VENTURE CAPITAL (VC)

VC flows into the coal2oil industry. In Russia, according to The St. Petersburg Times, 10/23/07, "Dutch entrepreneur Roel Pieper, who manages investment company ETIRC, plans to invest more than a $100 million in Irkutsk...to convert coal-to-oil." 

As oil approaches the $125.00 mark (5/17/08), BP is now investing in coal-to-oil (coal2oil) ultra-clean conversion energy in China. "BP could expand petrochemicals joint venture with China's Sinopec By Simon Hall Last Update: 5:19 AM ET Nov 5, 2007Print E-mail Subscribe to RSS Disable Live Quotes BEIJING (MarketWatch) -- China's booming demand for petrochemicals and transport fuels is prompting BP Plc (BP:bp plc sponsored adr News, chart, profile, more Last: 79.48+0.69+0.88% 9:54am 11/06/2007 Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: BP 79.48, +0.69, +0.9%) to look for possible further investments in petrochemicals and refining, as well as opportunities in the coal-to-liquids sector, a senior official with the company said. BP is considering whether to add additional production capacity to a joint ethylene cracker venture it has with China Petroleum & Chemical Corp. (SNP:china pete & chem corp spon adr h shs News, chart, profile, more Last: 141.18+0.57+0.41% 9:53am 11/06/2007 Delayed quote dataAdd to portfolio Analyst Create alertInsider Discuss Financials Sponsored by: SNP 141.18, +0.57, +0.4%) , better known as Sinopec, in Shanghai, and a decision on this could be made in early 2008, John Morgan, BP Group Technology senior vice president, told Dow Jones Newswires. The official strongly denied suggestions that BP may be considering selling its stake in the Shanghai ethylene cracker, known as the Shanghai Secco Petrochemical Co. BP has a 50% stake in the US$2.7 billion venture, which dates back to November 2001, and which has the capability to produce 900,000 metric tons of ethylene a year. "BP and Sinopec are looking seriously at an expansion," although there are "no decisions at the moment. We hope a decision will be taken at the beginning of 2008," Morgan said. A capacity expansion of up to 25-30% might be feasible, he said, although he declined to go into detail. He also expected more investment in China's petrochemicals sector, including Purified Terephthalic Acid, or PTA - a chemical product used in plastics, electronics and construction - in which BP has "very environmentally efficient, competitive, and low-cost technology". Although BP reported falling profits in the third quarter due to lower margins for refining and petrochemical products, at a time of surging oil prices, he believed "prices of oil derivatives will go up over a time, otherwise no one will invest." BP will be very happy to invest in refining in China if the opportunity comes, he said, and added China's economic planning agency, the National Development and Reform Commission "is prepared to allow foreign investment if foreign partners can bring crudes and advanced technologies". He declined to comment on whether BP has been talking with Sinopec and Kuwait Petroleum Corp. on jointly investing in a refining plant in southern Chinese city of Guangzhou. BP is interested in the coal-to-liquids business in China, including methanol, dimethyl ether, or DME, and diesel, but its plans are still at a "very early" stage, Morgan said. Any BP investment in coal-to-liquids is dependent on the Chinese government clarifying the regulations governing the sector, he added. The government is still to take a position on whether to permit methanol or DME produced from coal to be used as transport fuel. There are health concerns about methanol and the potential damage to, or cost of new engines required to use it. "It will be difficult to make investment decisions on coal before the Chinese government makes clear regulations in this area," he said. BP is talking to major Chinese companies, like
Shenhua Group Corp the country's largest coal producer, on coal-to-oil (coal2oil) technology, but no formal partnerships have been formed, he said. Shenhua is now building China's first coal-to-oil (coal2oil)complex in the northern region of Inner Mongolia, which is expected to start production early next year. It is designed to produce around 3 million tons of fuel, mainly diesel. Also, in the northern region of Ningxia, Shenhua is building a methanol plant with annual output capacity of 250,000 tons and a DME plant with an annual capacity of 210,000 tons. Many years ago BP did a study in the U.S. and Germany on using methanol as a transport fuel which showed it could be used safely, although there hasn't been any major development work on methanol-fueled vehicles, he said. "If China chooses to use methanol as vehicle fuel, we are very happy to work with China, both on regulation and technologies," he said. BP has invested around US$4.23 billion in China so far, including a liquefied natural gas terminal in the southern province of Guangdong and development of a natural gas field in South China Sea and its Shanghai petrochemicals venture. "We hope to continue our investment both in existing and potential businesses (in China), including coal, but it depends on opportunities," he said.  

HISTORICAL ANALYSIS

CleanCoal.com.au: Coal to Oil Coal 2 Oil Explained. The lack of stability in the Middle East and demand pressures from India and China has caused dramatic increases in the price of oil which has affected the global economy. However there are alternative resources that can be used for the production of oil – the main ones being black and brown coal. It just so happens that Australia and particularly the Latrobe Valley and Gippsland Basin in Victoria have some 500+ years of low cost, low sulfur, high moisture Brown Coal that is ideal for conversion to quality gasoline, aviation fuel and carbon fibers. The history of ‘coal 2 oil’ is not unlike the VHS v Beta phenomena whereby Beta had the best tape product but marketing and circumstances of the day lead VHS to dominate as the commercial product of choice. In ‘coal 2 oil’ there are two main technologies – 1) Fischer-Tropsch (VHS) & 2) Bergius Hydrogenation (Beta) ECT’s unique de-watering ‘Coldry’ process is applicable to both technologies; however we are proposing to pursue the 2nd and less popular Hydrogenation process which has been developed by the Japanese after many years of testing using Brown Coal from the Latrobe Valley (1988-95). Why are we choosing the less proven process? The reported differences between the processes show that Hydrogenation has a higher yield of petroleum per tonne of coal, lower cost and lower greenhouse output than its Fischer-Tropsch counterpart. Below is an outline of the general processes and the different products produced: Fischer – Tropsch Synthesis (as used by SASOL South Africa) Fischer – Tropsch Natural SynGas (GTL) Fischer – Tropsch BTL (Biomass to Liquid) Fischer – Tropsch CTL (Coal to Liquid) Bergius Hydrogenation Process (Liquefaction Japanese Style) Coal To Liquids (CTL) v Current Crude Oil Refineries CTL Production Costs Latest News - Japan Ready to Move on Coal Liquefaction Fischer – Tropsch Synthesis (as used by SASOL South Africa) This technology evolved in 1925 when Professor Franz Fischer, founding director of the Kaiser-Wilhelm Institute of Coal Research in Germany and his head of department, Dr Hans Tropsch, patented a process to produce liquid hydrocarbons from carbon monoxide gas and hydrogen using metal catalysts. The hydrocarbons synthesized in the process were made primarily of liquid alkenes (paraffin’s). Other by-products were olefins (basis of all poly plastics & fibers), alcohols, and solid paraffin’s (waxes). The required gas mixture of carbon monoxide and hydrogen - the so called synthesis gas - is created through a reaction of coke or coal with steam and oxygen, at temperatures over 900 degrees C. In the past, town gas and gas for lamps were a carbon monoxide-hydrogen mixture, made by gasifying coke in gas works. In the 1970’s it was replaced with imported natural gas (methane). Coal gasification and Fischer-Tropsch hydrocarbon synthesis together bring about a two-stage sequence of reactions which allows the production of liquid fuels like diesel and petrol out of solid combustible black coal. For indirect coal liquefaction, Fischer-Tropsch Synthesis can be used on all types of coal as well as other raw materials which contain coal. Fischer-Tropsch Synthesis took its first serious place in industry in 1935 at Celanese AG chemical company. By the beginning of the 1940s, some 600,000 tonnes of liquid hydrocarbons were produced per year in German facilities, made from coal using Fischer-Tropsch Synthesis. Just prior to WW II Germany licensed the process to four facilities in Japan, as well as a plant in France and in Manchuria. After WW II, the destruction of most of the production plants and competition from Middle East crude oil made petrol production from coal unprofitable. The only new production facilities built were in South Africa in 1950 in Sasolburg (hence the brand name SASOL). These plants were government backed for political reasons (the apartheid era). Currently, the two plants operated by SASOL represent about 28 % of South Africa's diesel and petrol needs, processing some 45 million tonnes of black coal per year. Fischer – Tropsch Natural SynGas (GTL) Syngas can also be created from natural gas and is less costly than making it from coal. Since 1993, Shell in Malaysia (Bintulu) and PetroSA in South Africa (Mossel Bay) have been operating industrial Fischer-Tropsch Synthesis facilities, which produce liquid fuels from syngas (Gas To Liquid, GTL). A third similar plant is being built by SASOL and Qatar Petroleum in Qatar in the Persian Gulf. In 2005, nine more GTL-facilities were being planned world-wide; most of them using Fischer-Tropsch Synthesis. Fischer – Tropsch BTL (Biomass to Liquid) For a number of years German companies have been developing processes to create liquid fuels from biomass (Biomass to Liquid, BTL) the most notable among them being Future Energy GmbH which uses Fischer-Tropsch Synthesis. The syngas is produced from wood, straw, and other raw materials of plant origin. Fischer – Tropsch CTL (Coal to Liquid) Given the quick rise in the price of crude oil which some analysts forecast to hit USD$100 bbl by Xmas 2006 combined with the current Lebanon situation and the dramatic consequences of the last hurricane season for American oil producers and processors - the Bush Administration is rethinking how it deals with its large domestic coal inventory. In 2006 the first US coal-to-diesel production facility is planned in Gilberton, Pennsylvania. It will use indirect coal liquefaction (CTL), via coal gasification and Fischer-Tropsch. China, too, has been investing in CTL technology using indirect Fischer-Tropsch Synthesis / black coal. Significantly in 2002 China began planning a commercial coal liquefaction plant using the Japanese version of the Bergius /coal hydrogenation process in Inner Mongolia with commissioning expected in 2008. Bergius Hydrogenation Process (Liquefaction Japanese Style) The second method (direct coal liquefaction) was invented a few years before Fischer-Tropsch, in 1913 in Hanover by Friedrich Bergius. Coal hydrogenation, aka coal liquefaction, involves converting coal into an oil (like crude oil), that can be processed in refineries to make petrol. The Bergius process, however, works best with Brown Coal and "geologically young" black coal. Coal To Liquids (CTL) v Current Crude Oil Refineries Coal liquefaction, by whichever route, is capital intensive and therefore benefits substantially from economies of scale. Most studies on process economics have assumed that a full-scale commercial plant would produce 50,000 - 100,000 bbl/day of liquid products. Such a plant would process 15,000 - 35,000 tonnes/day of black coal or up to double that amount of brown coal. Such output is still small relative to that from a typical modern crude oil refinery, where throughput in excess of 200,000 bbl/day is common. The economics of CTL depend strongly on coal costs and this coal must be delivered to the plant at a low price – this is the advantage of Victorian brown coals. Since coal is more difficult to transport than oil, it would, as a general principle, be better for CTL to be carried out in the country of origin and preferably close to the resource. CTL Production Costs The use of the Hydrogenation process and low cost brown coal (USD $4/t) and ECT’s front end ‘Coldry’ drying / de-watering process is predicted to achieve a production cost of around USD$25 - $30 per barrel (crude oil equivalent) which is a remarkable improvement over the last couple of decades costs. Production costs for the Fischer-Tropsch process using mainly black coal are purported to be around USD$40+/barrel. Latest News - Japan Ready to Move on Coal Liquefaction The following information comes from NEDOL Japan who did much of this work in the Latrobe Valley, Victoria. Announcement on June 12 in Tokyo advised: “Japan plans to provide Asian nations – particularly China – with the technology to liquefy coal as part of a broader effort to reduce global dependence on crude oil.” Through NEDOL they will join with Chinese companies (including Shenhua) “and plan to have a plant operating by around 2010.” “Construction costs are estimated at 100b Yen (USD877m).” “Japan has also entered into talks with the Indonesian government”… “Japan was also considering operating in India and Mongolia.” 

coal2oil updates

Dr. Carlo Kopp: U.S. Air Force coal2oil program,
and Professor Alan Goldman of
Rutgers:coal-to-oil breakthrough, and Inventor Claims To Have Developed ‘Super Clean’ Coal by Michael Owens Bristol Herald, 6/8/08.