Troubled Coal Policies

Guest essay by David Archibald

The last remaining credible mainstream media organisation is the Wall Street Journal.

But when an article in the WSJ begins by calling carbon dioxide “a dangerous greenhouse gas”, alarm bells go off because you know the writer is trying to conjure up a fantasy world for some nefarious purpose. What the article is about is the Kemper power plant in Mississippi owned by Southern Company

Kemper was conceived during the time of clean coal thought. So it designed to capture two thirds of the carbon dioxide produced and sell that gas to oil companies for tertiary recovery on oil fields. The carbon dioxide dissolves in the oil and lowers its viscosity. The viscosity contrast between the oil and the connate water is then reduced and more oil is recovered.

Any power station could do this. It would just take a lot of money and one third of the power station’s electrical output. And then finding some place to inject the gas which is probably the hardest bit of all. Instead of being simple and expensive, the Kemper plant was designed to be convoluted and expensive. The process at Kemper starts with lignite being burnt in pure oxygen in a gasifier to produce a mixture of mainly carbon monoxide, hydrogen, carbon dioxide and water. The syngas so produced is then cooled to allow removal of the carbon dioxide. Then it is put through a gas turbine to produce power. There are a lot of thermal inefficiencies in the process and power is consumed to make the liquid oxygen needed for the gasifier.

The Kemper plant was supposed to cost $2.9 billion. It ended up costing $6.9 billion and is two years behind schedule. The best thing to do with the Kemper plant would be to shut the front end gasifiers and run the turbines on natural gas. That way something would be salvaged from the mass of pipework that has been erected.

The Southern Company chose poorly in building a plant as a temple for global warming believers and should not escape the consequences of their moral hazard. The WSJ article is an attempt to obtain more tax credits for selling carbon dioxide to the oil industry. There will be a time for using carbon dioxide stripped from syngas to enhance oil recovery; it is not yet.

Federal interference in market forces in the gasification of coal has a bad history. To put that into context, let’s go back to the beginning. Before electrification took off, there were thousands of gasifiers around the country producing a low heating value gas which was reticulated to households, which used it for cooking. Thus the popularity of suiciding by sticking your head in an oven – the carbon monoxide was quick and painless.

The first piece of bad Federal legislation on natural gas was the Natural Gas Act of 1938 on the pricing of interstate trade in gas. The effect of that act was that the intra-state gas price in Texas, for example, was a lot higher than the price it could be sold at across the state’s border. Oilmen didn’t go looking for gas and it was thought there was a shortage of it.

As a consequence, when the Second Oil Shock came along in 1980, the first synfuels plant was dedicated to making synthetic natural gas instead of diesel and jet fuel. This is the Great Plains Synfuels Plant in Beulah, North Dakota that was completed in 1984. It is now known as Dakota Gasification Company. At the time it was completed, natural gas sold at the heating value equivalent of No. 2 fuel oil and most consumers could switch between the two. Then the shale gale came along last decade and the price of natural gas fell to a fraction of the oil price. The energy equivalent of a barrel of oil is 6,000 cubic feet of gas. So the current Henry Hub price of $3.54 per mcf equates to $21.24 per bbl of oil in energy equivalent terms. This is a bargain and that is causing trouble for our coal mining friends. So the Beulah plant has been reconfigured to make nitrogenous fertiliser from its syngas stream. The capital cost of making urea from coal is twice that of making it from natural gas, as you would expect.

The gasification process used at Beulah is the rotating grate gasifier developed by Lurgi in the 1930s. This technology was the basis of the South African synfuels industry developed during apartheid. The Kemper plant uses KBR’s Transport Integrated Gasification (TRIG) process which is a circulating fluidised bed technology. The best technology for lignite gasificiation is likely to be Thyssen-Krupp’s High Temperature Winkler (HTW) process, also a circulating fluidised bed technology.

So the last two big gasification plants in the United States were badly configured due misconceptions at the Federal level. Despite that bad start, there is a role for the Federal Government in liquid fuels but it is in getting nuclear technology right first. To put that into context, let’s start by describing what is going to happen from here.

The US will run out of oil before it runs out of coal. The cheapest way to make liquid hydrocarbon fuels will then be to convert coal by a gasification process. We will then start running out of coal twice as fast as we are now. The 200 years of coal reserves that are said to exist will become 100 years of coal reserves. Some being born today will see the end of coal and the end of coal is never a good thing.

As the oil price continues to rise, less of the energy in the coal will be used in the conversion process. At the moment, coal is burnt in pure oxygen to provide the energy for the whole process and generate syngas. The syngas doesn’t have the optimum ratio of carbon monoxide to hydrogen for the next stage of the process so some of it is burnt in the water shift reaction to increase the hydrogen content. With energy at right price from nuclear power, this will be displaced by hydrogen produced by electrolysis of water. Three cents per kWh for power should produce hydrogen at $60 per barrel in energy equivalent terms. At some point, in the combination of oil price and process yield, it will be more efficient to dispense with the gasification stage and instead directly liquefy coal in the presence of high temperature/high pressure hydrogen. This is the Bergius process which forces hydrogen atoms into the coal molecules.

The Canadian tar sands industry would be a good candidate for the application of nuclear power to extend humanity’s resource endowment. Production of a barrel of bitumen requires the energy from burning natural gas equivalent to one fifth of a barrel of oil. At that rate, production of the 180 billion barrels of the Canadian tar sands reserves will use the energy equivalent of 36 billion barrels of oil. Nuclear power could provide steam and hydrogen for that process and save that natural gas for other purposes. Applying nuclear power to the Canadian tar sands industry would effectively create 36 billion barrels of fossil fuels.

And there is another 34 billion barrels of oil to be had. For each ten barrels of synthetic fuels produced from coal, enough carbon dioxide is generated to recover one barrel of oil from depleted oil fields by enhanced oil recovery.

It follows that if we are going to need coal for conversion to liquid fuels then the more we leave for that purpose, the better. The motto is “Conserve to convert”. This does not involve interfering with the market’s price signals. Simply commercialise the thorium molten salt reactor as soon as possible and let nature take its course.

When the coal is all gone, we will scrape up carbon wherever we can find it and combine it with hydrogen produced from electrolysis of water with nuclear energy as the power source. The molecule we will most likely produce as the energy carrier will be dimethyl ether (DME) which will handle like propane and have a similar energy density.

Right at this moment, giving Southern Company the tax breaks they seek would send the wrong signal with respect to moral hazard. Don’t do it.

David Archibald’s next book is American Gripen: The Solution To The F-35 Nightmare.