In Situ Coal Gasification

Anyone with an interest in alternative fuels knows what coal gasification is. It's a technology that's been around for a couple of centuries, and it constituted a very large industry in the nineteenth and early twentieth century when gaslights and coal gas stoves and heaters were ubiquitous throughout the industrialized world. At one time coal gas was even used to run small internal combustion engines in factories. It was everywhere.

Coal gas, also known as synthesis gas or syngas, also known as producer gas, also known as town or city gas, is a medium heating value mixture of carbon monoxide, hydrogen, and generally some methane. It's still extensively used in the chemical industry, particularly for the manufacture of ammonia and methanol, only today more syngas is synthesized from natural gas than from coal. But that is likely to change. Coal will most likely be the principal source of syngas in the future.

The question is how widely will synthesis gas be used by electrical utilities and by synfuel refineries? The whole next generation coal initiative is based on a move away from using powdered coal as boiler fuel to creating syngas from coal and then using that to run gas turbines and to make liquid fuels. The problem is that only a handful of syngas turbines are producing electricity anywhere in the world and only three commercial coal-to-liquid plants are currently operational, all located in South Africa. There's no obvious momentum behind this embryonic industry.

And more's the pity. Syngas as opposed to powdered coal is clean burning, about on a par with natural gas. Further process it by means of steam reforming, and you get a pure stream of hydrogen which doesn't pollute at all, and a pure stream of carbon dioxide which can be easily diverted for storage or industrial use and need never be vented into the atmosphere. Syngas from coal also constitutes an abundant feedstock for the production of liquid fuels, especially important today in view of the rapidly ascending price of conventional petroleum.

So why is nothing happening?

The answer varies according to whether you're talking about syngas powered electrical utilities or IGCCs (Integrated Gasification Combined Cycle), as they're known, or synfuel refineries.

Syngas powered electrical utilities are much more like natural gas plants than today's coal plants and cost considerably more than either. And there's no real upgrade path from conventional coal to IGCC. A complete replacement of plant equipment is necessary except for possibly the electrical generators. Since the operator can't charge any more for the electricity produced in this manner, he has no incentive to change. And even in the case of new facilities the much higher capital cost associated with IGCC is a show stopper. Again, he can't pass the capital cost onto the consumer.

In the case of synfuel plants, capital costs are enormous, in the billions of dollars, which is why only a handful are under construction. Probably they can sell fuel profitably at current oil prices, but there's always the chance that oil prices will decline. Most oil executives and economists still maintain that they will, though I think the evidence is beginning to suggest that they're wrong.

As is, syngas as a fuel feedstock or power source is going nowhere. So is that the end of it?

Notes from the Underground

In situ gasification may provide a means of accelerating the acceptance of coal based liquid fuel and zero emissions coal fired utilities. Obviously both could go a long way to mitigate some of our more pressing energy problems.

Conventional coal gasification involves mining the coal in the usual manner, shipping it to a gasification facilities, and then heating the coal in an oxygen starved atmosphere to produce syngas. The syngas is usually chemically scrubbed to reduce impurities, and then either used to fire a gas turbine similar to the natural gas turbines in common use today or to produce liquid fuels by passing the gas over iron or cobalt catalysts under conditions of high heat and pressure. Incidentally, the liquid fuel so produced ordinarily requires extensive and costly hydro-treating in order to produce commercial grade refined products.

This doesn't sound awfully complex, and it isn't—the chemistry is pretty simple and straightforward. But like many industrial processes coal gasification doesn't lend itself to small scale implementations. In order to achieve cost structures that are remotely comparable to those for conventional oil refineries or for natural gas at the wellhead, you have to build enormous plants with multi-billion dollar construction charges. The same is true of syngas turbines. The installations have to be enormous—again in the billion dollar range. Today no one is prepared to risk that kind of capital.

The fact is that this business adheres to the pubic utility kind of model, which is not one characterized by a high degree of profitability. Public utilities are a good business to enter only if one is prepared to build a multitude of facilities, each at enormous cost. The revenue stream is pretty dependable, but the rate of return is pretty low and you can't get away with gaming the market and trying go gin up profits. Look what happened to Enron, the smartest guys in the room.

Clearly in order for coal gasification to happen any time soon the capital cost has to go way down, and that's where in situ gasification comes in. Here what you're doing is eliminating both the mining operation and the gasifier, two of the most capital intensive aspects of process. Instead you drill wells into a coal seam, initiate the gasification process with a burner and possibly steam and oxygen injection, and then tap the resulting syngas (normally separate well are used for gas injection and syngas recovery).

The technology was conceptualized in the late nineteenth century and first attempted in Soviet Russia under Nicolai Lenin. In situ gasification was continually used in Russia from the late twenties until 1996. It has also been subject to tests in Spain, Australia, the U.S., and elsewhere, and at least two companies, Linc and Ergo claim to have brought the technology to a commercial level of development. Ergo seems to be the furthest along, and they have obtained independent validation of their methodology. Ergo's principals, it should be noted, were all employed by in situ operations in Russia prior to emigrating to the United States, so they're highly experienced.

I started perusing the technical literature on the subject, and I found that the process is not as simple as one might suppose and that the operator is apt to encounter numerous technical difficulties. Still, the consensus among third party investigators is that it is feasible. And the equipment costs are indubitably much lower than is the case for conventional gasification operations.

An Ergo executive told me that the company could produce Fischer Tropsch diesel for $18 a barrel. The cost at a conventional FT plant would be at least $25 per barrel and probably close to double that.

This looks like something that could really work and could provide the United States with a dependable alternative liquid fuel supply in fairly short order. But don't expect either investors or the government to support it. It lacks a lobby and a constituency. And in this political and economic climate that is everything.

Excellent analysis again -

Excellent analysis again - thankyou.