Sasol, Shell may license first coal-to-diesel project in US

Gulf Times ^ | 9-29-2005 | Bloomberg

[John Jamieson]

NEW YORK: Sasol Ltd, the world’s biggest maker of motor fuel from coal, and Royal Dutch Shell Plc are in talks to provide technology for the first US plant that will produce diesel from waste coal.

The plant will be in Gilberton, Pennsylvania, and will have capacity to produce 5,000bpd, John W Rich Jr, president of project developer WMPI Pty LLC, said this week in an interview. He said Eastman Chemical Co, which makes plastics from coal, may operate the plant, and Sasol and Shell may get a portion of sales by licensing their technology.

Loan guarantees in the US energy bill signed into law last month and soaring fuel prices spurred the project, Rich said. Pennsylvania Governor Edward Rendell plans to announce today an agreement for the state and its trucking association to buy 40% of the plant’s output. WMPI is asking $1.30 a gallon, less than half of current retail prices for diesel.

“It’s a fantastic price,’’ Rendell said in a September 20 telephone interview. “It’s doable.’’ The governor also is urging the US Defense Department to sign a supply contract, arguing that promoting a new domestic fuel source improves national security. The state, home of about 8% of US coal deposits, has gotten inquiries from others who want to convert coal to motor fuel, he said.

Unlike an earlier synthetic fuel programme now used by companies that process coal waste to be used for power generation, WMPI won’t depend on federal tax credits for profit, Rich said. He said won a state tax credit and is negotiating federal loan guarantees. Private financing will fund $465mn of the $612mn project cost, Rich said. Rich, who is pitching similar projects in Indiana, Colorado and Wyoming, said he’s trying to negotiate a 10-year supply contract with Pennsylvania that would allow prices to rise as production costs increase.

Sasol produces 160,000bpd at the world’s only commercial coal-to-liquids refinery, in Secunda, South Africa. The 50-year-old plant provides 28% of South Africa’s supplies of such fuels as diesel, gasoline and kerosene, Sasol said in an August 24 statement. The Hague-based Shell, Europe’s second-largest oil company, is in talks to license to WMPI technology for the first part of the conversion process, cooking coal into a gas that can be scrubbed of sulphur and other pollutants. Paul Hamilton, president of the Shell Global Solutions US technology unit, said the company has licenced 14 gasifiers in China. – Bloomberg

[John Jamieson]

I bought a small amount of Sasol about 2 months ago. My profits have paid for my gas since. This deserves consideration as a National Energy Plan. Each ton of coal produces the equivalent on one barrel of oil and the waste product is coke which goes right into existing electric plants. Current coal prices are $12 to $40 a ton.

[SauronOfMordor]

At $12/ton, it would be cost-effective, at $40, plus the process cost, it might not be

Unless it's built close to a source of $12 coal, I might prefer to see the capital investment go to building another nuke plant.

PA Gov Rendell(D) was on CNBC hawking the plant. With its location in PA, i'm thinking it's probably a boondoggle to increase employment for unionized PA coal workers

[John Jamieson]

I don't know the price of Penn coal, but somebody must think it's cheap enough. They sell a lot of it.

The $12 a ton price in one of the world's largest coal fields, Powder River in Montana. Texas imports clean coal from there to mix with with our local dirty coal. 22 coal trains are in constant motion between Montana and Texas.

Most experts agree coal liquefaction makes sense as long as crude stays above $40.

[Altair333]

"things-nazis-did-after-afrika-korps-bit-the-dust-ping."

LOL! Although I think the Romania and the Ploesti Oil Fields leaving the Axis was the main reason for the Nazis going the synthetic route.

[John Jamieson]

PS. Nuke plants a good thing too!

[Altair333]

"Unless it's built close to a source of $12 coal, I might prefer to see the capital investment go to building another nuke plant."

Vehicles don't run on nuke plant-generated energy.

[truth_seeker]

Sasol plants since the 1950s, using technology from Hitler's era.

Sasol plants built by American company Fluor Corp.

Yet another pathway towards energy independence (or at least reduced dependency).

But the environmentalists will scream bloody murder.

[John Jamieson]

BTW: Coal Liquefaction is an exothermic process (it generates, not uses heat). These plants will co-generate electricity. Natural gas is also a by product.

[backhoe]

An old post of mine:

Oil from Coal....Boon, Bane, or Boondoggle?

BTW, I'm all for it.

[John Jamieson]

"environmentalists"

It's time to just ignore these irresponsible jerks for their own good as well as ours. They accept no solution that doesn't drag us back to the stone age.

[John Jamieson]

Excellent post! 2001 ..... We're very late. Time to get on the stick.

[Freebird Forever]

BTTT

[Wonder Warthog]

"I bought a small amount of Sasol about 2 months ago. My profits have paid for my gas since. This deserves consideration as a National Energy Plan. Each ton of coal produces the equivalent on one barrel of oil and the waste product is coke which goes right into existing electric plants."

Glad to hear it. This is the first HARD evidence that I have seen that "peak oil" theory might be real.

[Wonder Warthog]

"Unless it's built close to a source of $12 coal, I might prefer to see the capital investment go to building another nuke plant."

As much as I like nukes---a nuke plant isn't going to produce transportation fuel---this plant will.

[John Jamieson]

Sasol stock was about $10 in 2002. Nothing but up since. I hope you bought some back then. Hit $39 today and pays a nice dividend.

[thackney]

The $12 a ton price in one of the world's largest coal fields, Powder River in Montana.

Why does Powder River sell so far below the rest of the market? Is it a low BTU coal?

[John Jamieson]

I just read Hubbert's Peak and I think he really only go one thing wrong. It's not so much a peak as it is a plateau. He just didn't take into account that people would pay almost anything for energy.

[John Jamieson]

Somewhat lower BTU but mostly transportation cost for shipping. Change it to liquids and electricity there and ship by pipe and wire.

[thackney]

Thanks, I did find it is a low ash and low sulfur coal.