Tagiev Sanan Mehman oglu

Kuzbass State Technical University, Kemerovo

Economic overview coal to liquids

technologies

In absolute terms, CTL will be expensive to build and expensive to run. Therefore, it will only be deemed worthwhile proceeding if concerns about the security of oil and gas supplies are such that substitute oil products via CTL can provide a level of reassurance at a price that is deemed worth paying. As with all ‘insurance policies’ this will always seem unnecessary until it is actually needed. Also, as with all insurance policies, under-investment or failure to pay the premiums will mean that benefits will not be paid out when they are needed [1].

CTL, by whichever route, is capital-intensive and therefore benefits substantially from economies of scale. Most studies on process economics have assumed that a full-scale commercial plant would produce 50,000-100,000bbl/day of liquid products . Such a plant would process 15,000-35,000 tonnes/day of bituminous coal or up to double that amount of sub-bituminous coal or lignite.

Sasol have stated that their prerequisites for contracting with an organization to proceed with a CTL FT plant would be assume a minimum plant size of 80,000 bbl/day, to take advantages of the economies of scale. At the same time, access would be needed for to up to 400 million tonnes of coal over the project lifetime. This would most likely be ‘stranded coal’ due to its low-quality or location, making it unsuitable for alternative applications, such as electricity generation.

Of equal importance would be the need for government support for the very large capital investments, on the grounds of improved energy security through decreased dependence on imported energy, and to shield developers from oil price volatility. In late 2006, the likely cost of such a plant was given as US$ 5-6 billion with annual operating costs of some US$ 250 million [2].

In 2006, the IEA noted that for CTL to be competitive, a plant would need to have access to coal at less than 20 US$/t. Although this is less than half of the current international price, over 80% of the world’s coal is not internationally traded, and at least 30–40% of the world’s coal is mined for less than 20 $/t - including most low rank coals. On that basis, at a steam coal price of 20 US$/t, CTL can be competitive with a crude oil price of under 40 US$/bbl, and the average production cost of synfuels would be about 50 $/bbl. There will be economies and cost reductions associated with the building of a series of CTL plants as operational experience is gained and the initial designs are copied and refined.

MIT examined the possible impact of including CCS on a CTL unit. In broad terms, the capital cost of a synthetic fuels production facility would be around $53,000 per bbl/d of liquids output with no CO₂ capture. This would increase to $56,000 per bbl/d with CO₂ capture. This assumes a 20-year plant life, a three-year construction period, and a 15.1% capital carrying charge factor on the total plant cost, a 50% overall thermal efficiency for the FT plant, and a 95% plant capacity factor. Using these factors, the production cost of FT fuels is estimated to be 50 $/bbl without CO2 capture (similar to the IEA estimate) and 55 $/bbl with CO₂ capture [3].

Table 1. Modified investment costs structure for 1 Mt fuels per year plant

In Poland, the investment costs for industrial coal hydrogenation plant were estimated in the 1970s and 1980s by GBSiPPW SEPARATOR. In 2006, these estimates were updated at the Central Mining Institute, based on the indices of the cost of apparatus and equipment, and on indices of investment cost increases in the chemical industry (Chemical Engineering Archive 1979–2005). The investment cost for a plant of 1 Mt per year of coal-based liquid fuels, recalculated for 2006 is 2.8 billion US $ (± 30%).

Analysis of the investment costs structure showed that the cost of the hydrogen production unit is much higher than those of the coal hydrogenation and fuel production units. This is due to the assumed postreaction residue separation by low temperature carbonization and hydrogen production in the Winkler reactor. An application of new technologies, industrially proven over the last twenty years, such as supercritical post-reaction residue separation and advanced gasification processes for coal and residue – based hydrogen production, should decrease the investment costs for hydrogen production.

Based on the literature and material balance data, economic estimates for a modified concept of the Coal Liquefaction Plant CMI 2006 (CMI 2006) producing 1 and 3 million tonne of liquid fuels (gasoline and diesel oil) were prepared. The calculations were carried out for two coal price levels of 54 US$/t (Poland) and 20.5 US$/t (China). The modified investment cost structure for the 1 Mt per year plant is given in Table 1.

This analysis allows an evaluation of the impact of coal price and plant production capacity on the basic economic indicators of the plant (required product market price and required crude oil market price) to ensure that the required product price selling price can be met. The calculations were carried out for 2006 prices using simplified economic models based on indices given in DTI, 1999.

As can be seen, the production capacity and coal price are key to the economics of a coal liquefaction plant. For a plant producing 3 Mt of liquid fuels per year, assuming a coal price below 54 US$/t, the required selling price for liquid fuels produced is within the range of prices met by refineries processing crude oil of the price level of 44 US$/bbl, while for a plant of capacity of 1 Mt of liquid fuels per year, the limiting crude oil price is 63 US$/bbl [4].

Production of 3 Mt of fuels per year would increase the share of coal – based fuels in the total fuel consumption in the transport sector in Poland. For example, the production of coal hydrogenation plant would cover 34% of the amount of engine fuels used by the transport sector in 2005. Assuming an annual increase in fuel consumption of 1%, the production level would satisfy 27% of the transport sector demand in 2030. This suggests that the development of such plant would strengthen the national energy independence in terms of engine fuels in a longer time perspective.

The key point is that the results of these various studies are consistent with each other and show that the production of liquid fuels from coal is broadly economic, given the range of oil prices to be expected over the coming decades. When the security of energy supplies is also taken into consideration, CTL to provide transport fuels becomes an attractive proposition providing that there is enough coal available to make sufficient quantities of the required fuels.

Bibliography:

1. Tagiev S. M. Coal to liquid technologies in the World and development prospects in Australia // Materials of XI International Research and Practice Conference. – Sheffield UK, 2015

2. Parker D. Brown coal to diesel a world first in scale. The Australian. www.theaustralian.news.com.au. 28.04.2007

3. Kavelov B., Peteves S. D. The Future of Coal, EUR 22744 EN, ISBN 978-92-79-05531-7, ISSN 1018-5593 Luxembourg: Office for Official Publications of the European Communities, European Commission, 2007

4. Euracoal (2005) Coal Industry across Europe 2005. Euracoal, Brussels