPD), Headwaters (30 BPD). Also two commercial GTL units operational.

15 E-MetaVenture, Inc. 15 CTL Facilities and Projects In the Works (USA) Project LeadProject PartnersLocationFeedstockStatusCapacity (BPD)Cost (US$ million) American Clean Coal Fuels None citedOakland, IL Bituminous, Biomass Feasibility25,000N/A Synfuels, Inc. GE, Haldor- Topsoe, NACC, ExxonMobil Ascension Parish, LALigniteFeasibilityN/A5,000 DKRW Advanced Fuels Rentech, GEMedicine Bow, WYBituminous Design (2011) 13,0001,400 DKRW Advanced Fuels Rentech, GE, Bull Mountain Land Co. Roundtop, MT Sub-bituminous, Lignite Feasibility22,0001,000-5,000 AIDEAANTRL, CPCCook Inlet, AKSub-bituminousFeasibility80,0005,000-8,000 Mingo CountyRentechWVBituminousFeasibility20,0002,000 WMPISasol, Shell, DOEGilberton, PAAnthracite CulmDesign5,000612 Rentech/PeabodyN/AMT Sub-bituminous, Lignite Feasibility10,000-30,000N/A Rentech/PeabodyN/ASouthern IL, SW IN, Western KYBituminousFeasibility10,000-30,000N/A Rentech Kiewit Energy Co., WorleyParsons East Dubuque, ILBituminous Construction (2010) 1,800800 Baard EnergyAMEC ParagonWellsvile, OH Sub-bituminous, Lignite Feasibility35,0004,000 HeadwatersHopi TribeAZBituminousFeasibility10,000-50,000N/A Headwaters NACC, GRE, Falkirk NDLigniteFeasibility40,0003,600 DOE/Office of Fossil Energy—DOE/FE-0509, Green Car Congress

16 E-MetaVenture, Inc. 16 CTL Facilities and Projects In the Works (Non-US)—Partial Project LeadLocationStatusCapacity (BPD) ShenhuaOrdos City, Inner Mongolia, PRCConstruction20,000 Lu’anPRCConstruction?3,000-4,000 YankuangPRCConstruction?40,000-180,000 Sasol JVPRCPlanning80,000 Shell/ShenhuaPRCPlanning70,000-80,000 Headwaters/UK Race InvestmentsPRCPlanning70,000-80,000 Pertamina/AccelonIndonesiaConstruction?76,000 HeadwatersPhilippinesPlanning50,000 Alton Resources plc, Jacobs Consultancy, MineConsultAustraliaFeasibility45,000 Anglo American (Monash), ShellVictoria, AustraliaFeasibility60,000 L&M GroupNew ZealandPlanning50,000 DOE/Office of Fossil Energy—DOE/FE-0509, Green Car Congress Also, a number of related projects world-wide: gasification, CCS, direct coal-to-liquids, coal-to-chemicals,…

17 E-MetaVenture, Inc. 17 CTL Facilities and Projects EIA Projection to 2030: Coal used in CTL (USA) As % Total Consumption: 2015: 1.2 2020:1.9 2025:5.2 2030:6.3

18 E-MetaVenture, Inc. 18 CTL Facilities and Projects EIA Projection to 2030: Liquid Fuels from CTL (USA) As % Total Jet+Distillate Consumption: 2015: 1.3 2020:1.9 2025:5.6 2030:6.2

19 E-MetaVenture, Inc. 19 A Word on GTL Diesel Supply Projections A large number of potential projects; only a small fraction likely to be built Qatar: self-described GTL capital –Oryx I: 2006 start up; March 2007 upgrader on line, May 2007 1 st product lift –Shell Pearl: 2009 (cost issues: $18 billion) –ExxonMobil: 2011 (canceled Feb. 2007) –Marathon, ConcoPhillips on hold per Qatar government temporary moratorium— likely to hold at least until 2009 Nigeria: –Escravos (Sasol/Chevron): under construction (delays and cost increase) California Energy Commission estimate (early 2000s): –2010: 75 MBD global GTL diesel capacity –2015: 388 MBD –2020: 800 MBD Sasol Chevron estimate: 600 MBD by 2016-2019

20 E-MetaVenture, Inc. 20 More on CTL Diesel Projections Global US (Baker and O’Brien study): –2017-2022: 4-6 large-scale (>40 MBD) CTL in Western US –Some smaller plants under consideration in the Eastern US Potential: 250 MBD of middle distillates PRC : –A number of projects under study/planning/construction Example: 20 MBD plant in Inner Mongolia –CTL considered a key component of the PRCs overall, long-term energy strategy –A new key issue: recent environmental concerns of the PRC government –Projected (Robinson and Tatterson, OGJ Feb 2007 study): as much as 160 MBD liquid fuels Others: various projects under study/planning 2020 Hand-waving estimate (global): 300-500 MBD 2030: 600-1,000 MBD—many unknown factors

21 E-MetaVenture, Inc. 21 What Impact will CTL have on… Coal market? Proved reserves, production, production increase capability Liquid fuels market? Supply/demand, change in other sources –Diesel –Jet –Naphtha (for cracking or blending) US v. worldwide Regional markets A word on specialty products: lubes and waxes Environmental impact Some factors affecting CTL growth: - Petroleum prices -Capital availability - E&C resources - Technology - Movement on CCS - Incentives and regulations

22 E-MetaVenture, Inc. 22 Policy Action (1) Regulations and Incentives—Key Factor Multiple forms of incentives under consideration (or in effect) in various jurisdictions. Include: –Direct subsidies or price guarantees Example: 2005 Federal Transportation Bill—$0.50/gallon of FT naphtha and diesel. –Loan guarantees Example: EPAct 2005—loan guarantees for gasification projects with < 65% output as electricity. –Investment tax credit EPAct 2005—20% credit applied to first $650MM investment during first year of operation

23 E-MetaVenture, Inc. 23 Policy Action (2) Regulations and Incentives—Key Factor Other incentives: –USAF Synthetic Fuel Initiative: successfully tested 50/50 Syntroleum FT fuel; targeting 50% synfuel use (domestic) by 2016; awarded 7,500 Bbl FT jet fuel for 2007. –Government funding of R&D and demonstration units Environmental regulations/incentives: –Multiple on emissions from plant and fuel –Multiple on fuel quality –EU: Emissions Trading Scheme –Voluntary emissions trading markets (e.g., Chicago Climate Exchange) –US State initiatives (e.g., California, several NE States) In flux. Subject to lobbying by interest groups on all sides.

24 E-MetaVenture, Inc. 24 Typical Overall CTL Balance Two Recent Studies * NETL study for DOD/Air Force (August 2007) **NETL/DOE study (April 2007) ***Not verified. Does not include all energy recovered in process. Total Liquid Product Capacity11,000 BPD*50,000 BPD** Coal (Illinois #6, bituminous)—TPD4,89124,533 Other feeds: air, water, … Diesel—BPD7,50027,819 Naphtha—BPD3,50922,173 CO 2 —TPD6,03532,481 Net Power—MW9.7124.3 Other products: S, slag, fuel gas,… Bbl Liquid/Ton Coal2.252.04 Ton CO 2 /Ton Coal (carbon/carbon)0.530.57 Ton CO 2 /Ton Coal1.231.32 Overall Thermal Efficiency—% HHV51***47***

25 E-MetaVenture, Inc. 25 Typical CTL Economics 50,000 BPD * CAPITAL COST** Coal and Slurry Prep$ 425 MM Gasification$ 1,150 MM Air Separation Unit$ 425 MM SynGas Clean-Up$ 850 MM WGS + FT$ 510 MM Product Upgrading$ 210 MM Power Generation$ 255 MM Other$ 425 MM TIC$ 4,250 MM OPERATING COST* (annual, 1 st year basis) Fixed$ 230 MM Variable (net)$ -20 MM Purchased Feed$ 300 MM TOC$ 510 MM * One scenario. For discussion purposes only. Results depend on a number of variables and parameters including: product prices, plant availability, EPC cost, % debt financing,… ** Excludes CO 2 compression, transportation, sequestration costs. ROI16.8 % Simple Payout6 years 67% 12% 5% 16%

26 E-MetaVenture, Inc. 26 Driver: Environmental Concerns (1) As we go from lighter hydrocarbon resources (Natural Gas) to heavier (Crude Oils) to heaviest (Coal) –C/H increases –More CO 2 made during conversion to useable fuels KEY POINT: every single coal carbon molecule, when converted to fuel, will eventually end up in CO 2 –Question is NOT whether we make CO 2 –Rather, it IS where we make CO 2 and what we do with it –(Same applies to natural gas and crude oil) Key: Capture, Compress, Transport (pipeline), Sequester (“CCS”) –Multiple sequestration options under consideration

27 E-MetaVenture, Inc. 27 Driver: Environmental Concerns (2) Concern: All agree that CCS is necessary for CTL but major parties do not incorporate the cost of CCS in their economics Concern: Though CTL+CCS compare well with oil refining in terms of CO 2 emissions, there are other options (e.g., BTL, nuclear, wind) with significantly lower CO 2 emissions (Concern: Some sequestration options are technically unproven or risky)

28 E-MetaVenture, Inc. 28 CO 2 from CTL Given production of a typical 0.65 ton CO 2 per Bbl of liquid products –50,000 BPD plant: 11.3 million tons CO 2 /year Question: –Is this significant? –How important is it to capture, compress, transport, and sequester (CCS)?

29 E-MetaVenture, Inc. 29 Worldwide Large Stationary CO 2 Sources ProcessNumber of Sources Emissions (million tons CO 2 /year) Power4,94210,539 Cement Production1,175932 Refineries638798 Iron and Steel Industry269646 Petrochemicals Industry470379 Oil and Gas ProcessingNot Available50 Other Fossil Fuels9033 Bioethanol and Bioenergy30391 TOTAL7,88713,466 Intergovernmental Panel on Climate Change (2005)

30 E-MetaVenture, Inc. 30 CO 2 Emission Projections from CTL Typical CCS in the context of CTL: 80-90% CO 2 emission reduction –Recovers as much as 95% of the CO 2 –However, CCS uses energy  lower net reduction CTL with no CCS: emissions worse than refineries, better than coal-fired power plants CTL with CCS: emissions on par with refineries Consider earlier EIA US CTL projections: Projected Emissions from CTL (million tons CO 2 /years) without CCSwith CCS 201510-411-8 202028-613-12 2030175-23017-46 2030 CTL Emissions as % 2005 Global Stationary Sources 1.3-1.70.1-0.3

31 E-MetaVenture, Inc. 31 CO 2 Capture, Compression, Transport, Sequestration (CCS) (1) Capture includes separation/concentration, treating (e.g., dehydration), etc. –Mature technology used extensively in gas plants and refineries worldwide Compression: to pressure acceptable to pipeline Transport—a number of factors –Distance –Tons per year – millions of tons per year: pipeline most economical –>1000 km + 2,500 km pipelines transporting > 40 million tons of CO 2 per year in the US

32 E-MetaVenture, Inc. 32 CO 2 Capture, Compression, Transport, Sequestration (CCS) (2) Sequestration can involve –Use in enhanced oil recovery (EOR) Example: currently, in US, 30 millions tons per year CO 2 is injected for EOR applications –Injection in depleted oil/gas fields or other suitable geologic formations Most likely option (largest capacity, location, stability/leak) Current example: 1 million tons per year CO 2 from Sleipner gas field is injected into saline aquifer under North Sea –Ocean storage In R&D; Technical issues –Conversion to inorganic carbonates or direct industrial use Small In essence: every one of the elements in the CCS chain is tested/run-commercially. However, not all together in one chain. –Very active area: R&D as well as commercial testing –Very high likelihood of technical success –QUESTION: impact on economics?

33 E-MetaVenture, Inc. 33 Economics of CTL + CCS CCS economics vary wildly, depending on factors such as capture process specifics, pipeline length, injection reservoir type and depth, etc. One study (IPCC 2005) (incl. amortized add’l capital): –Capture from power plant: $15-75/ton CO 2 –Transport (250 km): $1-8 –Geological storage (excl. remediation/liability): $0.5-8 Another study (MIT 2007): –Capture/compression: $25/ton CO 2 –Transportation/storage: $5 A third study (Australia 2006) (capital cost for 0.5 million TPY CO 2, equiv. to approx. 2,200 BPD with 50 km pipeline): –Capture: $25 MM –Compression: $8 MM –Pipeline: $15 MM –Sequestration: $3 MM –Net operating cost: $24/ton CO 2 captured (incl. amortized capital)

34 E-MetaVenture, Inc. 34 Rough CTL+CCS Economics 50,000 BPD* Consider 50,000 BPD CTL Addition of CCS (incl. 50 km pipeline): –$300 MM extra to TIC –Or $230 MM/year to operating costs (including amortized TIC addition) CaseCTLCTL+CCS ROI16.8 %11.3 % Simple Payout6 years9 years * One scenario. For discussion purposes only. Results depend on a number of variables and parameters.

35 E-MetaVenture, Inc. 35 Summary Significant new interest in CTL Many parties—pro and con—in a number of countries –Energy security and strategy, environmental impact, product quality Mature technology; many variable affecting economics Large number of projects—mostly in study; a few in design or construction Projection for CTL diesel suggests 1-2% of demand by 2020, 6-7% by 2030 Capital intensive but multiple studies show potential for reasonable economics Environmental impact key—CO 2 capture, compression, transmission, sequestration

36 E-MetaVenture, Inc. 36 Contact Information Iraj Isaac Rahmim, PhD E-MetaVenture, Inc. P. O. Box 271522 Houston, Texas 77277-1522 USA Telephone: USA (713) 446-8867 Email:

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