Post by
no1coalking on Feb 12, 2008 1:40pm
Coal:
COAL: High oil prices make CTL profitable without government help, developer says (02/12/2008)
Ben Geman, Greenwire senior reporter
HOUSTON -- High oil prices are making coal-to-liquid technology competitive with conventional gasoline even without big federal subsidies, the developer of a planned Wyoming CTL plant said today.
"We think we have moved into a new era in terms of oil pricing, which is suitable for putting coal-to-liquids facilities in place," said Robert Kelly, a partner in DKRW Advanced Fuels, at an energy conference here.
The company's plant could return profits in the 15 percent range when oil is roughly $60 per barrel, he said. Crude oil was trading this morning at $93.60 per barrel on the New York Mercantile Exchange.
"We will take the benefits that come out of any energy legislation in terms of investment tax credits and depreciation," Kelly said. "But we are not asking for that right now."
DKRW plans to start construction this year on a $2 billion CTL plant near a coal mine in southeastern Wyoming that would supply about 20,000 barrels of fuel per day. Kelly said that plant can "do very well without a lot of help."
The coal industry has been seeking loan guarantees, tax credits and other support on Capitol Hill, but lawmakers have yet to give significant support to CTL, which emits far more heat-trapping emissions of carbon dioxide than conventional petroleum-based fuels if pollution is not controlled.
Kelly told the Cambridge Energy Research Associates conference that his company plans to capture CO2 emissions and sell them for use in enhanced oil recovery projects. Banks, he added, are unlikely to finance a CTL project that does not capture carbon because such plants would not be viable under a cap-and-trade system for greenhouse gases.
DKRW is planning to have its plant running in 2013. The company is licensing coal gasification technology from General Electric Co. and methanol-to-gasoline technology from Exxon Mobil Corp. Arch Coal has a 24 percent stake in the project.
Cambridge Energy analyst Mark Morey said worldwide CTL production is currently about 400,000 barrels per day -- a major portion of that in South Africa -- but could reach 2 million barrels daily by 2020. Interest in the technology is being driven by energy security concerns and what has become a wider gap between the prices of coal and oil.
Morey offered a wide range of oil prices -- between $60 and $90 per barrel -- for when CTL becomes cost-competitive. But he also said that competitiveness will depend on a variety of factors. "They make sense in certain areas and for certain producers of coal, and in certain oil markets," he said.
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