This report is an update of EPRI TR-1004066 ("Assessment of Technical Innovations for the Co-Production of Transportation Fuels and Electricity", August 2001). The need for this update became evident as a result of technology, economic and market developments over the past five years. A key driver has been the escalation of natural gas prices, which results in increased competitiveness of coal-fired plant options.
The objective of this report is to inform the decision making process when considering various power plant and/or co-production plant options. The level of accuracy of the data contained herein is such that certain options may be eliminated during the early stages of project conception, though definitive conclusions regarding the competitiveness of the remaining options will require further study.
The main challenge associated with the development of this report is the rapidly and continuously changing market for power and co-production plants. Given increases in raw material, labor and engineering costs along with a significant impact of supply/demand and project-specific/owner-specific costs related to site conditions, performance and cost guarantees, etc., the accuracy of the data in this report is in question, though the relative cost comparisons should hold regardless of scale.
A contractor, SFA Pacific, Inc., was selected for their experience in the industry. They have produced several comparable products in the past for EPRI and other organizations. The single page spreadsheet calculation method is viewed as a good tool for producing quick, screening-level performance and cost comparisons. EPRI provided guidance to SFA over the course of the project to ensure that the latest industry information is reflected in the report.
The report serves two functions. The first function is to provide a snapshot of the current state of the industry as it pertains to co-production of fuels and electricity. The second is to provide a series of screening-level performance and cost estimates of various plant options based on recent economic trends.
Application, Value and Use
Projects currently in development in the Middle East for Fischer-Tropsch diesel fuel development along with projects such as the one announced by BP in Carson City, CA for co-production of power, hydrogen for refinery use and carbon dioxide for enhanced oil recovery, should result in significant enhancement of the knowledgebase on which future projects are built. Periodically revisiting the plant costs will allow users of this report to stay up-to-date on the most recent trends in the industry.
The report presented here was developed during 2006, a year in which many projects were announced while the cost estimates for those projects rose rapidly. Engineering companies most capable of providing good, detailed performance and cost estimates for power, hydrogen, substitute natural gas (SNG) and Fischer-Tropsch diesel fuel from coal, petroleum coke, natural gas, or water are over-booked with work. As such, there was a dearth of reliable cost information in the public domain that could be used to set expectations of plant costs. This resulted in the use of many project cost estimates developed in the 2003 time frame (accounting for escalation over the following years, as published in the Chemical Engineering Plant Cost Index).
Impacts of vendor-EPC alliances, supply and demand impacts, and project specific pricing may be neglected in those cost estimates, which creates a gap in costs expected by the public and those being reported to utilities engaged in FEED studies. The increased crude oil prices have also spurred a renewed interest in the production of Fischer-Tropsch diesel from low cost remote gas and via coal gasification. Other examples of governmental interest include the Air Force and their potential use of F-T for their secure and reproducible jet fuel supplies and the interest of Congress in putting forward several bills to provide incentives for CTL plants in the US and to extend a 50¢/gal fuel tax credit for such fuels.
Given the difficulty of obtaining reliable and complete cost estimates from industry at present, the EPRI-SFA Pacific team decided to rely on best available information for generation of screening level cost estimates presented in this study. The focus should be on the relative differences in the cost estimates based on their various assumptions, rather than the specific cost data.
There are currently several SNG projects in various stages of development in the US, most of which are located in the mid-western part of the county and produce power in addition to SNG. One such project is the Indiana Gasification LLC project announced in October of 2006, which plans to produce 40 billion scf/year of SNG at a projected price of ~$6/MMBtu. Federal loan guarantees and letters of intent for 30 year supply contracts may increase the likelihood of project execution.
There have been other recent studies that have looked at the business case for coal-to-liquids plants that produce Fischer-Tropsch diesel fuel. One was done by the Southern States Energy Board in July 2006 and is titled "American Energy Security". Sixteen configurations were considered for bituminous, sub-bituminous, lignite coal and biomass at 10,000, 30,000, and 60,000 bpd plant sizes. Recycle and once-through reactor designs were considered, though the once-through configurations might be considered IGCC co-production plants since there is significant export power produced. Figures 1-3 show results of that study for bituminous ($36/ton in single stage slurry-fed water quench gasifier), sub-bituminous ($11/ton in single stage dry coal-fed water quench gasifier) and lignite ($10/ton in single stage dry coal-fed water quench gasifier) coals.