XTL

David Gray, NoblisHarold Schobert, PSUPresentation to NPC Hydrocarbon Liquids Group9 February 2011

Disclaimer

•The views expressed in this presentation are those of the authors only and do not represent the views of any company or university affiliated with the authors or any government agency.

3

Technology overview

•XTL—conversion of hydrocarbon resources to liquid fuels via synthesis gas (CO + H2). Processes vary depending on feedstock:

GTL: natural gas CTL: coal CBTL: coal and biomass

• DCL—conversion of coal to liquid fuels via direct reaction with H2 under pressure and temperature and/or H-containing solvent.

Status of Commercial XTL Fischer-Tropsch Plants Worldwide

COUNTRY COMPANY TYPE PLANT NAME

SIZE BPD

STATUS

SOUTH AFRICA

PETROSA GTL MOSSGAS 40,000 OPERATING

SOUTH AFRICA

SASOL GTL SASOL 1 6,000 OPERATING

SOUTH AFRICA

SASOL CTL SASOLS II & III

160,000 OPERATING

QATAR SASOL GTL ORYX 34,000 OPERATING QATAR SHELL GTL PEARL 140,000 IN

CONSTRUCTION MALAYSIA SHELL GTL BINTULU 13,000 OPERATING

NIGERIA SASOL/CHEVRON GTL ESCRAVOS 34,000 DELAYED

5

XTL MTG Process• Commercial

-First plant built in New Zealand, plant now produces methanol-JAMG plant in Shenhua, China produces 2,500 BPD-several plants are planned

• -produces about 90+% high octane gasoline-this contrasts to FT that produces diesel and kerosene

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Barriers to XTL development • Technical risks for CTL—

advanced gasification and advanced slurry-phase synthesis have never been integrated.

• Technical risk for CBTL—co-gasification of coal and biomass.

• Demonstrating successful CO2 capture and sequestration.

• Uncertainties about future oil prices.

• High capital expenditures, ≈$160,000/DB.

• CTL will require significant expansion of mining, possibly with public opposition.

• Process equipment, engineering and labor skills bottlenecks if multiple plants built simultaneously.

• Permitting issues; public opposition to coal.

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Direct coal liquefaction

•Important contribution to German war effort in Second World War.

•Pilot plants in U.S., UK, Japan, Germany, and Australia built and successfully operated in 1970-1980s, but have all been dismantled.

•Worldwide, one plant (Shenhua in Inner Mongolia) is currently operating, mainly producing ≈24,000 BPD diesel and naphtha.

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GTL Schematic

Air

NG Cleaning

Steam Methane

Reforming

Auto Thermal

Reforming

Hydrogen Recovery

Fischer-TropschSynthesis

Raw Product Separation

ASU

Steam Turbine

HRSG

Gas Turbine

FT Product Refining

Condenser

Cooling Tower

Natural Gas (NG)

Air

Oxygen

Nitrogen

Steam

Power

FT DieselFT Naphtha

CW Make Up

CWPower

Syngas Recycle

AqueousPhase

Wax, LiquidHydrocarbons

StackBFW

Hydrogen

Refinery Gas

Air

NG

NG

NG

9

Conceptual Advanced FT Technology: Recycle CTL Configuration

Air

Coal Handling

Coal MillingDrying

Coal Gasification

Quench

Raw Shift

COS Hyd

Hg2-Stage Selexol

Hydrogen Recovery

SulfurPolish

FT Synthesis

Raw Product

Separation

ASU Claus

Steam Turbine

HRSG

Gas Turbines

CO Removal2

CO DehydCompression

2

FT Product Refining

Condenser

Cooling Tower

Illinois Coal

Air

Oxygen

Nitrogen

Steam

Sulfur

Air

Power

FTDiesel

FTNaphtha

CW Make Up

CWPower

2H

Syngas

LT. HC

AqueousPhase

Wax LiquidHydrocarbons

2CO

2CO

2COHP

Stack BFW

10

Conceptual Advanced FT Technology: Recycle CBTL Configuration

Air

Coal Handling

Coal MillingDrying

Coal Gasification

Quench

Raw Shift

COS Hyd

Hg2-Stage Selexol

Hydrogen Recovery

SulfurPolish

FT Synthesis

Raw Product

Separation

ASU Claus

Gas Turbines

CO Removal2

CO DehydCompression

2

FT Product Refining

Illinois Coal

Air

Oxygen

Nitrogen

Steam

Sulfur

Air

Power

FTDiesel

FTNaphtha

2H

Syngas

LT. HC

AqueousPhase

Wax LiquidHydrocarbons

2CO

2CO

2COHP

Biomass Handling

Biomass Prep/Drying

Switchgrass

Steam Turbine

HRSG

Condenser

Cooling Tower CW Make Up

CWPower

Stack BFW

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Assumptions for XTL plants

GTL CTL CBTL

PLANT SIZE BPD 34,000 50,000 50,000

CAPITAL COST $/DB 70,000 150,000 157,000

EFFICIENCY %HHV 60 50 50

NATURAL GAS FEED MMSCF/D

294 0 0

COAL FEED TPD AR 0 23,000 20,400

BIOMASS FEED TPD AR 0 0 3,600

PRODUCT DIESEL BPD 23,324 34,300 34,300

NAPHTHA BPD 10,676 15,700 15,700

NAPHTHA VALUE % DIESEL 70 70 70

DIESEL:CRUDE FACTOR 1.2 1.2 1.2

Economic Assumptions

GTL CTL CBTL BASE CAPEX $/DB 70,000 150,000 157,000 HIGH CAPEX $/DB 180,000 300,000 314,000

CAPITAL RECOVERY FACTOR %

20

20

20

CAPACITY FACTOR % 90 90 90 O&M COST %OF CAPEX 5 5 5

HHV EFFICIENCY % 60 50 50 FEEDSTOCK VALUE

RANGE

5-10$/MMBTU NG

$35-$70 /TON

COAL

$35-$70 /TON COAL

$71/DRY TON BIOMASS

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Variation of Required Selling Price (RSP) of Diesel Fuel (COE basis) from GTL with Natural Gas Feed Stock Price

 

70

90

110

130

150

170

190

210

230

4 5 6 7 8 9 10

COE

RSP

$/B

NATURAL GAS PRICE $/MMBTU

RSP GTL VS NAT GAS PRICE(20% CRF)

HIGH CAPEX

BASE

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Variation of Required Selling Price (RSP) of Diesel Fuel (COE basis) from CTL with Coal Feed Stock Price

110

130

150

170

190

210

230

250

1 1.5 2 2.5 3

COE

RSP

$/B

COAL PRICE $/MMBTU

RSP CTL VS COAL PRICE (20% CRF)

HIGH CAPEX

BASE

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Variation of Required Selling Price (RSP) of Diesel Fuel (COE basis) from CBTL with Coal Feed Stock Price (biomass at 15 weight %)

110

130

150

170

190

210

230

250

270

1 1.5 2 2.5 3

COE

RSP

$/B

COAL PRICE $/MMBTU

RSP CBTL VS COAL PRICE (20% CRF)

HIGH CAPEX

BASE

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Potential Supply Curves for XTL Assuming EIA Reference WOP and for Base and High Capex Scenarios

0

500000

1000000

1500000

2000000

2015 2020 2025 2030 2035 2040 2045 2050

BPD

YEAR

XTL SUPPLY CURVES (REF WOP CASE)

HIGH CAPEX

BASE

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Potential Supply Curves for XTL Assuming EIA High WOP and for Base and High Capex Scenarios

0

500000

1000000

1500000

2000000

2500000

3000000

2015 2020 2025 2030 2035 2040 2045 2050

BPD

YEAR

XTL SUPPLY CURVES (HIGH WOP CASE)

HIGH CAPEX

BASE

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Environmental Issues

• Life cycle GHG emissions-Section 526 of EISA: Petroleum Ratio (PR) assessment based on energy allocation methodology-uncertainty concerning LCA GHG emissions for natural gas production and transport-uncertainty relating to LCA GHG emissions for biomass production because of direct and indirect land use change impacts-uncertainty related to successful implementation of CCS

• Water usage• Issues related to increased coal mining for CTL and CBTL• Issues related to hydraulic fracturing for shale gas for GTL• Issues related to cost of producing biomass and competition for land

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Environmental Issues ContinuedTECHNOLOGY CTL (CCS) CBTL (CCS) GTL (NO

CCS)

PETROLEUM RATIO (PR)*

0.9-1.0 0.8-0.9?? ~1.0-1.1??

WATER USE (B/B) 2-8** 2-8 ?

*PR = LCA carbon (#/MMBtuLHV)/58.5**depending on water use strategy

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Generic flow chart for direct liquefaction processes

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Barriers to DCL development• DCL will share most of the

barriers identified for XTL development.

• Primary liquid will require substantial downstream refining to meet current environmental and performance standards.

• DCL plants have large requirement for H2; probably made by coal gasification and thus raising capital and operating costs.

• Need to verify that DCL primary liquids can indeed be upgraded in standard refinery operations.

• Also need to verify that upgraded DCL products are fungible with common petroleum products.

• Other unresolved technical barriers—e.g., solid/liquid separation, materials of construction.

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Environmental issues•GHG emissions. DCL does not produce

concentrated, “capture-ready” CO2 streams.

•Should have very low SOx, NOx, Hg, and other criteria emissions.

•Primary DCL liquids can contain known or suspect carcinogens. These can generally be destroyed by subsequent hydrotreating.

•Water usage depends on process design and extent of use of air cooling. Could be 1-10 bbl/bbl.

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Estimated economics for DCL plants

•A detailed economic analysis of DCL has not been done for ≈20 years.

•Plants are likely to be more expensive than CTL because a DCL plant will require a gasification section for H2 production, and CCS is likely to be more difficult.

•Estimated cost of finished DCL products is ≈$0.20/gallon higher than CTL products.

Conclusions• Both XTL and DCL likely to have very high capital costs, ≥$160,000

DB. A better estimate of XTL Capex is necessary to assess its future contribution to alternate fuels supply.

• Significant GHG emissions, as much as double comparable petroleum products, if CCS not used so successful commercialization of CCS will be essential before coal can be used for XTL

• XTL needs to demonstrate integration of advanced gasification with advanced synthesis and co-gasification of coal and biomass.

• Only one DCL plant running worldwide; no detailed economic study in past 20 years.

• Shale gas potential must be clearly understood before GTL is viable in the U.S.

• Biomass costs must be reduced, biomass LC emissions better defined and biomass availability must be confirmed for CBTL to become viable