INL/CON-11-22867 PREPRINT

The Technical and Economic Feasibility of Siting Synfuels Plants in Wyoming

2011 International Pittsburgh Coal Conference Anastasia Gandrik Richard D. Boardman Rick A. Wood David Bell William Schaffers Thomas Foulke September 2011
This is a preprint of a paper intended for publication in a journal or proceedings. Since changes may be made before publication, this preprint should not be cited or reproduced without permission of the author. This document was prepared as an account of work sponsored by an agency of the United States Government. Neither the United States Government nor any agency thereof, or any of their employees, makes any warranty, expressed or implied, or assumes any legal liability or responsibility for any third partys use, or the results of such use, of any information, apparatus, product or process disclosed in this report, or represents that its use by such third party would not infringe privately owned rights. The views expressed in this paper are not necessarily those of the United States Government or the sponsoring agency.

2011 International Pittsburgh Coal Conference Pittsburgh, PA September 12 15, 2011 Final Paper

PROGRAM TOPIC: COAL-DERIVED PRODUCTS THE TECHNICAL AND ECONOMIC FEASIBLITY OF SITING SYNFUELS PLANTS IN WYOMING Anastasia Gandrik, Richard D. Boardman, Rick A. Wood Idaho National Laboratory, P.O. Box1625, Idaho Falls, ID 83415-3710 USA Anastasia.Gandrik@inl.gov, (412) 443-6550, Fax: (208) 351-8161 David Bell, William Schaffers, Thomas Foulke Depts. of Chemical & Petroleum Engineering, Agriculture & Applied Economics, University of Wyoming, Laramie, WY 82017-3295 USA, DaveBell@uwyo.edu, (307) 766-5769, Fax: (307) 766-6777

Abstract: A comprehensive study has been completed to determine the feasibility of constructing and operating gasification and synfuels plants which convert Wyoming fossil resources (coal and natural gas) into higher value products, including electric power, synthetic transportation fuels, and chemical feedstocks, such as ammonia and methanol. Conceptual plant designs, simulation models, economic models, and well-to-wheel greenhouse gas models were developed in order to address the following topics: 1. 2. 3. 4. 5. 6. 7. 8. Quantification of plant capital and operating expenditures Plant heat integration Quantification of coal, natural gas, electricity, and water requirements Access to raw materials and markets1 Requirements for new infrastructure, such as electrical power lines and product pipelines1 A cost-benefit analysis of using natural gas reforming versus coal gasification for synfuels production Labor resource requirements for plant construction1 and for permanent operations Options for managing CO2 emissions, including capture and use in enhanced oil recovery and/or sequestration 9. Options for reducing water requirements, such as recovery of the high moisture content in Wyoming coal and use of air coolers rather than cooling towers 10. Permitting requirements1 11. Construction and economic impacts on the local communities1

This paper will summarize the analysis completed for two major synfuels production pathways, methanol to gasoline and Fischer-Trosph diesel production, using either coal or natural gas as a feedstock.

Results for these topics will not be covered in this paper, please see INL/MIS-11-22553 for the complete project results summary.

1.

Introduction

The primary purpose of the Idaho National Laboratory (INL) Wyoming project was to develop process and economic models of commercial-scale gasification and synthetic fuels facilities in Wyoming. The initial project focused exclusively on coal gasification for the purpose of producing electrical power, ammonia and ammoniabased fertilizer, substitute natural gas (SNG), and synthetic diesel fuel using the Fischer Tropsch (FT) process. During the course of the three-year project, the methanol-to-gasoline (MTG) process was added to the study. In addition, with the substantial decrease in natural gas prices, the study was further expanded to include the evaluation of converting natural gas to synthetic fuels. In summary the INL Wyoming project considered five potential routes for converting Wyoming coal and natural gas into higher value products; the studies discussed in the following sections are indicated in boldface: x x x x x Integrated gasification combined cycle (IGCC) power production, with and without carbon capture and sequestration (CCS) Conversion of coal and natural gas to Fischer-Tropsch fuels, with and without CCS Conversion of coal and natural gas to gasoline via the methanol-to-gasoline process, with and without CCS Conversion of coal to ammonia Conversion of coal to SNG

INL developed the coal and natural gas process simulation models in Aspen Plus. Plant economic models were developed using Microsoft Excel to facilitate individual use by project developers. The accuracy of the economic models is -30%/+50% for the total capital investments and operating costs. Subject matter experts and engineering firms independently reviewed the process simulations. Both the Aspen Plus and Excel economic models are available for project studies through the Wyoming Business Council (WBC). A summary report is also available (INL/MIS-11-22553) which addresses the key technical, economic, and social barriers for the various cases, including: x x x x Resource requirements (coal, natural gas, water) Pollutant emissions, solid waste generation, and waste water discharge CO2 by-product rates and disposition options Infrastructure requirements for product off-take and electrical power import or export

Again, this paper will summarize the results for the synthetic fuel processes only. Furthermore, this paper is limited to the discussion of the process, economic, and life-cycle greenhouse gas modeling results. 2. Process Modeling Overview

The plant models for the FT and MTG processes were developed using Aspen Plus. Because of the size and complexity of the processes modeled, the simulations were constructed using hierarchy blocks, a method for nesting one simulation within another simulation. In this fashion, submodels for each major plant section were constructed separately and then combined to represent the entire process. Significant emphasis in the models has been placed on heat integration between different parts of the plant. To facilitate energy tracking, Aspens utility blocks were used extensively. Four cases were identified for modeling; each case is presented below along with their respective block flow diagrams (BFD): 1. 2. 3. 4. Coal to liquids process (CTL), Figure 1 Gas to liquids process (GTL), Figure 2 Coal to MTG process, Figure 3 Gas to MTG process, Figure 4

Plant Water Treatment

Cooling Towers

HRSG Exhaust Air Air Separation O2 Tail Gas Power Production Tail Gas

N2

Coal

Coal Milling & Drying

Coal

Gasification & Syngas Cleaning & Conditioning

Syngas

Fischer-Tropsch Synthesis

FT Liquids

Product Upgrade & Refining

LPG Naphtha Diesel

CO2 Slag Sulfur Plant (Claus) and Tailgas Sulfur Reduction Sour Gas CO2 Tail Gas

Sulfur

CO2 Compression

CO2

Figure 1. BFD for CTL process.

N2

Air

Air Separation

O2

Tail Gas Recycle Tail Gas

Sulfur Removal

Gas Mix

Preforming & Autothermal Reforming

Syngas

Fischer-Tropsch Synthesis

FT Liquids

Product Upgrade & Refining

LPG Naphtha Diesel

Plant Water Treatment

Steam

Power Production

Figure 2. BFD for GTL process.

N2

Air

Air Separation

DME Synthesis

DME

Gasoline Synthesis

O2

Crude MeOH

Crude MTG Products

Coal

Coal Milling & Drying

Coal

Gasification

Syngas

Methanol Synthesis

Gasoline Purification

Gasoline

Slag Sour Gas Sulfur Plant Tail Gas Sulfur CO2

Light Fuel Gas CO2 Compression

LPG

CO2

Power Production

Water Treatment

Cooling Towers

Figure 3. BFD for coal to MTG process.

Figure 4. BFD for natural gas to MTG process.

3.

Economic Modeling Overview

The economic viability of the cases outlined above was assessed using standard economic evaluation methods. For all cases the fuel price necessary for an internal rate return (IRR) of 12% was calculated, as well as the fuel price for a range of carbon taxes at a 12% IRR. The following table outlines the assumptions that were made for the economic analyses: Table 1. Economic modeling assumptions. Assumption Construction Information Construction Period Capital Investment per Year Plant Startup Information Startup Time Operating Costs Multiplier Revenue Multiplier Economic Analysis Period Availability Inflation Rate Debt to Equity Ratio Loan Information Interest Rate on Debt Interest on Debt During Construction Loan Repayment Term Tax Information Effective Tax Rate State Tax Rate Federal Tax Rate MACRS Depreciation Term IRR Feedstock Prices Poweder River Basin (PRB) Coal Natural Gas 4. Economic and Process Modeling Results 36 months 33% 12 months 0.85 0.65 30 years 92% 2.5% 80%/20% 8% 8% 15 years 38.9% 6% 35% 15 year life 12% $10.15/ton $5.50/MSCF

The FT and MTG processes are preceded by converting coal or natural gas into syngas and then synthesizing the syngas into synthetic fuel products. In the case of FT, a range of hydrocarbon products are generated that are separated and refined into diesel, naphtha, and liquefied petroleum gas (LPG). Heavier waxes are then cracked to optimize the production of diesel, the primary product. In the case of MTG, the fuel product specificity is better; however, the final product is gasoline rather than diesel. Both the coal and natural gas to MTG processes produce less light gases than the CTL and GTL processes. These light gases are combusted to produce power; consequently, neither MTG process can produce the required auxiliary power loads; therefore, power must be purchased from the grid. The modeling and economic results for the FT and MTG cases are summarized in Table 2.

Table 2. Technical and economic modeling results. Coal to Liquids Economic Indicators Fuel Price for 12% IRR2,3 ($/gal) % IRR at Current Fuel Market Price3 Total Capital Investment (Billion 2009$) Feedstock Summary Coal Feed Rate (ton/day) Natural Gas Feed Rate (MMSCFD) Liquid Product Summary Diesel (bbl/day) Gasoline (bbl/day) Naphtha (bbl/day) LPG (bbl/day) Electrical Power4 (MW) Total CO2 Produced (MMSCFD) Capturable CO2 (MMSCFD) CO2 Emitted (MMSCFD) Water Summary Water Consumed (gpm) Potential Water Recovery from Coal Drying (gpm) 1.66 30 5.9 Natural Gas to Liquids 1.69 49 2.0 Coal to MTG 1.73 26 5.6 Natural Gas to MTG 1.60 36 1.7

36,300 1.66 428

31,100 1.73 288

35,200 12,700 2,000 103 845 583 262

34,600 12,200 3,240 60 124 124

52,200 8,200 -462 555 530 25

33,500 5,300 -98 49 49

23,700 8,000

12,900 N/A

15,900 1,200

8,700 N/A

The following technical and economic conclusions were drawn for the synthetic fuel processes considered: x x The price of fuels produced from PRB coal compares closely to synfuels derived from natural gas, when the natural gas price is $5.50/MSCF. The capital investment required for a medium-sized (50,000 bbl/day) natural-gas-fed FT synfuels plant is less than one-half the investment needed for a comparably sized coal FT plant. The largest costs for the coal based processes are the gasification island, air separation unit (ASU), and gas cleanup operations. Furthermore, these sections of the plant carry moderate technical risk for meeting performance targets. On

3 4

Diesel price for FT processes and gasoline price for MTG processes, the prices do not include taxes or distribution costs. Without CO2 sequestration Positive value indicates power available for sale to the grid, negative value indicates power must be purchased from the grid

x x

the other hand, traditional natural gas reforming and authothermal reforming are well proven and present less technical risk. The FT process produces a significant volume of naphtha, which has three likely uses in the Mountain West: isomerization to produce gasoline, use as a diluent for heavy crude oil transport such as the bitumen being sent from the Athabasca fields in Canada to U.S. refineries, or combustion in a gas turbine to produce electrical power. The last choice is the economically least attractive, but can produce clean power similar to natural gas. FT plants produce surplus electrical power while the MTG process requires power import. The MTG plants must either build an auxiliary power generation unit or contract an electrical utility to provide this power. The amount of high-purity, capture-ready CO2 produced by a single coal based process is significant; in fact, one coal based synfuels plant could exceed all enhanced oil recovery (EOR) needs in vicinity of the Gillette or Rock Springs. A significant amount of CO2 is produced from combustion of light gasses in the reforming units, gas turbines, and/or fired heaters. The possibility of capturing CO2 from the various flue gas vents was not considered cost effective. Water consumption is relatively high, ranging from 5 to 16 barrels of water per barrel of fuels produced for the plants considered in this study. In the coal based processes, recovery and cleanup of the available coal moisture prior to gasification and replacement of evaporative cooling towers with air-coolers is technically feasible and would be environmentally advantageous. In no case was the project able to demonstrate that zero water discharge or water neutrality could be achieved, even when all coal moisture is recovered. This contradicts a number of studies that may not be taking practical plant designs and energy flows into consideration.

The sensitivity of the diesel price to economic assumptions for the CTL case is shown in Figure 5; results are presented in Figure 6 for GTL. Similar trends apply to gasoline synthesis by the coal and natural gas to MTG processes. The largest sensitivity for CTL is a tax on CO2 emission. This sensitivity can be offset by incorporating CO2 sequestration into the CTL process. The sensitivity to a CO2 tax is less pronounced for GTL case, owing to the higher hydrogen content in natural gas when compared to coal. However, as natural gas prices rise, it becomes less costly to produce synfuels using coal, which is projected to have a more stable long-term cost.

$2.82 50 $/ton CO2 $2.26 -30% TCI $5/ton Coal $1.21 $1.56 $2.12 $2.03 1.91 10% IRR 40 year Economic Recovery Period 90% Debt/10% Equity 24 month Construction Period 4.5% Interest 20 year Loan Term $1.55 $1.63 $1.64 $1.62 $1.49 $1.61 $1.84 $1.78 $1.77 $1.77 $1.77 $1.74 1.5 0 50 $/ton CO2 w/ Sequestration +30% TCI $30/ton Coal Sequestration 15% IRR 20 year Economic Recovery Period 50% Debt/50% Equity 60 month Construction Period 10% Interest 10 year Loan Term 10 20 30 40 50

No CO2 Tax No CO2 Tax TCI $10/ton Coal No Sequestration 12 % IRR 30 year Economic Recovery Period 80% Debt/20% Equity 36 month Construction Period 8% Interest on Debt 15 year Loan Term Baseline Sensitivity Values

0.17 1.17 0 0.5 1 Product Selling Price ($/gal) - Baseline of $1.67

Figure 5. CTL Economic Sensitivity Analysis.

Low Natural Gas Price $4.50/MSCF

$1.46 $1.88

$3.15

High Natural Gas Price $12.00/MSCF 50 $/ton CO2 +30% TCI 15% IRR 20 year Economic Recovery Period 50% Debt/50% Equity 60 month Construction Period 10% Interest 10 year Loan Term 20 10 20 30 40 50

Natural Gas Price $5.50/MSCF No CO2 Tax TCI 12 % IRR 30 year Economic Recovery Period 80% Debt/20% Equity 36 month Construction Period 8% Interest on Debt 15 year Loan Term Baseline Sensitivity Values

-30% TCI 10% IRR 40 year Economic Recovery Period 90% Debt/10% Equity 24 month Construction Period 4.5% Interest 20 year Loan Term

$1.53 $1.65 $1.68 $1.68 $1.67 $1.63 $1.67

$1.85 $1.76 $1.73 $1.73 $1.73 $1.73 $1.72

0.5 1 1.5 -0.69 -0.19Selling 0.81 1.31 0 - Baseline of $1.69 Product 0.31 Price ($/gal)

Figure 6. GTL Economic Sensitivity Analysis.

5.

Life-Cycle Greenhouse Gas Analysis

A full life-cycle inventory or well-to-wheel analysis of greenhouse gas (GHG) emissions for the production of synthetic diesel and gasoline was assessed for the processes described in the preceding sections. For this study, all results are scaled for the diesel, gasoline, naphtha, LPG, and/or electricity products. This is accomplished by ratioing the lower heating values of the products along with the electricity (if produced in the plant) to determine the emissions assignment, or the percentage of the total energy content for the diesel, gasoline, naphtha, LPG, and/or electricity product. The emissions for the diesel and gasoline products are converted to a gram per mile basis using the vehicle fuel economy. The fuel economy was adjusted to account for the heating value of the synthetic fuel versus traditional petroleum derived products. The GHG emissions considered include carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O). Emissions for CH4 and N2O are converted into CO2 equivalents using their global warming potentials (GWP). CO2 equivalents are the amount of carbon dioxide by weight emitted into the atmosphere that would produce the same radiative force as a given weight of another radiatively active gas. The WTW analysis conducted for this study was based on the formal methodology presented by the National Technology Engineering Laboratory, in the Life-Cycle GreenhouseGas Emissions Inventory for Fischer-Tropsch Fuels, and categorizes GHG emissions according to the following sources: x x x x Resource extraction and production for both coal and natural gas feedstocks Transportation and distribution, included feedstock transportation to the plant as well as final product transportation to the pump Conversion and refining End use combustion

Results from the life-cycle GHG analysis for FT diesel and MTG gasoline were compared to WTW emissions for the U.S. baseline and average imported GHG emissions for conventional diesel and gasoline to determine the environmental impact of the synthetic fuels in comparison to standard petroleum fuels. The results are presented in Figure 7.

1400 1200 1000

g CO2-eq/mile

800 600 400 200 0 CTL CTL w/ Seq Baseline Diesel Imported Diesel GTL Coal to MTG Coal to MTG w/ Seq NG to MTG

Baseline Gasoline

Imported Gasoline

Figure 7. Life-Cycle GHG Analysis. Reduction in GHG emissions is possible through the implementation of sequestration for the coal based processes. The natural gas processes have even lower life-cycle emissions. However, both are above the life-cycle emissions for traditional petroleum fuels.

6.
BFD CCS CTL EOR FT GHG GTL GWP INL IRR LPG MTG PRB SNG WBC

Acronym List
Block Flow Diagram Carbon Capture and Sequestration Coal to Liquids Enhanced Oil Recovery Fischer-Tropsch Greenhouse Gas Gas to Liquids Global Warming Potential Idaho National Laboratory Internal Rate of Return Liquefied Petroleum Gas Methanol to Gasoline Powder River Basin Substitute Natural Gas Wyoming Business Council