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Coal to Liquid a Viable Energy Alternative

Coal to Liquid a Viable Energy Alternative. Scope of Presentation. Why coal-to-liquid (CTL)? What is Headwaters DCL technology How to deal with high ash coals Strategy for implementing CTL project. Indian Oil Balance (BP Statistical Review).

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Coal to Liquid a Viable Energy Alternative

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  1. Coal to Liquid a Viable Energy Alternative

  2. Scope of Presentation • Why coal-to-liquid (CTL)? • What is Headwaters DCL technology • How to deal with high ash coals • Strategy for implementing CTL project

  3. Indian Oil Balance (BP Statistical Review) Indian oil import projected to be 6 million BPD in 2030 CTL is the pragmatic alternative to imported crude

  4. India ranks 4th in coal reserves (mostly high ash coals)

  5. Oil Gas Coal Coal remains the cheapest energy option

  6. Recent steep increases in energy prices

  7. Maximizing the Value of Coal A choice to make: Electricity Production Products Value 3 MWh electricity $120 Total $120 Combustion Fuel and Power Production Products Value 0.083 MWh electricity $3 0.28 bbls naphtha $13 2.13 bbls diesel fuel $166 Total $182 1 ton Coal Indirect Coal Liquefaction Fuel, Power & Fertilizer Production Products Value 0.31 MWh electricity $12 0.30 bbls naphtha $14 1.58 bbls diesel fuel $123 0.30 t ammonium nitrate $105 Total $254 Polygeneration Liquid fuel provides greater mobility

  8. CTL Technology Options Direct Coal Liquefaction (DCL) Coal + H2linear + ring Hydrocarbons (CxH2x) Coal/resid + H2linear + ring Hydrocarbons (CxH2x) Indirect Coal Liquefaction (ICL) 1. Gasification: Coal + O2 + Steam Syngas (H2 + CO) 2. FT Synthesis: H2 + CO linear Hydrocarbons (CxH2x+2) MTG Synth. : H2 + CO ring Hydrocarbons (CxH2x) Note: Practiced during WWII by Germany Hybrid Coal Liquefaction Integration of Direct and Indirect Coal Liquefaction Catalyst Catalyst Catalyst Catalyst Coal Properties and Product Objective influence choice of technology

  9. Technology Performance

  10. H2S, NH3, COx C1 – C2 Recycle H2 Gas Recovery Treatment Make-up Hydrogen LPG Gasoline Hydro- treating Coal or coal-resid + disposable Fe catalyst Coal Liquefaction Diesel Fuel Refining H-Donor Slurry Fractionation Slurry Heavy Vacuum Gas Oil (HVGO) Solvent De-ashing De-Ashed Oil (DAO) Ash Reject Direct Coal Liquefaction Process Can be omitted for low ash coal

  11. Petroleum Resid Hydrocracking Reactors Tonen Japan Husky, Canada PKN, Poland Pemex, Salamanca Mexico Pemex, Tula Mexico

  12. Shenhua Inner Mongolia 20,000 BPD DCL Plant 2005 Early Headwaters’ 1st DCL license: End of 2008 Startup

  13. Refined DCL Liquids - Shi, Yuhua (RIPP, Oct/04)

  14. Approach in Processing High Ash Indian Coal • High ash coal: • lower efficiency • higher maintenance cost • Ash reduction prior to DCL • Conventional coal washing • Coal/oil agglomeration • Solvent refined coal • Blending with low ash or no ash feedstock • Gasification: petcoke (ash <30%) • DCL: petroleum resid (ash < 12%) (coal/oil co-processing)

  15. Economic Analysis of ICL Project (US mine mouth location) Baler & O’Brien (Mar/2007) • CAPEX $85K per barrel/day capacity • OPEX $15/bbl • Feedstock $10 short ton • Total Liquid Yield 1.9 bbl/short ton • Distillate Price 122% of WTI • Equity 100% • No CO2 Capture • Breakeven crude oil price (WTI) = $48 • To generate 12% after-tax IRR with no government incentive Economics of CTL project depend on coal type, scale, & location

  16. Overview of Worldwide CTL Activities • China: to startup first DCL plant; ICL-FT, MTG, MTO under design/construction; government controlled pace • USA: mostly ICL with emerging interest in DCL • Indonesia: Active partnership with Korean & Japanese companies • India: Oil India Limited Assam DCL project; government coal block allocation RFP (both ICL and DCL proposals) • Australia: UCG & ICL-FT activities • Mongolia, Columbia, etc..

  17. CTL Strategies/Key Points for Success • Coal reserve secured and accessible • Proven technology and adequate security package • Robust and experienced contractor • Deep pocket sponsors for completion & performance risk • Optimal financing structure (low debt/equity ratio) • Sound risk allocation strategy • Use derivatives to control commodity risk • Positive government policy incentives SNC-Lavalin April 2008

  18. Cost Breakdown of ICL – FT Plant Baler & O’Brien (Mar/2007) $80 to 100K per barrel/day capacity (US location)

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