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Economic and Environmental Barriers to

Implementing Coal-to-Liquid Energy

2014 Clean Energy Workshop

Richard D. Boardman, Ph.D. Chem. Eng. Manager, Energy Systems Integration

September 14-15, 2014

Taiyuan, Shanxi Province

Work Sponsored by Wyoming State

Wyoming Coal Deposits

Strippable Coal (million of short tons)*

Powder River Basin

570,000

Greater Green River 2,700

Hanna-Carbon

7,200

* USGS, 1999 Resource Assessment

2

Major Barriers to implementing CLT

• Environmental Risks of Pollutant Emissions and Water Withdrawals

• Technical Risk Associated with Syngas Cleanup and Fuels Synthesis

• Custom Equipment Supply Chain and Limited Construction Experience

• Operational Control Risks Associated with Complex, Highly Co-Dependent Plant Operations

• Economic Pro-forma Uncertainty Relative to Conventional Oil

• Capital Investment Competition with Subsidized Energy Sources

3

Coal Gasification and Conversion to Fuels & Chemicals

4

Gasification (Syngas Production)

CO, H2, CO2

Air Separation

O2 and N2

Syngas Cleanup

& Conditioning

CO2 for EOR or

Sequestration

Indirect Liquid

Fuel Synthesis

(CTL & C/MTG)

Methane

Synthesis

Ammonia

Synthesis

Combined Gas

& Steam

Turbines

Transportation

Fuels & Chemical

Feedstock

Gas Pipeline

Ammonium

Nitrate

Clean

Electrical

Power

Coal

& Biomass Air

O2

CO CO2 H2

N2

Liquids

SNG

NH3

Tail gas

Coal to Methanol & Methanol to Gasoline Process

5

Water

Scrubber

Coal

Slag

Black

Water

System

Soot

Syngas

Superheated

Steam

BFW

BFW Pump

Activated

Carbon Bed

(optional)

Compression

Syngas

Cooler

Steam

BFW

(jacket)

Syngas

Steam

(jacket)

Steam

Cyclone

Fly Ash

Condenser

Water

Rectisol Process +

Sulfur Guard Beds

(H2S, CO2 Removal)

Purge Gas

CO, H2

H2S, CO2

Claus

Process

Elemental Sulfur Byproduct

SCOT

Process

Claus

Tail

Gas

SCOT

Offgas

CO2

Generator

Condensing

and Saturated

Steam Turbines

Entrained

Flow

Gasifier

Pulverizer

Coal

Drying

Coal

(Dried &

Sized)

SeparationGas

Gasoline

Column

Heavy

Gasoline

MeOH

Reactor

Tail Gas

Recycle

Quench

GasBFW

BFW

Steam

Cryogenic

ASUAir

O2

N2

Sour

Shift

Reactors

Steam

Compression

Pump

CO2

Byproduct

TEG

Dehydration

Unit

HRSG

Air

Exhaust

Gas

Stack

Exhaust Gas

BFW

Steam Generated

via Heat Recovery

Gas Turbine Generator

Compressor

Light

Gasoline

Separation

Tail

Gas

BFW

Steam

Shift

Bypass

Depropanizer

Column A

DeEthanizer

Column

LPGC2

Fuel Gas

BFW

Steam

Ar

Compression

DME

ReactorBFW

Steam

MTG

Reactor

BFW

Steam

Cooler

E-329

Depropanizer

Column B

Treated

Gasoline

Blending

Finished

Gasoline

LPG

Hydro-

Treater

Hydrogen

Coal to Methanol & Methanol to Gasoline Process

6

Water

Scrubber

Coal

Slag

Black

Water

System

Soot

Syngas

Superheated

Steam

BFW

BFW Pump

Activated

Carbon Bed

(optional)

Compression

Syngas

Cooler

Steam

BFW

(jacket)

Syngas

Steam

(jacket)

Steam

Cyclone

Fly Ash

Condenser

Water

Rectisol Process +

Sulfur Guard Beds

(H2S, CO2 Removal)

Purge Gas

CO, H2

H2S, CO2

Claus

Process

Elemental Sulfur Byproduct

SCOT

Process

Claus

Tail

Gas

SCOT

Offgas

CO2

Generator

Condensing

and Saturated

Steam Turbines

Entrained

Flow

Gasifier

Pulverizer

Coal

Drying

Coal

(Dried &

Sized)

SeparationGas

Gasoline

Column

Heavy

Gasoline

MeOH

Reactor

Tail Gas

Recycle

Quench

GasBFW

BFW

Steam

Cryogenic

ASUAir

O2

N2

Sour

Shift

Reactors

Steam

Compression

Pump

CO2

Byproduct

TEG

Dehydration

Unit

HRSG

Air

Exhaust

Gas

Stack

Exhaust Gas

BFW

Steam Generated

via Heat Recovery

Gas Turbine Generator

Compressor

Light

Gasoline

Separation

Tail

Gas

BFW

Steam

Shift

Bypass

Depropanizer

Column A

DeEthanizer

Column

LPGC2

Fuel Gas

BFW

Steam

Ar

Compression

DME

ReactorBFW

Steam

MTG

Reactor

BFW

Steam

Cooler

E-329

Depropanizer

Column B

Treated

Gasoline

Blending

Finished

Gasoline

LPG

Hydro-

Treater

Hydrogen

Gasification

and Hydrogen

Adjustment

Syngas

Cleanup:

Sulfur &

CO2

Separation

for EOR

Methonal,

DME,

Oxygenate

Synthesis

Motor Gasoline

Production

Power Generation

(CO2 emissions)

7

Coal Conversion to Fuels by Fischer-Tropsch Process

8

Gasification

and Hydrogen

Adjustment

Syngas

Cleanup:

Sulfur &

CO2

Separation

for EOR

Fuels

Synthesis (Co Catalyst)

Power Generation

(CO2 emissions)

Coal Conversion to Fuels by Fischer-Tropsch Process

9

GE-CVX

(Texaco)

EGAS

(Destec)

Siemens

(Noell)

Developing gasifiers:

KBR Transport

Rocketdyne

GE – dry feed

Fixed-Bed

(Lurgi)

Shell (SGP)

Uhde (Prenflow)

GTI (U-Gas, fluid bed)

INL Submodels Based on Test Results of Commercial Gasifiers

F-T: Anderson-Schulz-Flory Product Distribution

• F-T models in FORTRAN

• Fixed-Bed or Slurry-Bubble-Column reactor models

• Based on catalyst performance data given chain growth probability and product selectivity data

Methanol Conversion to Alcohols & Oxygentates

Methanol

CO2 +3H2 CH3OH + H2O

CO + 2H2 CH3OH

Di-Methyl Ether

2CH3OH CH3OCH3 + H2O (DME)

Gasoline

nCH3OCH3 CxHyOz + nH2O

(ZSM-5 catalytic MTG)

Developed by ExxonMobil

• Methanol and MTG Reactor Submodels calibrated to published data

Simplified Chilled Methanol Gas Cleanup

• Modeled in FORTRAN with custom thermodynamic data

• H2S and CO2 selectively separated

• Problem: CO2 stripping column modification necessary to achieve CO2 purity for liquefaction (97.5% attained)

• Solution: Strip CO2 with steam and less N2

• Impact: Increases methanol reflux chiller electrical duty

12

Aspen Process Modeling Results for Wyoming Coal

Coal / FT Coal / MTG

Coal Feed Rate (ton/day) 36,300 31,100

Liquid Product Summary 49,000 bbl/day 60,400 bbl/day

Diesel (bbl/day) 35,200 -

Gasoline (bbl/day) - 52,200

Naphtha(bbl/day) 12,700 -

LPG (bbl/day) 2,000 8,200

Electrical Power (MW) (+) 103 (-) 462

(Export Required) (Import Required)

Total CO2 Produced (MMSCFD) 845 555

Capturable CO2 (MMSCFD) 583 530

CO2 Emitted (MMSCFD) 262 25

(plus power plant emissions)

Water Summary

Water Consumed (gpm) 23,700 15,900

Potential Water Recovery

from Coal Drying (gpm) 8,000 1,200

14

Economic Pro Forma Example: Methanol to Fuels

• Greater than 50% of capital cost is associated with gasification and syngas clean-up unit operations

• Methanol/MGT process

capital equipment costs

• Scaled and factored cost

adjusted

• $5.6 Billion Total Capital

Investment (TCI)

• $92,000 per barrel installed

15

Economic Pro Forma Example: Methanol to Fuels

• Coal feed costs range from 10-30% of CTL costs

• Catalysts range from 15-25% of CTL operating costs

• Electricity costs are 25% of manufacturing costs

• 75% of electrical power duty is associated with oxygen supply, gas cleaning, and CO2 processing (compression)

Price Consumed Annual Cost

Direct Costs

Materials

Coal 10.51 $/ton 31,124 ton/day $105,069,447

Fly Ash Disposal 15.00 $/ton 648 ton/day $3,122,064

Rectisol Solvent 1.10 $/gal 4,628 gal/day $1,760,861

Makeup H2O Treatment 0.046 $/k-gal 28,027

k-gal/day $237,120

Wastewater Treatment 1.41 $/k-gal 8,138 k-gal/day $3,701,736

Claus Catalyst 21.00 $/ft3 5.48 ft3/day $36,969

SCOT Catalyst 0.16 $/ft3 0.80 ft3/day $40

Carbon, Hg Guard Bed 5.56 $/lb 35

lb/day $62,960

Zinc Oxide 300 $/ft3 1.042 ft3/day $100,397

WGS Catalyst 825 $/ft3 387 lb/day $102,483,481

Iron Sorbent (Zeolite) 10.07 $/lb 43 lb/day $140,356

Methanol Catalyst 750 $/ft3 0.412 ft3/day $0

DME Catalyst 840 $/ft3 0.264 ft3/day $99,209

MTG Catalyst 54.26 $/lb 0.412 lb/day $71,182

HGT Catalyst 2500 $/ft3 1.30 ft3/day $41,436,215

CO2 Sequestration 14.54 $/ton 30,794 ton/day $1,047,014

Utilities

Electricity 1.67 $/kW-d 436,000 kW $283,924,432

Water 0.05 $/k-gal 27,735 k-gal/day $414,109

Royalties $1,050,694

Labor and Maintenance $234,219,262

Indirect Costs

Overhead $152,242,520

Insurance and Taxes $84,657,564

Manufacturing Costs $1,170,730,270

Natural Gas ($/MMBtu)

CO2 Sequestration

Internal Rate of Return (%) 20

Total Capital Investment

Capacity Factor (%)

Debt to Equity Ratio

Plant Life (yrs) 40 20

Loan Period (yrs) 30 15

$1

.25

$1

.35

$1

.38

$1

.40

$1

.50

$1

.70

$1

.80

$2

.00

$2

.10

$2

.20

$2

.30

$2

.40

$2

.50

$100/ton$50/ton

$1

.60

$1

.90

$1

.45

7

$1

.20

55/45

9.00

0.75

+30-30

6.5

16

PRB Coal

Natural Gas

CO2 penalty risks

are a significant

barrier to CTL

~$.50/gal taxes

~$0.15/gal distrib.

~$0.15 profit

= $0.80 add at pump

CO2 emissions

offset cost Financial Sensitivity

Life-Cycle Greenhouse Gas Emissions Assessment

• Emissions from production, transportation, conversion, and end use

17

Life-Cycle Assessment (LCA) of Greenhouse Gas Emissions

• Problem: Life-Cycle CO2 emissions exceed petroleum fuels baseline

• Solutions: 1. Use more biomass 2. Capture CO2 in flue gas discharge

3. Replace water-gas-shift 4. Use clean-power hybrid systems

• Impact: May increase cost depending on capital and operating cost tradeoffs

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

2

CTL CTL + 30%BM

CTL + CCS CTL + NG +CCS

Relative CO2 LCA Footprint

(50,000 bbl/day FT Plant)

Compared to LCA for

conventional petroleum

refining fuels

19

Hydrogen through hydrocarbon conversion Steam Reforming CH4 + H20 + ½ O2 = CO2 + 3H2

Shift Reaction CO + H20 = CO2 + H2

Water splitting using electrical and/or clean (nuclear) sensible heat: Electrolysis Thermal/Chemical Electro/Thermal (e.g. plasma) Electro/Chemical

Clean Hydrogen Production Alternatives

20

Steam Methane Reforming versus Nuclear-Assisted High Temperature Steam Electrolysis

• Nuclear reactor provides clean electricity and heat for high temperature steam electrolysis

• Oxygen co-product is used for gasification of coal

21

• Reduces Life-Cycle GHG emissions to minor combustion sources only, such as local fired-heaters

• 70% reduction in coal use

• Reduces number of gasifiers and gas cleanup capital and operating costs

Coal to Liquids Integration with Nuclear-Electrolysis Plant

22

Alternative Solution: Thermal-Chemical Hydrogen Production

• US Patent No. 8,366,902 B2 for HTSE (Idaho National Lab)

• Various thermal-chemical looping schemes are possible

• Syngas cooler design change require

GE-CVX

(Texaco)

Heat

Transfer

1,500 C Flame T

Small Modular Reactor Study Results

23

• Nuclear produced hydrogen is economically feasible for China with new nuclear reactors

• U.S. market depends on time-of-use electricity price

>$12 per MMBtu

in China

~$6.0 per MMBtu

projected for U.S.

• Small Modular

Reactor Technology

• Pressurized Light

Water Reactors in the

near term

• High Temperature

Reactors in the future

24

Wind Farm

Power

Converter

O2 H2

ElectricitySteam

Fuels Synthesis

Coal Power Plant

CO2 to

EOR

Oxy-fire

High T.

Steam

Electrolysis

Fuels

Coal and Biomass Water

ELECTICAL

GRID

Clean Coal – Synfuels – Renewable: Hybrid with Grid

• Firms renewables (wind and solar) on the electricity grid

• Optimizes capital equipment utilization factor

• Transfers “low GHG” energy into transportation fuels

Nuclear

SMR

Possible

25

Stress relieving

Heavy wall

plate rolling

Photos: High Country Fabrication, Inc.

Casper, Wyoming

Highway and rail limitations

14-ft diameter in U.S.

Plant Design, Fabrication, Construction, &Operation

• Problem: 1st-of-kind plants involve expensive pressure vessels engineering, fabrication & operational certainty risks

• Solution: Modular equipment fabrication and supply chain; Stream-line engineering, permitting and construction

• Impact: Reduces cost; ensures high on-line capacity factors

* Industry Investment

* U.S. DOE Labs

* University Research

* Computational Simulations

* Deployment *

26

RDD&D Partnerships…

Industrial

Deployment

State

Infrastructure

Authority Investment

Product

to

Market

RDD&D

Manufacturing

Supply Chain

* Applied R&D

* Pilot Demonstrations

Work-

Force

* Chinese Academy of Sciences

27

Short-Term Profits Driven Plan Strategic Holistic Energy Plan

Insurance against short-term oil

shortages caused by economic

disruption and oil supply interdiction

Long range energy planning for

production of domestically derived

replacement fuels, and hybrid systems

with all energy resources

Whole Life Insurance Term Insurance

OR

Opportunity Requires Vision and Strategy