Fischer-Tropsch Fuels from Coal, Natural Gas, and Biomass: Background and Policy

Order Code RL34133

Fischer-Tropsch Fuels from Coal, Natural Gas,

and Biomass: Background and Policy

Updated March 27, 2008

Anthony Andrews

Specialist in Energy and Energy Infrastructure Policy

Resources, Science, and Industry Division

Jeffrey Logan

Specialist in Energy Policy

Resources, Science, and Industry Division

Fischer-Tropsch Fuels from Coal, Natural Gas, and

Biomass: Background and Policy

Summary

As the price of crude oil sets a record high, liquid transportation fuels

synthesized from coal, natural gas, and biomass are proposed as one solution to

reducing dependency on imported petroleum and strained refinery capacity. The

technology to do so developed from processes that directly and indirectly convert

coal into liquid fuel. Congress now faces decisions on whether, and to what extent,

it should support such a solution.

Lacking domestic petroleum resources, but abundant in coal, Germany built

synthetic fuel plants during World War II that employed the Bergius coal

hydrogenation process (direct liquefaction), and Fischer-Tropsch synthesis (indirect).

The United States attempted to capitalize on the German experience after World War

II. Despite considerable investment in synthetic fuel research and development, the

United States cut support for commercialization when crude oil prices dropped and

supplies stabilized in the mid-1980s. Since then, several synthetic fuels plants have

been constructed around the world that convert coal, natural gas, or biomass to liquid

fuels using the Fischer-Tropsch process. Several private ventures in the United

States are now studying the feasibility of constructing Fischer-Tropsch synthetic fuel

plants based on coal, natural gas, and biomass.

Proposals to expand the use of coal to synthesize transportation fuels have

generated much opposition, particularly because the carbon dioxide (CO2) produced

in the Fischer-Tropsch process is a greenhouse gas associated with global warming.

Also, opponents claim that coal-based synthesis, in particular, is inefficient and thus

prohibitively expensive. Proponents counter that Fischer-Tropsch technology

provides a means of capturing carbon dioxide for geological sequestration (though

a promising solution, sequestration remains unproven on an industrial scale) and that

it appears economically viable in a sustained crude oil price range above $40 to $45

per barrel.

Fischer-Tropsch synthesis is well suited to producing middle-distillate range

fuels like diesel and jet. The diesel produced is superior to conventionally refined

diesel in terms of higher cetane-number and low sulfur content. Overall, middle

distillate fuels represent roughly a quarter of U.S. refinery production, which is

primarily driven by the demand for gasoline. In order for a synthetic fuels industry

(whether coal, natural gas, or biomass based) to begin rivaling or even supplanting

conventional petroleum refining, a major shift in transportation mode toward diesel

engine light-passenger vehicles would have to occur. Coal-to-liquids would also

compete for the same resources needed for electric power generation, and the rail

capacity currently supporting their demand.

Recent energy legislation promotes research on capturing and storing

greenhouse gas emissions and improving vehicle fuel efficiency, among other goals.

Fisher-Tropsch fuels present the paradox of high carbon emissions associated with

production versus lower carbon emissions associated with their use.

Contents

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

Synthetic Fuel Technology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Bergius Direct Liquefaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Fischer-Tropsch Synthesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Comparing Fischer-Tropsch Products to Conventional Petroleum

Distillates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Octane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Cetane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Sulfur . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Exhaust Emissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Synthetic Fuel Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Germany’s Synthetic Fuel Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

U.S. Synthetic Fuel Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Sasol Coal-to-Liquids Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Shell Bintulu Gas-to-Liquids Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Oryx Gas-to-Liquids Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Syntroleum Catoosa Demonstration Facility . . . . . . . . . . . . . . . . . . . . . . . . 12

U.S. Air Force Coal-to-Liquids Initiative . . . . . . . . . . . . . . . . . . . . . . . . . . 12

China’s Coal-to-Liquids Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Choren Industries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

National Energy Technology Laboratory Study . . . . . . . . . . . . . . . . . . . . . . 15

Baard Energy Coal-to-Liquids Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Comparing Efficiencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Greenhouse Gas — CO2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Policy History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Authorizations Under the Energy Policy Act . . . . . . . . . . . . . . . . . . . . . . . . 21

Additional Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Defense Related Authorizations and Appropriations . . . . . . . . . . . . . . . . . . 23

Bills Introduced in the 110th Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Additional Tax Incentives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Policy Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

List of Figures

Figure 1. Fischer-Tropsch Synthesis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Figure 2. Conceptual Fischer-Tropsch Plant . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Figure 3. Iso-octane vs N-octane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Figure 4. Greenhouse Gas Impacts of Expanded Renewable and Alternative Fuels

Use. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

List of Tables

Table 1. Comparative Merits and Drawbacks of Fischer-Tropsch . . . . . . . . . . . . 2

Table 2. Comparative Efficiencies of Processes Converting Coal, Gas, and

Biomass to Liquid Fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Table 3. DOD Synthetic Fuel Projects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Table A1. Energy Consumed by Refining in 2005 . . . . . . . . . . . . . . . . . . . . . . . 30

Fischer-Tropsch Fuels from Coal, Natural

Gas, and Biomass: Background and Policy

Introduction

Record high crude oil and diesel fuel prices, as well as strained refining

capacity, continue to stimulate congressional and private sector interest in producing

synthetic fuels from alternative resources. Current conditions almost reprise the era

of the 1970s, when energy security concerns generated by oil embargoes stimulated

federal spending in synthetic fuels. Despite considerable investment, federal support

was withdrawn after supply concerns eased in the 1980s. The currently favored

approach to producing synthetic fuels — the Fischer-Tropsch process — uses carbon

monoxide and hydrogen from combustion of fossil or organically derived feedstocks.

The process and has been commercially demonstrated internationally and in pilot

plant demonstration in the United States. Jet fuel from a gas-to-liquids pilot plant

has already been certified for use by the United States Air Force, at least one coal-toliquids enterprise is in the planning phase, and others are being studied.

As an abundant resource in the United States, coal has long been exploited as

a solid fossil fuel. As oil and natural gas supplanted coal throughout the last two

centuries, technologies developed to convert coal into other fuels. Proponents of

expanding the use of coal, such as the Coal-to-Liquids Coalition, argue that the

United States should alleviate its dependence on imported petroleum and strained

refinery capacity by converting coal to transportation fuels. Opponents, such as the

Natural Resource Defense Council, argue that “considerable economic, social, and

environmental drawbacks of coal-derived oil preclude it from being a sound option

to move America beyond oil.”1

Fischer-Tropsch synthesis, particularly coal based, poses several challenges. It

is criticized as inefficient and thus costly. The byproduct of synthesis is carbon

dioxide, a greenhouse gas associated with global warming. The use of coal and

natural gas as feedstocks would compete with electric power generation — over 50%

of domestic electricity generation is coal based — and gas is widely used as fuel for

peak generating plants and domestic heating. The fuels produced, primarily diesel

and jet, would not substitute widely for the preferred transportation fuel in the United

States — gasoline. Similarly, using biomass as feedstock would compete with

cellulosic ethanol production, as it is now envisioned.

Some of Fischer-Tropsch technology’s comparative merits and drawbacks are

presented in Table 1.

1

NRDC, Why Liquid Coal Is Not a Viable Option to Move America Beyond Oil, February

2007 [http://www.nrdc.org/globalwarming/solutions].

CRS-2

Table 1. Comparative Merits and Drawbacks of Fischer-Tropsch

Abundant coal reserves available as

feedstock.

ø

Competition for coal in electric power

generation.

Coal-to-liquids generates significant

CO2.

ø

CO2 separation during synthesis gas

production makes capture feasible.

Produces ultra-low sulfur, high cetane

diesel.

ø

Produces low-octane gasoline.

Low efficiency in converting coal to

liquid.

ø

Waste heat available for electricity cogeneration.

May have lower operating expenses

than direct coal liquefaction.

ø

Conceptually more complex than

direct liquefaction approach and higher

in capital investment cost.

Deep geologic sequestration offers

solution for CO2 emissions.

ø

CO2 sequestration not yet

demonstrated on a large industrial

scale.

Gas-to-liquids offers reduced CO2

generation.

ø

Competition with domestic natural gas

use.

Biomass-to-liquids offers zero carbon

footprint.

ø

Competition with biomass for

cellulosic ethanol production.

This report begins with a review of the synthetic fuels technology, which

evolved from direct and indirect conversion of coal to liquid fuels. Attention is given

to Fischer-Tropsch synthesis, as this represents the currently favored and

commercially demonstrated technology. Past and currently operating synthetic fuel

plants are described with comparisons of their relative efficiency. Finally, policy

history and policy considerations are presented, along with bills recently introduced

in Congress pertaining to coal-to-liquids research and industrial development.

Synthetic Fuel Technology

Synthetic fuels can be traced to the mid-19th century processes of making coal

oil, coal gas, and the later manufacture of town gas. Coal oil was introduced as a

substitute for more costly illuminating fuels, particularly premium whale oil.

Originally sold under the trade name of kerosene, coal oil was in turn replaced by a

similarly named, but cleaner burning, crude oil distillate. Coal gas also served as an

early illuminating fuel, but burned with a yellow flame of poor quality. A process for

improving coal gas was devised by passing it over a water bath. This was improved

on further by passing steam through incandescent beds of charred coal (coke) to

produce “water gas,” a mixture of carbon monoxide (CO) and hydrogen (H2) gases.

Water gas, more commonly known as “town gas,” produced a hotter, cleaner burning

blue flame than coal gas. Town gas illumination eventually gave way to electric

lighting, but it continued as an industrial heating fuel into the 1950s, when natural

gas became more widely available.

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Petroleum was considered a scarce commodity in the early 20th century, more

suited to making illuminating fuel. Gasoline was considered too volatile a petroleum

distillate and did not find widespread use until transportation modes shifted from

horse and buggy to the automobile. With the growth of the automobile and aircraft

industries, the demand for gasoline and thus petroleum increased. In Germany,

researchers looked to coal for a petroleum substitute. The carbon monoxide and

hydrogen produced in manufacturing town gas provided an essential first step in

synthesizing liquid fuel from coal. The two processes developed, direct and indirect

coal-to-liquids conversion, provided complementary means of producing a range of

fuels and chemicals. Each offered advantages and disadvantages.

Bergius Direct Liquefaction

In the early 20th century, German researcher Friedrich Bergius developed a

process to directly liquefy coal under high temperature and pressure (coal begins to

dissolve above 250 degrees centigrade), and then “crack” the coal molecules into

smaller molecules using hydrogen.2 Bergius termed the process “coal hydrogenation,”

which was later referred to as “direct liquefaction.” Coal also served as the source of

hydrogen. (In modern refining, hydrogen is manufactured from methane gas (CH4)

decomposed by a process termed “steam reforming.” Modern refineries rely

extensively on hydrogen for hydrocracking and hydrotreating.)

Fischer-Tropsch Synthesis

As Bergius was perfecting direct liquefaction, German scientists Franz Fischer

and Hans Tropsch were developing a means of indirectly converting coal into a liquid

fuel. In 1926, Fischer and Tropsch reported a process to synthesize hydrocarbons

using an iron or cobalt catalyst to react hydrogen (H2) with carbon monoxide (CO)

under lower temperatures and pressures than Bergius’ process.

Essentially, Fischer-Tropsch (F-T) synthesizes straight molecular chains of

carbon and hydrogen, whereas Bergius breaks heavier-weight hydrocarbons into

lighter-weight, shorter-length molecules. Both processes involve hydrogen.

Fischer-Tropsch synthesis, however, relies on carbon monoxide’s potential for

exchanging oxygen with hydrogen in the presence of a catalyst. As in the

manufacture of water gas, coal is burned to produce the carbon monoxide and steam

reacting with hot coal disassociates to produce hydrogen, as shown in the following

“water gas shift” equations:3

C + H2O ÷ CO + H2 and CO + H2O ÷ CO2 + H2

The CO2 byproduct of these reactions can be scrubbed from the “syngas” stream

before it is introduced to the synthesis reactor. This provides the opportunity to

capture CO2 for sequestration as discussed below.

2

A.C. Feldner, Department of Commerce Bureau of Mines, Recent Developments in the

Production of Motor Fuel from Coal, Information Circular No. 6075, 1928.

3

Robert Bernard Anderson, Fischer-Tropsch Synthesis, Academic Press Inc., 1984.

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In the following simplification, Fischer-Tropsch synthesis occurs through two

simultaneous reactions promoted by the contact of CO and H2 with a catalyst:

2H2 +CO ÷ -CH2- + H2O and CO + H2O ÷ CO2 + H2

which can be simplified as:

2CO + H2 ÷ -CH2- + CO2.

As shown conceptually in Figure 1, CO and H2 (syngas) react on the catalyst

surface to form -CH2- that links up to build longer-chain hydrocarbons. As discussed

later, these hydrocarbons substitute for conventional middle-distillate fuels.

Figure 1. Fischer-Tropsch Synthesis

A conceptual Fischer-Tropsch plant is shown in Figure 2. The slate of products

synthesized can be adjusted by varying the temperature, pressure, and duration of

reaction. F-T synthesis ideally produces straight-chain hydrocarbons in the paraffin

series (also referred to as alkanes).

Figure 2. Conceptual Fischer-Tropsch Plant

Paraffins are characterized as having carbon atoms attached by single bonds, and

remaining bonds saturated with hydrogen. The paraffin series ranges from the

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methane (CH4 — the principle component of natural gas) through the gasoline

boiling range of C5-C10, the middle-distillate range fuels of C11-C18 (kerosene, jet,

and diesel), and longer chain waxes.4

Comparing Fischer-Tropsch Products to Conventional

Petroleum Distillates

Conventionally refined gasoline, diesel, and jet fuels are complex mixtures of

hydrocarbons that include paraffins, naphthenes, and aromatics (which give diesel

fuel its unique odor).5 F-T synthesized fuels, by comparison, are composed primarily

of paraffins.

Refining begins in the atmospheric distillation tower, where the “straight-run”

petroleum fractions in the boiling ranges of gasoline, naphtha, kerosene, diesel and

jet fuel condense and separate. Heavier fractions are cracked with catalysts and

hydrogen to produce more gasoline range (C5+) blending stock, and low-octane

paraffins are converted into high-octane aromatics (octane is discussed below).

Other processes such as alkylation produce branched chain hydrocarbons in the

gasoline range. Diesel and jet fuel are formulated by blending straight-run cut

distillates with cracked stock (heavier fractions) to meet standardized specifications

developed by the American Society for Testing and Materials (ASTM International)

and the Environmental Protection Agency (EPA). These include octane and cetane

number, sulfur content, and exhaust emissions.

The fuel specifications most familiar to motorists are “octane” and “cetane”

numbers. In the case of gasoline, the octane-rating refers to the property of resisting

spontaneous ignition. In contrast, diesel fuel is rated by its relative ease of ignition

under compression (a desired property). This may seem a paradox — gasoline

should resist ignition and diesel should ignite easily. As gasoline is more volatile

than diesel, it is desirable that it not ignite before the spark plug fires.

Octane

Higher octane-number fuels better resist engine “knock” — the sound caused

by fuel prematurely igniting during compression. In early gasoline research, the least

knock resulted from using iso-octane, which arbitrarily received a rating of 100.6 Isooctane refers to a branched “isomer” in the paraffin series having eight carbons

(C8H18).7 The straight-chain isomer in this series, n-octane, has a rating -19. These

isomers of paraffin are shown in Figure 3. Fischer-Tropsch synthesis produces

primarily straight-chain paraffins, thus any gasoline produced is low in octane rating.

4

The length of the carbon chain is abbreviated. For example a paraffin consisting of six

carbons would be written as C6.

5

James H. Gary and Glenn E. Handwerk, Refining Petroleum — Technology and

Economics, 4th Ed., Marcel Dekker, Inc., 2001.

6

John M. Hunt, Petroleum Geochemistry and Geology, W. H. Freeman and Co., 1979. p.

51 .

7

Or more correctly 2,2,4-trimethylpentane.

CRS-6

Figure 3. Iso-octane vs N-octane

Modern formulated gasolines range in octane from 87 to 93, achieved by

blending various petroleum distillates, reforming gasoline-range hydrocarbons, and

adding oxygenates such as MTBE or ethanol to boost octane-number. Branched

paraffin series like iso-octane can not be directly produced in Fischer-Tropsch

synthesis. Consequently, when Fisher-Tropsch synthesis has been used to produce

gasoline, it has been blended with conventionally refined petroleum to achieve the

desired octane-number.

Cetane

The standard for diesel fuel rates the ease of which auto-ignition occurs during

compression in the engine cylinder, thus eliminating the need for a spark plug. The

number 100 was assigned to “cetane,” the more common name for n-hexadecane.

Cetane’s chemical formula is often written as C16H34 to represent a straight-chain

hydrocarbon in the paraffin series. It consists of 16 carbon atoms with three

hydrogen atoms bonded to the two end carbons, and two hydrogens bonded to each

of the middle carbons. In other words, the benchmark for rating diesel fuel is a

paraffin — the hydrocarbon the Fischer-Tropsch synthesis is best suited to making.

Diesel fuel cetane-numbers range from 40 to 45, and as high as 55 in Europe,

where high-speed diesel engines are prevalent in light-duty passenger vehicles. The

cetane-number for F-T synthesized diesel can be as high as 70. In tests conducted by

the National Renewable Energy Laboratory (NREL) Fischer-Tropsch diesel fuel had

a cetane-number greater than 74.8 The diesel fuel was supplied by Shell Oil

Company’s gas-to-liquids plant in Bintulu, Malaysia.

8

P. Norton, K. Vertin and B. Bailey (NREL); N. N. Clark and D. W. Lyons (West Virginia

Univ.); S. Goguen and J. Eberhardt (U.S. DOE); Emissions from Trucks Using FischerTropsch Diesel Fuel; Society of Automotive Engineers Technical Paper Series 982526;

1998.

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Sulfur

As now regulated by the EPA (40 C.F.R. 80.520) diesel fuel must contain less

than 15 parts-per-million (ppm) sulfur — referred to as ultra-low-sulfur diesel

(ULSD). Conventionally refined aviation jet fuel may have a sulfur content as high

as 3,000 ppm. However, as it has been used in blending winter diesel fuel to lower

the gel point, it has had a practical limit of 500 ppm (the previous EPA limit for

diesel). It is uncertain whether EPA may promulgate future rules on jet fuel sulfur

content, thus limiting its use in blending winter ULSD. Fischer-Tropsch diesel fuel

contains virtually no sulfur, as it must be removed before the synthesis reaction to

avoid poisoning the catalysts used in the reactor. Despite its detrimental

environmental effects, sulfur contributes to the “lubricity” of fuel. Under reduced

sulfur, engines wear out sooner. Fuel can be blended with additives to make up for

the loss of sulfur lubricity and engines can be manufactured from tougher materials,

as has been the case in the EPA mandated transition from low-sulfur diesel (500

ppm) to ultra-low-sulfur diesel (15 ppm).

Exhaust Emissions

Diesel engines characteristically emit lower amounts of carbon monoxide (CO)

and carbon dioxide (CO2) than gasoline engines, but they emit higher amounts of

nitrogen oxides (NOx) and particulate matter (PM). NOx is the primary cause of

ground-level ozone pollution (smog) and presents a greater problem, technically, to

reduce in diesel engines than PM. The CO, NOx, and PM emissions for gasoline and

diesel engines are regulated by the 1990 Clean Air Act amendments (42 U.S.C. 74017671q). In emissions testing performed by the National Renewable Energy

Laboratory (NREL), trucks using “neat” Fischer-Tropsch diesel fuel emitted about

12% lower NOx and 24% lower PM compared to trucks using conventionally refined

diesel fuel (meeting California No. 2 diesel standards).9

Synthetic Fuel Plants

The following discussion summarizes industrial progress in synthetic fuels. As

a means of comparing plant efficiencies (where possible), the energy in Btu contained

in the feedstock (coal, gas, biomass) consumed is compared to the energy in the

product produced.10 Greenhouse gas emissions, primarily carbon dioxide, are also

discussed as they may present regulatory challenges for future Fischer-Tropsch

plants.

Germany’s Synthetic Fuel Program

As part of continency planning for petroleum supply shortages, Germany built

a number of coal-based synthetic fuel plants, which operated through World War II.

9

P. Norton, et al., op. cit.

10

The energy term Btu refers to British Thermal Unit, which describes the unit of heat

energy required to raise 1 pound of water by 1 degree Fahrenheit.

CRS-8

Germany operated 12 coal hydrogenation plants to produce aviation gasoline

(primarily), motor gasoline, diesel, heating oils, and lubricants. Peak production of

21.5 million barrels was reached in 1944.11 According to the interrogation of a

scientist who had worked on Germany’s synthetic fuel program, roughly 6.7 to 7.7

metric tons of coal were required to produce one metric ton (approximately 7 barrels)

of liquid product — roughly one barrel per ton of coal. 12

Germany also built synthetic fuel plants based on Fischer-Tropsch synthesis

leading up to World War II, and had completed nine by the war’s end. Production

was geared to low-octane motor fuel, diesel, lubricating oil, miscellaneous chemicals,

and soap. Fischer-Tropsch output was low in comparison to hydrogenation at

approximately 450,000 barrels annually, with the best plant capable of producing no

more than 3,000 barrels per day. The plants were also about 20% more costly to

operate than the hydrogenation plants, with 50% of the cost in synthesis gas

production. Low-grade coal (bituminous and lignite) was used as a feedstock. From

7.1 to 8.9 metric tons of coal were required to produce one metric ton of liquid

product — slightly less than one barrel per ton.

U.S. Synthetic Fuel Program

Concerns for oil supplies during World War II also prompted U.S. interest in

synthetic fuels. The U.S. Synthetic Liquid Fuels Act of 1944 authorized construction

and operation of plants producing synthetic liquid fuel from coal, oil shale, and

agricultural and forestry products.13 After WWII, the United States tried to capitalize

on German technology and experience by sponsoring a number of research,

development, and demonstration projects. The Bureau of Mines received funding for

an 11-year demonstration plant program that ended in 1955. Work on FischerTropsch synthesis was carried out in a pilot-scale plant at the Bureau’s Morgantown,

West Virginia, Laboratory. Research improved on the German fixed-bed synthesis

reactor with the development of a fluidized-bed reactor.

During the 1960s, the Department of the Interior’s Office of Coal Research

sponsored research to directly liquefy Eastern coal, expending approximately $45.7

million (unadjusted for inflation) between 1961 and 1969.14 Under the 1970s era

DOE Synthetic Fuels program, two coal liquefaction projects were planned.

Approximately $1,666 million (unadjusted for inflation) was spent between 1975 and

11

Anthony N. Stranges (Texas A&M University), Germany’s Synthetic Fuel Industry 19271945, AIChE Spring National Meeting, 2003.

12

Synthetic Oil Production in Germany — Interrogation of Dr. Butefisch available through

the Fischer-Tropsch Archive, [http://www.fischer-tropsch.org/].

13

30 U.S.C. Secs. 321 to 325 authorized $30 million over five years for “the construction

and operation of demonstration plants to produce synthetic liquid fuels from coal, oil shales,

agricultural and forestry products, and other substances, in order to aid the prosecution of

the war, to conserve and increase the oil resources of the Nation, and for other purposes.”

14

Linda B. Cohen and Roger C. Noll, “Synthetic Fuels from Coal,” in The Technology Pork

Barrel, The Brookings Institution, 1991.

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1984 on research, development, and demonstration.15 Several processes were

evaluated — noncatalytic solvent extraction, catalytic processing, and donor solvent

processing — and various coals were tested.16 In privately sponsored development,

the Gulf Oil Company reported yielding three barrels of low sulfur fuel oil per ton

of Eastern high-sulfur coal using its catalytic coal to liquids process. Exxon

reportedly achieved a comparable yield with its donor solvent process. Accordingly,

Gulf was achieving a 62% thermal conversion efficiency (see Appendix for

calculations).

Efforts to move coal liquefaction beyond the demonstration phase stalled,

despite federal and private funding commitments. Project cost overruns of several

times the initial $700 million estimate led DOE to cancel work. Several other factors

during in the 1980s also contributed to cancellation. The dramatic drop in crude oil

prices, the development of new oil fields, and reduced consumption from

conservation efforts all contributed to making synthetic fuels economically

uncompetitive. Refineries also began converting heavy heating oil into higher value

transportation fuel.

Though U.S. interest in making coal-based transportation fuel was abandoned

by the mid-1980s, South Africa continued in its efforts to develop Fischer-Tropsch

synthesis on a commercial scale. Several other commercial scale efforts have since

succeeded in adapting Fischer-Tropsch synthesis to natural gas, where abundant

supplies make it economically feasible to do so. Renewed U.S. interest in the

technology includes both coal and natural gas. Consequently, the balance of this

report will focus on Fischer-Tropsch.

Sasol Coal-to-Liquids Plants

The lack of petroleum resources but abundant coal resources led the Republic

of South Africa to investigate establishing an oil-from-coal industry in 1927. After

WWII, South Africa’s government adopted German technology to build a coal-toliquid synthetic fuel plant. The South African Coal Oil and Gas Corporation (now

known as Sasol) was founded as a state owned company in 1950 to synthesize fuel

from coal based on German and U.S. developed Fischer-Tropsch technology (see

Bureau of Mines above). Sasol was privatized in 1979.

Sasol One started operation in 1955 at Sasolburg, South Africa. It employed

two technologies. One unit used a fixed-bed catalyst similar to a German process

operated during WWII, provided by the German firm Argbeit-Gemeinshaft Lurgi und

Ruhrchemie (Arge).17 It operated in the temperature range of 220-240EC at a

pressure of 925 bar. Production was optimized for long-chain linear paraffins. A

15

Paul F. Rothberg, CRS Report IB77105, Coal Gasification and Liquefaction, February 1,

1984.

16

Martin A. Elliot, Ed., Chemistry of Coal Utilization, 2nd Supplementary Volume, John

Wiley & Sons, 1981.

17

National Academy of Sciences/National Research Council, Chemistry of Coal Utilization,

pp. 2112-2113, John Wiley & Sons, 1981.

CRS-10

second unit used a fluid bed catalyst system developed by the U.S. firm M.W.

Kellogg. Technical difficulties prevented its operation until 1957. Its higher

operating temperature range of 310-340EC made it better suited to producing

gasoline-range hydrocarbons. In 1970, Sasol One produced approximately 297,000

tons of liquid annually (1.9 million barrels of fuel oil equivalent), while consuming

approximately 3.96 million tons of coal. This equated a yield of approximately ½

barrel per ton coal.

A second and third plant were built in Secunda, South Africa. Sasol Two was

completed in 1980 at a cost of $3,200 million and Sasol Three in 1984 at a cost of

$2,520 million.18 (Costs reflect value of U.S. dollar at the time, unadjusted for

inflation.) The Secunda complex is dedicated to producing liquid fuels and

chemicals.

The Secunda complex originally operated 80 Lurgi fixed-bed dry-bottom

gasifiers to make synthesis gas, and 16 circulating fluid bed reactors (rated at 7,500

barrels per day each). These processes gave it a capacity of 120,000 barrels per day.

In 2000, Sasol replaced the fluid-bed reactors with 8 Sasol Advanced Synthol (SAS)

reactors (rated at 20,000 barrels per day). The SAS reactors use a fluidized,

iron-based catalyst that operates in the 300-350EC temperature range.

With the new SAS reactors, the Secunda complex production increased to

150,000 barrels per day of products in the C1-C20 range (automotive fuels and light

olefin used as feedstock for chemical manufacturing).19 In 2001, Secunda also

supplied 14.3 million gigaJoules (135.54 million therms) of methane rich gas to

South Africa’s gas distribution network.20

In 2006, Secunda consumed approximately 41.8 million metric tons of low rank

sub-bituminous coal supplied by Sasol Mining (the equivalent of 126,000 U.S. short

tons per day).21 At that rate of consumption, Secunda yields approximately 1.2

barrels per ton of coal, making it approximately 27% efficient in converting the

coal’s heat content (Btus) to liquid products. (Refer to the Appendix for calculation

of the value). This does not include the heat value of the methane-rich gas that

Secunda also produces, which would increase efficiency.

18

Costs reflect value of U.S. dollar at the time, unadjusted for inflation. Sasol Coal-toLiquids Development, presentation to the gasification technologies Council Conference,

October 2005.

19

Thi Chang, Oil & Gas Journal, “South African Company Commercializes New F-T

Process, January 10, 2000.

20

A gigajoule (GJ) is a standard measure used for the heating value of fuel gas supplied to

South African customers. A joule is an international unit of energy defined as the energy

produced from one watt flowing for one second. Giga denotes a measure of a billion (109).

1 GJ = 0.96 million cubic feet (mcf) of gas, under standard temperature and pressure

conditions. 1 Therm = 100,000 Btu. Department of Minerals and Energy, Republic of

South Africa, Gas Infra-Structure Plan, April 19, 2005, [http://www.dme.gov.za/pdfs/

energy/gas/gas_infrastructure_plan.pdf].

21

Platts, Coal-to-Liquids Technology, December 19, 2006 [http://www.platts.com/Coal/

Resources/News%20Features/ctl/sasol.xml].

CRS-11

Sasol Sasolburg and Secunda, combined, produce 30 million metric tons of CO2

annually. Sasol uses the Benfield process to absorb and capture 90-98% of CO2

produced.22 Sasol reports producing 3.04 metric tons of CO2 per metric ton of overall

product,23 the equivalent of 0.82 metric tons elemental carbon per ton liquid.24 This

is approximately equivalent to emitting 0.48 U.S. tons of CO2 per barrel of product

produced.25

By the end of 1979, production costs were estimated at approximately $30 per

barrel, while world spot prices for crude oil were $10 per barrel higher.26 Until 2000,

Sasol had been receiving a tariff protection when the world market oil price fell

below $21.40 per barrel.27 Crude oil prices had remained below the tariff protection

level in the years 1986 through 1996, except for a brief period during the 1991

Persian Gulf War. The tariff protection lapsed in 2000. South Africa also put a

sliding price scale in place to make imported refined products more costly than

Sasol’s, up to crude oil prices of $45 per barrel.

Shell Bintulu Gas-to-Liquids Plant

In 1993, Shell International Gas Limited began operating the first-of-its-kind

full-scale commercial gas-to-liquids plant, built alongside its liquefied natural gas

(LNG) plant at Bintulu in Sarawak (Malaysia).28 Shell’s Middle Distillate System

(SMDS) technology was developed using natural gas as a feedstock for FischerTropsch synthesis to produce middle distillates.

The Bintulu plant produces 12,500 barrels per day of product (50% middle

distillates, and 50% speciality products such as detergent feedstocks and waxes),

while consuming 100-120 million cubic feet per day of natural gas produced from

the South China Sea. This makes it approximately 54% efficient in converting the

energy content of natural gas to liquid products. (Refer to the Appendix for

calculation of the value.)

Shell states that the SMDS fuels produced have virtually no aromatic and sulfur

components, and when blended with conventional diesel give significant reductions

22

The Benfield process uses a hot potassium carbonate solution that is diethanolamine

promoted. A. Engelbrecht, A. Golding, S. Hietkamp, and B. Scholes, The Potential for

Sequestration of Carbon Dioxide in South Africa, March 12, 2004, South Africa Department

of Minerals and Energy.

23

Sasol, Highlights Sasol Sustainable Development Report 2006.

24

To convert CO2 gas to elemental C, multiply CO2 by 12/44. EPA Office of Transportation

and Air Quality, Metrics for Expressing Greenhouse Gas Emissions: Carbon Equivalents

and Carbon Dioxide Equivalents, EPA420-F-05-022, February 2005.

25

1 metric ton product . 7 barrels.

26

Sasol Ltd, Hoovers, [http://www.hoovers.com].

27

“S. Africa to cut price protection for synfuel,” Oil & Gas Journal, December 25, 1995.

28

Shell Gas & Power External Affairs, Gas to Liquids: Shell Middle Distillate Synthesis

Process and Products, August 2002.

CRS-12

in regulated emissions (NOx, SOx, HC, CO, and particulates). SMDS diesel can also

be used as a “neat” fuel in diesel engines with minor modifications.

Oryx Gas-to-Liquids Plant

The Oryx Gas-to-Liquids (GTL) plant at Ras Laffan Industrial City, north of the

Qatar capital Doha, represents a joint venture between state-owned Qatar Petroleum

(51%) and Sasol Ltd. (49%).29 Built at a cost of $950 million, operations commenced

in June 2006, after 2½ years of construction. The plant uses Sasol’s Fischer-Tropsch

based Slurry Phase Distillate low temperature process.

Oryx is designed to produce 34,000 barrels per day of liquids (24,000 barrels

diesel, 9,000 barrels naphtha, and 1,000 barrels liquefied petroleum gas). Qatar’s

Persian Gulf North Gas Field is expected to provide approximately 330 million cubic

feet per day of “lean” gas as feedstock. This makes Oryx approximately 52%

efficient. (Refer to the Appendix for calculation of the value.)

Sasol Chevron — the London-based joint venture between Sasol and Chevron

Corporation — will market the Oryx GTL diesel initially in Europe and then

elsewhere. The joint venture plans to expand Oryx plant capacity to about 100,000

barrels per day and is considering plans to build an integrated GTL plant with a

capacity of about 130,000 barrels per day.

Syntroleum Catoosa Demonstration Facility

Syntroleum Corporation (Tulsa, Oklahoma) operates a 3-barrel-per-day FischerTropsch pilot plant, used primarily to evaluate catalyst systems, and a 70-barrel-perday demonstration plant used to produce products and evaluate technology.

Syntroleum has received $31.6 million in federal government contracts since 1998

to evaluate Fischer-Tropsch technology for the Departments of Defense, Energy, and

Transportation.

U.S. Air Force Coal-to-Liquids Initiative

As envisioned by the Office of the Secretary of Defense (OSD), the Assured

Fuels Initiative has the intent of catalyzing commercial industry to produce clean

fuels for the military from secure domestic resources.30 Under the initiative, FischerTropsch technology is under evaluation for converting coal to liquid (mobility) fuel.

In 2006, the U.S. Air Force purchased 100,000 gallons of jet fuel synthesized

from natural gas, and in August 2007 certified the fuel as a blending substitute in

conventionally refined JP-8 for the B52 Stratofortress. In December 2007, a C-17

29

Qatar Petroleum, Oryx GTL Inauguration - A Key Step in Qatar’s Bid to Become the GTL

Capital of the World [http://www.qp.com.qa/qp.nsf/8c264276b952633c432571290026c60e/

4cebdaa21d0dc4264325718600180400?OpenDocument#].

30

William Harrison, OSD Assured Fuels Initiative. [http://www.trbav030.org/pdf2006/

265_Harrison.pdf]

CRS-13

Globemaster III completed a transcontinental certification test flight using a synthetic

fuel blend. The Air Force hopes to certify F-T fuels for its entire fleet of aircraft by

2011. The U.S. Navy will be evaluating synthetic fuel as a substitute diesel fuel.

The Air Force is now exploring the possibility of leasing property at Malmstrom

Air Force Base, Montana, for construction of a coal-to-liquids plant.31 Under its

Enhanced Use Leasing authority, the Air Force would lease land to a private

developer who would in turn finance and construct a facility capable of producing

25,000 barrels per day of CTL fuel. On January 30, 2008, the Air Force conducted

a CTL Opportunity Community Meeting in Great Falls, Montana, to respond to

community concerns about the initiative. A final request for qualifications (RFQ) for

the proposed plant issued on February 29 requires proposals to be submitted to the

Air Force by May 2008.

China’s Coal-to-Liquids Program

China’s long-term policy on coal-to-liquid deployment remains uncertain,

despite the completion of many small “coal-to-chemical” facilities. While China sees

unique advantages in promoting coal-based alternatives to petroleum, there are key

challenges that will likely result in a period of experimental policy that “crosses the

river by feeling the stones.”

China’s interest in CTL is driven by the country’s growing sense of oil

insecurity. China went from being a net oil exporter in 1993 to relying on imports

for approximately half of total oil demand in 2008. Chinese decision-makers are less

familiar with, and confident in, global petroleum markets than many of their

industrialized country counterparts.32 But unlike petroleum, China has abundant

domestic coal supply.33 For government planners steeped in the central planning

mantra of self-sufficiency, CTL has obvious attractions. For others, its drawbacks

may outweigh its advantages. Still, the technology has become one of the elements

of a multi-pronged Chinese strategy to boost energy security.34

Chinese industry has decades of experience gasifying coal. In recent years, there

has also been a mushrooming of “coal to chemicals” plants that produce methanol,

dimethyl ether (DME), olefin, and other petrochemical feedstocks.35 Experience with

coal liquefaction to produce diesel, liquid petroleum gas (LPG), and naptha is more

limited, but took on greater urgency in the late 1990s when it became irrefutable that

domestic oil production would not be able to keep pace with surging demand.

31

Air Force Real Property Agency, Coal-to-Liquid Fuel Plant Opportunity Fact Sheet.

[malmstrom.ctl@afrpa.pentagon.af.mil]

32

K. Lieberthal and M. Herberg, China’s Search for Energy Security: Implications for U.S.

Policy, National Bureau of Asian Research, 2006.

33

China is ranked 3rd in global coal reserves behind the United States and Russia.

Nevertheless, some question the accuracy of China’s reported coal quantity and quality.

34

Other measures include creation of a strategic petroleum reserve, increased vehicle fuel

economy standards, and expanded investment in overseas oil assets.

35

Wall Street Journal, “Coal Gasification Surging in China,” December 31, 2007.

CRS-14

The National Development and Reform Commission (NDRC) has announced

approval of three major CTL facilities. In 2008, China’s Shenhua Group is scheduled

to open a first-of-a-kind direct liquefaction plant in Inner Mongolia with initial

production capacity of about 1 million tons per year. The two other approved

projects are slated to be larger and use the more tested indirect liquefaction process,

but their deployment remains uncertain. In late 2006, NDRC issued an ambitious

draft plan for coal-based chemicals, calling for 30 million tons of diesel and LPG, 20

million tons DME, and over 60 million tons of methanol output by 2020.36 It also

issued a ban on the construction of small CTL, methanol, and olefin plants that had

been mushrooming without approval or oversight. In mid-2007, China’s ambitious

plan was called into doubt when an NDRC official announced that the country might

halt most CTL projects.37 Like some other countries, China is wary about CTL

because:

!

!

!

!

!

the technology (especially direct liquefaction) is untested and still

immature;

it is capital intensive and prone to “stranded investment” should oil

prices fall;

coal supply may be insufficient to supply long-term market demand;

increased greenhouse gas emissions will attract international

concern; and perhaps most importantly,

water is scarce where coal is plentiful.38

Government planners are carefully evaluating the costs and benefits of CTL

deployment in China. Today they are more likely to use hard-nosed economic

analysis to evaluate CTL’s viability compared to earlier years when self-sufficiency

could trump economic efficiency. Nevertheless, water shortages and other

environmental concerns are likely to moderate China’s support for CTL.

Choren Industries

Choren Industries (a partnership of Daimler AG, Volkswagen, and Shell) is

finishing construction of its Beta biomass-to-liquid plant in Freiberg, Germany. The

initial production goal is 15,000 metric tons (735,000 barrels) per year of diesel.

Choren plans are to expand capacity to 200,000 metric tons (1,400,000 barrels) per

year with its Zeta-plant (equivalent to 3,800 barrels per day). The German Energy

Agency assumes that biomass-to-liquids is 42% efficient in energy conversion.39

36

China Daily, “Coal Chemical Plans Announced,” December 28, 2006.

37

Xinhua, “China May Halt Coal-to-Liquid Projects,” June 10, 2007.

38

Chinese coal is abundant in the provinces of Shaanxi, Shanxi and Inner Mongolia. The

lack of water resources in northern China is considered one of the greatest development

challenges that the region faces. A general rule of thumb is that five to ten gallons of water

are required for every one gallon of CTL production.

39

Deutsche Energie-Anentur GmbH, Biomass to Liquid - BtL, Implementation Report,

December 2006.

CRS-15

National Energy Technology Laboratory Study

The National Energy Technology Laboratory (NETL) has examined the

technical and economic feasibility of a commercial scale coal-to-liquids facility using

Illinois basin coal.40 With a production goal of 50,000 barrels per day (diesel and

naphtha) and consumption rate of 24,533 tons of coal per day, the plant would yield

slightly more than 2 barrels per ton of coal. This would making it approximately

40.5% efficient. (Refer to the Appendix for calculation of the value.) This efficiency

would not include 125 megawatts of electric power that would be generated from

waste heat.

The plant is expected to produce 560 million cubic feet (32,032 tons) of CO2 per

day, which would equate to 0.64 tons of CO2 per barrel.41

NETL estimated that construction could cost upwards of $4.5 billion.

Baard Energy Coal-to-Liquids Plant

Baard Energy, L.L.C., through its project company Ohio River Clean Fuels,

L.L.C., is planning to build a nominal 50,000 barrel per day coal-to-liquids plant in

Wellsville, Ohio. Baard’s plans call for converting coal and biomass to synthesis gas,

and using Fischer-Tropsch synthesis to produce diesel, jet, and naphtha

hydrocarbons. The plant would also generate 250 to 300 megawatts of electricity

daily. Baard expects that up to 85% of the CO2 produced by the plant could be

captured. Baard cites an Idaho National Laboratory study of the project that

attributes use of Fischer-Tropsch diesel fuel with a 46% reduction in CO2 emissions

over conventionally refined diesel fuel.42

Comparing Efficiencies

For comparison purposes, yield and thermal conversion efficiency of the

various plants discussed above are presented in Table 2. Yield in barrels per ton

pertains to liquid fuels from coal. Thermal conversion efficiency is a term adopted

in this report to compare the heating value of the feedstock to the product. It does not

imply an economic comparison; that is, that one technology requiring lower Btu than

another is necessarily economically superior. An economic comparison would also

weigh the capital cost of construction, operation and maintenance costs, the price of

40

U.S. DOE National Energy Technology Laboratory, Baseline Technical and Economic

Assessment of a Commercial Scale Fischer-Tropsch Liquids Facility (DOE/NETL2007/1260), April 9, 2007.

41

42

1 standard cubic foot (SCF) CO2 = 0.1144 pounds.

Richard D. Boardman, Plant Modeling & Emissions Comparative Analysis Approach —

Coal/Biomass Gasification with Fischer-Tropsch Diesel Production, Idaho National

Laboratory, May 2007. A full technical report is scheduled to be delivered by Baard Energy

and the Idaho National Laboratory at the 24th Annual International Pittsburgh Coal

Conference in Johannesburg, South Africa, September 10-14, 2007.

CRS-16

fuel, and the intrinsic value of environment and national security, which is beyond

the scope of this report.

Table 2. Comparative Efficiencies of Processes Converting

Coal, Gas, and Biomass to Liquid Fuels

Germany

WWII

DL

F-T

CTL

Gulf

DL

Sasol

F-T

CTL

Shell

F-T

GTL

Oryx

F-T

GTL

Choren NETL

F-T

F-T

BML

CTL

Yield

barrels/ton

1

1

3

1.2

n.a.

n.a.

n.a.

2

Thermal

conversion

efficiency %

—a

—a

62

27b

54

52

42

40.5

Note: DL: direct liquefaction; F-T CTL: Fischer-Tropsch coal-to-liquids; F-T GTL: gas to liquids,

F-T BML: biomass-to-liquids.

a. insufficient information on coal heating value to determine thermal conversion efficiency

b. does not credit methane-rich gas production

Comparison might be made with the efficiency of producing other energy

resources, such as petroleum, tar sands, or oil shale. The giant oil fields of North

America, now depleted, produced from 50 to 1,000 barrels per acre-foot (43,560

ft3).43 The NETL study expects to yield approximately 2 barrels per ton of Illinois

bituminous coal — the equivalent of 3,806 barrels per acre-foot.44 In further

comparison, Canada’s mined oil sands yield ½ barrel per ton.45 Oil shales of the

western United States could be expected to produce no more than 2/3 barrel per ton.46

A further comparison might be made to refining oil and generating electricity.

The 5,555.3 million barrels of crude oil refined in 2005 (the equivalent of 32,221.3

trillion Btu)47 consumed approximately 2,862.5 trillion Btu (fuel oil, still gas,

43

American Association of Petroleum Geologists, Geology of Giant Petroleum Fields, 1970.

44

Assumes in place density of 1,903 tons per acre-foot for bituminous coal. From James G.

Speight, The Chemistry and Technology of Coal, Table 9.3 Expressions of the In-Place

Density of Coal, CRC Press, 1994.

45

Government of Alberta, "Oil Sand Facts," [http://www.energy.gov.ab.ca/OilSands/

790.asp].

46

CRS Report RL33359, Oil Shale: History, Incentives, and Policy, by Anthony Andrews.

47

U.S. DOE EIA Petroleum Navigator, Refinery Net Input, [http://www.eia.doe.gov/].

CRS-17

petroleum coke, natural gas, coal, purchased electricity and steam).48 (For analysis,

refer to the Appendix.) Thus, on average, U.S. refineries consumed roughly 9% of

the equivalent energy contained in the crude petroleum refined, making them 91%

efficient. (ExxonMobile estimates, however, that its refineries require from 10%-20%

of the energy in a barrel of crude oil to convert the remaining barrel into products.)49

Coal-fired electric power plants, by comparison, average about 33% efficiency.50

It is emphasized that these comparisons are illustrative and do not of themselves

indicate overall economic or environmental advantages.

Greenhouse Gas — CO2

Carbon dioxide sequestration may offer a viable solution if CO2 emissions were

to be regulated. Sequestration depends on the ability to capture CO2 after combustion,

and then pump it into deep underground reservoirs. (See CRS Report RL33801,

Direct Carbon Sequestration: Capturing and Storing CO2.) Though considerable

reservoir capacity exists in the United States, the pipeline infrastructure to facilitate

sequestration would be needed on an industrial scale. (See CRS Report RL33971,

Pipelines for Carbon Sequestration: Emerging Policy Issues.)

Congress is considering various bills aimed at reducing and stabilizing

greenhouse gas emission. The Energy Independence and Security Act of 2007 (P.L.

110-140) amends the Energy Policy Act of 2005 with research and development

programs to demonstrate carbon capture and sequestration, and restricts the federal

government’s procurement of alternative fuels that exceed the lifecycle greenhouse

gas emissions associated with conventional petroleum based fuels. Carbon dioxide

production associated with Fischer-Tropsch coal-to-liquids remains the primary

objection by many in Congress to offering or approving legislation that promotes its

development.

Of 42 states that have conducted greenhouse gas inventories, at least 30 states

have either completed or are in the process of preparing climate change action plans

and 12 states have set statewide greenhouse gas targets. A small, but growing,

number of states have implemented or are creating mandatory emission reduction

programs. (See CRS Report RL33812, Climate Change: Action by States To

Address Greenhouse Gas Emissions.)

A recent U.S. Supreme Court decision compels the EPA to consider regulating

CO2 emissions from mobile sources under the Clean Air Act.51 Whether EPA would

48

U.S. DOE EIA, Petroleum

[http://www.eia.doe.gov/].

Navigator,

Fuel

Consumed

at

Refineries,

49

Lori Ryerkerk, Beaumont Refinery Manager, Texas Industrial Energy Management

Forum, April 7, 2005.

50

President’s Council of Advisors on Science and Technology, Report on Energy Efficiency

— Findings and Recommendations, February 20, 2003.

51

Massachusetts et al. v. Environmental Protection Agency et al. Certiorari to the United

(continued...)

CRS-18

be compelled to extend rulemaking to stationary sources, such as coal burning power

plants or coal-to-liquids plants, for example, is uncertain. EPA has estimated the

percentage change in lifecycle greenhouse gas emissions, relative to petroleum-based

fuels that would be displaced by alternative and renewable fuels, including coal-,

gas-, and biomass-to-liquids.52 The analysis is based on work performed by the DOE

Argonne National Laboratory using the Greenhouse Gases, Regulated Emissions,

and Energy Use in Transportation (GREET) model. The fuels are compared on an

energy equivalent basis. The assumptions made about Fischer-Tropsch coal-toliquids include a plant efficiency of 52.4%, and that 85% of the carbon (exclusive of

the fuel product) is captured. As shown in Figure 4, the impact on greenhouse gas

emissions (GHG) from coal-to-liquids fuel with carbon capture and sequestration

(CC&S) would represent an increase 3.7% over petroleum-based fuels; without

capture and sequestration a 118.8% increase. Gas-to-liquids would increase

greenhouse gas emissions by 8.6% (EPA does not state whether this factors in

CC&S).

A direct comparison might be made with CO2 emissions from refineries. In

2005, U.S. refineries emitted 277.6 million metric tons (306.11 million U.S. tons) of

CO253 to produce 5,686 million barrels of petroleum products in 200554 — or

approximately 0.05 tons CO2 per barrel. Sasol, considered the largest single global

source of CO2,55 emits approximately 0.48 U.S. tons per barrel of product.56 The

NETL study plant would emit 0.64 tons of CO2 per barrel.

51

(...continued)

States Court of Appeals for the District of Columbia Circuit No. 05-1120. Argued November

29, 2006; decided April 2, 2007.

52

EPA Office of Transportation and Air Quality, Greenhouse Gas Impacts of Expanded

Renewable and Alternative Fuels Use (EPA420-F-07-035), April 2007.

53

Mark Schipper, U.S. DOE EIA, Energy-Related Carbon Dioxide Emissions in U.S.

Manufacturing (DOE/EIA-0573), 2005.

54

U.S. DOE EIA, Refinery Net Production (annual-thousand barrels) [http://

tonto.eia.doe.gov/dnav/pet/pet_pnp_refp2_dc_nus_mbbl_a.htm].

55

John Yeld, Cape Argus (Cape Town), South Africa: Sasol Plant Named as Top Culprit

in Emissions [http://allafrica.com/stories/200708080651.html].

56

1 metric ton product . 7 barrels.

CRS-19

Figure 4. Greenhouse Gas Impacts of Expanded Renewable

and Alternative Fuels Use.

Policy History

Congress first promoted synthetic fuel from coal through the U.S. Synthetic

Liquid Fuels Act of 1944.57 Intended to aid the prosecution of World War II and

conserve and increase national oil resources, the act authorized the Secretary of the

Interior to construct, maintain, and operate plants producing synthetic liquid fuel

from coal, oil shale, and agricultural and forestry products.58 The Bureau of Mines

received funding for an 11-year demonstration plant program that was largely

completed by 1955.

During the Korean War, Section 303 of the Defense Production Act of 1950

(Ch. 932, 64 Stat. 978) authorized the President to have liquid fuels processed and

refined for government use or resale, and to make improvements to government- or

privately-owned facilities engaged in processing and refining liquid fuels when it

would aid the national defense.59 During the 1970s, the Department of Energy

57

30 U.S.C. Secs. 321 to 325.

58

30 U.S.C. Sections 321 to 325 authorized $30 million over five years for the construction

and operation of demonstration plants to produce synthetic liquid fuels from coal, oil shales,

agricultural and forestry products, and other substances.

59

Ch. 932, 64 Stat. 798 (Title III Expansion of Production Capacity and Supply) intended

to develop and maintain whatever military and economic strength necessary to support

collective action through the United Nations. The act authorized the diversion of certain

materials and facilities from civilian to military use when expansion of production facilities

(continued...)

CRS-20

(DOE) directed a synthetic fuels program toward commercializing coal liquefaction,

coal gasification, and oil shale technologies. In 1980, Congress amended Section 305

of the Defense Production Act (P.L. 96-294, Energy Security Act) to authorize the

President’s purchase of synthetic fuels for national defense. President Carter then

directed the Secretary of Defense to determine the quantity and quality of synthetic

fuel needed to meet national defense needs for procurement.60 Congress further

amended the Defense Production Act to financially assist synthetic fuel production

from coal, oil shale, tar sands, and heavy oils by establishing the U.S. Synthetic Fuels

Corporation (P.L. 96-294, the United States Synthetic Fuels Corporation Act of

1980).61 The stated goal of the act was reaching a daily synthetic fuels production

capacity of 500,000 barrels of oil equivalent by 1987, and 2 million by 1992.

Within a few years, the House began considering a bill (H.R. 935, Synthetic

Fuels Fiscal Responsibility Act of 1985) to abolish the Synthetic Fuels Corporation.

The Energy and Commerce Committee debate of the bill (H.Rept. 99-196) linked

abolishing the Corporation to reducing the federal deficit and viewed purchasing oil

for the Strategic Petroleum Reserve as a far more cost effective defense against

another oil embargo than subsidizing synthetic fuels. Congressional criticism also

focused on conflicts of interest among the Corporation board members, high salaries

for staff, lack of interest on the part of private industry, and the possibility of huge

subsidies going to profitable oil companies.62 The minority view noted that as late

as 1983, the Department of Defense had certified that synthetic fuel was needed to

meet national defense needs. Language rescinding most of the Synthetic Fuels

Corporation funding was included in the FY1986 continuing appropriations

resolution (H.J.Res. 465, P.L. 99-190).

Though direct federal support for synthetic fuel ended, production continued to

receive indirect benefits. Section 45K (Credit for Producing Fuel From a

Nonconventional Source) of the Internal Revenue Code defines a qualified fuel for

the purpose of tax credit to include “liquid, gaseous, or solid synthetic fuels produced

from coal (including lignite), including such fuels when used as feedstocks.” The

Energy Information Administration reports on production of “coal synfuels,” but

limits the definition to coal-based solid fuels that have been processed by a coal

synfuel plant and coal-based fuels such as briquettes, pellets, or extrusions, formed

from fresh or recycled coal and binding materials.63

59

(...continued)

beyond the levels needed to meet civilian demand was required.

60

The American Presidency Project, Executive Order 12242 Synthetic Fuels,

[http://www.presidency.ucsb.edu/ws/index.php?pid=45171], signed September 30, 1980,

was later revoked by President Reagan’s Executive Order 12346, February 8, 1982.

61

Title I, Part B of the Energy Security Act of 1980.

62

CQ Almanac, “Congress Dismantles Synthetic Fuels Program,” 1985.

63

Energy Information Administration Frequently Asked

[http://tonto.eia.doe.gov/ask/coal_faqs. asp#coal_synfuel].

Questions

-

Coal

CRS-21

Authorizations Under the Energy Policy Act

The Energy Policy Act of 2005 (EPAct 2005 — P.L. 109-58) introduced several

new provisions for promoting alternative fuels derived from unconventional

resources and loan guarantees for facilities using Fischer-Tropsch technology to

produce the fuels.

!

Section 369 (Title III — Oil and Gas) amended 10 U.S.C. 141

(Miscellaneous Procurement Provisions) by inserting Section 2398a

for procurement of fuel derived from coal, oil shale, and tar sands.64

This directed the Secretary of Defense to develop a strategy to use

fuel produced from coal (among other strategic unconventional

fuels) to help meet the fuel requirements of the Defense Department

when the Secretary determines that doing so is in the national

interest. The Air Force has begun acting on Section 369 to procure

coal-based fuel and encourage production of coal-based jet fuel as

discussed above, and defense related legislation has gone further to

encourage this procurement (see discussion below).

!

Section 417 (Department of Energy Transportation Fuels from

Illinois Basin Coal) directed the Energy Department to evaluate

production of Fischer-Tropsch transportation fuels from Illinois

basin coal (though it remained unfunded by Congress and the

President’s budget request).

!

Section 1703 (c) (1)(D) (Eligible Projects) authorized the Energy

Secretary to make loan guarantees to facilities that generate

hydrogen-rich and carbon monoxide-rich product streams from the

gasification of coal or coal waste and use the streams to produce

ultra clean premium fuels through the Fischer- Tropsch process.

!

Section 1703(c)(4) (Liquefaction Project) authorized funds awarded

under the clean coal power initiative in subtitle A of Title IV for

coal-to-oil liquefaction projects to finance the cost of loan

guarantees (though guarantees have yet to be awarded).

EPAct 2005 also authorized coal related programs that support research in

solving some technology issues related to synthesizing liquid fuels from coal.

!

64

Title IV (Clean Coal) authorizes the annual appropriation of $200

million in FY2006 through FY2014 for the Clean Coal Power

Initiative. Of the funds made available, 70% ($140 million annually)

are to be used only in funding coal-based gasification technologies

that includes advanced technologies capable of producing

Energy Policy Act of 2005, P.L. 109-58, Title III, Subtitle F, Sec. 369. Oil Shale, Tar

Sands, and Other Strategic Unconventional Fuels; (q) Procurement of Unconventional Fuels

by the Department of Defense.

CRS-22

concentrated carbon monoxide (a component of syngas generation

essential to F-T coal-to-liquids).

!

Title IX (Research and Development) authorized DOE

approximately $90 million for carbon capture research between

FY2006 and FY2008. Carbon capture research and development has

been expanded and extended under the authorization of the Energy

Independence and Security Act of 2007 (P.L. 110-140), which

authorizes $240 million annually from FY2008 through FY2012.

!

Title XVII (42 U.S.C. 16511-16514) authorizes the Secretary of

Energy, after consultation with the Secretary of the Treasury, to

make loan guarantees for projects that (1) avoid, reduce, or sequester

air pollutants or anthropogenic emissions of greenhouse gases; and

(2) employ new or significantly improved technologies as compared

to commercial technologies in service in the United States at the

time. The face value of the debt guaranteed by DOE is limited to no

more than 80% of total project costs. Policies, procedures, and

requirements for the Title XVII loan guarantee program are

promulgated in rules under 10 CFR Part 609 — Loan Guarantees for

Projects That Employ Innovative Technologies.65

Additional Tax Incentives

Coal-based synthetic fuels benefit from certain tax incentives.

As amended by Section 11113 (Title XI) of the Safe Accountable, Flexible,

Efficient Transportation Equity Act (P.L. 109-59), federal tax law imposes a

24.3¢/gallon tax on any liquid fuel (other than ethanol or methanol) derived from

coal.66 However, a 50¢/gallon allowance of credit against the imposed tax is provided

for alternative fuels (which are defined to include any liquid fuel derived from coal

through the Fischer-Tropsch process). The tax credit provisions expire September 30,

2009.

The American Jobs Creation Act of 2004 (P.L. 108-357) amends Section 45 of

the 1986 Internal Revenue Code (relating to electricity produced from certain

renewable sources) to include “refined coal,” defined as a fuel which is a liquid,

gaseous, or solid synthetic fuel produced from coal (including lignite) or high carbon

fly ash, including such fuel used as a feedstock.

65

66

Final rule. Federal Register, Vol. 72, No. 204, October 23, 2007.

The Leaking Underground Storage Tank Fund Program established under Title V of the

Superfund Revenue Act of 1986 (P.L. 99-149) imposes an additional 0.1¢/gallon on motor

fuels which is extended to March 2011 under EPAct 2005.

CRS-23

Defense Related Authorizations and Appropriations

In addition to directing a Defense coal-based unconventional fuel strategy under

EPAct 2005, Congress also authorized procurement of the fuel under Defense

appropriations.

Title XXVIII (Military Construction General Provisions)67 of the John Warner

National Defense Authorization Act for FY2007 (P.L. 109-364) reorganizes 10

U.S.C. Section 2865. A new chapter: “Chapter 173 — Energy Security” is inserted,

under which the new section 2914 (Energy Conservation Construction Projects)

authorizes the Secretary of Defense to carry out a military construction project for

energy conservation, not previously authorized, using funds appropriated or

otherwise made available for that purpose, that may include procurement of fuel

derived from coal.

The Joint Explanatory Statement (in H.Rept. 109-676) to the Defense

Appropriations Act, 2007 (H.R. 5631, P.L.109-289)68 notes that at the behest of

Congress, the Air Force initiated research into developing coal-based and natural gas

derivative jet fuel substitutes. The Navy plans to initiate a pilot program to develop

alternative fuels. “Given the high costs of fuel and maintenance, the conferees are

encouraged by these reports and believe that the military services should continue to

pursue alternative fuels research and development. As such, the conferees encourage

the Department to provide sufficient funding in its FY2008 and future budget

requests to continue these important research programs.”

The Energy Independence and Security Act of 2007 (P.L. 110-140), however,

included language discouraging the Defense Department from procuring coal-based

jet fuel. Section 526 introduces a new requirement for federal procurement of

alternative or synthetic fuels. Contracts must specify that the lifecycle greenhouse

gas emissions associated with the production and combustion of the alternative fuel

not exceed emissions from conventionally produced petroleum based fuel. As

explained by the House Oversight and Government Reform Committee Chairman,

the section was included in legislation in response to proposals under consideration

by the Air Force to develop coal-to-liquid fuels, and is intended to ensure that federal

agencies are not spending taxpayer dollars on new fuel sources that will exacerbate

global warming.69

Department of Defense synthetic fuel initiatives, which include CTL, fall under

both Operation and Maintenance (O&M) and Research, Development, Test and

Evaluation (RDT&E) budget activities. These programs are summarized in Table

3 by budget activity, and program description.

67

Division B, Subtitle E — Energy Security.

68

“Alternative Fuels,” Congressional Record, p. H6996.

69

Committee on Oversight and Government Reform, Letter to Senate Energy Committee

Chairman [http://oversight.house.gov /story.asp?ID=1820].

CRS-24

Table 3. DOD Synthetic Fuel Projects

($ million)

Program Element

and Title

Project Number, Title, and Description

FY07 FY08 FY09

Air Force

O&M

Synthetic fuel program to test/certify synthetic fuel

to meet the goal of certifying the entire fleet for

synthetic fuel use by 2011.

-

-

26.9

RDT&E 0601102F 2308 - Propulsion: academic research coal

transformation laboratory.

Defense

Research

2308 - Propulsion: Starting in FY2008, conduct

Sciences

basic research in support of Air Force priority

“Energy Conservation - Assured Fuels Initiative” to

identify and develop technologies that enable the

use of domestic fuel sources for military energy

needs.

-

-

1.0

11.1

13.7

Congressional Add: Coal-based jet fuels conducted research to produce coal-based jet fuels,

assess military utility and suitability of this fuel.

2.8

RDT&E 0602203F 3048 - Fuels and Lubrication: In FY2007,

Aerospace

investigated performance of Fischer-Tropsch and

Propulsion

other alternative fuels for aircraft and other field

hardware.

-

Congressional Add: Alternative Energy Research In FY2008, perform research on alternative energy,

focusing on alternative hydrocarbon fuels made

from coal, biomass, oil shale. Research includes

fuel property evaluation and enhancement, as well

as component and engine testing of alternative

fuels.

RDT&E 0603216F

Aerospace

Propulsion

and

Power Tech.

2480 - Aerospace Fuels: Assured Fuels Initiative to

characterize and demonstrate the use of alternative

hydrocarbon jet fuel to comply with Air Force

certifications and standards for jet fuels. Funding

redirected in FY2009 due to increased emphasis on

development of alternative hydrocarbon jet fuel.

1.8

1.2

-

-

2.9

-

-

-

Navy

RDT&E

0603640M

USMC Advanced

Tech. Demo.

2223 - Marine Corps ATD: Initiate new mobility

efforts in FY2009 to include Fischer-Tropsch and

coal gasification processes for use in military

tactical wheeled vehicles.

Source: Department of Defense Budget Fiscal Year 2009.

CRS-25

Bills Introduced in the 110th Congress

A number of bills promoting coal-to-liquid fuels have been introduced the

110 Congress, however non have been enacted. They include:

th

!

H.R. 370, Coal-to-Liquid Fuel Promotion Act of 2007, would

provide loan guarantees, and authorize the Defense Secretary to

enter contracts for long term procurement of CTL fuel.

!

H.R. 2208, Coal Liquid Fuels Act, would provide standby loans for

CTL projects.

!

H.R. 6, Renewable Fuels, Consumer Protection, and Energy

Efficiency Act of 2007, enacted as P.L. 110-140, would have defined

fuel derived from coal as an industrial source of carbon dioxide (for

the purpose of carbon capture and sequestration). S.Amdt. 1781 (To

Provide for Corporate Average Fuel Economy (CAFE) Standards)

to H.R. 6 would have included a coal-to-liquid fuel direct loan

program.

!

S. 133, American Fuels Act of 2007, would define alternative diesel

fuel to include CTL that provides for sequestration of carbon

emissions, and amend 10 U.S.C. Section 2922d to authorize the

Defense Secretary to enter contracts for fuels produced from coal.

!

S. 155, Coal-to-Liquid Fuel Promotion Act of 2007, would provide

loan guarantees for large scale CTL facilities, authorize the Defense

Secretary to enter into contracts with companies that operate CTL

facilities near military installations, and provide a tax credit for

investing in qualified CTL projects.

!

S. 1443, Clean, Affordable, and Domestic Fuels for Energy Security

Act of 2007, would mandate regulations and emission standards for

coal-derived fuels, provide loan guarantees for coal-derived fuel

facilities.

!

H.R. 2419, Farm Bill Extension Act, includes a tax provision that

would extend an existing 50¢ per gallon fuel excise tax credit for

CTL until 2010 and requires CTL producers to capture and store

50% of carbon dioxide emissions. CTL producers could be required

to capture and store 75% of carbon dioxide emissions should an

independent arbitration panel determine that such a level is

commercially feasible. Without an extension, the tax credit, created

by the Energy Policy Act of 2005, is set to expire in September

2009.

CRS-26

Additional Tax Incentives

As amended by Section 11113 (Title XI) of the Safe, Accountable, Flexible,

Efficient Transportation Equity Act (P.L. 109-59), federal tax law imposes a

24.3¢/gallon tax on any liquid fuel (other than ethanol or methanol) derived from

coal.70 However, a 50¢/gallon allowance of credit against the imposed tax is provided

for alternative fuels (which are defined to include any liquid fuel derived from coal

through the Fischer-Tropsch process). The tax credit provisions expire September 30,

2009.

The American Jobs Creation Act of 2004 (P.L. 108-357) amends Section 45 of

the 1986 Internal Revenue Code (relating to electricity produced from certain

renewable sources) to include “refined coal,” defined as a fuel which is a liquid,

gaseous, or solid synthetic fuel produced from coal (including lignite) or high carbon

fly ash, including such fuel used as a feedstock.

The Tax Relief and Health Care Act of 2006 (P.L. 109-432) amends Section 48

of the 1986 Internal Revenue Code by extending tax credits through December 31,

2008.

Policy Considerations

In the past, the precipitous drop in crude oil price and increased supply played

key roles in suspending federally funded coal-based synthetic fuel programs.71 Direct

coal liquefaction was considered economically unviable and fraught with technical

problems. Critics of refineries charged at that time that they were inefficient,

polluting, and produced dirty fuels — much the same criticism leveled at coal-toliquids. Meanwhile, U.S. refineries began an intense period of recapitalization in

response to Clean Air Act amendments and applied much of the same technology

considered too costly for direct liquefaction. For some time afterwards, refineries

remained the loss-leader in vertically integrated petroleum operations. Unprofitable

refining was necessary for petroleum producers in order to maintain their market

access.

Proponents of coal-to-liquids point to Sasol as evidence that the FischerTropsch technology is viable. However, the South Africa government protected

Sasol while crude oil prices remained low. During that same economic period,

Canada continued to support the development of its oil sands resources. Thus,

criticism that U.S. energy policy decisions were shortsighted in abandoning synthetic

fuel efforts contrast with the reality that the refining industry transformed itself under

the same economic circumstances without government support.

70

The Leaking Underground Storage Tank Fund Program established under Title V of the

Superfund Revenue Act of 1986 (P.L. 99-149) imposes an additional 0.1¢/gallon on motor

fuels which is extended to March 2011 under EPAct 2005.

71

See section on U.S. Synthetic Fuels Program and the Synthetic Fuels Corporation in CRS

Report RL33359, Oil Shale: History, Incentives, and Policy, by Anthony Andrews.

CRS-27

Constructing a first or even second Fischer-Tropsch synthetic facility (regardless

of feedstock is coal, gas or biomass) is likely to encounter permitting as well as

economic barriers. (See CRS Report RL32666, The Gas to Liquids Industry and

Natural Gas Markets.) Advocates of developing a synthetic fuels industry argue for

a variety of incentives they view necessary in helping help bridge barriers to entry;

such as: loan guarantees, streamlined permitting, infrastructure improvements, and

long-term contracts for purchasing coal-, gas-, or biomass- to-liquid fuels. Some

might argue that offering loan guarantees for such an industry would be a misplaced

incentive given the current high prices of crude oil and refined gasoline. Others

might argue that the petroleum industry’s reluctance to increase refining capacity

justifies federal intervention. The Energy Policy Act of 2005 already includes the

provisions of Section 391, Refinery Revitalization, for streamlining the application

and permit process among federal agencies for new refineries, which arguably could

be applied to Fischer-Tropsch plants.

Mandated improvements in average fuel economy standards, as provided in the

Energy Independence and Security Act of 2007 (P.L. 110-140) could have some

stimulus on a fledgling Fischer-Tropsch industry. (See CRS Report RL33831,

Energy Efficiency and Renewable Energy Legislation in the 110th Congress.)

Automobile manufacturers might achieve the proposed standards through increased

production of diesel passenger vehicles, which at the same time consume less fuel

and emit lower CO2 than gasoline engines (partially offsetting the CO2 emitted in

producing such fuels). In that case the demand for diesel fuel might increase. U.S.

refineries would be pressed to adjust their product slate toward more diesel

production, and distributors would be pressed to import more diesel fuel. However,

refineries may be limited to adjusting their product slates to no more than 10% to

20% diesel without making capital investments. The increased U.S. demand for

imported diesel would compete with European demand, where the preference for

diesel vehicles is already increasing. Either case could place upward pressure on

prices and thus stimulate private investment.

Carbon dioxide’s contribution to global warming represents the primary

drawback to Fischer-Tropsch, particularly when using coal feedstock. It also

represents the primary detraction to coal as a fuel in general, as evident in the

cancellation of a number in coal-fired power plant projects (11,000 megawatts in

capacity) in 2007. The Edison Electric Institute attributes the cancellation, in part,

to the uncertainty over the future regulation of carbon.72 Carbon capture and

sequestration offers a promising solution. However, sceptics of the solution may go

unchallenged without an industrial scale demonstration. Private interests may

forestall investment in synthetic fuels over the uncertainty of future carbon emission

regulations, particularly if rules are not applied evenly to existing emission sources.

Policy makers may face few options in contending with the broad issue of reducing

carbon emissions from existing fossil fuel users.

72

Edison Electric Institute, Q3 2007 Financial Update.

CRS-28

Appendix

Gulf Oil Company Direct Coal Liquefaction Efficiency

Feedstock:

Pittsburgh coal @ 14,040 Btu/pound x 2,000 pounds/ton = 28,080,000 Btu per tona

Product:

distillate fuel oil = 5,825,000 Btu per barrelb

Calculation:

(3.0 barrels x 5,825,000 Btu/barrel) ÷ 28,080,000 Btu/ton = 62%.

Sources:

a. Marks’ Standard Handbook for Mechanical Engineers 10th Ed, Sec. 7, “Fuels and

Furnaces,” McGraw Hill, 1996.

b. Energy Information Administration, Monthly Energy Review, Appendix A Thermal

Conversion Factors, 2007.

Sasol Secunda Complex Coal-to-Liquids Efficiency

Feedstock:

sub-bituminous coal: 41,800,000 metric tons/yr x 1 year/365 days x 2204 lbs/m-ton

x 11,482 Btu/lba = 2,898,094,549,041 Btu

Products:

liquid fuels: 150,000 barrels/day x 42 gal/bbl/ 123,600 Btu/galb = 778,680,000,000

Btu

Calculation:

Product (778,680,000,000)/ Feedstock (2,898,094,549,041 = 27%

Sources:

a. Sasol coal ranges from 10,000 to 11,482 Btu/lb in calorific value, with fixed carbon

ranging from 49.4% to 57.7%. Methane rich gas: 33.9 megaJoules/cubic meter) (910

Btu/ft3) compared to natural gas: 37 to 40 MJ/m3 of (1,027 Btu/ft3). Republic of South

Africa, Department: Minerals and Energy, Operating and Developing Coal Mines in

the Republic of South Africa 2005, Table 1, [http://www.dme.gov.za/pdfs/minerals/

d2_2005.pdf].

b. assumed for diesel, no further information is available. Department of Minerals and

Energy, Republic of South Africa, Gas Infra-Structure Plan, April 19, 2005,

[http://www.dme.gov.za /pdfs/energy/gas/gas_infrastructure_plan.pdf].

Shell Bintulu Gas-to-Liquids Efficiency

Feedtsock:

natural gas: 20,000,000ft3/day x 1,027 Btu/ft3 = 123,240,000,000 Btu

Products:

middle distillate: 6,250 bbl/day x 42 gal/bbl x 123,600 Btu/gala = 445,000,000 Btu

detergent feedstocks and waxes:

34,606,250,000 Btu

6,250 bbl/day x 5,537,000 Btu/bblb =

product total =

67,051,250,000 Btu

Calculation:

Product (67,051,250,000)/Feedstock (123,240,000,000) = 54%

CRS-29

Sources:

a. Norton et al.

b. assumed based on EIA

Oryx Gas-to-Liquids Efficiency

Feedstock:

“lean” gas: 330,000,000 ft3 /day x 1,027 Btu/ft3 a = 338,910,000,000 Btu

Products:

diesel: 24,000 bbl/day x 42 gal/bbl x 123,600 Btu/galb =

124,588,800,000 Btu

a

47,232,000,000 Btu

naphtha: 9,000 bbl/day x 5,248,000 Btu/bbl =

liquified petroleum gas: 1,000 bbl/day x 4,000,000 Btu/bbla = 4,000,000,000 Btu

product total =

175,820,800,000 Btu

Calculation:

Product (175,820,800,000)/ Feedstock (338,910,000,000) = 52%

Sources:

a. assumed based on EIA

b. Norton et al.

NETL Coal-to-Liquids Efficiency

Feedstock:

Illinois No. 6 coal: 24,533 tons/day x 13,126 Btu/lb. x 2000 lb./ton =

644,040,316,000 Btu

Products:

diesel: 27,819 bbl/day x 42 gal/bbl/ 123,600 Btu/gal =

144,413,992,800 Btu

naphtha: 22,173 bbl/day x 5,248,000 Btu/bbl =

116,363,904,000 Btu

product total =

260,777,896,800 Btu

Calculation:

Product (260,777,896,800) / Feedstock (644,040,316,000) = 40.5%

CRS-30

Table A1. Energy Consumed by Refining in 2005

Volume by Unit

Crude Oil Refined

Heat Content

Energy (million BTU)

5,555 million barrels

5.825 million Btu/barrel

32,221,264,446

Liquefied Petroleum Gases

4.17 million barrels

4.000 million Btu/barrel

16,680,000

Distillate Fuel Oil

0.76 million barrels

5.825 million Btu/barrel

4,427,000

Residual Fuel Oil

2.21 million barrels

6.287 million Btu/barrel

13,894,270

Still Gas

238.24 million barrels

6.000 million Btu/barrel

1,429,440,000

Petroleum Coke

89.65 million barrels

6.024 million Btu/barrel

540,051,600

Other Petroleum Products

5.33 million barrels

5.825 million Btu/barrel

31,047,250

Natural Gas

682,919 million cubic feet

1,027 Btu/cubic foot

701,357,813

Coal

41,000 short tons

20.4 million Btu/ton

836,400

Purchased Electricity

36,594 million kilowatt hours

3,412 Btu/kilowatt-hour

124,858,728

Purchased Steam

63,591million pounds

1,000 Btu/pound

63,591,000

TOTAL ENERGY CONSUMED IN REFINING

2,926,184,061

FUELS CONSUMED ÷ CRUDE OIL REFINED =

9.08%

Fuels Consumed

Sources: U.S. DOE EIA, Petroleum Navigator, Fuel Consumed at [http://tonto.eia.doe.gov/dnav/pet/pet_pnp_top.asp] (Refineriespet_pnp_capfuel_dcu_nus_a.xls); U.S. DOE EIA,

Thermal Conversion Factor Source Document [http://www.eia.doe.gov/emeu/mer/pdf/pages/sec12_a_doc.pdf].