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Economics of Coal to Liquids Plant in Asia
Bharthwaj Anantharaman, Debasree Chatterjee, Siva Ariyapadi, Ron Gualy. Through a case study on the process economics for liquid fuels production from coal in Asia, this paper describes a Coal to Liquids (CTL) process, in which Coal Gasifi cation Technology is integrated in a Fischer-Tropsch (FT) Synthesis Unit and Product Upgrading Unit, supplying syngas for producing Premium Diesel, Jet Fuel and Naphtha. CTL plants are economically viable in India and more attractive than refi ning. The FT Premium Diesel can be produced at costs lower than the refi nery gate prices of Ultra Low Sulfur Diesel (ULSD).

The recent high prices of oil and natural gas in Asia are leading to an increased interest in technologies such as coal gasification, which convert lower value hydrocarbon feed stocks into higher value end products1. Figure 2 below compares the projected world prices (nominal USD 2007) of crude oil, natural gas and low rank coals1&2. Feedstock differential is the key business opportunity to utilise low rank coal.

Liquid fuels including gasoline, diesel, naphtha, and jet fuel are usually manufactured by refining crude oil. Due to the direct distillation, crude oil is the most suited raw material for liquid fuels production. However, with increasing crude oil prices and depleting crude oil reserves, Gas to Liquids (GTL) and Coal to Liquids (CTL) are the alternative routes used for liquids production. Natural gas and coal are converted to syngas first, and the well-proven Fischer-Tropsch (FT) technology is used to convert the syngas to a raw product, which is further upgraded in a Product Upgrading Unit to produce primarily Premium Diesel, Naphtha, and Jet Fuel. Commercial GTL plants have been operating successfully for a long time at various parts of the world. However, the scarcity of natural gas and the premium prices of natural gas in Asia make coal gasification an economically viable alternative route. Besides, the faster depleting natural gas reserves and the more abundant, longer lasting coal reserves make coal gasification and CTL sustainable solutions to produce liquid fuels in the long term.

Figure 2 above shows the worldwide coal availability3. It has been estimated that there are over 900 billion tonnes of proven coal reserves worldwide. Asian countries including Russia, China, India and Indonesia account for 370 billion tonnes. More than 50 per cent of the proven coal reserves are the cheaply priced low rank and high ash coals. With faster depleting reserves of oil and gas in Asia, coal presents an attractive alternative option for making liquid fuels in Asia. KBR has a proprietary coal gasification technology using the Transport Reactor Integrated Gasifier, also known as TRIGTM.

This paper integrates TRIGTM technology for coal gasification with a Fischer-Tropsch (FT) Synthesis and Product Upgrading Unit producing Premium Diesel, Jet Fuel and Naphtha. The paper presents a case study of the technical performance and economic feasibility of a typical CTL plant in Asia.

Variety of liquid products from coal In addition to synthetic oil and diesel fuels, numerous additional liquid products can be derived from coal, including these examples from FT process5.

Coal to Liquids has several key benefits such as Ultra clean; Sulfur-free; Low in Particulates; Low level of oxides and nitrogen; Reduced CO2 emissions through Carbon Capture and Storage (CCS); Coal-derived diesel can be used as clean transportation fuels; Uses low cost coal available abundantly in several geographical regions Figure 4 illustrates the reduction in CO2 emissions in the CTL Diesel through CCS. It is observed that the reduction in CO2 is 5-12 per cent for CTL diesel with CCS when compared to diesel from crude oil.

Majority of Worldwide CTL Projects are in Asia
There are numerous CTL projects worldwide and Figure 5 provides a broad overview of the various CTL projects. Blue color in the figure denotes the CTL plants that are in current operation and green color denotes the CTL projects that are in design or under construction.

From Figure 5, it is noted that a majority of the CTL projects that are either in operation or construction are concentrated around Asia with a significant presence in China, India and Indonesia. There are five operating CTL plants in China (Yitai, Lu An and JMG are semi-commercial) and 3 CTL projects in India.

Case Study of a Typical CTL Plant in Asia For this study, KBR TRIGTM technology has been integrated with typical FT Synthesis and Upgrading units. Figure 6 shows a block flow diagram of the TRIGTM integrated CTL process.

Typical coal composition and high heating value for a sub-bituminous high moisture, high ash, and low rank coal as fed to a gasifier is listed in Table 1. Table 2 (See next page) lists the production and consumption for a typical 20,000 bbl/day CTL plant.

Table 3 (See next page) lists the steam generation from WHBs and boilers in a 20,000 bbl/day CTL plant. Table 4 (See page:#) summarises steam consumption in a typical 20,000 bbl/day CTL plant.

Following assumptions are made in the economic analysis of CTL plant:

• Liquids production capacity = 20,000 bbl/day • FT Diesel = 14,671 bbl/day
• Naphtha = 5,329 bbl/day
• Compressed CO2 = 12,740 tonne/day
• C oal cost = USD 20/tonne = USD 1.8/MMBTU
• E lectricity cost = USD 100/MWh
• O xygen cost is included in the CAPEX of Air Separation Unit (ASU)
• O perations & Maintenance = 3.5 per cent of CAPEX

• A dministration = 0.5 per cent of CAPEX
• Feedstock/ Product escalation = 5 per cent per annum
• C apital Structure: Debt-to-Equity Ratio = 60 per cent : 40 per cent
• C ost of financing = 8 per cent
• C orporate tax rate = 25 per cent
• P lant availability = 330 days per year, 90 per cent
• I nternal Rate of Return (IRR) = 20 per cent

Since FT Diesel is a superior quality diesel with no/very low sulfur content, low aromatics content, high cetane number and good cold flow characteristics, the price of FT Diesel will be at a premium compared to the Ultra Low Sulfur Diesel (ULSD) prices that are readily available from market data in literature6. For this economic analysis, 5 per cent premium on the current ULSD price is assumed for the current FT Diesel selling price. The current selling price of naphtha is also taken from the literature6. The compressed CO2 at pressures of 155 bara are suitable for either Enhanced Oil Recovery (EOR) and/or storage. The plant-gate selling prices of compressed CO2 are reported in literature7. Table 5 (See next page) lists all the selling prices. Assuming an IRR of 20 per cent, the cost of production of FT Diesel is estimated (See Table 5).

The CAPEX for the CTL project in Asia is only 70 per cent of the CAPEX in US Gulf Coast. Since the FT Diesel production costs are significantly lower than its selling price, the CTL plant is extremely profitable in Asian markets like India, China and Indonesia where the cheap low rank, high ash, high moisture coals are abundantly available and where natural gas and oil are scarce and/or priced at premium.

Sensitivity analysis of CTL production cost in Asia
Since the estimated cost of production of liquid fuels depends on the assumptions made on the underlying factors, it is important to identify the sensitivities of these factors on the liquid fuels production cost. Figure 7 (See next page) shows such sensitivity analysis. Blue color in Figure 7 indicates the effect of increase in each factor on FT Diesel production cost, while yellow color indicates the effect of decrease in the factor.

As seen in Figure 7 (See next page), the FT Diesel production cost is most sensitive to capital cost (CAPEX). Increasing the CAPEX by 25 per cent increases the FT Diesel production cost by 31 per cent, while decreasing the CAPEX by 25 per cent decreases the FT Diesel production cost by 31 per cent. The cost of coal has the second highest impact on the FT Diesel production cost. Increasing the coal cost to USD 30/tonne (USD 2.7/MMBTU) increases the production cost by 13 per cent, while decreasing the coal cost to USD 10/tonne (USD 0.9/MMBTU) decreases the production cost by 13 per cent. Although oxygen is also a raw material in addition to coal, the oxygen cost is already included in the CAPEX of the Air Separation Unit (ASU). Hence, it is not explicitly used as a variable for sensitivity analysis. Plant availability and corporate tax rate have the least impact on the production cost. The current inflation rates in China and India are 5 per cent and 9 per cent, respectively8&9. The inflation rates are varied in the economic analysis to cover various Asian countries.

What price of crude oil makes CTL economically more attractive than refining? CTL is estimated to be economically more attractive than refining when the selling price for crude oil is between USD 55 and USD 65 per barrel (US 2007 dollars) using a WTI bench mark11. These prices include the costs of capturing about 90 per cent of CO2 emissions from the CTL plant but do not assume any income or outlays associated with sequestering that carbon dioxide. The FT Diesel can be produced at USD 1.7 to USD 2.0 per gallon (January 2007 dollars), directly comparable to refinery gate prices of ULSD which is USD 2.41 per gallon10. At the world crude oil prices of between USD 60 and USD 100 per barrel (2007 dollars), direct economic profits are more likely11. Lower world oil prices will likely be the result of any increase in liquid-fuel production, either domestically or abroad, from unconventional resources. Based on examining a broad range of potential responses by the Organisation of the Petroleum Exporting Countries (OPEC), it is anticipated that world oil prices will drop by between 0.6 and 1.6 per cent for each million barrels of unconventional fuel production that would not otherwise be on the market.

Further, this price decrease should be close to linear for unconventional-fuel additions of up to ten million bpd. Looking only at coal-derived liquids, it is possible that total world production could reach about six million bpd by 203011.

Coal gasification technology for liquid fuels plants offers an economically attractive option for manufacturing liquid fuels in Asian countries with large coal reserves and limited or high cost crude oil and natural gas deposits, such as China, India and Indonesia. Coal gasification technology for liquid fuel plants will ease the pressures due to increasing global demand of liquid fuels and various derivatives.

Coal gasification technology will find increasingly greater use due to a wide range of coal feed stocks, particularly the low rank, high ash, high moisture lignites and sub-bituminous coals which are cheap and abundant in India, China, Indonesia and other Asian countries.