Affordable, Low-Carbon Diesel Fuel from Domestic Coal and Biomass

Transcription

1 Affordable, Low-Carbon Diesel Fuel from Domestic Coal and Biomass 32 nd IAEE International Conference San Francisco, CA June 23, 2009 John G. Wimer Director, Systems Division, NETL

2 Disclaimer This report 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, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference therein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof. The views and opinions of authors expressed therein do not necessarily state or reflect those of the United States Government or any agency thereof. 2

3 National Energy Technology Laboratory Where Energy Challenges Converge and Energy Solutions Emerge Conduct onsite research Implement and manage extramural RD&D Support energy policy development Promoting America s energy security through reliable, clean, and affordable energy 3 R. Boyle, 02/07/2008

4 Coal and Biomass to Liquids (CBTL) CO 2 Coal + Biomass CO 2 CO 2 C 4

5 Energy Demand QBtu / Year 85% Fossil Energy + 13% United States Energy Demand QBtu / Year 79% Fossil Energy Coal 23% Oil 34% Gas 22% Nuclear 8% Renewables 13% 465 QBtu / Year 81% Fossil Energy + 45% World 675 QBtu / Year 81% Fossil Energy Fossil Energy Continues to Provide Vast Majority of Supply 5 U.S. data from EIA, Annual Energy Outlook 2009 early release ; world data from IEA, World Energy Outlook 2008

6 Using Coal While Satisfying Divergent National Energy Goals CBTL is a Balanced Solution 6

7 CBTL: A Balanced Solution to U.S. Energy Goals Energy Supply Security Utilizes only domestic energy resources (coal and biomass) Leverages these against our greatest energy vulnerability Economic Sustainability Profitable when crude oil price exceeds $86/bbl A 3MM bpd CTL industry would yield over $300B in national benefits and create up to 400,000 jobs Climate Change Comparison to Petroleum CTL with CCS produces a fuel with 5% lower life cycle GHG emissions than average petroleum-derived diesel Adding 30 wt% biomass yields fuel with 63% lower emissions Near-term technology that produces a drop-in fuel 7

8 8 Liquid Fuels: Recent Requirements for Life Cycle GHG Emissions

9 Life-Cycle GHG Emissions Baseline for Petroleum-Derived Diesel Fuel Average for U.S. Refineries in 2005 EPA Draft Baseline is 2% Higher (96.8 vs. 95.0) 9

10 10 Coal and Biomass to Liquids Definitions

11 CTL/CBTL Process Configuration CO 2 capture is inherent. Applying CCS adds only 7 cents/gal to diesel price. Power Generation CO 2 Capture Gasification Syngas Processing Fischer- Tropsch Synthesis Product Processing Oxygen Sulfur and Mercury NEAR-TERM SOLUTION Except for sequestration, all techs demonstrated at commercial scale - need an integrated CBTL demo: Baard & Rentech plants progressing 11

12 Biomass Availability at Potential Plant Sites (2009 National Academy Study) Dedicated energy crops* Woody residues Crop residues MSW *assumed to be grown on CRP land Number of Sites Only top quartile could supply at least 4,000 dry tpd 800 to to to 7000 >7000 Biomass Availability within 40 Miles, dry short tons per day 82 Will RES-induced demand splinter local supplies? 17 Reproduced from: Liquid Transportation Fuels from Coal and Biomass, National Academy of Sciences and Engineering,

13 Limited Biomass Availability Constrains Scale CBTL/BTL Plants Plant Capacities Plant Capacity, bpd CTL 15wt% CBTL 30wt% CBTL BTL 13

14 14 Total As-Spent Capital Cost (includes escalation and interest during construction) thousand $ per daily barrel of capacity (mixed year $) % Coal, no CCS, 50k bpd 100% Coal, CCS, 50k bpd 100% Coal, CCS+ATR, 50k bpd 8 wt% SG, CCS, 50k bpd 15 wt% SG, CCS, 50k bpd 30 wt% SG, CCS, 30k bpd 100 wt% SG, no CCS, 5k bpd 100 wt% SG, CCS, 5k bpd 100 wt% SG, CCS+ATR, 5k bpd Thousand $/DB GHG Emissions* 147% 5% 12% 20% 33% 63% 109% 322% 358% *relativeto the petroleum baseline CAPEX for BTL is 2x that of CTL SG = Switchgrass

15 Economic Methodology Required Selling Price (RSP) The price at which diesel product must be sold to: cover operating costs, service debt and provide the required IRROE. Naphtha by-product assumed to be 77% of the diesel price. Equivalent Crude Oil Price The spot price of ULSD in the U.S. has been ~1.25 times the price of crude oil. Assessed on an energy equivalency basis. Hypothetical Carbon Regulation A cost for life-cycle GHG emissions is embedded in the price of all fuels (petroleum-derived diesel and alternative diesel) If a fuel achieves negative life-cycle GHG emissions, a credit would be applied at the same rate. 15

16 Financing Scenarios NEAR TERM - Coal projects unlikely to get debt financing in the near-term Technical uncertainty Oil price uncertainty Carbon regulatory uncertainty MID TERM NO INCENTIVES 3 rd or 4 th of a kind plant: technical risk lower but still present Oil price uncertainty unchanged Carbon regulation assumed to be in place, removing regulatory risk MID-TERM with LOAN GUARANTEE Basis for NETL Study Title XVII of the Energy Policy Act of 2005 More leveraged, extended debt term, reduced interest rates 16

17 % Change from Baseline Life Cycle GHG Emission Proflie for Petroleum Derivied Diesel Fuel 50% 0% 50% 100% 150% 200% 250% 300% 350% Life Cycle GHG Emissions Compared to Petroleum Diesel NETL Petroleum-Diesel Baseline CTL w/ CCS 5% CTL w/ CCS CTL w/ Aggressive CCS 12% CTL w/ Aggressive CCS 8wt% CBTL w/ccs 20% 8wt% CBTL w/ccs 15wt% CBTL w/ccs 33% 30wt% CBTL w/ccs 63% 15wt% CBTL w/ccs 30wt% CBTL w/ccs BTL w/ CCS, 322% BTL w/ CCS GHG Reduction 5% 12% 20% 33% 63% 322% Carbon Capture 91% 96% 91% 91% 91% 88% HHV Efficiency 53% 49% 54% 54% 54% 44% 17

18 Oil Price Required for Economic Feasibility when GHG Value is $45/mtCO 2 E At a GHG value of $45/mtCO 2 E, the plant is feasible when crude oil exceeds $80 to $85/bbl crude oil exceeds $95/bbl crude oil exceeds $175/bbl As the GHG value increases, CBTL diesel becomes more competitive with pet-derived diesel (crude oil) because it has lower GHG emissions. Economic feasibility based on 20% IRROE. 18

19 19 What about Higher GHG Emission Values?

20 20 What if Higher Emitting Fuels were Excluded under a 20% LCFS?

21 Will CTL/CBTL be Economically Feasible? Economic rents could be large if oil prices rekindle 2007 dollars per barrel June-09 BP CEO AEO 09 High Price $200 June-09 Goldman Sachs CBTL 8%wt. w/ccs AEO 09 Reference $130 $125 WEO 08 Reference CTL w/ccs History Projections 21 EIA Annual Energy Outlook 2009 Reference Case Presentation -- December 17, 2008

22 Potential Economic Benefits of a 3MM bpd CTL Industry by 2030 *Based on 2008 WEO oil price projection: $100/bbl in 2010 rising to $125/bbl in

23 Solutions for U.S. Energy Goals Energy Supply Security Economic Sustainability Climate Change Creates Jobs up to 400,000 for a 3MM bpd industry Reduced Carbon Uses Emissions Domestic Reduces Resources foreign payments CBTL with 8-30 wt% biomass is 20-63% lower Biomass enables continued CCS retains maximizes economic use of vast power coal of profits resource biomass to reduce emissions Drop-in fuel addresses liquid fuel vulnerability A Balanced Solution Profitable! Low Cost CCS Demo Reduces Imports Coal enables biomass CCS to be adds used only at economic 7 cents/gal scale to diesel RSP 20% IRROE for 8wt% CBTL when oil price exceeds $93/bbl 23

24 For More Information: Affordable, Low-Carbon Diesel Fuel from Domestic Coal and Biomass Baseline Data and Analysis of Life Cycle GHG Emissions of Petroleum-Based Fuels Acknowledgments Noblis Princeton Environmental Institute 24

25 To CO 2 Sequestration Feed Gas H 2 Biomass Coal Gasification Quench COS HYD Hg Removal SELEXOL H 2 Recovery Fuel Gas Sulfur Polish Air Oxygen ASU AGT Backup SHIFT Slides Slag FT Synthesis Steam Export Power Steam Turbine CW System ~ Make-up Water Plant Power Direct-Fired Heater BFW Stack Gas CO 2 Removal WGS ATR Steam Oxygen To CO 2 Sequestration Plant Optimization Designed by NETL/Noblis Product Recovery/ Upgrading Finished Diesel Fuel and Naphtha 25

26 26 Effect of Finance Structure on RSP Today 100% Equity Mid Term Loan Guarantee (NETL Ref.) NAS/Princeton 100% Coal, no CCS, 50k bpd 100% Coal, CCS, 50k bpd 100% Coal, CCS+ATR, 50k bpd 8 wt% SG, CCS, 50k bpd 15 wt% SG, CCS, 50k bpd 100 wt% SG, CCS, 5k bpd $ per gallon petroleum diesel equivalent (Jan 08 $) SG = Switchgrass

27 52% of Imports to U.S. in 2008 Above the 2005 WTW GHG Baseline* (Sec. 526) Draft RFS2 Baseline 96.8 kg CO2E/MMBtu diesel (2% above NETL 2005 baseline) Section 526* 27 * Source: NETL report, Development of Baseline Data and Analysis of Life Cycle Greenhouse Gas Emissions of Petroleum-Based Fuels, November 26, 2008 NETL Petroleum Baseline Section 526 value is a proxy pending designation by the EPA Administrator according to EISA 2007

28 Biomass Carbon Cycle without CCS net emissions

29 Biomass Carbon Cycle with CCS net emissions

30 GHG Accounting Methodology Raw Material Acquisition (coal and/or non-food biomass) Transport to the Energy Conversion Facility Energy Conversion Facility (with carbon capture and transport) Transport, Storage, and Dispensing Total Well-to-Gate GHG Emissions for Producing Diesel, Naphtha, and Electricity (Raw Material Acquisition thru the exit gate of the energy conversion facility) End Use Study Boundary ( ) Carbon Content (converted to CO 2 ) of the Biomass Feedstock Utilized by the Energy Conversion Facility (applicable to CBTL facilities only) ( ) Naphtha Well-to-Gate GHG Co-product Displacement Value per Million Btu of Naphtha Produced ( ) Electricity Well-to-Gate GHG Co-product Displacement Value per Million Btu of Electricity Produced (+) GHG Emissions from Transportation & Distribution of Diesel Fuel to the End User (+) GHG Emissions from Combustion of the Diesel Fuel in the End Users Vehicle Total Life Cycle GHG Emissions for FT diesel Produced from a CTL or CBTL Facility 30