Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
Are large-scale coal gasification projects worth all the expense?
“If somebody makes a breakthrough technology it may be worthwhile, but so far it hasn’t made much financial sense,” said Dan Kish, senior vice president of policy at the Institute for Energy Research, a Washington, D.C.-based think tank that advocates for free-market solutions to energy issues.
“Coal gasification is not new. It’s been around at least 30 years,” said Alison Kerester, executive director at the Gasification Technologies Council, which advocates for the industry. “What’s new with Duke and Kemper is the scale … Anytime you’re going to scale up like that, you inevitably are going to have issues that come up during construction and initial operation that need to be resolved.”
What will natural gas prices look like over the next 40 years?
Well, over the past 20 years, prices recorded at the dominant Henry Hub distribution center in Erath, Louisiana, ranged from a low of $1.05 per million BTU to a high of $18.48. Over the past 10 years prices ranged from $1.46 to $13.31.
The current price is $2.60. Forecasts show prices rising over the next two decades, but they vary in pace and amount. The U.S. Energy Administration projects natural gas prices through 2040 using multiple scenarios that encompass demand, supply, exports and various consumption projections. Its latest forecasts indicate prices may remain below $4.50 or jump as high as $9.20.
The only knowable thing about natural gas prices is they are volatile.
When Mississippi Power Company proposed its Kemper lignite plant to the Public Service Commission over a decade ago, traditional coal-fired plants were under attack by environmentalists and EPA and natural gas prices were high, averaging $7.81 at Henry Hub from 2005 through 2008. The company and the commission deemed it prudent for Mississippi Power to pursue an alternative fuel source for its next baseload power plant. The alternatives were nuclear and clean coal. Given Mississippi’s vast, cheap lignite deposits, the clean coal alternative was chosen.
All know what happened next. Shale oil discoveries dramatically ramped up gas supplies, driving down prices. And the costs to build the lignite plant skyrocketed.
Over the next several months, PSC commissioners will be tempted, and politically pressured, to gaze into a crystal ball and guess what natural gas prices will be over the next 40 years. That’s because the lignite plant will soon come fully online and the commission has linked the “viability” of the plant to natural gas prices.
Yes, the technology works. Syngas produced from lignite coal has powered electricity generation, which has been delivered to Mississippi Power customers for weeks now. Carbon dioxide has been sequestered, sulfuric acid produced, and both delivered to downstream users.
The final hurdle for the plant to come fully online is for both syngas turbines to operate simultaneously for a specified period of time.
When it does, the company will ask commissioners to approve rates to allow recovery of costs for building and operating the multi-function facility. Building costs for the power plant were capped at $2.8 billion. Another $1.4 billion was authorized for the CO2 pipeline, the coal mining operation, and limited other items. Allowable operating costs have yet to be determined.
How much cost to allow Mississippi Power to recover from ratepayers will be the great challenge for our elected commissioners. Politicians tend to focus on the moment. Utility companies must focus on multiple decades. That’s why major power generators have diversified baseload fuel supplies. History has shown reliance on a single fuel source over time to be imprudent.
So, the real analysis facing commissioners is not what natural gas prices may do, but how much rate payers should invest to provide Mississippi Power necessary and prudent fuel diversification.
Mississippi Power announced Monday it expects the Kemper energy facility to be operational with lignite coal by April 30.
Kemper plant cost rises $70M as start date pushed again
The company also upped the cost estimate by $70 million in its February report to the Mississippi Public Service Commission, which spokesman Jeff Shepard said will be paid by Mississippi Power and Southern Co. and not its customers.
The breakdown of costs is: $45 million related to extending the projected schedule through April 30, $15 million for start-up fuel and $10 million for outage work and operational maintenance and improvements.
In its January report, Mississippi Power reported leaks in tubes on one of the syngas coolers and estimated the start date at mid-March. The company said the leaks in the tubes made that date unattainable.
“The schedule adjustment is related to repairs of tube leaks and associated corrective actions in one of the project’s syngas coolers,” Shepard said. “The repairs have been completed and the new schedule reflects the time needed for restarting that portion of the plant and to achieve integrated operation of all plant systems.”
While one syngas system was down for repairs, he said the other system remained in operation and producing clean syngas for chemical product production and electric power generation.
Integrated operation will occur when both of the plant’s gasification systems, the gas cleanup and generation systems operate simultaneously, he said.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
ROCKMAN wrote:The world's largest CO2 sequestration project only received about 10% of it's funding from the federal govt. It isn't President Obama's questionable CO2 sequestration project. It's NRG Energy et al questionable CO2 sequestration project.
Even if the sequestration side is a bust at least the US tax payers will get some return as a result of the additional oil recovery.
Pertamina partners with Adaro, Indika for coal gasification facilities
The Jakarta Post Jakarta / Wed, December 9, 2020 / 07:04 pm State-owned oil and gas giant Pertamina signed on Monday a strategic partnership with privately owned coal mining giants PT Adaro Energy and PT Indika Energy to develop coal gasification facilities in Indonesia.
Pertamina president director Nicke Widyawati, in a joint statement on Monday, said the companies aimed to convert low-rank coal – the dirtiest fossil fuel – into dimethyl ether (DME), which would replace imported liquefied petroleum gas (LPG) as the go-to cooking gas in Indonesia. “This aligns with Pertamina’s strategy going forward to optimize [domestic] natural resources as feedstock to produce energy so we can reduce imports and the trade deficit,” she said. Pertamina’s partnership with Adaro and Indika is meant to fill the gap in domestic DME supply needed by Pertamina, the country’s largest LPG distributor.
The switch to DME is supposed to lower the consumption of LPG, a fuel the country has been heavily importing at the cost of widening its trade deficit, a key vulnerability for Southeast Asia’s largest economy.
From January to October this year, the trade deficit in oil and gas reached US$5.14 billion, as imports stood at $11.68 billion against exports at $6.54 billion, Statistics Indonesia (BPS) data shows. The trade deficit is less than $7.99 billion recorded in the same period last year.
Indonesia to mix coal-based DME, LPG as cooking gas to reduce imports In October this year alone, Indonesia’s oil and gas imports fell by 38.6 percent year-on-year (yoy) to US$1.08 billion from the same month in 2019, amid cooling economic activities due to the COVID-19 outbreak.
Nicke had told lawmakers in Jakarta in February that Pertamina’s own under-construction, coal-to-DME plant in South Sumatra could only replace roughly a quarter of the country’s total imported LPG. Pertamina’s plant, being jointly developed with national coal miner PT Bukit Asam and United States-based Air Products, is slated to produce 1.4 million tons of DME annually, compared to the country’s need for roughly 5 million tons of LPG annually. Meanwhile, while Adaro is currently looking to develop a coal-to-methanol facility and Indika an underground coal gasification facility, the statement did not indicate which company would build the capacity to convert these coal derivatives into DME.
Both miners' facilities are slated to be built in Kalimantan. “[Indika] is committed to studying downstream technology,” the coal miner wrote in a separate statement on Monday. The deal also brings Adaro and Indika closer to securing a state-backed DME offtaker for their capital-intensive projects that according to one landmark study, might not always be economically competitive with imported LPG.
An Institute for Energy Economics and Financial Analysis (IEEFA) study published on Nov. 10 calculated that at current low LPG prices, Bukit Asam would face $377 million dollars in operational losses each year in selling DME at competitive prices with LPG. The government countered the study in a statement on Monday by saying that LPG prices had averaged at $600 per ton over the past 10 years, higher than the $365 per ton price tag used in IEEFA's study, and thus, the project was "economical and not a loss”. “That means Pertamina is committing itself to a capacity payment for DME, whose profit or loss depends on the LPG prices at that time,” IEEFA analyst Elrika Hamdi to The Jakarta Post on Tuesday. For Adaro, Indika and Bukit Asam, downstreaming is also a means of diversifying its coal business as the global market slowly moves away from coal-fired power plants, the biggest market for the dry fuel. Adaro commissioner Arini Saraswaty Subianto, who Forbes listed as one of Indonesia’s richest women last year, said in the joint statement that the downstreaming project “opened the opportunity to diversify and develop Adaro’s business”. FOLLOW OUR SOCIAL MEDIA The Jakarta Post
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
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