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Vol. 15, No. 43 Week of October 24, 2010
Providing coverage of Alaska and northern Canada's oil and gas industry

Tyonek looking at new coal to liquids process for Cook Inlet

Coal-to-liquids for Cook Inlet has been an on-again off-again topic of discussion for some 20 years, but has never happened. Now a new technology could bring synthetic jet fuel production to Southcentral Alaska.

Coal-to-liquids, or CTL, is an approach that Tyonek Native Corp. has been pursuing seriously in recent years because of plentiful coal in Southcentral. Tyonek worked first with Sasol but has recently partnered with a new player, Accelergy, John McClellan told a joint meeting of the Alaska Legislature’s House and Senate Energy committees Oct. 13 in Anchorage.

There is high-quality bituminous coal all around Cook Inlet, McClellan said, but “the highest-value coal happens to lie right around Tyonek’s property” on the west side of Cook Inlet. Tyonek is a surface land owner, he said, with subsurface belonging to Cook Inlet Region Inc., the regional corporation on Tyonek lands.

Partnering with Sasol

Things looked good for CTL in 2008, McClellan said, when Sasol was looking at Alaska as a site for a facility. The U.S. Air Force had said half of its jet fuel needs would be met by CTL products by 2016, and had a contest for a site for a facility the Air Force would finance and build.

He said several states responded to the competition, and while Alaska did not, Tyonek Native Corp. did, meeting with the Air Force at the Pentagon and pitching a Tyonek location as “the most cost-effective coal-to-liquids site in North America,” based on both the fuel source and the plant being at tidewater.

McClellan said things looked pretty good until Congress passed a restriction, cutting the Air Force’s ability to finance projects from 20 years to five years.

Since it couldn’t finance a CTL project, the Air Force started looking for public-private partnerships.

Further congressional restrictions on CTL required that it meet or better the efficiency of a petroleum refining system.

“And that pretty much killed the ability of the Fischer-Tropsch process which Sasol was using” because it couldn’t meet those efficiencies, McClellan said. Sasol turned its back on its U.S. projects, he said, because with so much demand worldwide for Sasol plants the company didn’t need to try to overcome those congressional obstacles.

In search of a partner

In 2009 Tyonek went in search of a new CTL partner, “someone who would be willing to come to west Cook Inlet and start developing our coal-to-liquids plant.”

Mutual friends in Washington, D.C., introduced Tyonek to Accelergy, “and we found that Accelergy had new technology,” McClellan said.

The first step for an Accelergy project is to certify the coals “and one of Tyonek’s prerequisites is that the state participate in that certification,” he said. Tyonek was unable to find state money for the certification, but it eventually realized, McClellan said, that “the Department of Natural Resources would be the real beneficiary of certifying Tyonek coals, because basically all the coal in west Cook Inlet is pretty much owned by the Department of Natural Resources — even if it’s under lease they would benefit by royalties.”

Pennsylvania jumps ahead of Alaska

But in early 2010, the State of Pennsylvania discovered Accelergy and within a few weeks came up with $10 million toward a plant in Pennsylvania. Since then, McClellan said, Accelergy has been putting its time and effort into that project.

On the positive side, Senate Bill 220 created an emerging energy technology fund and that could provide startup funds to certify the coals.

“So that’s where we’re at now,” he told the committees.

Tyonek has an application that it’s prepared to submit under that emerging energy technology fund, McClellan said, noting that the corporation is not changing any administrative fees: “They’ll be a complete pass through to the actual certification process.”

McClellan said Tyonek looks forward to enabling regulations for that technology fund.

The new technology

Rocco Fiato, Accelergy Corp.’s chief technology officer, told legislators that alternative fuel technologies must meet four performance parameters: provide energy security for the United States; use domestic resources sustainably; meet environmental standards; and be economically viable.

What Accelergy is working on, he said, is a new technology based on coal-biomass conversion. The acronym, ICBTL, is a play on “ICBM” because of the Air Force connection — jet fuels from this technology would meet synthetic fuel standards for the military.

Integrated coal-biomass-to-liquids, ICBTL, uses technologies licensed from ExxonMobil and others, such as Raytheon, Fiato said, “so-called indirect conversion and biomass conversion technologies.”

What Accelergy is doing “is integrating those into a novel position platform” to produce gasoline, diesel or jet fuel, and the combined technology’s “unique ability” to produce jet fuel is why Accelergy is interested in Cook Inlet, Fiato said, because more than 65,000 barrels per day of jet fuel is consumed in the Cook Inlet area.

And while Accelergy needs to see evidence of commitment from the State of Alaska, it’s not really after money.

“We’re backed by Goldman Sachs and others; we have lots of money. It’s not a matter of the money; it’s a matter of demonstrating the willingness to support a concept,” he told legislators.

Problems addressed

The problem with biomass on its own is the acreage required: 2.5 million acres of soybeans for an 8,000 barrel-per-day facility; 943,384 acres of corn; 12,264 acres of algae. But a coal-biomass-to-liquids process requires only 4,000 acres; and Accelergy’s integrated process, ICBTL, fewer than 820 acres.

The Accelergy process, he said, uses coal and converts processed CO2 to algae — further converted to fuel and/or synthetic fertilizer. The process has more than 80 percent energy efficiency, Fiato said, requires less than 10 percent of the land area required for biomass, meets greenhouse gas requirements in military fuel specifications and is cost competitive with today’s price of crude oil.

By comparison, Fiato said, current CTL or BTL technologies are relatively expensive; have low thermal efficiency; produce a nonoptimal product mix (a lot of light hydrocarbons); have greenhouse gas emissions above oil-based refining; and the biofuel option requires a large land area to grow the crop.

While ICBTL can achieve 80 percent energy efficiency, in Accelergy’s “fully integrated scheme” the company can achieve over 90 percent effective thermal efficiency, he said.

“Obviously, you can say it’s cheating because we’re using sunlight. But in reality, if you look at the energy content of the feed, over 90 percent is coming out useful product.”

Three-step process

Fiato said Accelergy has a three-step process using micro catalytic liquefaction technology developed at Exxon over a 30-year period. The process takes coal, adds hydrogen, and converts it into cycloparaffinic fuels, along with carbon dioxide.

The CO2 is captured and recycled, with algae going either back for gasification or processed into isoparaffinic fuels.

The cycloparaffins and aromatics from coal, combined with isoparaffins from biomass, provide fit-for-purpose fuels for military and civilian jets.

Compared to the Sasol process, Accelergy’s ICBTL produces more barrels of fuels (4.5 per ton of coal v. 2.5 for Sasol) and less than half a ton of CO2 compared to 1.6 tons of CO2 for Sasol, Fiato said.

The other difference is in the products, with the Accelergy process producing more gasoline, diesel and jet fuel with the CO2 capture, compared to a high greenhouse gas footprint for Sasol and a low yield of gasoline, diesel and jet fuel, he said.

McClellan’s presentation included figures on coal: a measured resource of 1,300 million tons of measured coal resource in the Cook Inlet area (700 million tons of proven reserves at Chuitna, another 1,100 million tons of reserves at Barrick and Skwentna).

“Take the numbers you were told for Tyonek bituminous coal alone and do the math and you’ll understand the strategic significance of this,” Fiato said.

—Kristen Nelson

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