Coal Dilemma II, "COGAS" - ACS Publications - American Chemical

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C o a l D i l e m m a II, " C O G A S "

Downloaded by UNIV OF CALIFORNIA SANTA BARBARA on April 3, 2018 | https://pubs.acs.org Publication Date: November 21, 1979 | doi: 10.1021/bk-1979-0110.ch002

RALPH BLOOM, JR. COGAS Development Company, P.O. Box 9, Princeton, NJ 08540

Based on the title of this symposium the objective of this paper is to discuss some dilemmas facing synthetic fuel process developers. The COGAS Process under development by the COGAS Development Company* is a combined liquefaction and gasification process. Development has been conducted since mid-1972 when the joint venture company was formed. We face two types of dilemmas. * COGAS ο ο ο ο

Development Company (CDC) is a partnership of : Consolidated Gas Supply Corporation FMC Corporation Panhandle Eastern Pipe Line Company Tennessee Gas Pipeline Company, a subsidiary of Tenneco, Inc.

Paraphrasing Shakespeare's Hamlet we could express the first dilemma as : A synthetic fuels industry - to be or not to be The second dilemma - competitive process economics are re ported publicly on varying bases often with l i t t l e detail. Before discussing these two problems, the COGAS Process will be briefly described. If further detail is desired, CDC has available a number of papers. The COGAS Process The COGAS Process, Figure 1, features low-pressure conver sion of coal to liquid products and high Btu substitute pipeline gas. The Process integrates multi-stage pyrolysis technology with steam gasification of char technology. Multi-stage pyrolysis was proven in a pilot plant of 36-tons-per-day of coal feed capacity which was operated successfully on a full range of coals from lignite through high-volatile A bituminous. Products of pyrolysis are o i l , gas and low-volatile char. 0-8412-0516-7/79/47-110-023$05.00/0 © 1979 American Chemical Society Pelofsky; Coal Conversion Technology ACS Symposium Series; American Chemical Society: Washington, DC, 1979.

Pelofsky; Coal Conversion Technology ACS Symposium Series; American Chemical Society: Washington, DC, 1979.

COAL PREPARATION

CHAR

FLUE GAS

SYNGAS

GAS

OIL .

STEAM

SLAG

COMPRESSION, PURIFICATION, SHIFT, AND METHANATION

HYDROTREATING

COGAS process

AIR

TTT

GASIFICATION & COMBUSTION

Figure 1.

MULTISTAGE PYROLYSIS

OIL RECOVERY

COGAS PROCESS

PIPELINE GAS

FUEL OIL/NAPHTHA OR SYNCRUDE OIL


2.

BLOOM

Coal Dilemma II

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Promptly a f t e r formation of the COGAS Development Company, work s t a r t e d on the design and c o n s t r u c t i o n of a g a s i f i c a t i o n p i l o t p l a n t . P i l o t - p l a n t o p e r a t i o n was i n i t i a t e d i n March 1974. In a d d i t i o n , e a r l y i n the program, process design engineering f o r commercial-scale p l a n t s was i n i t i a t e d . Cold models were a l s o used e f f e c t i v e l y t o develop the p i l o t - p l a n t design and then t o prove out elements of the commercial-scale design. In the l a t t e r p a r t of 1975, the development of the COGAS Process had proceeded t o the p o i n t that i t was considered ready f o r demonstration. On the b a s i s of an e x t e n s i v e study and e v a l u a t i o n o f second-generation c o a l g a s i f i c a t i o n processes which were deemed t o be ready o r n e a r l y ready f o r demonstration, the COGAS Process was s e l e c t e d by the I l l i n o i s Coal G a s i f i c a t i o n Group* (ICGG) f o r t h e i r p r o p o s a l t o the Energy Research and Development A d m i n i s t r a t i o n (now Department of Energy, DOE) f o r the p i p e l i n e - g a s - f r o m - c o a l Demonstration P l a n t c o m p e t i t i o n . This s e l e c t i o n was based on the h i g h thermal e f f i c i e n c y of the process f o r the p r o d u c t i o n of s y n t h e t i c p i p e l i n e gas and f u e l o i l and naphtha o r s y n t h e t i c crude o i l . A l s o , the process had been p i l o t e d s u c c e s s f u l l y on I l l i n o i s c o a l which was the primary c o a l f o r the ICGG Demonstration P l a n t . *ICGG i s a p a r t n e r s h i p o f s u b s i d i a r i e s of f i v e major I l l i n o i s gas u t i l i t i e s : ο Northern I l l i n o i s Gas Company ο The Peoples Gas L i g h t and Coke Company ο C e n t r a l I l l i n o i s P u b l i c S e r v i c e Company ο C e n t r a l I l l i n o i s L i g h t Company ο North Shore Gas Company In June 1976, DOE s e l e c t e d the ICGG proposal as one of two proposals f o r c o n t r a c t . Work under DOE c o n t r a c t s t a r t e d i n June 1977. The a r c h i t e c t / e n g i n e e r i s the Dravo C o r p o r a t i o n . Continued development of the COGAS Process promises t o help make our n a t i o n s e l f - s u f f i c i e n t i n meeting i t s needs f o r l i q u i d and gaseous f u e l s . The process can handle a l l ranks of c o a l s , ranging from l i g n i t e through h i g h - v o l a t i l e A bituminous c o a l . This v e r s a t i l i t y w i l l be demonstrated f u r t h e r i n the Demonstration P l a n t on three w i d e l y v a r y i n g c o a l feeds. The most recent conceptual commercial COGAS p l a n t , F i g u r e 2, produces 265 MM standard cubic f e e t of 950 Btu/scf p i p e l i n e gas per day, from bituminous c o a l p l u s 16,800 b a r r e l s per day of l i g h t (No. 4) f u e l o i l and 3800 b a r r e l s per day of g a s o l i n e r e former feedstock grade naphtha. N i t r o g e n content of t h i s naphtha i s l e s s than 1 ppm. The combined gas and o i l output from one such p l a n t w i l l permit a r e d u c t i o n of o i l imports by as much as 22 MM b b l / y r . Coal feed r a t e i s 26,000 tons per day o r


Pelofsky; Coal Conversion Technology ACS Symposium Series; American Chemical Society: Washington, DC, 1979. PLANT

47.9 TPD

ANHYDROUS

TPD AMMONIA

2178 TPD OR 6 8 2

R. J. Eby

SULFURIC ACID OR SULFUR.

3,815 B B L / d

NAPHTHA

Conceptual commercial COGAS plant

THERMAL EFFICIENCY = 6 5 . 3 %

Figure 2.

SOURCE- REFERENCE 4 .

16.52 MMGPD

WATER

COMMERCIAL

16,823

MMSCFD

BBL/d

FUEL OIL

2 5 , 9 3 5 TPD

264.53

COAL

CONCEPTUAL

PIPELINE GAS


2.

BLOOM

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Coal Dilemma II

8,600,000 tons per year based on 330 days per year on-stream time. The COGAS Process promises t o become an important means f o r t h i s country t o supplement i t s d i m i n i s h i n g petroleum and n a t u r a l gas s u p p l i e s by the conversion of c o a l t o c l e a n - e n e r g y - f u e l s . Depending on c o n t i n u i n g t e c h n i c a l success, and a r e c e p t i v e economic c l i m a t e , t h i s promise should be achieved i n the l a t e 1980 s. Downloaded by UNIV OF CALIFORNIA SANTA BARBARA on April 3, 2018 | https://pubs.acs.org Publication Date: November 21, 1979 | doi: 10.1021/bk-1979-0110.ch002

f

Dilemma I A l l the above sounds g r e a t , doesn't i t ? Our process development has proceeded s u c c e s s f u l l y , i n i t i a l l y w i t h p r i v a t e f i n a n c i n g by the CDC p a r t n e r s , more r e c e n t l y w i t h Department of Energy f i n a n c i n g . We are proceeding w i t h the Demonstration P l a n t design program. C o n s t r u c t i o n and o p e r a t i o n i s t o f o l l o w , financed j o i n t l y by ICGG and the Government. But - w i l l commercial p l a n t s ever be b u i l t using the COGAS Process o r any other c o a l l i q u e f a c t i o n or g a s i f i c a t i o n process? Much has been s a i d i n the past about the problems of generat i n g a s y n t h e t i c f u e l s i n d u s t r y - an i n d u s t r y which may r e q u i r e as many as 100 major p l a n t s i n the 1990's (1) - not very long from now when you look a t development, funding, s i t i n g , p e r m i t t i n g and c o n s t r u c t i o n schedules. A very s m a l l sample of what has been s a i d before i n c l u d e s Mr. A. C. B e l l a s ' paper on F i n a n c i n g Coal G a s i f i c a t i o n P r o j e c t s a t the October 1975 S y n t h e t i c P i p e l i n e Gas Symposium (2) and most of the papers and d i s c u s s i o n a t t h i s D i v i s i o n ' s E x c e l l e n t Symposium on Commercialization of S y n t h e t i c Fuels ( 3 ) , three years ago. A l l the problems discussed i n these two examples a r e s t i l l w i t h us i n 1979 and show no s i g n s of going away. No p r o j e c t s have been s t a r t e d u s i n g e x i s t i n g , soc a l l e d " f i r s t generation technology and the developing technology faces j u s t as u n c e r t a i n a c o m m e r c i a l i z a t i o n f u t u r e . The 1990 s are s t e a d i l y g e t t i n g c l o s e r , - but the i n i t i a t i o n of a s y n t h e t i c f u e l s i n d u s t r y does not seem t o be moving n e a r l y as s t e a d i l y . 11

f

I would l i k e t o c i t e a few s p e c i f i c s of t h e s i t u a t i o n today. Using the COGAS Process as an example, the most recent estimate of the t o t a l p l a n t investment cost of the commercial COGAS p l a n t i s $1.4 b i l l i o n i n mid-1978 d o l l a r s (4_) . I n a d d i t i o n , there w i l l be costs f o r l a n d , a d m i n s t r a t i o n during c o n s t r u c t i o n , s t a r t - u p , working c a p i t a l requirement t o $1.5 b i l l i o n e x c l u s i v e of i n t e r e s t d u r i n g c o n s t r u c t i o n before the p l a n t produces a t design c a p a c i t y . Continuing i n f l a t i o n w i l l i n c r e a s e these c o s t s f u r t h e r . For example, the design of a f i r s t COGAS commercial p l a n t could be s t a r t e d i n 1986 a t the end of the second year of o p e r a t i o n of the ICGG Demonstration P l a n t , assuming the program proceeds as


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COAL CONVERSION TECHNOLOGY


scheduled w i t h no f u r t h e r delays i n d e c i s i o n s or f i n a n c i n g . I f c a p i t a l costs e s c a l a t e at 7% per year, the $1.4 b i l l i o n p l a n t investment estimate would i n c r e a s e to $2.4 b i l l i o n i n 1986 d o l l a r s . At t h i s same average e s c a l a t i o n r a t e t h i s 1986 c a p i t a l cost could i n c r e a s e by 50 percent over the design and c o n s t r u c t i o n p e r i o d of about f i v e years and the p o t e n t i a l s u b s t a n t i a l a d d i t i o n a l time f o r o b t a i n i n g a u t h o r i z a t i o n s and permits, f i g h t i n g lawsuits, etc. C e r t a i n l y , there are not many c o r p o r a t i o n s today that could a f f o r d - even i f they had the assets - to put up t h e i r a s s e t s f o r such a p l a n t . F i n a n c i n g would be a s u b s t a n t i a l problem because of the enormous investments, p a r t i c u l a r l y f o r a process which has not p r e v i o u s l y been p r a c t i c e d commercially. Of course, we expect that o p e r a t i o n of the COGAS Demonstration P l a n t w i l l develop the confidence i n the process that w i l l be r e q u i r e d f o r f i n a n c i n g a commercial p l a n t . So, what's the answer - the U.S. Government? Maybe the balance-of-payments s i t u a t i o n and i t s i n f l u e n c e on i n f l a t i o n , p l u s the beginning of a worldwide o i l shortage, w i l l become s e r i o u s enough to move the Congress and the A d m i n i s t r a t i o n to take a c t i o n s to make such investments p o s s i b l e . The forthcoming debate over the FY1980 budget may show the a t t i t u d e of the U.S. toward p r e p a r i n g f o r such e v e n t u a l i t y . Look at the example of the Great P l a i n s Coal G a s i f i c a t i o n * Phase I P r o j e c t f o r producing 137.5 m i l l i o n standard cubic f e e t per day of s y n t h e t i c p i p e l i n e q u a l i t y gas from l i g n i t e v i a the L u r g i dry-bottom process, considered a commercially proven process because of i t s use i n other c o u n t r i e s s i n c e the l a t e 1930's. To proceed w i t h t h i s p r o j e c t , approval was sought from the F e d e r a l Energy Regulatory Commission (F.E.R.C.) f o r surcharges and l o a n guarantees r e q u i r e d to help f i n a n c e the t o t a l of $904,488,000 i n 1978 d o l l a r s estimated to be r e q u i r e d f o r the p r o j e c t Ç5,6). The DOE was reported i n June 1978 (7) to have advised the consortium t h a t i t would j o i n i n asking F.E.R.C. f o r orders p r o v i d i n g : 1. F u l l recovery of debt c a p i t a l p l u s i n t e r e s t i f the p r o j e c t i s abandoned. Advance approval of a t a r i f f c a l l i n g f o r system-wide r a t e payers to cover l o s s e s . 2. I n i t i a l assurance that 60% of e q u i t y would be recovered i n the event of p r o j e c t non-completion and the r i g h t f o r i n v e s t o r s to seek recovery of the remaining 40% i n separate prochedings. 3. Current recovery of i n t e r e s t on debt d u r i n g c o n s t r u c t i o n . 4. R o l l e d - i n p r i c i n g f o r the c o a l gas at a l l l e v e l s and to a l l c a t e g o r i e s of customers. 5. C o s t - o f - s e r v i c e t a r i f f f o r s a l e of p i p e l i n e q u a l i t y gas by the p a r t n e r s h i p to p i p e l i n e members.


2.

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Coal Dilemma II

29


* P r o j e c t Sponsors: Great P l a i n s G a s i f i c a t i o n A s s o c i a t e s (American N a t u r a l Resources and Peoples Gas), Columbia Gas Transmission Co., Michigan Wisconsin P i p e L i n e Co., N a t u r a l Gas P i p e l i n e Co., o f American, Tennessee Gas P i p e l i n e Co., a d i v i s i o n o f Tenneco, I n c . , T r a n s c o n t i n e n t a l Gas P i p e l i n e Corp. The DOE had announced t h a t t h i s was a s y n t h e t i c f u e l commerc i a l i z a t i o n p r o j e c t i t would s t r o n g l y support. So what has happened? A f t e r p u b l i c h e a r i n g s , the F.E.R.C. s t a f f f i l e d a 24-page motion w i t h the A d m i n i s t r a t i v e Law Judge t o d i s m i s s t h e case w i t h p r e j u d i c e . The p r i n c i p a l problems i n t h i s case, a r e the h i g h c a p i t a l c o s t , and the high i n i t i a l gas p r i c e and - as i t w i l l be i n a l l s y n t h e t i c gas cases - who w i l l take the f i n a n c i a l r i s k . And that case was only f o r p r o d u c t i o n o f 40 b i l l i o n cubic f e e t o f gas a year, 2/10 o f one percent o f the current U.S. consumption. (The U.S. consumption i s about 20 t r i l l i o n cubic f e e t a year). The cost of s y n t h e t i c f u e l s must be looked a t i n l i g h t o f the years of p r o d u c t i o n . I f p l a n t investments were made now the esc a l a t i o n e f f e c t over a 20-year p r o d u c t i o n p e r i o d would be r e versed. For example, Great P l a i n s showed, F i g u r e 3, t h a t w i t h p l a n t c o n s t r u c t i o n s t a r t i n g i n 1978 the s y n t h e t i c p i p e l i n e gas would i n i t i a l l y cost s u b s t a n t i a l l y more than n a t u r a l gas - but over a 20-year p e r i o d i t would be c o n s i d e r a b l y l e s s c o s t l y . No c o r p o r a t i o n o r consortium has yet sought t o f i n a n c e a commercial p l a n t f o r producing l i q u i d s from c o a l ; so we have no example t o d i s c u s s , but we f e e l most o f the same problems e x i s t even though F.E.R.C. would not be i n v o l v e d . F i n a n c i n g i s probably the g r e a t e s t c o n s t r a i n t f o r the synt h e t i c f u e l s i n d u s t r y , but there are o t h e r s . Two examples are l o c a t i n g a s i t e and o b t a i n i n g the necessary permits and water supply. Recently i t was reported (8) t h a t 22 a u t h o r i z a t i o n s from 14 agencies are r e q u i r e d f o r c o n s t r u c t i o n and o p e r a t i o n o f a s y n t h e t i c p i p e l i n e gas p l a n t . Dilemma I I The second dilemma f o r a s y n t h e t i c f u e l s process developer i s r e l a t e d t o " s e l l i n g " the process. To be put t o commercial use, the process under development must not only produce the products r e q u i r e d , but must be shown t o do so a t c o s t s t h a t are competitive w i t h other supplemental sources. The problem i s t o o b t a i n economic a n a l y s i s i n f o r m a t i o n on a c o n s i s t e n t b a s i s . A review of p u b l i s h e d economics i n d i c a t e s that i t would probably be d i f f i c u l t to do t h i s from papers presented a t p u b l i c meetings. Thus, f o r choosing a developing process t o be used - o r even t o be supported




I

ο

Ο

ι

8

ο

2.

BLOOM

Coal Dilemma II

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i t i s necessary t o have a study c a r r i e d out which would put a l l processes on the same b a s i s and provide an i m p a r t i a l a n a l y s i s of how t o apply the technology - an expensive study, i f s e v e r a l processes are i n v o l v e d .


We cannot go i n t o a l l the d e t a i l s here o f the i n p u t s i n t o economic e s t i m a t e s , but the most important items which must be s p e l l e d out f o r meaningful i n t e r p r e t a t i o n a r e : 1.

2.

3. 4.

5. 6.

7.

8.

The degree of development o f the d e s i g n , the extent o f vendor quotes and the contingency used i n the c a p i t a l estimates. The cost data base used i n the c a p i t a l e s t i m a t e s ; f o r example, cost e s t i m a t e r s of e n g i n e e r i n g f i r m s which have b u i l d chemical process p l a n t s and r e f i n e r i e s have a v a i l able an e x t e n s i v e data bank from t h e i r experience. The year i n which the economics are based, i n c l u d i n g the escalation rates, i f applicable. The p r i c e of the c o a l d e l i v e r e d t o the p l a n t , and t h e b a s i s f o r a l l of the cost elements of the o p e r a t i n g cost estimate. The way maintenance c o s t s are estimated and the s p l i t of maintenance l a b o r and m a t e r i a l s . The f i n a n c i a l f a c t o r s such as e q u i t y , debt, i n t e r e s t r a t e s , d e p r e c i a t i o n , income tax r a t e , investment tax c r e d i t , e n t i t l e m e n t , r a t e o f r e t u r n on e q u i t y and/or DCF rate. The type o f f i n a n c i n g - u t i l i t y o r i n d u s t r i a l - and, i n the case o f u t i l i t y - t y p e , whether the product p r i c e i s f i r s t year o r average over a s p e c i f i e d p e r i o d of y e a r s . The q u a n t i t i e s of products and by-products and the p r i c e s for the by-products.

Coal l i q u e f a c t i o n analyses would be based on i n d u s t r i a l f i n a n c i n g , g a s i f i c a t i o n p r o j e c t s f o r producing p i p e l i n e q u a l i t y gas would be u t i l i t y - t y p e f i n a n c i n g . I n the case o f a h y b r i d process such as COGAS which from a bituminous c o a l would produce about 65 percent gas and 35 percent l i q u i d s , on a Btu b a s i s , we have g e n e r a l l y used u t i l i t y - t y p e f i n a n c i n g w i t h the co-product l i q u i d s given by-product c r e d i t a g a i n s t p r o d u c t i o n c o s t s . An example of the c o n f u s i o n t h a t a r i s e s comes from the economic data presented a t the S y n t h e t i c P i p e l i n e Gas Symposium i n October 1978. C. F. Braun presented a f i n e r e f e r e n c e paper (9) on g a s i f i c a t i o n p l a n t s i z i n g u s i n g one process from t h e i r Western subbituminous c o a l study of processes as an example. A t a b l e was presented, dated Sept. 1978, which presented average 20-year gas costs i n January 1976 d o l l a r s . C. F. Braun presented another


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paper (10) on t h e i r more recent Eastern bituminous c o a l study. This paper pointed out that c e r t a i n changes i n the procedure f o r computing o p e r a t i n g costs were made which reduced the s i g n i f i cance of a comparison of costs between the eastern and western c o a l s . A number of e x c e l l e n t f i g u r e s and t a b l e s of cost data were presented. Only one t a b l e , the d e t a i l e d t a b l e of t h e c a p i t a l cost estimate, noted i n a footnote that the b a s i s was a l s o January 1976 w h i l e a t the top of the t a b l e i t was dated March 1978. C a p i t a l cost estimates can, as noted above, be a problem. C. F. Braun s t a t e d that the data bases were such that design assumptions f o r t h e commercial concepts were not a l l confirmed and c a p i t a l estimates might be o p t i m i s t i c a l l y low. The C. F. Braun papers have been presented t o summarize the r e s u l t s of s t u d i e s which they have reported i n d e t a i l i n DOE r e p o r t s . T h e i r s t u d i e s a r e the only ones t h a t a r e a v a i l a b l e t o the p u b l i c which present economics f o r m u l t i p l e h i g h Btu gas processes on a c o n s i s t e n t b a s i s by one o r g a n i z a t i o n . But one must be c a r e f u l i n using the i n f o r m a t i o n i n t h e papers t o note the dates and t h e caveats. Other papers a l s o presented economic data, but not necessa r i l y using the C. F. Braun economic g u i d e l i n e s . Three papers, (11,12,4), d e a l i n g w i t h processes under c o n s i d e r a t i o n f o r demons t r a t i o n p l a n t s sponsored by the DOE i n c l u d e d economic informat i o n . I n the paper by Procon on the HYGAS Process (11), a l l of the d e t a i l s were s p e l l e d out and gas c o s t s were presented on four bases. C a p i t a l requirements a r e based on the conceptual commerc i a l p l a n t design and cost estimates done by Procon. The 20-year average gas p r i c e presented f o r bituminous c o a l by the u t i l i t y f i n a n c i n g method was $3.78 w i t h $61.3MM by-product c r e d i t i n 1978 d o l l a r s . For a s i m i l a r p l a n t , C. F. Braun f i g u r e s were $3.69/MMBtu w i t h $25MM by-product c r e d i t s i n 1976 d o l l a r s . T o t a l p l a n t investment c a p i t a l c o s t s were $1,006,000,000 i n 1978 d o l l a r s and $930,000,000 i n 1976 d o l l a r s r e s p e c t i v e l y . The C. F. Braun p l a n t was based on 250 b i l l i o n Btu/day w i t h no gas h e a t i n g value s p e c i f i e d w h i l e the Procon p l a n t was based on producing 250MM s c f d of 990 Btu/scf gas. For the BGC/Lurgi Slagging G a s i f i e r process (12) economic d e t a i l s f o r a conceptual commercial p l a n t were not presented. The author s t a t e d t h a t gas cost would be l e s s than $5/MMBtu on a u t i l i t y - f i n a n c i n g b a s i s w i t h 12% r e t u r n on e q u i t y (13). The COGAS Process (4) was presented by the s e n i o r author from the I l l i n o i s Coal G a s i f i c a t i o n Group, the prime c o n t r a c t o r f o r the DOE demonstration p l a n t program. Economics f o r t h e conceptual commercial p l a n t were presented i n mid-1978 d o l l a r s .


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P l a n t investment was prepared by the Dravo Corp. Gas p r i c e was presented on the b a s i s o f a t y p i c a l u t i l i t i e s g u i d e l i n e s " which d i f f e r e d i n many d e t a i l s from the u t i l i t y f i n a n c i n g method o f C. F. Braun. I n the case of COGAS, l i q u i d product c r e d i t has a s u b s t a n t i a l e f f e c t on the gas p r i c e . I n the paper t h i s c r e d i t was a t c u r r e n t market p r i c e s o f $15.40/bbl f o r No. 4 f u e l o i l and $16.80 f o r naphtha. The r e s u l t i n g p l a n t t a i l g a t e gas p r i c e on a 20-year o p e r a t i n g time DCF b a s i s was $5.08/MMBtu. However, i f the l i q u i d s and gas are p r i c e d on an e q u i v a l e n t Btu b a s i s , the f u e l o i l would be $25/bbl, the naphtha $27/bbl and the gas $4.10/MMBtu. These l a t t e r l i q u i d p r i c e s are i n the range of those estimated f o r l i q u i d s from c o a l by other processes.


ff

For a s o - c a l l e d "advanced process" o f f l a 3 h h y d r o p y r o l y s i s , (14), a paper by Rockwell I n t e r n a t i o n a l and C i t i e s S e r v i c e Research and Development r e p o r t e d a 1977 minimum h i g h Btu gas p r i c e o f $2.36/MMBtu from western subbituminous c o a l u s i n g "AGA/ERDA c o s t g u i d e l i n e s " w i t h u t i l i t y f i n a n c i n g under c o n d i t i o n s y i e l d i n g s i g n i f i c a n t q u a n t i t i e s of by-product BTX l i q u i d s . F o r d e t a i l s , r e f e r e n c e was made t o c o n t r a c t u a l r e p o r t s . When c o n s i d e r i n g processes i n e a r l y stages o f development, such as the Rockwell process, one must c o n s i d e r the statement o f Exxon i n t h e i r paper on t h e i r c a t a l y t i c c o a l g a s i f i c a t i o n process: (15) "Exxon's experience i n process development has shown that as a process moves through development the estimated cost i n v a r i a b l y r i s e s . To compensate f o r t h i s h i s t o r i c a l trend we add c o n t i n g e n c i e s t o estimate the investment r e q u i r e d f o r a f i r s t commercial p l a n t " . The amount o f the contingency i s a matter o f judgement and w i l l vary w i t h the developer. CDC's experience i s s i m i l a r t o that o f Exxon, As d e t a i l e d designs a r e developed, c o s t s i n c r e a s e . With v a r y i n g economic i n f o r m a t i o n , such as d i s c u s s e d above, being presented a t one meeting, i t i s no wonder that p o t e n t i a l users of such processes might be confused as to which ones a r e the most a t t r a c t i v e . However, the problem i s not simple t o r e s o l v e . Keeping conceptual commercial p l a n t designs and economic analyses c u r r e n t w i t h processes development i s time-consuming and expensive. So when papers are presented, the authors have t o use the data a v a i l a b l e . Thus, the process f u r t h e s t along i n development and w i t h the l a t e s t economic analyses are l i a b l e t o show the h i g h e s t product c o s t . The DOE attempt a t standardized analyses as done by C, F, Braun i s not the complete answer. Only the f i v e processes i n the DOE/AGA development program p l u s L u r g i dry-bottom were i n c l u d e d and C, F. Braun's caveat on the c a p i t a l c o s t estimates i s s i g n i f i c a n t s i n c e c a p i t a l r e l a t e d c o s t s are a s u b s t a n t i a l p o r t i o n o f the s y n t h e t i c f u e l product c o s t s .


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Conclusions


So s y n t h e t i c f u e l process developers have the two dilemmas discussed h e r e i n - when w i l l there be a commercial s y n t h e t i c f u e s l i n d u s t r y and i s the process under development going to be c o m p e t i t i v e . H o p e f u l l y , the Government w i l l make the moves necessary t o produce the investments i n commercial-scale p l a n t s soon. COGAS Development Company f e e l s i t has the c o m p e t i t i v e process.

"Literature Cited" 1

McCormick, Wm. "Perspective on Synthetic Fuels", Symposium on Commercialization of Synthetic Fuels, Feb. 1976.

2

Bellas, A. C. "Financing Coal Gasification Projects", Seventh Synthetic Pipeline Gas Symposium, October, 1975.

3

Proceedings, Symposium on Commercialization of Synthetic Fuels, Division of Industrial & Engineering Chem., A.C.S., Feb., 1976

4

Eby, R. J., McClintock, Ν., Bloom, R. J r . , "The Illinois Coal Gasification Group Project - COGAS Process", 10th Synthetic Pipeline Gas Symposium, October, 1978.

5

Great Plains Gasification Associates, et al., "Additional Prepared Testimony of Eugene T. Zaborowski", July 7, 1978 and "Additional Prepared Testimony by Rodney E. Boulanger", July 14, 1978.

6

ANG Coal Gasification Co., Michigan Wisconsin Pipeline Co. "Additional Prepared Direct Testimony and Exhibits, Docket No. CP 75-278" Aug. 5, 1977.

7

Anon., "DOE Backs First Coal Gasification Plant", Oil and Gas Journal, June 12, 1978.

8

Dillon, R. E . , and Newsom, H. R., "Commercialization of Coal Gasification". The National "Conference on the Impact of the ΝΕΑ on Utilities and Industries Due to Conversion to Coal", December, 1978.

9

Maifield, D., Musgrove, R., "Considerations in Coal Gasifi cation Plant Size", 10th Synthetic Pipeline Gas Symposium, Oct., 1978.


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10 Detman, R., "Preliminary Estimates for Gasification of Eastern Coal", 10th Synthetic Pipeline Gas Symposium, Oct., 1978.


11 Vierk, H. S., "Conceptual Commercial HYGAS Plant Design", 10th Synthetic Pipeline Gas Symposium, Oct., 1978. 12 Verner, R. A, and Sudbury, J. D., "Slagging Coal Gasification in Industry and Government", 10th Synthetic Pipeline Gas Symposium, Oct., 1978. 13 Author's notes from 10th Synthetic Pipeline Gas Symposium, Oct., 1978. 14 Friedman, J., Combo, L. P., Silverman, Jr., Greene, M. I., "The Rockwell Advanced SNG Gasifier", 10th Synthetic Pipeline Gas Symposium, Oct., 1978. 15 Furlong, L. E. and Nahas, N. C., "Catalytic Coal Gasification Process Research and Development", 10th Synthetic Pipeline Gas Symposium, Oct., 1978. RECEIVED

July 23, 1979.


Coal Dilemma II, "COGAS" - ACS Publications - American Chemical

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