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Can Coal Reinvent Itself? Can it be Economically Converted to Other Fuels?

coalWith the global community turning increasingly to more sustainable fuels, the coal industry is left wondering what it must do to stay alive. One idea that surfaces time-and-again is whether coal can be converted to a transportation fuel or to a synthetic natural gas, which makes it useful and perhaps cleaner. Is this practical today? Is ever this practical?

Today, both oil and natural gas prices are relatively inexpensive. A barrel of oil is less than $50 while the price of natural gas per million Btus is less than $3 now, and not expected to much higher during the winter heating months. So, what’s the point of spending a ton of money on a plant that would take coal and convert it to oil or natural gas? And would that conversion process produce more emissions than if oil or natural gas is burned straight up?

“Coal to synthetic natural gas is dead (for now) and I believe coal to liquids is too expensive to be viable even with crude over $100 a barrel,” says Paul Grimmer, president of Eltron Research in Boulder, Colo., in an earlier talk. 

The start-up costs of a coal to liquids plant is high at about $1 billion. Besides that capital costs, there’s the price of removing all the contaminants from the solid product before it can be gasified and converted to oil. Meantime, the process of turning natural gas into liquids is a possible competitor to turning coal into liquids. And what’s the point of even doing that now that vehicles can be made to run on natural gas. 

Environmental worries are also a part of the equation. While the United States is seeking to limit its foreign oil consumption, it is also trying to cut its carbon emissions. The conversion process whereby coal is transformed into gasoline is a double-whammy: During the alteration, greenhouse gases are produced and then again after the newly-formed gas is burned. And in a typical coal-to-liquids plant, about 40 percent of the energy is lost in the conversion process.

The idea is to take an abundant resource such as coal and gasify it — a process that cleanses it of its impurities. That byproduct can then supplement the use of crude oil, which would lessen the country’s thirst for foreign oil. 

South Africa’s Sasol Co. is the world’s leader when it comes to coal-to-liquids technology. Its plants have been around since 1955 and now produce as much as 150,000 barrels a day of oil from coal. This technology came of age during the Apartheid era when the world had embargoed South Africa and it was forced to come up with new methods to replenish its oil needs. Sasol’s three plants meet 40 percent of the oil demand in the country. Sasol, meantime, licenses its technology to Mossgas, which takes natural gas and turns it into liquids — all as a means to replace crude oil.

To be sure, world oil prices are constantly changing while the technology is expensive and the level of performance unknown. It takes 5-8 years to build a plant. To be practical, the snafus need to be ironed out while the price of oil must remain in the $50-$60 a barrel range during the construction phase if lenders are to get on board.

Beyond that, experts say that the liquid fuel from coal produced using the Fisher-Tropsch process actually results in twice the levels of CO2 than if petroleum is burned by itself. “The impacts that a large coal gasification program could have on global warming pollution, conventional air pollution and environmental damage resulting from the mining, processing and transportation of the coal are substantial,” Antonia Herzog, deputy director of climate and clean air for the Natural Resources Defense Council has said. 

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