The Oil Drum | Is there a CTL in your future

63 comments on Is there a CTL in your future

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Nate Hagens on May 18, 2006 - 12:32am

I thought it was 10 years from the word 'go' to make a 100,000 barrel CTL plant - they are talking small scale by 2010 I think. Im not sure what it all entails but Sasol has been doing it for a long time and has plenty of coal and is only up to 150,000 barrels or so. Maybe they werent incentivized until recently to ramp up - anyone know if they are doing so?

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Robert Rapier on May 18, 2006 - 1:07am

I thought it was 10 years from the word 'go' to make a 100,000 barrel CTL plant - they are talking small scale by 2010 I think.

Yeah, there is no freaking way they are going to have a full scale plant up and running by 2010. I think they are trolling for dollars. It takes enormous capital to build a CTL facility. For 100,000 bbls, I bet you are talking in excess of $3 billion, and a huge design project.

The company involved is Rentech, and their entire market cap is $700 million, and they have operated in the red for several years. So, no, they aren't going to be building any full scale CTL plants any time soon. That may be their intention, much like it is my intention to rule the world in 2010.

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Robert Rapier on May 18, 2006 - 1:21am

For 100,000 bbls, I bet you are talking in excess of $3 billion, and a huge design project.

I was off by a factor of 2. But, I did say "in excess". According to that EIA link that I provided below, capital costs for CTL are $60,000 per daily barrel. For a 100,000 barrel facility, you are talking about $6 billion in capital. So, where is a company with a market cap of $700 million going to come up with the funds? Maybe they could float some more stock, and get some uninformed investors to give them some money.

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JD on May 18, 2006 - 1:26am

So, where is a company with a market cap of $700 million going to come up with the funds?

How about the military? All previous CTL facilities (Nazi, apartheid) have been built by governments for national security reasons. The U.S. military is interested in CTL, and they've got a bottomless budget.

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Bigelow on May 18, 2006 - 9:59am

About $6 billion for 100,000 barrel production capacity? $6 billion is what the government of China spent last year on all renewable energy investments.

"Energy is a national security issue," said Michael A. Aimone, the Air Force assistant deputy chief of staff for logistics.
(...)
Ground experiments are scheduled to begin in coming weeks at Wright-Patterson Air Force Base in Ohio, followed by test flights at Edwards Air Force Base in California.
Although the Air Force is leading the project, it is working with the Automotive Tank Command of the Army, in Detroit, and the Naval Fuels Laboratory, at Patuxent River, Md.
The research and tests on synthetic fuel would ultimately produce a common fuel for the entire military, Air Force officials said.
The initial contract for unconventional fuel for the tests will be signed with Syntroleum Corporation of Tulsa, Okla., which has provided synthetic fuel for testing by the Departments of Energy, Transportation and Defense since 1998.
John B. Holmes Jr., Syntroleum's president and chief executive officer, said his firm would sell the Air Force its synthetic fuel for testing "at our cost, and we may be losing a little bit."
Neither Mr. Holmes nor the Air Force would provide cost estimates for the experimental fuel deal in advance of signing a final contract, expected in coming days.
Air Force officials have acknowledged, however, that the cost per gallon of the test fuel will be expensive.
Syntroleum can produce 42 gallons of synthetic fuel from 10,000 cubic feet of natural gas. The raw materials cost about $70.
If the military moves ahead with using the synthetic fuels, the Syntroleum technology could be used by factories elsewhere to produce the same 42 gallons of fuel from just $10 worth of coal, Mr. Holmes said. Military Plans Tests in Search for an Alternative to Oil-Based Fuel

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Stuart Staniford on May 18, 2006 - 4:43am

Given that during the .com era investors were willing to fund business models like ordering heavy low-value petfood over the Internet, a CTL plant might not be too much of a stretch as the oil/commodities sector prices get more bubbly.

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Valuethinker on May 24, 2006 - 11:41am

The time to payoff is vastly greater than it was for the Internet companies. At least 5 years to build a plant, and nearly 10 from start to full production, including site acquisition, environmental approvals etc.

These projects will either be done by very large energy/mining companies, who can spread the risk over many projects

and/or

with the help of government loan guarantees.

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westexas on May 18, 2006 - 6:26am

Last year I asked the president of Exxon Production (one of the subsidiaries) about the economics of LNG versus GTL. He said that while they were funding a GTL project, he thought that the economics of LNG were superior to GTL. Robert, any thoughts on this subject?

This is a timely subject for me. I have been asked by the Dallas Morning News to write a 900 word rebuttal to a cornucopian essay by a writer for Reason Magazine (I'll have to start talking nice about at least some sectors of the MSM). They are going to run the columns side by side, the pro and con arguments regarding Peak Oil.

As I have outlined before, fossil fuels can be viewed as a continuum, from natural gas, to natural gas liquids, to condensate, to light sweet crude, to heavy sour crude, to bitumen, to coal. This is a progression from gas, to liquid to solid. This is also a progression from cleanest, natural gas, to dirtiest, coal. The world wants Liquid Transportation Fuels (LTF's)---principally gasoline, diesel and jet fuel. LTF's can be obtained for the least expenditure of capital and energy from condensate and light sweet crude. It only makes sense that light sweet has been the first to peak. The industry is upgrading refineries as fast as they can to handle more heavy sour crude.

But increasingly, we are looking at the endpoints for LTF's--GTL and CTL. As has been discussed, these are vastly expensive projects, in terms of both capital and energy expenditures. There is another factor. Increasingly, we are going to be looking at a bidding war of sorts between companies that want to use natural gas and coal for heating and electricity generation and companies that want to use them for LTF's. It seems to me that this is somewhat analogous to the battle between food producers and biofuel producers, for a finite supply of land.

In any case, by moving to the endpoints of the fossil fuel continuum, we are only accelerating our rate of extraction of our finite fossil fuel supply.

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Robert Rapier on May 18, 2006 - 9:11am

I would say that in most cases, this is true. I know a bit about this, but not much I can comment on unless I find it published in public sources.

In any case, by moving to the endpoints of the fossil fuel continuum, we are only accelerating our rate of extraction of our finite fossil fuel supply.

This is why I am more concerned about the global warming angle. There are ways of extending the endpoint, and some of these ways are being implemented. Global warming is going to hurt us, though. In any event, we can't move the endpoint forever. You have to deal with sustainability sooner or later.

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Wolfric on May 18, 2006 - 9:34am

Hi Westexas

I'm just making sure you wont use too many acronyms. They tend to confuse ordinary people more than necessary :)

I'm confident you will be able to write a column that will be sound and useful. Either way, the depate is on and it is always better to have a debate than none at all.

Remember that when people try to argue against, they are just one step toward understanding. Think of Chris Skrebowski, he was arguing against before siding with our camp.

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tochigi on May 18, 2006 - 12:18pm

Hi westexas,

if there's one thing worse than a cornucopian libertarian, it's a cornucopian fake libertarian. These Reason magazine people are anything but reasoned. Good luck. And just remember, we would live in a perfect infinite world if it wasn't for that goddam government and its corruption and taxation. Oh, and the market and technology will solve all problems if we would just let them do their magic. Reason? Who needs reason when we have the religion of the market? Halleluyah! We're saved!

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Valuethinker on May 24, 2006 - 11:39am

Take a look at Macquarie Bank, as an example, listed in Australia. Specialists in infrastructure finance and own assets all over the world.

It is the Project Risk which will terrify the market. Those sorts of sums can be raised, but the market will cough on the cost overruns/ risk of lower future oil prices problem.

These things will get built when governments get behind them-- China first, I am sure. Governments will build these things as hedges against things going wrong.

In the West, governments will have to provide some kind of debt guarantee to the Project Finance. Effectively what happened with Eurotunnel (although there is a UK law against such, effectively the refinancings are only working because the government is sitting behind it).

The UK nuclear industry is another good example of government intervention to maintain an energy option. Or the French one (the largest in the world).

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