Q&A (Updated as of 6 December 2007)

Q&A will be regularly updated. Please do not hesitate to ask questions at :
wctl2008info@mci-group.com

A1 - What are the reasons of the growing interest on CTL worldwide?

A2 - Is CTL commercially operated today?

A3 - What is the amount of the total world reserves of oil, gas and coal?

A4 - Where are the reserves of oil, gas and coal located?

A5 - Worldwide, where are CTL projects developing?

A6 - Why are not there more CTL plants in operation, while crude oil price is skyrocketing?

B1 - What are the economics of CTL?

B2 - What is the investment cost of a CTL plant?

B3 - What is the technology to produce CTL?

C1 - What is the environmental footprint of CTL?

C2 - What is the Well to Wheels analysis?

 

A1 - What are the reasons of the growing interest on CTL worldwide?

Energy has become a very sensitive subject, with several interconnected features including:

• the skyrocketing price of crude oil and its volatility;
• the growing energy needs of developing countries;
• geopolitical uncertainties in several parts of the world, particularly in some oil producing countries;
• the location of coal reserves in countries with high energy needs;
• several alerts on the decreasing reserves of oil, while coal reserves are abundant.

This subject will be addressed in session 1 of the Conference.

 

A2 - Is CTL commercially operated today?

Today, CTL is only operated by Sasol in South Africa, where Coal-To-Liquids covers around 30% of the needs of liquid fuels and petrochemicals.

China Shenhua will start a 20,000 barrels per day unit in the beginning of 2008.

More than 30 projects exist in the world, generally at a feasibility study stage.

Speakers of both Sasol and China Shenhua will present papers on this subject at the Conference.

 

A3 - What is the amount of the total world reserves of oil, gas and coal?

According to the 2006 BP statistics published in 2007, worldwide fossil energy reserves represent:

• 41 years of oil consumption;
• 63 years of gas consumption;
• 147 years of coal consumption.

These figures simply result from the division of proved reserves as of December 31, 2006 by the 2006 consumption.

 

A4 - Where are the reserves of oil, gas and coal located?

According to the BP 2006 statistics published in 2007,

• The oil reserves are mostly located in the Middle East and to a lesser degree in Russia, Venezuela, Kazakhstan, Libya and Nigeria, which collectively account for 84% of the world reserves;
• The gas reserves are mostly located in the Middle East and Russia, which collectively account for 70% of the world reserves;
• The coal reserves are mostly located in the USA, Russia, China, India, Australia and South Africa which collectively account for 81% of the world reserves.

A5 - Worldwide, where are CTL projects developing

Around fifteen projects are located in the USA, a few of them are at the design stage.

Around ten are in China, with one plant to be commissioned in the beginning of 2008.

Other projects exist in a number of other countries including South Africa, Australia, India, New Zealand, the Philippines and Indonesia.

 

A6 - Why are not there more CTL plants in operation, while crude oil price is skyrocketing?

The instant price of crude oil is one of the important parameters.

However, the lead time (time between decision and the plant start-up) of such projects is more than five years. Given that capital expenditure accounts for several billion dollars or euros, investment decisions can only be taken after serious consideration.

Environmental issues, greenhouse gas emissions in particular, are considered important by the community, with various consequences on the feasibility and the economics of CTL plants.

Other parameters in CTL investment decisions include:

- the volatility of crude oil price;
- the level and volatility of coal market price;
- the availability of coal and the sensitivity of the CTL process to the variety of coals to be used as feedstock;
- the incertitude on fiscal policies;
- the environmental regulations and their evolution (mainly on CO2 production);
- the commercial experience in the industry, today limited to the one of Sasol.

 

B1 - What are the economics of CTL?

Economics depend on the production costs and revenues from CTL outputs. Costs vary with several parameters such as construction costs and the price of coal, as well as local specificities.

Revenues depend mainly on the price of crude oil, from which are produced comparable products.

The cost of Carbon Capture and Storage will also impact the economics of CTL.

The notion of “crude barrel equivalent price” is commonly used to measure the competitiveness of CTL with crude oil for producing given outputs. Litterature mentions “crude barrel equivalent prices” varying from $25/bbl to $80/bbl. A recent article in the Wall Street Journal (4 January, 2008) mentioned $45/bbl.

Economics will be addressed globally in session 1 and more specifically in session 2 of the Conference

 

B2 - What is the investment cost of a CTL plant?

Capital expenditure amounts to several billion dollars for a 20 000 barril per day plant. The greater the capacity, the lower the cost per unit produced.

The US Department of Energy quoted estimates of invetsment costs from $70,000 to $90,000 per bpd if the capacity is in the range of 50,000 bpd (March, 2007).

 

B3 - What is the technology to produce CTL?

Two main technologies are proposed commercially:

• The “Indirect Coal Liquefaction” route: coal is first gasified to a synthetic gas (mainly carbon monoxide and hydrogen); this gas, after purification, is converted to liquid products under a “Fisher-Tropsch” catalytic process;

• The “Direct Coal Liquefaction” route: pulverized coal is dissolved in a slurry coming out of a recycled process, and, together with the addition of hydrogen, produces liquid products.

More about technologies during session 2 of the Conference.

 

C1 - What is the environmental footprint of CTL?

CTL is a process industry with similarities to refining. As such, effluents and wastes need to be carefully handled.

Focus is mostly on CO2 emissions, CO2 being one of the most important greenhouse gases (GHG).

On another hand, liquid fuels produced by CTL contain less impurities than conventional fuels, which reduces pollutant emissions where the fuels are consumed.

Multiple analyses have been made on the emission quantities, their potential reduction, CCS (Carbon Capture and Storage), the use of biomass as a complement to coal.

These analyses will be detailed during session 3 of the Conference.

 

C2 - What is the Well to Wheels analysis?

For a given energy source, the Well to Wheels analysis corresponds to the calculation of the total environmental footprint, from primary energy extraction up to the final use by the consumer. This total footprint can then be compared to total footprint from other energy sources in a meaningful way.

This analysis will be detailed during session 3 of the Conference.

 

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