Is there a CTL in your future
Posted by Heading Out on May 17, 2006 - 11:57pm
The company has a project in East Dubuque, Illinois, which it expects to be the first commercial coal-to-liquids plant in the United States by 2010. Even before that, it expects to show the project is doable. A demo plant in Colorado will be producing 10 barrels of coal-based oil a day by the first quarter of 2007, says Ramsbottom."The future of coal-to-liquids in the United States is no longer a theoretical, what-if, conversation," says Ramsbottom. "We plan to have a fully commercial, fully operational coal-to-liquids plant up and running by 2010.
About the time that this post first got started Aramco were designating the increased production from Abu Sa'fah and Qatif (some 800,000 bd) as being purely to replace depletion of existing wells. They subsequently have added them into available increased production, while stating that they would balance of the depletion by, instead, going back and doing more in-field drilling in the old fields. If one takes that number and recognizes that it is roughly 8% of Saudi production this is consistent with other statements, that have been coming out for about 6 months now, and which are reported here when we find them, that the basic Saudi drop from existing production, is around 8%.
Mainly as I have tracked this over the past year (and posted on it), and the situation has changed, I chose to concentrate on how much additional production Aramco can bring on stream, given that we have an indication of the number of rigs they have, how many are set aside for exploration (against production); how fast they normally drill wells, and how much oil, on average, one can expect from each well. (A number that declines a bit each year and which I recently suggested is now in the range between 3,000 and 3,500 bd).
The actual sentence that I picked up on this time was the one about them now only being able to sustain 10.8 mbd, since this is down from numbers that have been quoted in the past.
And as a final aside, since my travels continue on the morrow, I chatted with someone today that was just back from MENA and his comment was that light sweet crude had definitely peaked and is in decline, and the industry is still adjusting to the needs to work with the heavier crudes, since the change in production practice extends all the way from initial extraction, through refining, to final EOR.
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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.
RR
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.
RR
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.
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.
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.
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.
RR
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.
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!
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).
RR
Regarding the OP, CTL is certainly feasible. It's just that the capital costs are even higher than for GTL. See:
http://www.eia.doe.gov/oiaf/aeo/pdf/issues.pdf
This is the 2006 Annual Energy Outlook from the EIA. There is a section in there with a graph comparing carbon to liquids facilities. CTL and BTL won't be competitive until we start to deplete all of the stranded natural gas. There is no telling what the global warming implications will be once we get to that point, but I am preempting my essay a bit.
RR
I was thinking today about all the yard debris and wood trash we produce. Would localized plants to convert this material be possible or would incineration for electricity be more efficient? I just strikes me that in the future our grass clippings and fall leaves may be more valuable.
Matt
You could convert this kind of stuff into ethanol, but it would be far more efficient to convert it to electricity, or use it directly for heat and displace coal or natural gas.
RR
Wood is easy to burn in a stove, but leaves and grass mostly smoke and they don't store well. Do you know of any process currently used for this material? As far as ethanol from the stuff at what point would it be economical for a company to remove curbside trash for free to convert and sell?
matt
RR
Composting! I would have thought most municipal dumps would separate compostable materials, simply to save landfill space?
Conventional agriculture harvests crops from fields and replaces the non-renewable nutrients removed by the process with fertilizers of various kinds. When a homeowner (stupidly) cuts their lawn and gathers up leaves just to ship the "waste" to a landfill, they too have to replace the nutrients removed with fertilizers.
Better systems would use "smaller loops" to return the nutrients to the soil. With the homeowner, a mulching lawn-mower (or better yet, a reel mower) and a compost bin results in a tight loop. For the farmer, going vertical and doing as much on-farm processing can keep much of the nutrients on the farm (as "waste" by-products of processing) so that they can be spread back on the fields. I often see trucks headed for the landfill with stuff that I'd rather see dumped on my property so that I could spread it on my fields, possibly after composting.
This is one of the reasons that I would liek to see a more agrarian lifestyle in the future. It has relatively tight nutrient loops. These smaller loops can have much smaller energy demand.
Seems to me that the energy in tree clippings and garden wastes is quite small, especially considering the high moisture content of these materials, so making compost is a better use. Composting is a process requiring very little capital expenditure and produces a useful product which replaces chemical fertilisers manufactured using natural gas.
I am glad to hear that. Unfortunately, I don't think this is the case for our dump. I could be wrong, but I have never heard anything about this. Heck, my city doesn't even require recycling, which I think is irresponsible for a city of 100,000 people.
RR
Some years ago, during the mid 1990's, our fair city of 70,000 souls decided to get out of the sanitation (garbage pickup and handling) business. They let all the sanitation workers go, sold their trucks, closed the various "drop off" dump sites located around the area (where you could take larger items, like old washing machines, etc), closed the city dump, and hired a private sanitation company to take over the duties, including trucking the garbage to a new facility 3 counties away (about 50 miles).
Everyone got a single new green plastic wheeled bin to put their trash in, instead of the self-provided trash cans of various types, and garbage pickup switched from twice a week to once a week. Additionally, non-household garbage (such as lawn debris) would now be collected every other week, instead of was now picked up once a month, instead of biweekly. On top of it all, everyone's sanitation bill went up nearly 20%.
The upside of it all was that this company gave everyone a small recycling bin, and was going to sort all garbage and recycle as much of it as possible, as part of their contract. They were even going to sell those recycled materials (such as aluminum, glass, newspaper, etc) for reuse. As a 'green' solution for the whole city, most applauded the effort.
Some years passed, and around 2003 it came to light that the recycling center operated by this sanitation company had been a revenue drain on the company, and they had closed it soon after it opened, years previously. Instead of sorting and recycling the materials collected by the city's citizenry, they had been simply been dumping it back in with all the other garbage.
Needless to say, our citizens were inscenced, they had been asked to pay more and accept less service in the name of the environment. Politicians ran around like chicken little. The city sued the company for breach of contract, to which it responded by going belly up (bankruptcy).
The city ended up hiring another sanitation company, which continues pretty much the same practices as its predecessor.
Those recycling bins are now mostly used to store gardening supplies and what have you.
Only problem is, there won't be enough for everyone, and the price will go up at some point (currently much cheaper than heating fuel). Also, in case the distribution network breaks down, it would need to be useable with manual loading (good old logs...)
Biomassone
These are going in all over Oregon. One is slated for my town that will create 25 MW of electricity and warm up LNG when it comes in.
clippings on the ground. Otherwise,
you wind up having to fertilize the
lawn using petro-chemicals. Of
course, just because it makes sense
to do this doesn't mean it will be
done. I know that lots of people
wind up capturing their grass
clippings and burning or dumping
them. That should be one more thing
that will have to come to an end
with peak oil. That's if people will
even bother with lawns. When you're
starving, it makes more sense to
grown crops in your yard instead
of grass, unless you want to graze
a cow.
the most efficient combustion fuels, from a gw standpoint, are natural gas, then oil, then coal, then biomass. so sure, you can burn it, but you'll get more co2 than you would had you generated the same power from natural gas.
(i really wish i could point to a table on this, but even thou i'm sure i've seen them, surfing now i can't find one.)
my sister, a chem-eng, now doing a bit of work in biofuels, had a good phrase ... something like "carbon prejudice" ... as people put more emotional value on one kind of carbon and not another.
from a chem standpoint carbon is carbon, and at the end of the day it only matters how many tons you burn, and how many you sequester. if you've got the nat gas - then burning that, and landfilling/sequestering waste puts you ahead, on a non-prejudiced carbon standpoint.
(But if you are only counting carbon/hydrogen ratio, then coal is definitely the worst.)
Many people get confused about carbon accounting... Burning trees does not release carbon, and planting trees does not capture it, unless the burnt trees will not grow back (desertification), or the planted trees would grow where none would grow naturally (de-desertification). And one must look at more than just the trees, e.g., the organic matter in the soil, that may build up -- or may rot. A mature forest may or may not be accumulating carbon, depends on the climate and species and soils. E.g., some northern areas accumulate peat, which does not rot due to coldness and wet anaerobic conditions underground. GW is causing some of this accumulation to rot now, a disasterous feedback loop.
I've read of a Dutch fossil fueled power plant that boasts its green-ness by venting the flue gases into greenhouses in which vegetables are grown, "sequestering" the carbon. Never mind that:
- the carbon is released once the vegetables are eaten and digested, and
- the same vegetables grown elsewhere would (temporarily) trap the same amount of carbon.
The same is true for the idea of bubbling the flue gases through ponds of algae. It's only of any advantage if the algae grow faster due to the added CO2. But the limiting factor is the sunshine (the energy source) these algae need to convert the CO2 back into carbohydrates. And as one makes the ponds wider but shallower there are tradeoffs in cost and land needed and materials and energy for piping the gases - for a marginal benefit, as algae can grow without those gases.If we limited ourselves to burning only the carbon we can trap via photosynthesis in a closed loop, and left the fossil fuels in the ground (fat chance), we wouldn't be causing GW. That is only possible with a stable population and a steady-state economy.
net-net, burning gat gas and incarcerating biomass puts you ahead.
i understand that with a narrow scope my mesquite charcoal is neutral ... but it could be carbon prejudice to be that narrow.
this closed loop stuff assumes one glaring thing: that you can power everything with closed loop sources. when you are force (by consumption) to burn a mix of fossil and fresh biofuels it should become a question of which is the optimal mix.
"(But if you are only counting carbon/hydrogen ratio, then coal is definitely the worst.)"
i really think i saw numbers that put biomass beyond coal on the carbon line ... but i think the lack of mercury in biomass could put it ahead of coal on that basis.
Apparently even Sasol, the South African coal liquefier is switching from CTL to GTL due to the high capital costs of coal mining:
OK, I will quit hogging this thread and go to bed.
RR
RR
Coal to Liquid is quite real BUT
The countryside is much nicer than the cities. Do you speak cantonese or mandarin? If so pick a region with one of those. Have your physician write you a script for Tamiflu before you go to keep with you and consider vaccinations for Hep A, B Japanese Encephalitis and typhoid. Also poultry and poultry products should be well cooked or avoided. The healthcare there is excellent but if you have preexisting conditions you might have your history translated and keep a copy with your passport ID etc. If you can stay with a family or in their version of a bed and breakfast you will see more about how they live.
Also don't talk politics, they are communist and you would come off very left of them :)
Have a safe trip
Then, thank god, Volcker stepped into the Fed and crashed the stagflated economy into recession. At the same time everybody bought those little Japanese cars, cut oil demand and we were saved for awhile.
Now we're doomed.
CTL is a well understood and scalable technology. SASOL in South Africa perfected it during the Apartheid era, when they were worried about not having an oil supply.
However it is very polluting (in CO2 terms). And very capital intensive-- it would require a really big investment programme to turn the US' vast coal reserves into liquid oil.
If oil sustainably sits above $100/bl, I predict that it will happen.
What we will then do about the CO2 problem is anyone's guess. Ignore it I suspect, and hope the next Katrina isn't too devastating (although initial indications of the surface temperature of the Gulf this season are pretty unpleasant).
A figure on costs.
If $3bn to produce 440m bl pa ie 1.2 m bl/day is right, this is not an expensive technology.
Remembering that given labour costs, etc., construction cost in a Western economy could be as much as 100% more.
I have some scepticism the plant can be so easily scaled.
The problem will be CO2. If we solve the world's oil supply problem with CTL, then we could well drown in our own CO2 (in the sense that climate change would be irreversible, and larger in impact than we currently think - a 10 degree celsius rise in average temperatures could finish off our civilisation).
I think the UK researcher (link lost) was right who said that CO2 capture and storage at the (CTL) plant will not be economic at likely carbon trade prices. Strike another oil substitute off the list.
Actually, there is more. I know that sounds illogical, but it has to do with efficiency losses in the CTL steps. If you burn coal, you get more useful energy than if you convert it to liquids. So, in the liquids conversion step, you have to use more coal.
RR
Project to turn old tires into oil is moving ahead
http://www.grandforks.com/mld/grandforks/news/state/14601256.htm
Now that's a grand idea. Of course, if we start turning old tires into oil, we're going to run out of tires pretty soon. But given the ethanol debacle, I can just imagine the Bush administration giving a big tax break and/or subsidies to the tire companies to produce more tires so that they can be converted into oil.
Our energy problems are solved!
Sort of like building giant electric fans to blow on wind generators so that we can generate wind power 24/7 no matter what the weather. Hey, I should patent that idea!
I'm off right now to buy some heat lamps, to shine on my PV cells so they work all night long, too! Subsidize me!
From the energy viewpoint it doesn't matter at all what kind of a vehicle you drive - only thing that matters are the gallons of gasoline used. SUVs are no more a threat than smaller cars - it all depends of how much you drive. The gas prices are obviously still far too low.
Why don't everbody hear yell all time about the too big houses? Heating and cooling consume more energy in a bigger house. This is far more serious problem than the SUVs, because having a giant SUV standing in front of house as a status symbol (as you drive with the smaller car and car pool) doesn't use much energy - but the house does.
In fact, why should we bother exactly how the Americans use their energy - the main thing is how much is their total energy use. And we should count also the energy embedded in the imported goods. All imported energy doesn't show as oil and gas imports. It is quite obvious that the huge trade deficit with China means a net import of energy from China.
People will listen when the time comes - but then they will already know not to drive around with gaz-gussling cars. Do you have anything else to say to them then?
Yeah, too bad the MSM didn't tell the people before their world came crashing down around them.
but i think the best answer is that our mental focus is about "peak oil" and oil is primarily used as a transportation fuel in the US.
peak natural gas is a related issue, and natural gas does heat and cool (indirectly via electricity) those McMansions.
i used 17 'terms' last month. a therm is equal to 100000 Btu, a US gallon of Gasoline is 115000 Btu ... interesting, 15 gallon gasoline equivalent.
assuming i do 15K miles a year in my prius (not sure where i'm at right now, i don't drive much in town but have done a few road trips in the last 12 months), that's 25 gallons a month. so my natural gas use is roughly half my gasoline use.
(nationwide we'd save a lot if pilot lights could be eliminated on everything ... maybe this is in the works.)
So natural gas and electricity use at home is not irrelevant. As I said, you can leave the SUV or Prius standing when the time comes, but it is not so easy to cut electricity and gas from your house. This is the problem here.
not that it's that much of a burden, a bike ride to the beach isn't to hard to take.
... i smell similar leaks around the neighborhood (maybe getting a chem degree educates your nose a bit) ... i wonder how much leaks away in a whole city?
PS I do like what you have to say!
Yes they are typically badly designed from a heating and cooling viewpoint, but the low housing density, meaning more driving, is the biggest problem.
good thoughts on GTL, CTL.
Economic at $50/bl oil, the big problem will be scaling and construction. The world doesn't have the capacity to build that many big plants, that fast. The skilled labour, the metalforming, heavy capital equipment etc. just doesn't exist.
The other really serious problem with these technologies is CO2. This is the one we ignore at our peril. Peak Oil is a maybe (at $100/bl some pretty radical conservation measures and alternative supplies start to come in) but Global Warming is a lot less of a maybe.
Of course, after Peak Oil comes Peak Gas and Peak Coal. 'and so on littler fleas, ad infinitum'.