Gasification Project Economics and Critical Success Factors To Compete In The Marketplace

Transcription

1 Gasification Project Economics and Critical Success Factors To Compete In The Marketplace 2000 Gasification Technology Conference San Francisco, California October 8-11, 2000 Chuck McConnell, Praxair, Inc. Ray Drnevich, Praxair, Inc. Dale Simbeck, SFA Pacific, Inc.

2 Gasification Project Economics Typical IGCC Project Costs Costs Are Known & Documented +5% Gas Turbines 30% Gasification Technology 25% CAPEX Plus License Fee +5% Owners Costs +20% Costs Known & Documented +2% Owners Costs 10-20% ASU 15% Off Sites Cost Range 10-25% Project Development Cost Range 5-15% Project Development +25% Site Utilities and Off Sites +10% Capital ~$850/kW to ~$1500/kW Heat Rate ~ 7,000Btu/kWh to ~8,500Btu/kWh COE ~ $0.04/kWh to ~ $0.07/kWh $1.50/MM Btu

3 Gasification Project Economics Historical Gasification Drivers Energy/Environmental National Energy Supply Strategies Availability of Coal Reserves High Efficiency Very low emissions Waste disposal Technology Demonstrations/Energy Supply Diversity Incentives Cost Sharing (Capital & Operating) Price Supports, Tipping Fees, and Tax Credits Regulatory Enablement (Favorable Rate Base vs. Alternative Technology) Cost Advantage for Chemicals/Fuels Production Feedstock availability Syngas characteristics

4 Gasification Project Economic Incentives Gasification Project Economics Projects Dates Enabling Agency Coal Based SASOL Great Plains Cool Water Plaquemine Demkolec Wabash River Puertollano Polk County Pinon Pine South Africa Gov US Gov - DOE US Gov - SFC US Gov - SFC Neth Gov & utilities US Gov - CCT EC & utilities US Gov - CCT US Gov - CCT Oil Based ISAB api ENERGIA Sarlux Italy Gov Italy Gov Italy Gov

5 Gasification Project Economics Gasification Project Specific Incentives Project SASOL Great Plains Cool Water Plaquemine Demkolec Wabash River Puertollano Polk County Pinon Pine ISAB api ENERGIA Sarlux Specific Incentives Gasoline & Diesel fuel price supports Guaranteed loan - defaulted Syngas price supports Syngas price supports Capital & operating cost sharing Capital & operating cost sharing Capital & operating cost sharing Capital & operating cost sharing Capital & operating cost sharing Electricity price supports Electricity price supports Electricity price supports

6 Gasification Based on Feedstock Availability and/or Cost Advantage Gasification Project Economics Project Category Location Products Drivers Natural Gas to Syngas Texas City, US Syngas/H2/Steam/Power Cost Advantage Natural Gas to Syngas Texas City, US Syngas / Oxo-alcohols Cost Advantage Oil Based Hydrogen Pernis, NE Hydrogen/Power/Steam Cost Advantage Oil Based Syngas India Syngas/ NH 3 Availability Coal Based Syngas China Europe Syngas/ NH 3 Availability Coal Based Syngas South Africa FT Liquids Availability Coke Based Syngas US Power/Steam Cost Advantage* * Significant Environmental Impact

7 Gasification Project Economics Future Trends Dynamic Feedstock Costs and Availability Long Term Capital Investment Difficult To Rationalize Flexibility For Value Creation Polygeneration Greenfield Sites Will begin to Dominate Increased Business Development Costs Will Result Location Synergies Will Shape Project Site Requirements Owners Costs Utilities and External Support For Import/Export

8 Gasification Critical Success Factors How will Gasification Projects Compete In The Marketplace? Understanding Feedstock Cost and Availability Broad Based Value Creation Control Business Development, Owners, and Infrastructure Costs Maximize Synergies with Nearby Industries

9 Gasification Critical Success Factors Understanding Feedstock Costs Impact of Fuel Prices on Hydrogen Price 100 MMSCFD of H2 Hydrogen Price ($/1,000scf) $4.50 $4.00 $3.50 $3.00 $2.50 $2.00 $1.50 $1.00 Gasifier Fuel Price Natural Gas Price $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 Fuel Price ($/MM Btu) Hydrogen From Natural Gas Hydrogen from Solids Gasification

10 Understand Feedstock Cost and Availability Gasification Critical Success Factors Feedstock Cost vs. Natural Gas Over Project Timeline Is Critical Feedstock Costs Are Difficult To Project Natural Gas Supply and Delivery Capacity Continue to Grow Natural Gas Prices Continue To Increase Coal Prices Driven By Mining and Transportation Costs Residual Oil and Petroleum Coke Markets Remain Viable

11 Gasification Critical Success Factors Broad Based Value Creation Value Competitive with Alternative Technology Focus on high value products Gasification-Polygeneration Synergies Host Site Value Creation Base load product consumer Waste disposal opportunities Infrastructure synergies

12 Control Business Development, Owners, and Infrastructure Costs Gasification Project Economics Gas Turbines 30% Gasification Technology 25% Owners Costs +20% Owners Costs 10-20% ASU 15% Off Sites Cost Range 10-25% Project Development Cost Range 5-15% Project Development +25% Site Utilities and Off Sites +10% High Impact Highest level of Uncertainty

13 Control Business Development, Owners, and Infrastructure Costs Gasification Critical Success Factors Gasification Project Development Can Take 5-10 Years Project Development Requires Planning and Controls Control Owners Costs Understand Early and Identify Alternative Approaches Infrastructure Development Can Be Expensive and Complex Greenfield Site Development Requires Strong Local Knowledge and Presence Local Governmental and Agency Relationships Are Fundamental

14 Gasification Critical Success Factors Maximize Synergies with Nearby Industries/Infrastructure Optimize Product Supply Opportunities Economies of Scale Product Value Utilities/Off-sites Optimization Claus Plant Oxygen Addition for Capacity Extension Consolidated Water and Wastewater Treatment Product Exchange/Backup Supply Back Up Electricity and Steam Back Up Oxygen Export Oxygen, Hydrogen

15 Summary Gasification Project Economics and Critical Success Factors Vibrant Market Growth Cannot Rely On Incentives Projects Must Demonstrate Customer Based Value and Real Value vs. Alternative Sources Requirements for Success Include: In Depth Understanding of Feed Stock Values Development of Total Value Creation Focused Business Development Reliable/Controllable Costs Maximized Synergies