Abstract Process Economics Program Report 271 COAL TO GASOLINE (December 2009)

Abstract Process Economics Program Report 271 COAL TO GASOLINE (December 2009) Rising world oil prices have renewed interest in producing fuel from unconventional sources such as coal, oil shale, and biomass. Large coal reserves and viable technology to produce liquid fuels from coal give promise to the rebirth of a U.S. domestic coal industry. In the long term it makes sense to rigorously pursue the commercial development of coal to liquids (CTL) technologies from the perspective that it may be the only pathway that can deal with the tyranny of large numbers required to close the gap between supply and demand for transportation fuels. The United States has many opportunities including improving energy efficiencies that alone however will not be sufficient. Fiscal and regulatory actions will also be needed to promote greater economic and energy security. CTL must be an important part of the solution portfolio as the nation needs to respond to the realities of world energy markets, including global energy demand and the need to protect the environment. A commercially competitive CTL industry in a high energy price environment could be producing as much as 3 million barrels per day of high quality liquid fuels by 2030. This level of fuels production would provide about 15% of the current oil demand in the U.S. and would provide the means required to break the current national addiction to oil. In this report we examine the technologies involved to produce fuels from coal by two of the most promising routes, including high temperature Fischer-Tropsch (F-T) and methanol to gasoline (MTG. The first F-T route produces a slate of transportation fuels including gasoline, jet fuel, diesel, and fuel oil. The second route produces a 90+% yield of gasoline from methanol, which can be produced either from coal or natural gas. Finally, this report provides a combination of simulated and conceptual designs and economic analysis for the production of F-T liquids using high temperature synthesis technology. The bases for this analysis includes the construction of both demonstration and refinery scale plants that are free-standing. SRI Consulting PEP Report 271

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CONTENTS 1 INTRODUCTION... 1-1 BACKGROUND... 1-1 Coal to Liquids... 1-2 CTL Commercialization Risks... 1-3 CO 2 Storage... 1-3 Indirect Liquefaction Technologies... 1-5 Biomass Gasification... 1-5 CTL Synthesis... 1-6 Fischer-Tropsch Synthesis... 1-7 Methanol to Gasoline... 1-8 Emerging Innovative CTL Technologies... 1-9 Methane Oxidation to Methanol... 1-9 The PWR Compact Gasifier... 1-10 Co-fed Coal/Biomass to Liquids (CBTL)... 1-11 Prospective Carbon Policy Impacts on F-T Liquids Projects.... 1-12 Microchannel Technology for F-T Synthesis... 1-13 Bio-butanol... 1-15 Chemical Looping... 1-15 Hybrid Technologies... 1-16 Direct Coal Liquefaction... 1-16 Commercializing F-T CTL for Fuels Production Only... 1-18 OVERVIEW... 1-19 Feedstock... 1-19 Gasification... 1-21 Fischer-Tropsch Synthesis... 1-21 Product Upgrading (Syncrude Refining)... 1-22 Fuels Specifications... 1-23 SRI Consulting iii PEP Report 271

CONTENTS (Continued) Gasoline... 1-24 International Gasoline Specifications... 1-24 Motor Gasoline Properties... 1-25 Octane Number... 1-25 Volatility... 1-26 Density... 1-26 Oxygenate Content... 1-26 Olefin Content... 1-27 Aromatics Content... 1-27 Sulfur Content... 1-28 Metal Content... 1-28 Oxidation Stability and Gum Formation... 1-29 Future Motor Gasoline Specifications... 1-29 Aviation Turbine Fuel (Jet Fuel)... 1-30 International Specifications... 1-31 Aviation Turbine Fuel Properties... 1-31 Heat of Combustion... 1-31 Density and Viscosity... 1-31 Aromatic Content and Smoke Point... 1-32 Sulfur Content... 1-32 Freezing Point... 1-33 Volatility... 1-33 Thermal Stability... 1-33 Future Aviation Turbine Fuel Specifications... 1-33 Diesel Fuel... 1-34 International Diesel Specifications... 1-34 Diesel Properties... 1-35 Cetane Number... 1-36 Flash Point... 1-36 Density and Viscosity... 1-37 Aromatic Content... 1-37 Sulfur Content... 1-37 SRI Consulting iv PEP Report 271

CONTENTS (Continued) Lubricity... 1-38 Cold Flow Properties... 1-39 Future Diesel... 1-39 2 SUMMARY... 2-1 MARKETS... 2-1 TECHNOLOGY... 2-2 ECONOMICS... 2-2 COST ESTIMATES... 2-7 Fixed Capital Costs... 2-7 Production Costs... 2-7 Profitability Discussion... 2-8 3 INDUSTRY STATUS... 3-1 INTRODUCTION... 3-1 POTENTIAL CTL DEVELOPMENT BENEFITS... 3-1 National Security Benefits... 3-3 Oil Supply Disruption Benefits... 3-3 ENVIRONMENTAL IMPACTS OF COAL TO LIQUIDS PRODUCTION... 3-4 Greenhouse Gas Emissions... 3-4 Air Quality... 3-6 Land Use, Ecological and Water Quality Impacts... 3-6 Coal Mining Impacts... 3-7 Water Requirements... 3-7 INCENTIVES TO ENCOURAGE PRIVATE INVESTMENT... 3-10 FULL SCALE CTL PRODUCTION... 3-11 Technical Viability and Commercial Readiness... 3-12 Timeline for CTL Development... 3-12 SRI Consulting v PEP Report 271

CONTENTS (Continued) 4 TECHNOLOGY REVIEW... 4-1 DIRECT COAL LIQUEFACTION... 4-1 INDIRECT COAL LIQUEFACTION... 4-6 Methanol as a Synthetic Fuel for Transportation... 4-6 Dimethyl Ether (DME) As A Synthetic Fuel... 4-7 FT Synthesis... 4-8 Methanol to Gasoline... 4-12 Long Term Environmental Considerations... 4-15 5 SYNGAS FROM COAL GASIFICATION... 5-1 GASIFICATION PROCESS CHEMISTRY... 5-2 REVIEW OF PROCESS... 5-3 Gasification Pressure... 5-4 Gasifier Fuel... 5-4 Heat Recovery Systems... 5-5 Comparative Features of the Shell and GE Gasifiers... 5-5 PROCESS DESCRIPTION... 5-6 Fuel Feed System... 5-7 Extent of CO 2 Removal... 5-7 Carbonyl Hydrolysis... 5-12 Shift Converter... 5-12 Mercury Removal... 5-12 Acid Gas Removal... 5-13 Sulfur Recovery and Tail Gas Treating... 5-14 BASIS FOR ESTIMATES AND EVALUATION... 5-14 Section 100 - Coal Receiving and Storage... 5-20 Section 200 - Air Separation Plant... 5-21 Section 300 - Coal Preparation and Gasification... 5-21 SRI Consulting vi PEP Report 271

CONTENTS (Continued) Section 400 - Shift, Cooling and Mercury Removal... 5-23 Section 500 - CO 2 Removal and AGR... 5-24 Section 600 - Claus/SCOT... 5-24 Claus Sub-Section... 5-24 SCOT Sub-Section... 5-25 COST ESTIMATES... 5-26 6 HIGH TEMPERATURE FISCHER-TROPSCH SYNTHESIS... 6-1 PROCESS CHEMISTRY... 6-1 CATALYST... 6-5 HIGH-TEMPERATURE REACTORS... 6-7 Operating Conditions... 6-7 FISCHER TROPSCH GAS LOOP... 6-8 Synthesis Gas Composition... 6-8 Fischer-Tropsch Technology Selection and Process Requirements... 6-8 Environmental Aspects... 6-9 Open vs. Closed Loops... 6-10 H 2 /CO ratio and CO Content... 6-10 Methane Content... 6-11 Coal Tar Content... 6-11 Gas Loop Configurations... 6-11 BASES & ASSUMPTIONS FOR PROCESS DESIGN & COST ESTIMATION... 6-14 PROCESS DESCRIPTION... 6-19 Section 700 Fischer-Tropsch Synthesis... 6-19 Cryogenic Requirements of F-T Section... 6-21 Waste Heat Recovery in F-T Section... 6-22 PROCESS DISCUSSION... 6-23 Catalyst & Product Composition... 6-23 SRI Consulting vii PEP Report 271

CONTENTS (Continued) Overall Fuel Conversion Efficiency... 6-23 Wastewater Discharge... 6-23 Main Streams Flow Rates... 6-24 CO 2 Absorption & Syngas Drying... 6-24 Materials of Construction... 6-24 F-T PRODUCTS UPGRADING (SECTION 800)... 6-25 ALKYLATION... 6-26 OLIGOMERIZATION... 6-26 C 3 Oligomerization... 6-27 C 4 Oligomerization... 6-27 ISOMERIZATION... 6-28 Olefin Saturation Section... 6-28 Isomerization Section... 6-28 AROMATIZATION... 6-29 Reforming Section... 6-29 Aromatic Separation Section... 6-30 COST ESTIMATES... 6-39 Fixed-Capital Costs... 6-39 Production Costs... 6-40 7 SYNCRUDE REFINING... 7-1 INTRODUCTION... 7-1 Components of Syncrude... 7-2 Paraffins... 7-2 Mono-olefins... 7-2 Aromatics... 7-2 Oxygenates... 7-2 Alcohols... 7-3 SRI Consulting viii PEP Report 271

CONTENTS (Continued) Aldehydes... 7-3 Carboxylic Acids... 7-3 Esters... 7-3 Ketones... 7-3 Metal Containing Compounds... 7-4 α-values of Commercial Syncrudes... 7-4 Comparison of Crude Oil and Syncrude... 7-4 Conceptual F-T Refinery Designs... 7-5 Process Simulation Packages... 7-5 Custom Software... 7-5 Spreadsheets... 7-5 Potential F-T Refining Technologies... 7-6 Olefin Conversion... 7-7 Double Bond Isomerization... 7-7 Oligomerization... 7-8 Acidic Resin... 7-8 Zeolite... 7-8 Amorphous Silica-alumina (ASA)... 7-9 Solid Phosphoric Acid (SPA)... 7-9 Homogeneous Catalysts... 7-10 Olefin Skeletal Isomerization... 7-10 Pentene Skeletal Isomerization... 7-10 Etherification... 7-11 Aliphatic Alkylation... 7-12 Aromatic Alkylation... 7-12 Hydrogen Addition... 7-12 Hydrotreating... 7-12 Hydroisomerization... 7-13 C 4 Isomerization... 7-13 C 5 /C 6 Isomerization... 7-14 C 7 Isomerization... 7-14 Hydrocracking... 7-14 SRI Consulting ix PEP Report 271

CONTENTS (Continued) Hydrogen Rejection... 7-14 Catalytic Reforming... 7-15 Pt/Al 2 O 3 based Bifunctional Catalysts... 7-15 Pt/L-Zeolite Reforming... 7-15 Aromatization... 7-15 Alcohol Dehydration... 7-16 Environmental Friendliness and Maximum Gasoline Production... 7-16 Achieving Octane Number for HTFT Gasoline... 7-19 Paraffins... 7-19 Aromatics... 7-20 HTFT Olefinic Gasoline... 7-20 HTFT Oxygenated Gasoline... 7-20 Jet Fuel Refining... 7-21 Diesel Fuel Refining... 7-23 R&D Needs... 7-23 Separation and Properties... 7-24 Oxygenate Refining... 7-24 Catalysis of Linear α- Olefin and 1-Alcohol Conversions... 7-24 Metal Carboxylates... 7-24 Feedstock Integration... 7-25 HTFT MOTOR GASOLINE REFINERY... 7-25 Distillate and Residue Fractions... 7-25 HTFT Hydrotreating... 7-27 Diesel Lubricity... 7-30 HTFT Residue Hydrocracking... 7-30 Combined Hydrotreating and Hydrocracking... 7-30 Combined Hydroisomerization and Hydrocracking... 7-32 General Selection of HTFT Process Catalysts... 7-33 Recovery of Oxygenates from Fischer-Tropsch Aqueous Product... 7-35 Chemicals Recovery... 7-36 SRI Consulting x PEP Report 271

CONTENTS (Concluded) Primary Separation Column... 7-37 Carbonyl Recovery... 7-38 Alcohols Recovery... 7-39 Alcohol Dehydration... 7-41 Oxygenate Conversion by Acid Catalysts... 7-42 Benzene and Aromatic Alkylation... 7-43 Alkylation of F-T Syncrude... 7-44 Oligomerization Combined with Alkylation... 7-45 Hydrogenation of Olefins... 7-45 Oligomerization of F-T olefins... 7-46 SPA Oligomerization... 7-47 Pentene Hydroisomerization... 7-49 8 INTEGRATED PRODUCTION OF GASOLINE FROM COAL PROCESS ECONOMICS... 8-1 DESIGN BASES... 8-2 COST ESTIMATES... 8-8 Fixed Capital Costs... 8-8 Production Costs... 8-8 Economics & Profitability Discussion... 8-9 APPENDIX A: PATENT SUMMARY TABLES... A-1 APPENDIX B: DESIGN AND COST BASES... B-1 APPENDIX C: CITED REFERENCES... C-1 APPENDIX D: PATENT REFERENCES BY COMPANY... D-1 APPENDIX E: PROCESS FLOW DIAGRAM... E-1 SRI Consulting xi PEP Report 271

ILLUSTRATIONS 1.1 Indirect Coal Liquefaction Process Steps... 1-19 2.1 Product Value of F-T Fuels Product as a Function of After-Tax ROI... 2-13 2.2 Production Costs Breakdown... 2-14 4.1 Direct Coal Liquefaction... 4-2 4.2 Sasol Advanced Synthol Reactor... 4-9 4.3 Sasol Reactor Product Slates... 4-11 5.1 Shell SCGP Gasification Process... 5-1 5.2 Motor-Gasoline from Coal by High-Temperature Fluidized Bed F-T Tech Process Flow Diagram... E-3 5.3 Raw and Clean Syngas Compositions... 5-7 5.4 Coal Gasification of Syngas Feed to Fischer Tropsch... E-27 6.1 Product Yields from Fischer-Tropsch Synthesis... 6-4 6.2 Product Upgrading Block Flow Diagram... 6-25 6.3 Steam Flow Circuit (F-T Section) Process Flow Diagram... E-9 7.1 HTFT Distillate and Residue Refining Generic Process Flow Schematic... 7-26 7.2 Alternative Combined Hydrotreating/Hydroisomerization Process Flow Schematics... 7-32 7.3 Generalized Design for Defining Important Catalysts for Upgrading Fischer Tropsch Syncrude to Fuel... 7-34 7.4 Simplified Block Flow Diagram for Chemicals Recovery from Reaction Water... 7-36 7.5 Primary Product Separation for Refining Fischer-Tropsch Aqueous Products... 7-37 7.6 Carbonyls Recovery Process Flow Schematic... 7-38 7.7 Alcohols Recovery Process Flow Schematic... 7-40 7.8 Fischer-Tropsch Aqueous Phase Refining by Catalytic Alcohol Dehydration... 7-41 7.9 Solid Phosphoric Acid Catalyzed Combined Oligomerization and Alkylation Process to Produce Jet Fuel... 7-45 7.10 Recycle (Tetramer Mode) Operation for Refinery Scale Distillate Production by Oligomerization of Fischer Tropsch Olefins Over SPA... 7-48 SRI Consulting xii PEP Report 271

ILLUSTRATIONS (Concluded) 7.11 Separate Processing (Split Mode) Operation for Refinery Scale Distillate Production by Oligomerization of Fischer-Tropsch Olefins over SPA... 7-48 7.12 Process for Conversion of C5/C6 Fischer-Tropsch Naphtha to Isomerate over Pt- Mordenite Catalyst... 7-49 8.1 Product Value of F-T Fuels Product as a Function of After-Tax ROI... 8-17 8.2 Production Costs Breakdown... 8-18 SRI Consulting xiii PEP Report 271

TABLES 1.1 Effect of Reaction Temperature on Iron Catalyzed Fischer-Tropsch Synthesis... 1-20 4.1 Comparative Reaction Product Slates of Fischer-Tropsch with MTG... 4-14 5.1 DOE Illinois #6 Coal Composition (Wet, Ash Free)... 5-4 5.2 Comparative Features of Dry and Slurry Feed Gasifiers (Shell and GE)... 5-6 5.3 Design Specification for Gas Clean Up Systems... 5-8 5.4 Motor-Gasoline from Coal by High-Temperature Fixed Fluidized Bed F-T Tech Stream Flows... 5-9 5.5 Process Section... 5-15 5.6 Basis for Estimates and Evaluations Design Basis for Coal to Gasoline Process... 5-17 5.7 Syngas Composition Specifications... 5-20 6.1 Motor-Gasoline from Coal by High-Temperature Fixed Fluidized Bed F-T Tech Design Bases... 6-15 6.2 Processing of F-T Syncrude Fractions... 6-25 6.3 Motor-Gasoline from Coal by High-Temperature Fixed Fluidized Bed F-T Tech Stream Flows... 6-31 6.4 Motor-Gasoline from Coal by High-Temperature Fixed Fluidized Bed F-T Tech Utilities Summary... 6-41 6.5 Motor-Gasoline from Coal by High-Temperature Fixed Fluidized Bed F-T Tech Total Capital Investment... 6-42 6.6 Motor-Gasoline from Coal by High-Temperature Fixed Fluidized Bed F-T Tech Production Costs... 6-43 6.7 Motor-Gasoline from Coal by High-Temperature Fixed Fluidized Bed F-T Tech Major Equipment... 6-45 7.1 Octane Numbers for Some Linear Olefins... 7-7 7.2 Blending Vapor Pressures and Blending Octane Number of Fuel Alcohols and Ethers... 7-11 7.3 Compatibility of Refining Technologies with Fischer-Tropsch Syncrude and Their Overall Environmental Friendliness... 7-17 7.4 Comparison of Straight Run Iron Based HTFT Naphtha to Specifications and Quality Requirements of Euro 4... 7-18 7.5 Compound Physical Properties Relevant to Jet Fuel Requirements... 7-22 SRI Consulting xiv PEP Report 271

TABLES (Concluded) 7.6 Selective Properties of SRAGO HTFT vs. Mixed Arabian Crude... 7-27 7.7 Standard Heats of Reaction for Some Common HTFT Distillate Hydrotreating Reaction... 7-28 7.8 Hydrotreated Distillate... 7-29 7.9 Hydrocracking HTFT Vacuum Gas Oil to Middle Distillate... 7-31 7.10 Oxygenates in the Aqueous Product of Synthol HTFT Synthesis... 7-35 8.1 Motor-Gasoline from Coal by High-Temperature Fluidized Bed F-T Tech Main Design Bases... 8-3 8.2 Motor-Gasoline from Coal by High-Temperature Fluidized Bed F-T Tech Total Capital Investment... 8-10 8.3 Motor-Gasoline from Coal by High-Temperature Fluidized Bed F-T Tech Production Costs... 8-11 8.4 Motor-Gasoline from Coal by High-Temperature Fluidized Bed F-T Tech Production Costs... 8-13 8.5 Motor-Gasoline from Coal by High-Temperature Fluidized Bed F-T Tech Utilities Summary... 8-15 SRI Consulting xv PEP Report 271