Sustaining Coal s Market Presence Through Research, Technology and Infrastructure Investment

Transcription

1 Sustaining Coal s Market Presence Through Research, Technology and Infrastructure Investment RMCMI Regional Meeting Sheridan, WY September 16-17, 2015 UNIVERSITY OF WYOMING CARL O. BAUER MEMBER ENERGY RESOURCE COUNCIL UWY, SCHOOL OF ENERGY RESOURCES CBAUER8@UWYO.EDU 16 th September, 2015

2 OUTLNE OUR PAST PRESENT POSSIBLE PATHS FORWARD

3 Coal, part of Wyoming s economy since Union Pacific. 12,000,000 10,000,000 Wyoming Annual Coal Production World War 1 (1918) Great Depression (1930s) WY Export Era World War 2 (1970 onward) ( ) End Steam Rail Era (1953) Millions short tons 8,000,000 6,000,000 4,000,000 Union Pacific Mines open (1868) Peak of the Rail Era (1910s) WY Power Era (1959 onward) 2,000,000 0

4 Millions short tons National Share Wyoming: King Coal 450, , ,000 Historical Wyoming Coal Production National share now 40% and production level of ~400 mill tons/yr. 40% 35% 30% 300, , , ,000 Timeframe of previous slide 25% 20% 15% 100,000 10% 50,000 5% Production Avg ('000 tons) % of National Total 0%

5 Coal Perspective: Market Challenges Present MOST coal convert electricity & power Value constrained due to market rivalry (nuclear, gas and renewables) Reducing market share in USA Emission control costs increasing with new regulations Natural Gas low prices are having competitive impact CO 2 regulations are largest threat to coal SHORT TERM: Challenging technologically if recently published EPA Clean Power Plan (CPP) becomes reality in current form LONG TERM : Potentially cost prohibitive if anticipated Yr reduction target of 80% is memorialized at 2015 United Nations Climate Change Conference, Paris, Dec 2015

6 How will this impact PRB coal?

7 Total Electrification by 2050 Possible in 35 years? Source: Mark Jacobsen via David Roberts

8 Projection Move to 100% Renewables by 2050 Are the Assumptions Realistic?

9 Annual Wyoming Production (Mill. Short Tons) EIA CPP Base/ Policy Extension Scenario Outcomes for Wyoming Coal compared to Godby et al. (Rhodium-derived) Outcomes AEO2015 Reference Case AEO2014 Reference Godby et al. Reference EIA Base Policy Case EIA Policy Extension Case Godby et al. - National w/ EE Godby et al. - National w/o EE Godby et al. - Regional w/ EE Godby et al. - Regional w/o EE

10 Powder River Basin Coal: Advantages There is an abundant supply Classified as sub-bituminous volatile and organic content high Lowest sulfur & naturally the cleanest coal in the United States High Water content ca 20 to 30% Low concentration of trace elements such as mercury & arsenic when compared to Eastern USA coals Interesting char properties Lower priced coal based on btu value is a better prospect for chemicals production

11 Option 1 Offset Domestic Coal losses by Export Nearest Term Possibility Exports overseas Would require increase from approx. 3 million tons/yr. from WY (PRB incl. MT is 12 million tons/yr.) to over 100 mill. tons/yr. to offset losses Challenges: Environmental opposition Falling coal prices in Asia New Asian import tariffs/local free trade agreements Financing: bearish financial sentiment for projects? International carbon regulation/commitments and actions.

12 Potential Impact of Greater Coal Exports: Assume exports continue through Canada million tons new exports annually. Proposed Millennium Bulk and Gateway Pacific Terminal Projects ~ 100 million ton expansion in export potential by the end of the decade. Estimated economic benefit of an additional 100 million tons of Wyoming Coal Exports Increase in Gross State Product: Over $1.2 billion annually. Increase in State Jobs: Over 4,000 new jobs. Increase in State Labor Income: Over $345 million annually. Increase in State Revenue Over $230 million annually. These impacts are for the Powder River Basin Region only. Statewide impact would be larger, but most impact occurs in PRB. Compare to exports of approx. 3 million tons today.

13 Option 2 Develop Carbon Capture and use or sequestration (CCUS) Commercial Possibility in next decade Necessary for longer term continued use of Coal to Electricity Present technologies scale and economics are challenging EOR not possible everywhere and not permanent. Develop other uses for CO2 is just beginning Wyoming Integrated Carbon Capture Test Center. Efforts underway in Wyoming, Nationally and Internationally

14 Option 3 Develop New ways convert Coal Produce High value Carbon Products and Chemicals 15+ years to first commercial units Present Coal Conversion processes developed without CO2, other emissions and Water utilization were not a constraints Conduct the research to develop the technology that meets the demands for and the constraints on the full utilization of Coal.

15 Coal Perspective: New Market Opportunities FUTURE POSSIBILITY Use coal as source for manufacturing non-metals and chemicals Captures value beyond coal s btu value Turns CO 2 into products or does not make it in the first place Coal to chemicals plants are being built or planned in: China Germany India Demand for carbon based materials is rising Light-weighting Substitution for metals Superior functional performance of carbon materials over metals Growth in industrial and chemicals and solvents is rising

16 Integrated Coal to Chemical Processing The first oil refining process was invented to derive oil from coal more than 150 years ago - before Edwin L. Drake touched off a boom with his discovery of oil in Pennsylvania."

17 The Coal Refinery Adding Premium Value Beyond Its BTU Worth Current Product Slate Petroleum Refinery (Hydrogen Addition) Petrochemicals Olefins Acetyls Alcohols Aromatics Asphalt New Carbon Engineering Solutions Three Year Range: $80 to $110 per bbl Current Price = $62 per bbl. ($476/ton) Common Product Families Gasoline Diesel Naptha Aromatics Base Oil & Lubes Potential Product Slate PRB Coal Coal Refinery (Carbon Engineering) New Carbon Conversion Solutions Coal chemicals Pitch Activated Carbon Carbon Composites Aerogels Graphene Petrochemicals Acetyls Alcohols Aromatics Asphalt Carbon Fiber Carboxylates Needle Coke Three Year Range: $10 to $12 per ton Current Price = $11.55 per ton

18 China Pipeline of Coal-to-Chemicals Projects The Need for Chemicals in China continues to Grow

19 China s Biggest Challenge - Water Total installed capacity expansion has been aggressive in water scarce regions China plans to add 1.2TW of Power by 2030 most in thermal (coal, gas & nuclear) together with hydropower Majority of China s Proposed Coal-Fired Power Plants Located in Water-Stressed Regions Without upfront action, future Chinese thermal generation capacity could be left stranded.

20 Carbon Engineering Approach Coal Feed Refinery Compelling Requirements Maximize Yield of carbon-based intermediates & finished products Product slate worth is >> coal btu value Full conversion of primary (PRB) coal feed Include other feeds - /gas/lng/shale oil/biomass feeds only to support this prerequisite Deliberate H 2 recovery & reuse from coal Extraction & complete process use of water extracted from coal Zero or minimal pure stream CO 2 emissions Optimal energy consumption exothermic rather than endothermic processing Zero effluent discharge & water consumption neutrality

21 Magnitude of value in a coal refinery On average 1 ton of coal contains about 21 gigajoules of energy. Assuming full-conversion, 1 ton of coal could make 159 gallons of gasoline A 100,000 crude oil bbl/day full conversion integrated (fuel & chemicals) refinery manufactures 586,200 Giga-joules of product On an equivalent basis this equates to 28,000 tons of coal

22 The Coal Refinery Premium Value Beyond Btu Value Aspirational Outcomes Develop a sustainable value stream of carbon-based products, leveraging competitive advantages of coal in the state. Penetrate new (carbon product) markets, complementing existing power & energy Potential for new industrial base in Wyoming separate from or adjacent to coal mines or coal fired generation Provides export opportunity for made-in-wyoming valuable chemical products to established & emerging National & International markets.

23 The Coal Refinery Next 2 Years (Appraisal & Evaluation) In Progress Stoichiometric determination possible products Wyoming Powder River Basin (PRB) coal Establish techno-economic viability of coal refinery potential products Coming Year Define the decomposition properties Wyoming coal; Clarify competitive advantage Understand (carbon) product market targets suited to coal Conversion Scope coal conversion and transformation research projects to meet targets Longer View Craft compelling WY business model and attract investors to coal refinery development.

24 Thank You For further discussion on Coal Refinery Development Please contact Richard A. Horner: