High oil price, supply fears help turn coal to fuel

Fears over energy security and high oil prices have rekindled global interest in technology, once vital to the siege economies of Nazi Germany and apartheid South Africa, that converts coal to transport fuel.

Although potentially more polluting than other alternatives, coAl to-liquids has the advantage of relying on widely-available raw material. The rising cost of much scarcer oil resources is making it commercially viable.

‘It’s not a silver bullet, but it’s part of the mix,’ said Corey Henry of the U.S.-based CoAl To-Liquids Coalition. ‘With oil anywhere between $45-$55, you can produce a profit.’

Oil prices are approaching $70 a barrel for benchmark Brent crude LOCc1 and they are expected to stay high. That could embolden investors to make the huge outlays needed to build coAl to-liquids plants.

‘Not only is interest spurred by a likely new and higher floor for global oil prices ... but I would say rising concern, even apprehension ... about the increasing reliance on energy imports,’ said Luke Popovich of the United States’ National Mining Association.

The United States’ Energy Information Administration has revised upwards its forecast for world coAl to-liquids production to 2.4 million barrels of oil equivalent per day by 2030 in its 2007 International Energy Outlook, compared with 2.1 million in its 2006 outlook.

That is a tiny amount compared with total liquids production -- including crude, gasoline, coAl to-liquids and other alternatives -- which the EIA forecasts will reach more than 100 million barrels daily by 2030.

But campaigners say that for the world’s top two energy consumers the United States and China, which also both hold vast huge coal reserves, it could make a big difference.

‘I believe that fuel derived from coal will be the most beneficial fuel source for our country over the next 20 years,’ Senator Craig Thomas said in May, backing a US bill that calls for a phased increase of coAl derived fuels.

‘CoAl to-liquid technology can provide our nation with a sound way to reduce our dependence on foreign oil.’

Fischer-tropsch synthesis

CoAl to-liquids can provide fuel for cars and aircraft, as well as products such as fertilisers and tar.

The process involves converting coal to gas and then reacting it over a catalyst to make liquid products. It is also possible to liquefy coal directly, which can be more energy efficient, but this technique is commercially untested.

The original technology, named after its inventors Fischer and Tropsch, was developed in the 1920s in Germany, which was coAl rich and petroleum poor, and helped to provide fuel during World War Two.

It was also used for fuel in South Africa during the isolation caused by apartheid and the country still derives around 30 percent of its gasoline and diesel needs from indigenous coal, the London-based World Coal Institute said.

South Africa’s Sasol is so far the only commercial producer of transport fuel from coal but China is expected to start producing coAl to-liquids late this year.

In the United States, coal companies are assessing the commercial viability of coAl to-liquids projects, with at least one project expected to come on stream around 2011-12.

Apart from the widespread availability of coal -- it is mined in more than 50 countries worldwide and present in more than 70 -- advocates of coAl derived fuels say they can be clean, provided that carbon capture and storage (CCS) technology is used to bury emissions produced during manufacture.

Some say they could be cleaner than conventional fuels, while the Paris-based International Energy Agency (IEA) said they were roughly as clean.

‘With CO2 capture and storage at the coal liquefaction plant, the net CO2 emissions from coAl based transport fuels are similar to oil-based fuels,’ the IEA said in a report on a coAl to-liquids workshop.

‘Without CCS, emissions would be significantly above those from the oil-based alternatives -- roughly double current well-to-wheel emissions.’

In the United States, coAl to-liquids would be produced only if CCS were used, experts say, and there is an abundance of potential sites for storing captured carbon.

For China, CCS is not a priority, but the IEA said there was a willingness to use it if the economic cost could be covered.

But South Africa lacks suitable storage sites, experts say.

Apart from the environmental challenge, the other factor likely to check enthusiasm would be lower oil prices -- or a big rise in the price of coal, currently the cheapest fossil fuel.

Following the oil price shocks of the 1970s, significant research was undertaken into coAl to-liquids in the United States, as well as in Europe, Japan and Australia, but then oil prices fell and enthusiasm for coAl to-liquids waned.

Source : www.khaleejtimes.com