Quantex targets coal-to-liquids conversion at less than $50 per barrel
| 22 June 2011 | Mike Byfield – Oilpatch Report
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| Gordon Eberth, COO of Quantex Energy Inc., admits that his company’s coal-to-liquids (CTL) process seems too good to be true. Could there really be a CTL technology that converts low-grade raw coal to synthetic crude and high-value green coke at a break-even operating cost under US$50 per barrel? A conversion process that generates less CO2 per barrel than Arab light crude?
“Yes, it’s true – almost for sure,” says Eberth with a grin. “We’ve proven the technology in the lab, producing about one barrel per day. That’s a larger bench test than usual. We’re about to do the detailed engineering for a pilot plant producing up to 150 barrels per day [b/d] at Beaumont, Texas. The next move will be a series of reactors, each 1,000 b/d, which can be scaled up progressively to form a commercial plant with a capacity of 20,000 b/d or more. The commercial operation could launch as early as 2013/1024.” Quantex ranks as a micro-firm at this stage but it has at least one powerful ally. New Hope Corporation Limited is an Australian coal mining firm with a market capitalization of US$4.4 billion. A partner in Quantex, New Hope reported in 2010 that it had invested $4 million in the direct CTL process, and will inject another $35 million this year and next. Capital cost for a fully commercial CTL operation are estimated to be much less than Alberta’s oilsands, according to Eberth. Unlike bitumen processing, a Quantex-based reactor should operate efficiently at a relatively small volume. By keeping reactors small, start-up capital costs will remain in the range of millions, not billions. Also, the chemical reaction becomes more predictable. Eberth, who holds a bachelor’s degree in economics, was marketing vice-president at Calgary-based Fording Coal. In 2002 Fording merged with Teck Cominco and Luscar to form the Elk Valley Coal Corporation, where Eberth continued in the same role until 2007. The next year he signed on with Calgary-headquartered Quantex, a privately-held firm. Its chairman and CEO is Gilbert Chalifoux, an entrepreneur based in Toronto. This CTL process was discovered at West Virginia University, funded by the U.S. Department of Energy. The DOE was actually looking to manufacture coke and got crude as an unexpected byproduct. Further research indicated that a higher volume of oil was produced from lower grades of coal, another welcome surprise. Chalifoux acquired the rights and launched Quantex in 2007. The best-known coal liquefaction technology is the Fischer-Tropsch process, developed in oil-starved Nazi Germany and commercialized in South Africa when that country was under an international oil boycott. Fischer-Tropsch is an indirect process that converts coal to synthetic gas and the syngas to hydrocarbon liquids. The technology is expensive, involving high pressure and massive CO2 production. The Quantex technology involves crushing the coal and mixing it with a cheap diluent like coal tar distillate or decant oil, plus several additives. “The additives are safe, you could spray them on your mother,” Eberth says. The mix is then put through a centrifuge to remove ash and distilled to remove the diluent. The coal, now in a form called pitch, goes through a form of delayed coking that transforms it into intermediate-grade crude oil and green coke. Process pressures are low, temperatures a modest 400–500 degrees Centigrade. Ash would normally be disposed of at the mine site. What are the remaining risks? “Crushing, distillation, centrifuging and pumping are routine processes that scale up predictably,” Eberth replies. “We still don’t know whether the required chemical reaction will occur with crushed coal and diluent at a larger scale. There’s no reason to believe it won’t but you never know for sure until it’s demonstrated.” About two-thirds of the treated coal becomes crude, the rest green coke. The latter can be used as synthetic metallurgical coke or Pulverised Coal Injection (PCI) coal as well as anode and needle coke. These fuels are used in steel blast and electric furnaces, and aluminum smelters. “Initially I was concerned that we might flood the coke market but that’s not the case. The Chinese will need a lot of it as their economy continues to grow. Their first-generation steel products haven’t worn out yet but in future they will need to be recycled as scrap steel in electric furnaces,” Eberth says. “The most economic feedstock for our process would be land-locked deposits of low sulfur, low grade coals. The U.S. has large reserves of this kind in the [western] Powder River Basin. Alberta and Saskatchewan have similar resources,” continues the Quantex COO, adding that a lower-cost variant of its technology could produce diluent for bitumen pipelining purposes. The BP Statistical Review of World Energy calculates the global reserve-to-production ratio of proven oil reserves at 46 years, with 77% located in OPEC nations. Coal, generously distributed across the northern hemisphere as well as elsewhere, has an R/P ratio of 118 years. New Hope plans to proceed with at least one commercial plant once the pilot proves successful. |
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