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Coal and Liquid Fuels

Richard A. BajuraNational Research Center for Coal and Energy

Edward M. EyringUniversity of Utah

GCEP Advanced Coal Workshop March 15-16Provo, Utah

File: zert/utah talk

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Outline

• Concerns over liquid fuels supply• Case for coal liquids• History and status of coal liquefaction• Potential DOD initiative• Closing comments

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1970 1980 1990 2000 2010 20200

50

100

150

200

250

Qua

drill

ion

Btu

Oil

Renewables

Nuclear

Coal

Natural Gas

World Primary Energy Consumption by Fuel Type, 1970-2025

EIA, International Energy Outlook 2004

39% of World’sEnergy Supply

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Reliable Supply of Liquid Fuel Critical

Transport

Residential & Commercial

Industrial

Electric

U.S. Petroleum Uses

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Imports Approach 70% by 2025

54%70%

1970 1980 1990 2000 2010 20250

5

10

15

20

25

30

Domestic Supply

Consumption

History Projections

Net Imports

Mill

ion

Bar

rels

per

Day

DOE/EIA AEO 2004U.S. Oil Supply and Consumption (MBD)

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Saudi ArabiaCanada

IranIraqUAE

KuwaitVenezuela

RussiaLibya

NigeriaUnited States

ChinaMexico

QatarAlgeriaNorway

KazakhstanBrazil

AzerbaijanOman

Rest of World0 50 100 150 200 250 300

Billion Barrels

:World Oil Reserves by Country

Total 1,266 Billion Barrels

"Worldwide Look at Reserves and Production."Oil & Gas Journal, 12/22/03

Much of World Oil Supply Located in Politically Unstable Nations

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-505

101520253035

World Oil Demand Increasing Sharply

IEA World Energy Outlook: 2003 Insights

Mill

ion

Bar

rels

per

Day Incremental Oil

Demand by Sector (2000-2030)

OECD Non-OECD

Other SectorsTransportIndustryPower

Developing counties / economic recovery driving demand growth

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More Concerns:Liquid Fuel Supply

• World oil depletion– Even conservative Deutsche Bank

recognizes oil depletion is an issue in next few decades*

• Climate change (~40% of GHG from transportation fuels)

• Local air quality– Particularly in developing countries

*Deutsche Bank Research, Energy Prospects after the Petroleum Age, December 2, 2004

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Long Term VisionFuels with

• Very low or zero GHG emissions

• Zero local pollutants • Improved energy

source diversityChallenges

• Engine/fuel interdependency• Infrastructure adaptation• Government involvement• Consumer acceptance • Economics

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DOE’s Case for HydrogenIt’s Abundant*, Clean, Efficient, And Can Be Derived From

Diverse Domestic Resources

Biomass

Hydro

Wind

SolarGeothermal

Coal

Nuclear

NaturalGas

Oil

With

Car

bon

Sequ

estr

atio

n

High Efficiency& Reliability

Zero/Near-ZeroEmissions

Distributed Generation

Transportation

* (but not as H2)

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H2 Meets Vision Criteria But . . .• Automotive fuel cells are early on cost and

experience curve• Production of H2 from renewable or low carbon

sources – limited availability and costly• H2 storage and distribution need breakthroughs to

be cost effective

Increasing recognition that H2 “solution” is well into future

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Implication For Mid Term

• Relying on H2 economy to deliver and doing nothing else is not acceptable option

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All Eggs in One Basket

[H2]

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What if We Are in the Wrong Basket?

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Many Potential Options for Mid Term

• Natural gas fuels– CNG– LNG

• Electricity / batteries • Biofuels • Oil sands • Oil shale• Coal liquids - Today’s Talk

Energy Efficiency

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Coal data: BP Statistical Review, June 2004;Oil & gas data: EIA, Advance Summary U.S. Crude Oil, Natural Gas, and Natural Gas Liquids Reserves, 2003 Annual Report, September 22, 2004

Why Coal For Liquid Fuels?

0

100

200

300

Coal Oil Gas

U.S. Reserves / Production RatioYears Supply at Current

Production• Abundant domestic reserves

• Relatively low, stable prices

• 800 billion barrels of oil equivalent

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Two Approaches to Converting Coal to a Liquid Fuel

IndirectGasify coal and

rebuild small molecules to

desired product

DirectBreak coal down to maximize correct size

of molecules for liquid products

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Direct Liquefaction

• Reacts coal with H2– Usually in presence of a liquid solvent

• Aggressive reaction conditions– Temperatures > 400°C– Pressures > 100 atm– Appropriate catalyst

• Produces a syncrude – Can be refined to produce gasoline or

diesel fuel– More conversion than indirect process

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Indirect Liquefaction

• Involves gasification of coal to produce a syngas– Mixture of CO and H2

• Syngas converted into a liquid fuel via processes such as– Fischer-Tropsch (FT) process– Mobil Methanol-to-Gasoline (MTG) process

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Liquids Fuels Can Be Produced from Coal

Germany• Had nine indirect and 18 direct liquefaction plants at end of WWII

• Produced 4 MMT/yr fuels• Met 90% of nation’s needs

South Africa• Developed coal liquids industry from 1950s through the mid-1980s

• Three coal-to-liquids facilities

• Produced 10 MMT/yr fuels at peak

• Met 60% of nation’s needs

China• Planning a 1 MMT/yr direct liquefaction plant for 2007

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U.S. Had Aggressive Program from Mid 1970’s to Early 1980’s

• Many pilot and process development scale coal-to-liquid facilities

• U.S. Synthetic Fuels Corporation (SFC) support• Promising technologies included:

– Solvent Refined Coal (Gulf Oil)– Exxon Donor Solvent – H-Coal (Hydrocarbons Technologies

Incorporated) [adopted by China]

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Cost: A Key Coal Liquefaction Challenge

• Mitretek study indicate coal liquefaction should become viable if world oil price remains above $25 per barrel.– Polygeneration plant (produces liquids and

electricity) • DOE studies estimate cost of producing coal liquids at

$30 per barrel. – Upgrading FT coal liquids costs less than refining – crude oil

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Status of U.S. Support forCoal Liquids Research

• DOE has had modest coal liquids program since SFC days

• DOE has not requested funding for liquid fuels research in recent years

• Congress has continued to support projects in FE and EERE– Supports its interests through earmarked

programs• Some work relevant to liquefaction continues in

other DOE programs, particularly H2

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Polygeneration

• Polygeneration– Higher efficiency and more effective use of capital– Good prospects for cost-competitive production of clean

energy carriers and chemicals

• Polygeneration could meet most requirements for centralized production of electricity and clean fuels

Gasification SeparationSynthesis

H2

coal

Gas Turbine CC

methanol

ElectricitySeparation

CO2

DMEMethanol

Water Gas ShiftClean up

ASU air

oxygen Town gas

Carbonylation Acetic acidCO

enhanced resource recoveryor aquifer sequestration CO2

enhanced resource recovery or aquifer sequestration

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DOE’s FutureGen Includes Liquid Fuel Capability

By-ProductsUtilization

Fuel Cell

Electricity

ProcessHeat/

Steam

Gasification

PowerH2/CO2 Separation

Gas Cleaning

Figure 2

EnhancedOil Recovery

CoalSeams

SalineReservoir

CO2 Sequestration

H2

CO2

Fuels and Chemicals

High EfficiencyTurbine

OxygenSeparation

Coal

Transportation(fuel cell vehicles)

O-2

e–

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Coal Liquids and Greenhouse Gas Emissions

• Polygeneration/FutureGen approach makes CO2capture possible for fuel production

• High quality of FT liquids enables use of higher efficiency engines

• Indirect liquefaction’s use of the gasification process provides bridge to coal-to-hydrogen future

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1970 1980 1990 2002 2015 20250

400

800

1,200

1,600

Eastern

Western

Total

History Projections

Coal Production by Region

Annual Energy Outlook 2004, January 2004

Mill

ion

Shor

t Ton

s

Utah and other western states could be well

position to capitalize on the

jobs that a domestic coal-to-liquids industry

would create

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DOD’s Interest in Liquid Fuels• Nation’s largest energy user

– Uses 1% of all energy in U.S.– Probably world’s largest oil buyer

• Uses five billion gallons of petroleum a year • Concern about energy security

– SPR has limited supply and lifting capacity• Concern over cost of battlefield fuels ($300 per

gallon for delivery of fuel for ground forces in a war theater) – Seek means of producing fuels closer to point of use

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Under DiscussionA DOD Clean Fuel Initiative

Vision: Catalyze commercial industry to produce clean fuels for the military from secure

domestic resources using environmentally sensitive processes that create jobs and wealth

in the United States

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Benefits of a Coal Liquefaction Initiative

• Cleaner fuels reduce NOx and particulate emissions; enable use of higher efficiency engines

• Coupling with polygeneration enables partial carbon capture and builds bridge to H2 economy

• Produce more jobs for Americans

• Improves national security by lessening reliance of foreign oil

• Improves balance of trade

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Systems Integration

MembranesLower Cost Gasification

ImprovedCatalysts

ComputationalChemistry

FuelsTesting

Technology Development Key To Economic Viability and Real Markets

AdvancedTechnologies