July 09, 2006
First US Coal To Liquid Plant Coming

The New York Times reports on plans by Rentech to build a plant to convert coal to liquid fuel burnable in diesel engines.

Here in East Dubuque, Rentech Inc., a research-and-development company based in Denver, recently bought a plant that has been turning natural gas into fertilizer for forty years. Rentech sees a clear opportunity to do something different because natural gas prices have risen so high. In an important test case for those in the industry, it will take a plunge and revive a technology that exploits America's cheap, abundant coal and converts it to expensive truck fuel.

"Otherwise, I don't see us having a future," John H. Diesch, the manager of the plant, said.

If a large scaling up of coal-to-liquid (CTL) production takes place then an increase in pollution seems likely. Though perhaps advances in conversion technologies and tougher regulations could prevent this. The use of coal to make liquid fuels will increase CO2 emissions since the conversion plants will emit CO2 and of course the liquid fuel will emit CO2 just as conventional diesel fuel does. Those who view rising CO2 emissions with alarm therefore see a shift to CTL as a harmful trend.

And, uniquely in this country, the plant will take coal and produce diesel fuel, which sells for more than $100 a barrel.

The cost to convert the coal is $25 a barrel, the company says, a price that oil seems unlikely to fall to in the near future. So Rentech is discussing a second plant in Natchez, Miss., and participating in a third proposed project in Carbon County in Wyoming.

That sounds very profitable. The longer the price of oil stays high the likelier that capitalists will decide it is worth the risk to build CTL plants. Many are holding back worried that oil prices could tank again as happened in the early 1980s. That price decline drove the Beulah North Dakota Great Plains Synfuels Plant into bankruptcy. Though it was restarted and now produces natural gas from coal profitably. Though the bankruptcy cut the capital cost of operating that plant and so is not a perfect measure of the profitability of processes to convert coal to gas or liquid.

The rise in US natural gas prices has led to a cutback in the production of ammonia and ammonia-based fertilizers from natural gas in the United States. Ammonia production has ramped up in countries which have cheaper natural gas due to a surplus of local production (e.g. in the Middle East). But synthetic gas can be produced from coal for cheaper than recent natural gas prices. Rentech intends to convert an existing ammonia plant to coal gas and then at the same site they will implement a coal-to-liquids process to make synthetic diesel fuel.

Denver, Colorado-Rentech, Inc. (AMEX:RTK) announced today that its wholly owned subsidiary, Rentech Energy Midwest Corporation (REMC), has entered a Professional Services Agreement (PSA) with Kiewit Energy Company (KEC), Houston, Texas, a subsidiary of Kiewit Corporation located in Omaha, Nebraska. WorleyParsons, under contract to KEC, will lead the Front End Engineering and Design (FEED) from their offices in Houston, Texas. FEED services will include the planned coal gasification conversion of REMC's natural gas fed ammonia fertilizer facility in East Dubuque, Illinois and the production of ultra-clean fuels based on Rentech’s patented and proprietary Fischer-Tropsch (FT) coal-to-liquids (CTL) technology.

Rentech intends to implement ConocoPhillips E-Gas™ Technology for clean coal gasification at the site to produce syngas initially for use in the production of ammonia and ammonia-based fertilizers and ultra-clean FT fuels.

The FEED contract for the first phase of the project, which includes the conversion of the ammonia plant feedstock to coal derived syngas and the installation of FT liquids production, has been initiated. The results of the FEED work will be used to advance the project and provide a basis for an Engineering Procurement and Construction Contract. FEED activities are scheduled for completion during the first half of 2007. REMC's East Dubuque facility is expected to be the site of the United States' first commercial CTL plant utilizing clean coal gasification in conjunction with the Rentech Process.

The New York Times article also mentions GreatPoint Energy which has a pilot plant coal-to-gas (CTG) plant in Des Plaines Illinois. Their process uses a new catalyst that lowers the heat needed and therefore the energy loss from conversion of coal to natural gas. They list several advantages of their process:

GreatPoint lists many advantages for their process.

Produces methane in a single step and in a single reactor

  • Pipeline grade product
  • No need for external water gas shift reactor
  • No need for external methanation reactor
  • Produces CO2 as a valuable sequestration-ready byproduct

Significantly reduces operating temperature

  • Lower cost reactor components
  • Lower maintenance costs and higher reliability
  • Eliminates costly high temperature cooling

Utilizes steam methanation

  • Eliminates costly air separation plant

High efficiency

  • 65% overall efficiency
  • Thermally neutral reaction process
  • No need for integrated power plant

I like the fact that this process produces CO2 already separated out. This lowers the cost of CO2 sequestration.

The price of oil has gotten so high that lots of talented people with entrepreneurial streaks are coming up with cheaper ways to get liquid and gaseous fuel from coal. Given that I do not expect the political system to impose sufficiently stringent emissions regulations on coal-based energy processes I'm ambivalent about these developments. But the GreatPoint Energy process is reason for more optimism. If they really can produce the CO2 as a separate product of their process then perhaps coal-based energy technologies which are both low cost and low in emissions is an attainable goal.

Even if the plants that convert coal to liquid and gaseous fuels can be made to be carbon-neutral at low cost a shift to coal on a scale sufficient to increase liquid fuels production would still lead to higher CO2 emissions. The liquids would get burned in vehicles and vehicle consumption of hydrocarbon liquids would rise.

Advances in battery technology show the most promise for reducing both conventional pollutant emissions and CO2 emissions. First off, cheap and high energy density batteries would lower the cost of hybrids. That would increase efficiency of burning liquid fuels and therefore reduce emissions. Also, batteries will enable a migration toward use of electricity to charge up vehicles. Then stationary power plants - whose emissions are far eaiser to reduce - will supply an increasing fraction of all energy used in transportation.

The migration to pluggable hybrids and pure electric vehicles will allow nuclear, solar, and wind to provide power for transportation. Also, coal-burning electric plants could in theory be made to have zero emissions. Whether the cost of zero emissions coal will ever compete with nuclear, wind, and future cheaper photovoltaics remains to be seen.

Also see my posts US Air Force Plans Shift To Coal Derived Jet Fuel, Fischer-Tropsch Coal Gas Cost Effective With Current Oil Prices?, and Rapid Switch From Oil To Coal Possible?

Share |      Randall Parker, 2006 July 09 09:31 AM  Energy Policy


Comments
James Bowery said at July 9, 2006 2:29 PM:

CO2 is valuable as an aquaculture feedstock via algae growth for algae grazers. The algae grown can also produce biodiesel or, better yet, if you can keep the growing vats sterile, omega-3 oils -- the demand for which may rise very rapidly if more governments start mandating fish oil suplementation for school children due to neurological development findings (this is already happening in the UK and as a Guardian article points out "There aren't enough fish in the sea"). If you have a source of heat as well then you've solve the most difficult problem: keeping the algae growing at optimal rates.

Rick said at July 9, 2006 7:24 PM:

If we use nuclear for electricity and coal for liquid fuels, it will buy us enough time to figure out the whole sustainable solar/wind/biofuel thing. It is clear that CTL is a greenhouse gas nightmare, but by switching our electricity to nuclear, we can offset some of these emissions. If we do this the smart way, we can greatly reduce our dependence on nasty regimes for our energy, and maybe someone else can take a turn policing the globe.

Wolf-Dog said at July 10, 2006 12:59 AM:

Note that BATTERY based electric cars, are the ultimate form of multi-fueled cars, because you can make cheap electricity with any kind of fuel, nuclear, solar, coal, etc. These electric cars are very close to becoming reality for the masses within less than a decade:

http://www.teslamotors.com/

Already there are decent prototypes with range over 250 miles per charge, and some nanotechnology based lithium batteries can be charged within a few minutes, and they are very durable.

http://www.technologyreview.com/read_article.aspx?ch=specialsections&sc=transportation&id=16624

http://www.evworld.com/view.cfm?section=communique&newsid=10734

Bigelow said at July 10, 2006 6:02 AM:

Sequestering the CO2 might involve pipelines to old oilfields to implement advanced recovery techniques for oil and remove the CO2 from the biosphere.

Someone should start a petition site saying we will buy your hybrid car only if it is a fully plug to recharge hybrid. Four to five hundred thousand signers ought to get auto company attention.

Jake said at July 10, 2006 8:11 AM:

Bigelow:

Pray tell where is the electricity going to come from to charge those cars? Electricity is so tight that plug-in cars would cause massive power outages.

Before you demand plug-in cars, you have to demand nuclear power plants.

PacRim Jim said at July 10, 2006 10:06 AM:

If you make the pipelines long enough, the CO2 would be sequestered indefinitely.

Bigelow said at July 10, 2006 11:11 AM:

Jake:

Recharge most of those hybrids at off-peak hours. Since peaking oil is a paradigm change, perhaps all we impatient consumers could learn a few new tricks and plan. Not all hybrids may be recharged overnight, some might get a fast 20 minute to an hour recharge after work.

The extra electricity comes from restoring the margin of excess grid capacity lost to de-regulation; it means building combined cycle "clean" coal, wind farms and nuke plants. Yes I want nukes as long as the senior executives and board members are required to live within 20 miles of them.

bigelow

hamerhokie said at July 10, 2006 1:05 PM:

I still think that the carbon fuel cell technology from Lawrence Livermore will be the ultimate best use for our coal.

bigelow said at July 10, 2006 2:04 PM:

We can find many things to do with coal and that in it self is a problem. As someone on this board pointed out a long while ago we can have "peak coal" too. All the news touts hundreds of years of coal left, at present rates of use. I don't think they get what happens when coal is the feed stock for fertilizers, pesticides, fuel and plastics. Not to mention electricity generation. That is why I want hybrids now and energy efficiency as a patriotic value. I suggest buy some coal company shares later this fall.

bigelow

Randall Parker said at July 10, 2006 5:58 PM:

Rick,

I completely agree with you. We could reduce the use of coal for electric generation by replacing it with nuclear. Then we could use more coal for making liquid fuels.

bigelow,

I'm not worried about "peak coal" because 50 years from now a few different non-fossil fuels energy sources will be cheap and highly flexible. We just need to get through the short to medium term. A lot of technologies are finally going to mature in the next couple of decades. I expect electric cars and eventually even cheap methods for storing hydrogen.

Jake,

We can build more electric power plants to burn either coal or nuclear. I prefer nuclear because I want less pollution. But I do not see electric supply as a bottleneck. Also, bigelow is right about the grid. We can charge up at night. Plus, the grid can get expanded. It only takes money.

Engineer-Poet said at July 10, 2006 9:04 PM:

PHEV's are perhaps the ultimate load-levelling device, because they can fall back on liquid fuel if electricity supplies run short.

But I'm far less sanguine about CO2 emissions than you are, Randall.  I don't think we can afford any increases, and we have to start mitigating the existing warming effects immediately.  If you think forests are going to take up the difference, it appears that global warming is causing the West's forests to burn up.  I recently read (but can no longer find) a claim that grain productivity will drop about 10% for each 1°C increase in average temperature; this means that food supplies are in acute danger.

What we can do no longer matters.  Coal-to-liquids will extend the duration of the age of hydrocarbons, and we no longer have that as a non-suicidal option.

IMPO, we need to:

  • Do something about warming yesterday, and
  • Call an immediate halt to construction of all powerplants which are not set up to sequester carbon.
Yes, that means most everything.  Yes, that also means things like $6/gallon gasoline.  Yes, that means China and India too - but they'll have to go along if food exporters refuse to feed them.

Philip Sargent said at July 12, 2006 4:29 AM:

A reduction in overseas wars is itself a very serious carbon-saving initiative - probably enough to off-set the extra CO2 emissions from coal-to-liquids for road transport within the USA.

Not ideal perhaps, but at least the possibility is there to retrofit CO2 geological storage for the "extra" CO2 from the coal-to-liquids step.

In an article in the Washington Post (May 13th) by Cass Sunstein, it was reckoned that the Iraq war will have cost the USA $350m - and this does not include any costs borne by the non-USA participants. "Costs today for the USA are about $4b a month" it says. In 2000, Nordhaus and Boyer of Yale estimated the full cost to the USA of complying with the Kyoto treaty (over several decades) would be $325m: a figure very widely disputed but described by Bush as implying "serious harm to the U.S. economy."

Stan said at July 14, 2006 3:38 PM:

PHEV's may, at some distant future date be viable. Currently, the generating capacity is not there to support a trade of so little as 5% of gasoline powered auto travel to PHEV. Moreover, even if generating capacity is increased sufficiently, that is of no consequence as the transmission capacity is similarly insufficient. Perhaps, after a 20 year crash program of US electrical net renovation and upgrade, PHEV's on a moderate scale may make sense for intra urban travel, and then only if the electricity comes largely from nuclear. Perhaps, by then, a practical, 10 year life battery can be developed. Current battery technology is not economically competitive with gasoline. Just because a few "greenies" are willing to suffer the expense and inconvenience of current designs as a political statement does not make the currently available product viable on a large scale. There is far more to be done than has already been done, and the will does not appear to be there.

Engineer-Poet said at July 14, 2006 6:32 PM:
Currently, the generating capacity is not there to support a trade of so little as 5% of gasoline powered auto travel to PHEV.
You think so?  You're wrong.

The US uses about 140 billion gallons of gasoline per year.  At 126,000 BTU/gallon LHV and 15% drivetrain efficiency, that's 1.76 quads of energy or 59 GW average.  5% of that is ~3 GW, down in the noise of the daily demand cycle.

PHEV's may, at some distant future date be viable.
Rumor is that GM is going to announce one, and kept a Saab PHEV from being touted as such at a recent auto show so that the GM version could have the distinction of being first.
Perhaps, after a 20 year crash program of US electrical net renovation and upgrade, PHEV's on a moderate scale may make sense for intra urban travel....
The US fleet average economy is about 22 MPG, so that 140 billion gallons of gas moves cars roughly 3.08 trillion miles a year.  If the fleet was replaced by Prius-equivalent PHEV's consuming 270 WH/mile from the grid, that's about 830 billion kWh/year or roughly 20% of current US electric consumption.  We wouldn't even need to upgrade the grid if we charged them at off-peak hours.

Sorry, Stan, but you're way behind the times.  Mass-production hybrids proved they could be sold at a profit; as the world price of oil creeps toward $100/barrel, mass-production PHEV's will do the same.

Randall Parker said at July 14, 2006 7:17 PM:

I agree with E-P.

Mass production hybrids have provided the incentives for battery makers and venture capitalists to develop better batteries for cars. So, for example, the biggest battery maker in the United States, Johnson Controls, is trying to develop next generation batteries for hybrids that will make hybrids much more cost effective. Other battery makers are doing likewise.

If industry predictions are correct then hybrids are going to shift from NiMH to Lithium-based batteries in the next 5 years. For example, Johnson Controls projects big production volumes for lithium ion batteries for hybrids in 2010.

Manufacturers in Japan, Europe and the United States are working to replace nickel-metal hydride batteries with lithium ion. Earlier this month, Nissan Motor Co. launched the Atlas 20 medium-duty truck in Japan with lithium-ion batteries. Officials at Ford Motor Co., Toyota Motor Corp. and Johnson Controls Inc. say lithium-ion batteries will begin replacing nickel-metal hydride batteries in high volume around 2010. Johnson Controls has a joint venture with French battery maker Saft Groupe SA.
richard said at July 16, 2006 7:28 AM:

The answer to eliminate fossil fuels is here already. It's called the TEV ( Tilley electric vehicle ). The TEV is a self charging electric vehicle. Many proffessional people including scientists, engineers, etc say that it is impossible. The inventor of this vehicle ( Carl Tilley ) says that he's willing to put up 1 million dollars of his own money to anyone who can prove him wrong. Instead of giving you all the details, anyone interested should go to the tilleyfoundation.com web site to read all about his self charging devices already available to any buyer with enough money to make him a respectable offer. The foundation will be making a documentary this year on the developement of this vehicle and other self charging devices. This is the kind of invention that conspiracy theorists will say that big oil would never allow this product on the market unless they could find a way to control it and of c

Engineer-Poet said at July 16, 2006 7:32 AM:

tilleyfoundation.com returns a 404.  Appropriate.

Bob Badour said at July 16, 2006 7:51 AM:

Richard,

From your description alone, one can conclude Tilley is a crank. The onus lies on those proposing a radical new science to present a plausible, falsifiable hypothesis and experimental results that show the hypothesis provides some predictive value.

Only an ignorant crank would reverse the challenge.

Philip Sargent said at July 18, 2006 12:54 AM:

On a global economic basis, the most important aspect of coal to liquids technology is that it puts a ceiling on the oil price -- eventually.

This is what the former head of Total has been saying for a couple of years: expect the oil price to go up to $100-150/bbl for 10-15 years, then the price will drop back to the price of the cheapest other fossil fuel substitute (CTL, GTL) which is about $50/bbl until the coal runs out. The oil will have to be priced at that marginal price too.

Joel D. Fedder said at January 27, 2008 11:14 AM:

What is the status of this plant?
Joel D. Fedder

Wade Nye said at July 13, 2008 3:22 PM:

Coal to Liquid(CTL) synergized by feeding emitted Co2 from it's conversion process to an Algae/Aquaculture biodiesel operation then blending resulting synthetic diesel & biodiesel into a syn/bio blend.

Combine this with efficient plug in diesel/electric hybrids.What a concept!!!!I would vote for any candidate who could develope a coordinated goverment/business effort like this.I think the governor of Pennsylvania should be called on to lead this program.

If one of these candidates would jump on this with enough zeal and leadership.It would probably continue in similar fashion that Kennedy/Johnson & Nixon administrations committed themselves to the Mercury/Apollo projects.

It is my understanding that a by-product from an operation like this is enough steam to make huge amounts of electricity.Also it would increase and develope aqua-culture tech. to the point where by the time coal reached it's peak we wouldn't need it anyway because algae would take it's place.

Add to this the fact that it could clean up waste coal problems and even be used to clean sewage water.Also the aquaculture tech. could be used to clean Co2 emissions from nearby coal generation plants. How much synergy can you get in one process.It is my understanding that Aviation fuel/Heating oil & Diesel fuel combined which all can be made from this process make up 50% of the oil we import.Can you imagine how far oil prices would drop once these plants came online.

One problem is that when this plants start and oil prices start dropping prices would need to be supported by taxes so that they will not close down.These taxes could be used to pay out debt.

Let's also remember also the amount of temporary and permanent jobs thay would be created instead of us throwing our money down a hole in Saudi-Arabia.

Leonard Bynum said at August 1, 2008 4:14 AM:

All the recommendations to use Nuclear is disturbing. Espically when it is touted as clean energy. Nuclear is never clean when you cannot get rid of the spent after products that are highly deadly. Until we come up with a safe way to get rid of nuclear after products, it is my last choice. Have we learned nothing from the past? Wind, solar, hydro, and yes even coal are far better choices than nuclear. Other countries are developing coal into safe fuel, so can we. We have the largest coal reserve in the world, lets figure out how to use it effectively.

John M. Kocol said at March 24, 2011 6:22 PM:

Turning coal to oil (coal2oil) and then converting
CO2 to methanol will solve our energy problems.

John M. Kocol
Founder & CEO USMEXenergy.com,
coal2oil.com & CO2toMethanol.com
are USMEXenergy.com companies

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