Source: The Australian Financial Review newspaper [Page 18] Date: Tuesday, 22 July 2008
Counting cost of converting coal
While the coal-to-liquids process works, the economics still need to be proved commercially viable writes Paul Garvey.
Coal-to-liquids technologies such as those being pursued by several Australian companies face an uphill battle to prove the processes can operate economically, a senior Shell executive has warned.
Shell has invested heavily in the two technologies involved in the process of converting coal to diesel fuel, having developed a number of plants in China, Malaysia and the Netherlands to prove that the processes work.
But Shell's executive director of gas and power, Linda Cook, says it is yet to be determined if the technologies are economically viable. "It's been technologically challenging, but we've proven both technologies now in a number of places," Cook says.
"What's not proven is more on the commercial side and whether you can afford to do those two technologies back to back and have it be economically attractive."
Coal-to-liquids technology relies on two separate technology intensive processes, namely converting the coal into a gas and the gas into liquids such as diesel.
Companies such as Linc Energy, Carbon Energy and Cougar Energy are looking to reduce the costs of the first step by igniting coal deposits deep underground and extracting the gas that the ignition creates.
Blackham Resources and Altona Resources - the latter on the verge of listing on the Australian bourse - are both pursuing coal-to-liquids projects that involve mining the coal before gasification.
"You have to build a coal gasification plant and a gas-to-liquids plant, so [it's] very capital intensive," Cook says.
"It would work economically in a place where you have low constructions cost, where you're relatively close to market, and where you have a lot of low-cost coal reserves. So you can see maybe Australia has some of those ingredients.
In Australia, Shell is involved with Anglo American in a multi-billion dollar coal-to-liquids project around the cheap brown coal resources of Victoria's Latrobe Valley.
But while federal Resources Minister Martin Ferguson has given strong public support, it has attracted criticism for its comparatively high level of carbon emissions.
Companies focusing on underground gasification say they emit less carbon than other coal-to-liquids projects.
Cook says Shell is in the early stages of evaluating emissions storage options.
"On top of being capital intensive, it is also CO2 emissions intensive, and I think in today's environment one has to figure into the development of a coal-to-liquids project a means to offset the CO2 emissions associated with it," she says.
Ends.
Cheers, Pie :)
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