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Petroleum News: coal-to-liquids study in works for Beluga coal

EXTRACT: Peterson said the relatively large size of the initial plant reflects not only the extensive track record in CTL technology of Sasol of South Africa and Shell, two companies interested in investing in the plant, but also the scope of competing projects around the world that have attracted renewed interest, thanks to high oil prices.

THE ARTICLE 

Taiwan set to join Alaska, potential investors in assessing scope and benefits of proposed 80,000 barrels-per-day Cook Inlet plant

Rose Ragsdale
For Petroleum News

Spurred by high oil prices, the world is ramping up investment in coal-to-liquids projects, a trend that bodes well for future natural resources development in Cook Inlet.

The state-owned petroleum company in Taiwan, also known as the Republic of China, is poised to sign an agreement Oct. 13 with the Alaska Industrial Development and Export Authority and a small development company, Alaska Natural Resources-to-Liquids LLC, to study the feasibility of building an 80,000 barrels-per-day coal-to-liquids plant for roughly $5 billion on the west side of Cook Inlet.

The project, envisioned near the Beluga coal fields, which have more than 1 million tons in proven coal reserves, could become a catalyst for a dramatic upsurge in resources development activity in the region.

Taiwan’s Chinese Petroleum Corp. will join the state of Alaska through AIDEA in funding a $1.5 million preliminary feasibility study of the proposed project. The study will examine all aspects of the venture from size of available coal resources to the potential of West Coast markets in the Lower 48 for the ultra-clean fuels the plant would produce.

Colorado mining consultants Pincock, Allen & Holt Inc. will assess the old coal leases in the region to determine the true size of the resource, according to Richard Peterson, president of ANRTL.

Big is better

Peterson, the principal advocate for more than a decade of a substantial resource-to-liquids project in Alaska using the Fischer-Tropsch chemical conversion process, said the feasibility study should be completed by September 2007.

“We believe that once the project is under way it will have the potential to expand as more people become interested in it,” Peterson said.

Peterson said the relatively large size of the initial plant reflects not only the extensive track record in CTL technology of Sasol of South Africa and Shell, two companies interested in investing in the plant, but also the scope of competing projects around the world that have attracted renewed interest, thanks to high oil prices.

“Beluga will have 16 million to 18 million tons of coal production a year,” he said. “The size of the CTL plant is strictly the same as plants being designed and built today in other countries.”

But a Cook Inlet plant may have additional selling points, according to Peterson.

Not only can the facility draw on abundant water — a resource used in great quantities in CTL technology — it can provide 2 billion barrels of much-needed clean fuels that meet stringent requirements in the California market and jet fuel in Alaska, fuel for other major industries in Southcentral Alaska, vast quantities of carbon dioxide for enhanced oil recovery in Cook Inlet and waste heat equivalent to 6 trillion cubic feet of natural gas that could be used to generate 380 megawatts of electricity over 15 years.

“It appears we can produce far more power than would be needed in the Railbelt,” Peterson said.

Mike Barry, chairman of the Alaska Industrial Development and Export Authority, described the project at the Southcentral Alaska Energy Forum held in Anchorage Sept. 21.

Added benefits

Barry has said that AIDEA is very interested in developing the more than 50-year supply of coal resources in the Beluga coal field in ways that will bring added value to the state. He noted that Sasol’s CTL plant in South Africa produces hundreds of value-added products.

Barry cited numerous benefits of the project, including 1,300 permanent jobs (5,000 during construction).

Peterson said the CTL plant is especially desirable because it manufactures a product within the state using a natural resource rather than just exporting a resource as many past Alaska projects have done.

The CO2 by-product made in the CTL process will need to be injected into the ground unless a use can be found for it.

Peterson said CO2, used under the right conditions, can boost oil recovery in Cook Inlet’s aging fields dramatically. He cited a U.S. Department of Energy study released at the forum as evidence of the possibility.

Preliminary results from the study indicated that a carbon dioxide, enhanced-oil-recovery project in Cook Inlet could result in an additional 300 million to 400 million barrels of oil from five producing fields.

Barry said an EOR project resulting in 350 million additional barrels of oil also would provide nearly $2.75 billion in royalties and taxes to the state over 20 years.

While the estimate is based on crude oil prices ranging from $45 to $60 per barrel, Peterson said he believes enhanced oil recovery using CO2, a 40-year-old technology in the United States, would be economical at $40 per barrel.

A DOE study released in May said the process is the fastest growing oil recovery technique in the country. The CO2-recovered portion of U.S. oil production in 2004 was 206,000 barrels per day, a figure that could quadruple by 2025, the study said.

Kinder Morgan CO2 Co. L.P., the nation’s leading provider of CO2 to EOR projects, estimates that such projects can yield healthy profits when crude prices dip as low as $18 per barrel.

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