I have been kicking around the idea of writing an essay on the coal-to-liquids (CTL) dream of Montana governor Brian Schweitzer. However, a story just appeared in the Billings Gazette that emphasizes many of the points I would cover in an essay:
Making oil from coal is bad for Montana
The essay argues that we shouldn’t do it, mainly due to global warming and pollution concerns. I agree that we shouldn’t do it, but I think we will do it as we become more desperate for energy. However, the cost of a CTL plant is double the cost of a conventional refinery. This means that CTL is still not an economic option, even though the process is viable from a technical standpoint.
The article above claims $6 billion to build one 80,000 bbl/day plant. This is consistent with estimates I have seen, which are even higher than estimates for GTL plants. So, before we turn to CTL, I think we will have to further deplete our conventional oil resources, and then start building GTL plants. At some point prices will be high enough to justify building CTL plants. Of course we may be growing bananas in Greenland by then.
Oh, and if you want to see some opinions that will make you shudder, read some of the comments following the article above. Some of those comments reflect an incredible ignorance of the issues we face. One of the posters is confident that God won’t allow us to destroy ourselves. Someone else argued that if we cut back on CO2, plants will start to die. We have a real uphill battle trying to get people to face up to the challenges before us.
Robert said, “The essay argues that we shouldn’t do it, mainly due to global warming and pollution concerns. I agree that we shouldn’t do it, but I think we will do it as we become more desperate for energy.”
Robert,
CTL is going to be hard on the environment, and it will be expensive, but it is also inevitable. (Unless there is a breakthrough soon in fusion power)
All of that coal in Utah, Wyoming, and montana is our “ace-in-the-hole” as a source of liquid fuel. As long as we have that, there will never be a shortage of liquid fuels in the U.S.
If it comes down to a choice of millions of commuters burning billions of gallons of fuel to get back and forth to work, or sacrificing the pristine environment in the High Plains and Mountain West, I already know what the politicians will decide. (Afterall, look what ahppened to Butte.)
Regards,
Gary Dikkers
I agree about GW, but I’m curious about the other two objections.
Water: My understanding is that the 5:1 ration of water input to fuel output is primarily due to cooling requirements, and that a non-water cooling solution is feasible. Without water cooling I’m given to understand that the water requirements are perhaps 1:1, or 80% less.
Capital Expenditure: $6B for 80K Barrels/day works out to about $17 per barrel, assuming 7% interest and 30 year amortization. That doesn’t seem bad at all, given the cheapness of coal. At even $50 per barrel I would think you’d make lots of $.
Does that make sense?
Water: My understanding is that the 5:1 ration of water input to fuel output is primarily due to cooling requirements, and that a non-water cooling solution is feasible.
Water is needed for cooling, but water is also injected into the process to create hydrogen via the water-gas shift reaction.
Capital Expenditure: $6B for 80K Barrels/day works out to about $17 per barrel, assuming 7% interest and 30 year amortization. That doesn’t seem bad at all, given the cheapness of coal.
That’s only the capital costs, though. You still have the operating costs.
Cheers,
RR
“Water is needed for cooling, but water is also injected into the process to create hydrogen via the water-gas shift reaction.”
Well, that’s my understanding of the remaining 20% needed, for the hydrogen. So, the question is: is it correct to say that 80% of the 5 gallons cited by the article are for cooling, and 20% for the hydrogen, and that the water cooling can be avoided through other means of cooling?
On costs, I would guesstimate fuel costs roughly in the range of $10/barrel, and operating costs of
maybe $10, for a total of about $37. If you can sell the oil for anything more than $50, you’ll make out like a bandit.
Make sense?
So, the question is: is it correct to say that 80% of the 5 gallons cited by the article are for cooling, and 20% for the hydrogen, and that the water cooling can be avoided through other means of cooling?
I don’t know if it’s 80%, but there is a substantial cooling water requirement. But it’s not easy or cheap to cool without water.
On costs, I would guesstimate fuel costs roughly in the range of $10/barrel, and operating costs of
maybe $10, for a total of about $37. If you can sell the oil for anything more than $50, you’ll make out like a bandit.
Make sense?
One thing I suspect is that the $6 billion has gotten more expensive as energy prices have gone up. The other thing you have to consider is competing projects for those funds. If oil is projected to stay above $50 a barrel, most people are going to invest their money in cheaper oil production, or in GTL until those supplies start to deplete.
Cheers,
RR
I suspect part of the reason CTL is being pushed so hard in Montana is that the coal reserves are under-utilized. The coal has a higher sulphur content than in the Powder River Basin (Wyoming). As a result, as long as scubbers are not widespread in coal utilities there will not be a push to use Montana Coal. Further, the state is under served by railroads, with no new planned railroads in sight (it costs about $3M to build one mile of railroad). Building a coal utility without a railroad nearby won’t work.
Coal in Wyoming and Montana are a miners dream because all they do is blow up the ground and then collect the remains. It is the cheaps and safest way to mine coal. But this dream in Montana won’t work without railroads and high-sulphur coal — hense the idea of CTL.
What is the lead time to build one of these 80 Kbpd plants? Including all the additional coal mining & transportation (if needed) equipment and infrastructure?
If we wanted to build about 12-13 such plants (to get 1 million bpd or about 5% of US annual oil needs), what would be the long poles in the schedule?
IOW, how feasible – disregarding all environmental effects – is this?
Finally, is the “liquid” in CTL more like crude that has to be further refined, or is the CTL process tunable like refining?
How does the cost/complexity/yield change with subbituminous (low quality) coal?
Thanks.
What is the lead time to build one of these 80 Kbpd plants? Including all the additional coal mining & transportation (if needed) equipment and infrastructure?
Probably 5 years lead-time from the time the decision is made to build. And the problem is that the economics are very sensitive to the price of oil. So, nobody is going to make a big commitment without some guarantees.
If we wanted to build about 12-13 such plants (to get 1 million bpd or about 5% of US annual oil needs), what would be the long poles in the schedule?
The cost of that many plants would be phenomenal. Also, to justify the economics you have to have a very large, long-term source of coal. I am not sure we wouldn’t start to rapidly deplete our coal resources if we tried to make 1 million bpd of liquids from them.
IOW, how feasible – disregarding all environmental effects – is this?
It is technically quite feasible. The economics aren’t there right now. And, given that steel, labor, etc. all get more expensive (i.e., projects become more expensive) as oil gets more expensive, it isn’t clear to me that even higher prices of oil will make this go. If you could build when oil was $40, knowing it would be $70 for most of the time the project is in place, then those economics would probably work out fine. Otherwise, I don’t know.
Finally, is the “liquid” in CTL more like crude that has to be further refined, or is the CTL process tunable like refining?
It is not like crude, but more like a middle distillate cut from crude. It still has to be refined. And yes, the process is somewhat tunable.
How does the cost/complexity/yield change with subbituminous (low quality) coal?
I have not seen any data on that at all.
Cheers, RR