The world economy is affecting our industry drastically. Increased demand for oil and natural gas means that power generators and industries are desperate for basic raw materials that fuel will help the U.S. economy.
The new technology is created and innovations in our industry continue to grow, that lead is used more and more inventive for coal. With the right incentives and market conditions, companies introduce products in question andservices to meet those needs. Without this kind of thinking in the energy sector – where the growing demand for electricity and gas by touching the availability of vital fuels and putting upward pressure on prices will result in dire consequences for the global economy.
As we all know, natural gas is a finite resource, which at the current rate of production and consumption, would last about 60 years in the U.S.. We must also consider the fact thatdeveloping countries to expand and demand more of the world's oil and natural gas to fuel their growth. Since the U.S. comprises about five percent of the world population but uses about 30 percent of energy, it is inevitable that the balance of the day, especially as regards the transfer of production capacity to overseas markets .
With India and China want to get the same resources of the United States, the cost of raw materials. For example, the U.S. Energy SecretaryInformation Administration (EIA) projects oil consumption to increase from 3.1 to 2030, while electricity demand increases by 50 percent over the next ten years. Some experts predict this will lead to oil, which could cost up to $ 100 a barrel, while natural gas might run as high as $ 8 per million BTU + result in the same time.
When oil prices rise, usually results in other commodities such as natural gas and coal, usually at an interest rate lower than that of oil. Carbon generally increases witha rate of 40% oil, making it the cheapest and most abundant oil, which explains why the EIA to rise to its use in the next two decades, projects and does not expect that nuclear energy or renewable energy, coal is the market share would fall in that period.
There are solutions to the growing demand for energy, and include different use of coal as feed stock. Coal-to-liquids is one, is divided into the form of coal to fuel oil. Although potentially more convenient forRun over oil is capital intensive and requires that oil prices remain high to encourage investors to this company. Coal gasification is another technology that we saw at the forefront in our industry. These are plants that clean energy of the impurities from coal before it is burned and imitated by the fireplace or in the most recent developments (DOE project sent by the 70's), improving the quality of pipeline natural gas (PQNG).
When coal is burned, produces sulfurCarbon dioxide and nitrogen oxides that produce smog and acid rain. also produces fine particulates and mercury. Under the Clean Air Act, be removed pollutants from exhaust gases leaving the chimney. Burning coal produces carbon dioxide, which is not currently regulated. But the pressure to do so is increasing.
coal gasification removes sulfur dioxide, mercury and carbon dioxide from the "syngas" before it is burned or converted PQNG,experts say. And since the "synthesis gas is cleaner than raw coal, with lesser amounts of nitrogen oxides and particulates produced during the combustion process resulting in process. Carbon dioxide is more concentrated, making it easier to grasp.
Four coal gasification plants are now operating: two in the U.S. and two in Europe. American Electric Power is expected to study engineering next month spent on two potential coal gasification plants in Ohio and West Virginia. Itwould like to have one or both facilities operational by the end of the decade. Duke Energy coal gasification proposed harvest Cinergy in Ohio after the merger of two organizations.
There are practical ways to reduce global dependency on oil and natural gas. The use of energy efficient technology is a good start, and turning waste heat into electricity and heat.
For the global economy sustainable, creative solutions involving all the different types of fuel arenecessary. Coal will continue to play an important role, but the shape of this role seems to change. New technologies are on the verge of banal commercial, and utilities can use the traditional procedure of cooking undertake to control their emissions and their environmental impact. Regulatory and market pressure to give coal the opportunity to reinvent themselves, and with prices of oil and gas at current levels, and no significant main site, most of the newpower demand is likely to be made for the use of coal, the workhorse of the industry.
Coal is not without problems. Eastern Coal spot prices have increased, and reached its highest level in more than 25 years. This is the second time in four years, coal prices have more than doubled pre-2000 price levels. This suggestion has led prices to new long-term contracts, as well as rise. The peak current spot prices extended east is mainly to supply shortages, asThe demand has not grown much in recent years.
moved There are several reasons that coal prices. The coal industry has undergone significant consolidation over the past 15 years, with indications that a continuation of this trend. The top ten companies controlled 64% of coal production in the United States in 2003, compared to only 36% during 1989. Three companies control 60-70% of production in the Powder River Basin, Northern Appalachia and the Colorado / Utah. This consolidation hashave contributed to the volatility of spot prices by reducing excess capacity, and the number of competing mining contracts for coal.
Reducing the number of small mines, the price of coal in recent years, affected as well. An example is a 68% reduction in the number of small mines in Central Appalachia 1989-2003. Reducing the number of small mines that have the capacity to meet the peak demand reduced, leading to price increases in the spot market.
There areOther factors contributing to the rise of coal prices include increased demand, although in the last five years the increase was small. Other factors include reducing the size of coal reserves in the U.S. utility, reducing productivity Miner in all major coal-producing regions (with the exception of the Northern Appalachians), the pressure of demand for coal export in the United States and reduction of reducing the number of Class 1 railroads.
Spot market coal prices increased, whichare the opportunities for IT coal? They are available with integrated coal gasification combined cycle plants. Gasification, also known as partial oxidation, is commercially practiced for many years, especially in the chemical sector, where most of installations producing ammonia, hydrogen or other chemicals. The raw material for these plants is natural gas that contains petroleum-derived fuels, petroleum coke and coal. Integrated gasification combined cycle (IGCC) is often proposed as an alternativeMethod for converting fuel into electricity environmentally disadvantaged. Some believe that IGCC plants are not built in the short term, if gas prices continue to rise, there is growth and high load capacity of a national cap on CO2 emissions will be implemented. But with the arrival of the Clean Air Interstate Rule (CAIR) and Clean Air Mercury Rule, and availability of high sulfur content (ie, 7 pounds / MMBtu) of coal, as the Illinois Basin coal (see Figure 2) the market for these fuelsbased on a technology like IGCC and gasification processes, the sulfur content of high value and reduce emissions at the same time. The technology advantage of the most important long-term ability to control emissions of greenhouse gases. integrated gasification combined cycle technology, combined with the sequestration of carbon stripped of the process is so close to a perfect solution for environmental emissions, as it is. The biggest challenge will be to make a realityGiven the cost of developing gasification projects and their financial impact.
Gasification history
The gasification technology, even if the new energy economy, has been widely used in chemical industry for decades. Almost ten years ago, Tampa Electric opened an innovative plant, coal, the most often changed, but the dirtiest fossil fuel in a relatively clean burning gas to produce electricity. The plant emits pollutants far less of aconventional coal-fired power plants, and was also 10 percent more efficient.
Although there are many gasification plants currently under design for this work has opened up, but there were other similar facility in the United States, was more expensive mainly because of the price for the construction of that facility (about 20% instead of building a conventional coal-dust units) and the abundant supply of natural gas, which until recently was much cheaper.
In recent years,There were pressures on the price difference. GE Energy, a division of General Electric makes the technology offers operational cost savings that partially offset higher construction costs. Moreover, if Congress limits eventually make carbon emissions, as many energy-industry experts expect them, the technology of the operational benefits it could be said to make a deal.
There are several utility executives, proponents of gasification, as takingWorld Carbon Limited is inevitable. Duke / PSI, Bechtel and General Electric Company have signed a letter of intent on the feasibility of constructing a commercial, integrated gasification combined cycle (IGCC) power plant study. This is the first facility of its kind known as a GE-Bechtel alliance. But other projects using the same alliance are close behind.
Saving operation of IGCC result of a number of factors, including more efficient combustion(Shown to make 15 percent more than conventional plants, consuming less fuel). Plants use water in less than 40 percent of conventional coal plants, an important consideration in arid places, and increasing difficulties in securing water rights.
Many in the industry, that anticipate stricter pollution limits believe that the primary outlet of IGCC plants is their ability to chemically strip pollutants from gasified coal more efficiently and economically,Burn, instead of trying to reduce emissions to the rear clean.
Proponents of the technology believe that half of coal of pollutants – including sulfur dioxide and nitrogen oxides, which contribute to acid rain and smog – can be removed chemically, and before combustion. For example, 95 percent of mercury in coal can, in about one-tenth the cost of trying to spot it from a racing exhaust gas fireplace.
The biggest long-term draw for gasification technology is its ability toCapturing carbon dioxide before combustion. If the limits are adopted for greenhouse gases, this work is to do a lot more difficult and more expensive with conventional coal plants. It is estimated that carbon capture about 25 percent of the cost of electricity from IGCC power plant burning coal would be gassed to add, but adding 70 percent to the price of power from conventional plants.
Disposal of carbon dioxide gas naked in the process, however, is another matter. GovernmentThe laboratories have experimented with the resolution of the gas in saline aquifers or pumping in geological formations under the sea. The oil industry has long injected carbon dioxide into oil fields to help push more oil to the surface. Refining and marketing of these techniques is an essential part of a package of $ 35000000000 incentives, clean energy of the National Commission on Energy Policy recommended.
The recent energy bill must pass some incentives for industrygasification technology, and the Department of Energy will continue related efforts. These include FutureGen, a project of $ 950,000,000 for the show gasification full potential – not only for power plants, but as a source of low-carbon liquid fuels for cars and trucks but also, and more out as a source of hydrogen as fuel.
The integrated gasification combined cycle
In the IGCC process, coal or other carbonaceous material (petroleum coke, coal fines and residual oil)is the synthesis gas, mainly carbon monoxide and hydrogen, the cold, composed converted cleaned and cooked in a gas turbine. Furthermore, the gas turbine produces hot exhaust gases, flowing through a generator to produce steam to generate electricity with a steam turbine, with both the current through the gas and steam turbine generators.
The starting material is prepared and driven to the gasifier either dry or diluted form. The feedstock reacts in the gasifier with steam and oxygen at high temperatureand the pressure in a reducing environment (oxygen deficiency). This produces the synthesis gas or syngas, composed of more than 85% of carbon monoxide and hydrogen produced in volume, and smaller quantities of carbon dioxide and methane.
Coal gasification is a chemical process that removes potentially harmful materials such as mercury, sulfur and volatile from the syngas before combustion, if you want to be removed much easier and less expensive. non-volatile heavy metals can be removed in aWaste not releasable surface useful in the design and construction sectors may, for a possible additional source of income for these investments. The removal is due to high temperature in the carburetor and the results in inorganic materials such as ash and metals in the vitrified slag material, similar to natural sand. Some commodities, precious metals are concentrated and recovered for reuse. The synthesis gas is produced which is much cleaner than raw coal, and produces lowerThe quantities of fine particulates and nitrogen oxides, if you go through combustion.
Vs IGCC coal combustion
There is a dramatic difference in the level of pollution in comparison to an IGCC plant with that of a traditional pulverized coal plant. A plant produces coal dust and ash, smoke, that make up the majority of pollutants from coal. Although the fumes can with current technology that can remove a largePart of the pollutants, is not without costs and these costs can be prohibitive.
Gasification away on the other hand, these pollutants to be more efficient and effective, without wasting additional coal combustion is not as additional carbon dioxide, sulfur and mud (containing up to 5 pounds per pound. Removes sulfur). The removal of mercury and volatile carbon dioxide is an expensive process in traditional combustion plants, andit seems that this requirement will soon threaten the industry because of the continuous environmental requirements. To remove high concentrations of mercury from coal burning plant, there is need for injection and removal of active carbon powder, and success depends largely on coal and other raw materials, pollution control equipment
An example, the level of emissions from an IGCC plant to a supercritical pulverized coal (SCPC) is compared in Table 1
Table 1
PoundPollutants per MWh
Pollutant Release IGCC SCPC
SO2 0.47 1.19
NOx 0.50 0.72
PM-10 0.06 0.16
Pollutant Release IGCC SCPC
Hg (Volatile Mercury)> 90% from 30-80% by
Source: Eastman Gasification Services
1) estimates, with 2.2% sulfur Eastern coal
2) For the IGCC NOx is correct to 15% O2 for SCPC NOx was corrected to 6% O2
3) estimates, IGCC has an amine scrubber, packed bed of activated carbon for Hg, and SCR
4)Provided SCPC system is equipped with wet flue-gas exhaust
Pollution levels for IGCC may show further reductions in Table 1, to achieve this objective by an increase in sulfur removal technologies, such as Rectisol.
IGCC Economics and Finance
One of the hottest topics in the industry these days is the coal gasification and IGCC. In recent meetings industry, coal gasification sessions standing room only. Commercial banks are interested in the subject asGood, but not without reservations. The attraction is the potential lucrative contracts levies on the type of project. Depending on where the plant is up to 30 percent of the revenues of a project can come from non-power, for things such as hydrogen, nitrogen, sulfur and carbon sequestration.
A major problem with the growth of IGCC in the past is that the turbines and equipment for gasification of different vendors came and no one wantedensure the whole package, because there was uncertainty on other devices. Signed in 2003, Eastman Chemical Company Eastman Gasification Services Company, a partnership with ChevronTexaco, Eastman was among those, operation, maintenance, management and technical services projects for ChevronTexaco to offer. In 2004, GE acquired the Chevron-Texaco gasification technology and has shown that combined with the existing business-turbine, with guarantees for both. InThey also joined forces in a consortium with Bechtel for the construction of the plant. Eastman Gasification is ready to offer their services to these projects. All these combined efforts will help the credibility and financial viability of these projects, adding the technology to eliminate the risk.
The total cost for the construction of an IGCC plant is connected to approximately $ 1000000000 + state, with some experts that the technology 20% more than the cost of a pulverizedCharcoal. Without substantial subsidies from the federal and state governments, the future of IGCC technology is considered by some to be dim. Furthermore, as rated by the service programs are at stake, as commitments sealed with regulatory authorities is a necessity to avoid a negative rating. Strategies to address the legal risks AND financial measures should be implemented to help ensure this.
After Eastman Gasification Services Company, however, investment costs for new coalgasification plants are now estimated to be on equal ground with the last generation of coal power plants. The cost of pulverized coal plants have increased in recent years and is expected to continue in this direction, because of the increasing severity of federal air pollution regulations. With coal gasification, there are fewer environmental side effects, and is expected That actually costs down his head as the commercialization of technology moves forward,Improvements are incorporated into the design of future operating experience higher realized.
Solid fuel plants have recently been offering for less than $ 1,000 / kW on a turnkey basis, which is 30-40% of costs for the first few IGCC plants. Since then, capital costs through improved performance of gas turbines have been achieved, the extensions of the system for gasification, IGCC configuration changes, and finally down through the learning curve of a movement in the process of EPC hasprovided greater efficiency. An example configuration changes that the cost has fallen, GE is the association of a cycle based 9Fa combined with high efficiency to satisfy (HQE), which resulted in a reduction of 10% of the cost of electricity. The reduction is largely due to the heat exchanger high temperature gasification plant will be eliminated. next generation of GE gas turbines, such as "GE" H machine will provide significant improvements in performance and capitalCost reductions. These types of improvements will continue to provide additional economic benefits to IGCC. The cost of an IGCC plant would be between $ 1,200 to $ 1,400 / kW, and is expected to fall from there. This area is in competition with the latest generation of supercritical pulverized coal plants
If one considers the variable costs for a total coal gasification than any other fossil fuel-based electricity production plant (including gas)O & M, fuel, disposal of wastes and credits are much better with coal gasification. This is a consequence of the higher O & M costs for the gasification of coal from lower fuel costs through increased efficiency, lower environmental standards to offset the costs of treatment and disposal costs lower. Also be provided with the production of marketable products such as hydrogen, nitrogen and sulfur may be additional revenue streams. ultimate limit, with the Clean Air Mercury Rule emergingEmissions from new power plants, and the removal of carbon expected Demands taken probably in the future, the cost of disposing of these components must take into account, and it is much less Than other gasification technologies.
With rising gas prices at their current level, the cost of ownership of an IGCC become more competitive with that in the natural gas-fired combined cycle power. The specter that this remains true, if the gas levels above $ 4/mmBtu.Most of the Long Range forecasts gas prices show that natural gas is above that level for the foreseeable future.
State and Federal Incentives for Development
The Clean Coal Power Initiative (CCPI) is the response of the President of the national energy policy recommendations for the development of advanced clean coal and clean energy, reliable and economical to secure the future of U.S. CCPI is a ten years, $ 2,000,000,000 DOE program with multiple callcoal-based technologies that significantly increase the efficiency of energy production, environmental, economic or related to the state of the art technology. The purpose of the program is to try to accelerate the implementation of these new technologies through demonstration at commercial scale. They require cost sharing 50% of the participants in the industry.
Many states whose coal industries have been dramatically affected by the reduction of environmental laws requireSulphur have been several incentives, including grants and tax reduction in place to promote promoted the use of coal in their state. The countries whose resources include coal with high sulfur content, as found in Illinois, Indiana and Western Kentucky, Ohio and other areas have held the Appalachian Mountains, the main burden of the loss of jobs in coal mines, and have seen the market for their coal is drastically reduced. Many of these countries are committed to the mines back into their business andunemployed miners to work. The incentives were created to do, and many of these incentives are specifically focused on IGCC, to stimulate the development recognizes that despite the concerns of environmentalists.
Indiana
In early 2005, the clean energy legislation the Senate unanimously in Indiana, additional incentives for clean coal gasification plants has passed. Senate Bill 378 provides tax credits for businesses, Build Operate and integrated coalgasification plant in Indiana. The legislation was the technology of coal gasification investment tax credit, the newly constructed IGCC plants, which applies only Indiana coal. The amount of the tax credit is 10 percent of investment 500 million U.S. dollars, plus 5 percent of investment, a sum in itself. The tax credit will be spread over a period of ten years.
In April 2005 the Indiana General Assembly of tax incentives for Duke would save $ 75,000,000$ 1000000000 on an IGCC plant that are considering building a partnership with GE / Bechtel, where coal-fired mines Indiana.
In 2002, Indiana Governor signed an act of clean coal, in which energy suppliers or build new plants or repowering of existing coal plants with Illinois Basin are eligible for financial incentives, including possible up to 3% above the normal return. The Indiana Utility Regulatory Commission (IURC)assigned determines the actual amount of incentives on a case by case basis.
Since 1987, coal consumption in Indiana has increased by 30 percent, while Indian coal production had increased by only 3 percent. Currently used for more than half the 43 million tonnes of coal for generating electricity is imported into India. If Indiana were 22.5 million tonnes of coal to replace imported coal now, would be $ 1,350,000,000 and 18,000 jobs, the economy of the country he added. Therefore, it is clearBecause the state has implemented these incentives.
West Virginia
West Virginia, with the use of coal as a generator for its excellent source material, you will receive $ 13.1 to 17,300,000,000 U.S. dollars annual Economic output, $ 4.1 to 5.6 billion U.S. dollars annual household income, and 111,747 to 162,143 jobs. A further step, the coal charge $ 66 to 114 billion U.S. dollars of annual economic condition, $ 38-55000000000 annual family income of $ 1,100,000 to 1.7000000 jobs across SouthAppalachian region. In other words, coal is an important part of their business, and is likely to negotiate for some of its use of high sulfur coal
Kentucky
The Kentucky Coal Association (KCA) has said that financial incentives to promote coal in Kentucky, is a priority for the legislature of 2006 and the meetings of the Interim Committee. KCA has helped pass legislation in the past to burn, including one-off tax credits for coal seams thin and incentives for energy companiesCoal of Kentucky, is a legitimate expectation that the implementation will be as successful incentives.
Numerous government programs are there in Kentucky, which could benefit from an IGCC plant. These include:
Enterprise Zone Program
-Tax Increment Financing
-Tax Credits
Job evaluation fee
Industrial revenue bonds
Ohio
Ohio Coal Development Office (OCDO) within the Ohio Air Quality Development Authority (OAQDA), co-financed the developmentuse and implementation of technology, Ohio enormous reserves of high sulfur coal in an economical and environmentally friendly. Ohio produces nearly 90 percent of its electricity from coal and is the third largest consumer of coal and the fourth largest consumer of electricity in the U.S.
Projects financed by the public for prayers and OCDO query-for-proposals and cost sharing is required. Proposals will be reviewed by independent technical experts andthen established by law, the Office of the Technical Advisory Committee (TAC), a group of 15 members of the public and private members, which includes an interest in coal, power generation, and to the environment. Projects recommended by the TAC are welcome OAQDA submitted for final approval, the grant to start negotiations.
Illinois
Illinois has developed a comprehensive program to provide incentives that are prepared with sulfur Illinois coal, which are made unemployedMiners at work. In recent years, the rule of action for the development of coal in Illinois, the following provisions:
-Provides $ 3500000000 in bonds for coal and energy projects in a consolidated Illinois Finance Authority
Provides sales and utility tax exemptions for the construction of new power plants started after July 1, 2001
It is the property tax relief up to $ 4,000,000 in 10 years for new power plants and transmission lines
Orders to GovernorEnergy Laboratory to develop clean coal technology to help businesses obtain necessary permits faster and look into the creation of a payment corridor from south to north state
-Requests to start the investigation far more IEPA for SO2, NO2, CO2 and mercury
The Department of Trade and economic opportunities granted the infrastructure of coal through its Office of Coal Development and Marketing (OCDM) is pressed. Increase subsidies for coal infrastructure targetnational and international use of Illinois coal. The Illinois Clean Coal Review Board, Southern Illinois University was founded and initially funded from the sale of nuclear Commonwealth Edison Company, provides grants for innovative technologies, seek to increase the use of Illinois coal.
In Illinois, programs that include a generation IGCC plant could benefit:
Enterprise Zone Program
-Scholarships
Temporary Property TaxRelief
-Tax Increment Financing
Development Corporation loan program
Community Development Assistance
Workforce Development Program
Block Community support program
Linked Deposit Program
-Other
Completion
With the cost of the BTU increasing across the board, including not only natural gas and petroleum, coal, but also a challenge all in the energy sector, which today is a replacement cost of a higher Btufinancing at lower cost and in a position, the cost differential. These banks and financial institutions have for the community believes, That is the spread between the sources enough for the life of the project must be large or Mechanisms in place to protect these investments.
With recent advances in IGCC technology and development, including the ability of these facilities to high-sulfur coal, coal-burning Illinois Basin coal reserves and other high-sulfurduring meet or exceed all environmental requirements, has been a valuable source of energy for gasification. Coupling these advances with the public and government support of technology in the form of loans, grants and tax benefits, the provider combining the turbine with the carburetor in order to wrap the protection and improvement in operations of integrated gasification combined cycle technology is able to resolve the looming domestic energy needs has become the UnitedStates.
These improvements have opened the door for developing new-generation IGCC plants, such as Duke, AEP, Southern Company, Excelsior Energy, Steelhead energy, etc. However, a study of the transmission, fuel, water availability, and how the understanding of context "and" issues is still important to identify and develop attractive locations, is selected as with any power plant. As we have seen, thisThe pieces can fit in many ways, highlighting the existence of a number of interesting places in Illinois coal basin and elsewhere in the region of high-sulfur coal, where there is potential for coal long term contract for coal whose application is not so high that negotiating once. Many believe that the coal in this region one day the center of a vast energy complex in the United States will also increase coal gasification gas projects and converts them into a PQNG,Ultra-clean diesel or other liquid fuels, gasification is closer to commercial reality. Some of these projects are also looking for partners with gasification technologies for renewable energies in order to achieve additional savings and convert the power source to a non-distributable distributable through a combination of technologies.
There is still a premium for the capital cost of gasification. Meanwhile (3-5 years) prior to marketing, operationsImprovements and / or new environmental regulations reduce the price differential vulnerability of the capital cost of gasification compared to other technologies, sources of funding from both state and federal incentives available, combined with long-term contracts with high sulfur content of coal and the use of hedging strategies the path of the first wave will be constructed by gasification. In the near future, these projects can make the activities required for the sale of different products to reachas Enhanced Oil Recovery, sulfur and other chemicals.
Acknowledgements
I would like to thank Steve Shaw, Power Holdings, LLC, and Dennis Corn Company, Eastman Gasification Services for their insights and advice.
Federal Loan Andorra