ENGINEERING BETTER AIR QUALITY

1. ENGINEERING BETTER AIR QUALITY TOMAS MARAMBA III OIL, GAS, AND CHEMICALS GLOBAL BUSINESS UNIT BECHTEL INFORMATION PROGRAM BECHTEL CORPORATION HOUSTON, TEXAS Email: tcmaramb@bechtel.com REDUCING EMISSIONS FROM COAL COMBUSTION: DON’T COMBUST COAL – GASIFY IT! BETTER AIR QUALITY 2006

2. GASIFICATION BETTER AIR QUALITY 2006 Source: Gasification Technologies Council

3. GASIFICATION Gasification feedstocks: coal, petroleum products, natural gas, or biomass; with water, and oxygen. The oxygen, carbon, and water (or steam) in the feed produces syngas - CO (carbon monoxide) and H2 (hydrogen). The gasifier reactor operates at high temperature and pressure. Gasification products: electric power, methanol, hydrogen, ammonia/urea, Fischer-Tropsch liquid fuels (gasoline and diesel), and synthetic natural gas. Polygeneration (multiple products from one gasification plant) is an option. In 2004, there were 117 operating gasification plants. Asia/ Australia has 22% of world gasification capacity. 37% of world capacity is used for chemical production, 36% for Fischer-Tropsch liquid fuels, 19% for power generation, and 8% for gaseous fuels. (2004 US DOE/NETL World Gasification Survey) BETTER AIR QUALITY 2006

4. IGCC Integrated Gasification Combined Cycle (IGCC) Technology: the syngas from gasification is converted to electric power in a combined cycle power plant similar to natural gas combined cycle. IGCC Technology proven in 4 commercial-size demonstration plants: Tampa Electric (Florida), Nuon Buggenum (Netherlands), Elcogas Puertollano (Spain), and Wabash River (Indiana) (Debyani, Harvard, Sept. 2005). China’s Yantai IGCC Demonstration Plant is still in the planning stages. IGCC advantages over coal combustion technologies (such as pulverized coal or circulating fluidized bed): • Better emissions performance • Lowest cost CO2 capture and sequestration option • Fuel flexibility – capable of processing high sulfur fuels • High Efficiency (Integration of gasification Plant with combined cycle unit: heat exchange, extraction air to ASU, etc.) • IGCC can be a bridge to a future Hydrogen Economy BETTER AIR QUALITY 2006

5. IGCC Integrated Gasification Combined Cycle Technology • IGCC power plants have lower emissions because pollutants in syngas are removed at high concentration and high pressure before combustion. Conventional coal plants treat the flue gases from combustion, which are at low pressure and of much larger volumes than the syngas, so clean-up is more difficult and expensive. IGCC Emissions Summary (from U.S. EPA Report EPA-430/R-06/006, July 2006): • Greater than 90% mercury removal • 18% less NOx than supercritical pulverized coal (SCPC) • 50% less SOx than SCPC • 42% less particulate matter (PM) than SCPC Currently, proposed IGCC plant emissions are almost equivalent to natural gas combined cycle. BETTER AIR QUALITY 2006

6. IGCC • Mercury is removed from the syngas at high pressure using activated carbon beds or other equivalent proven technology. • IGCC water consumption is 30% lower than conventional coal technology. (EPA-430/R-06/006) • IGCC produces half the solid waste of conventional coal (EPA-430/R-06/006) and in more useful form (vitrified slag that is impervious to leaching) (Debyani, Harvard, 2005). • If CO2 sequestration is required, the cost of electricity from IGCC is lower than from any other coal technology, and certainly lower than from natural gas power generation, given the current relative prices of coal and natural gas. (Dancison, AEP, 2006) The IGCC capital cost per kilowatt is now aproaching 20% of supercritical pulverized coal (SCPC) plants. (Rigdon, GE, & Schmoe, Bechtel, GTC 2005) BETTER AIR QUALITY 2006

7. IGCC Although natural gas power plants are cheaper to build than IGCC plants, currently in most of Asia the cost per million Btu is much higher for natural gas than for coal or petcoke. So the cost per kw-hr for a coal IGCC would be lower than for natural gas CC. Several U.S. utilities (including AEP, Duke Energy, the Southern Company, and Edison) have recently announced plans to build commercial coal or petcoke-fired power plants using IGCC technology. The need to reduce mercury, NOx, SOx, PM, and future greenhouse gas emissions was cited as the main driving force behind their decisions. (Europe, too: E.ON, RWE) IGCC technology is currently best suited for high-sulfur bituminous coals. Alternatively, petroleum coke can be blended with sub-bituminous coals or lignite to feed an IGCC. Dispatch-wise, an IGCC would be optimum as a baseload plant, although it can also be configured as load-following or peaking plant. However: Utility Companies’ cultural unfamiliarity with Process Plants (Gasification portion of IGCC) needs to be overcome. BETTER AIR QUALITY 2006

8. IGCC – CARBON CAPTURE AND SEQUESTRATION Up to 100% of the CO2 can be captured from the syngas before the fuel is combusted using conventional carbon capture technology. CO2 capture from IGCC has lower capital and operating costs than any other power generation technology. Gasification CO2 capture involves adding shift reactors to react the CO in the syngas with H2O to CO2 and H2, then modifying the gas cleanup system to capture the CO2 and compress it. Example: The Dakota Gasification Company has been selling CO2 from its gasification plant for injection into EnCana Corporation’s oilfields in Saskatchewan, Canada for enhanced oil recovery, since October, 2000. The CO2 pipeline is 205 miles long. For an IGCC installation, the gas turbines in the IGCC power island would be modified to run on hydrogen-rich syngas. The U.S. DOE has chosen IGCC as a major part of its $1 billion FutureGen Initiative to develop a zero-emissions power plant with CO2 sequestration. BETTER AIR QUALITY 2006

9. IGCC – CARBON CAPTURE AND SEQUESTRATION CO2 sequestration options: • Inject into deep geologic formations such as saline aquifiers, unminable coal seams, or into older oil fields to enhance oil recovery, as in the Dakota Gasification example. Recent development: BP and Edison Mission Group announced that they are planning a new $1 billion petcoke gasification plant to generate power from hydrogen in Carson, California. The plant will also sequester 90% of the CO2 for enhanced oil recovery in the San Joaquin Valley oil fields. • Deep-water ocean sequestration – viable option in some coastal areas of Asia. Much R&D still required. • Bind CO2 into a stable mineral form for disposal. Nexant (a Bechtel affiliate) is performing R&D on this technology. In short: CO2 capture uses conventional, proven technologies; however, CO2 sequestration is not yet in wide use and research and development is still being performed. BETTER AIR QUALITY 2006

10. SYNTHETIC (OR SUBSTITUTE) NATURAL GAS The cost of natural gas has risen significantly, and greatly fluctuates. In the U.S., the December 2005 cost of natural gas peaked at US$14 per million BTU (currently ~$8). Oil = $10 per million BTU (at $60 per barrel); Coal price ranges from less than US $1 to $2.50 per million BTU, depending on coal quality. • Natural Gas availability – not all Asian countries have significant natural gas reserves. Sources of natural gas for Asia: • Domestic natural gas reserves and natural gas pipelines • Imported liquefied natural gas (LNG) – requires LNG receiving and re-gas facilities. Bechtel is currently building a huge LNG receiving and re-gas facility in Louisiana (Cheniere Sabine Pass). Bechtel is also one of the leading builders of LNG production facilities, with several projects in Trinidad, Egypt, Darwin Australia, Equatorial Guinea, and others. • Synthetic natural gas (SNG) produced by coal gasification - convert coal into a clean fuel for power and transportation. BETTER AIR QUALITY 2006

11. SYNTHETIC NATURAL GAS BETTER AIR QUALITY 2006

12. SYNTHETIC NATURAL GAS 2004 U.S. DOE study: SNG from lignite gasification feasible when natural gas price is US$7 per MMBTU (Marano, 2004). Also, several sources (Peabody Energy, Conoco Philips, Indiana Gasification LLC) have stated that SNG can be produced from coal at US$6 per MMBTU. Current SNG from Coal Production: The Great Plains Synfuels Plant (owned by Dakota Gasification Company) has being producing SNG from lignite since 1984 (54 billion SCF SNG/year from 6 million short tons of lignite) Current SNG Projects Under Development: • Indiana Gasification LLC has announced plans to construct a 40 billion cubic feet per year SNG plant in southwest Indiana. The plant would use 3 million tons of coal per year. • The Power Holdings of Illinois LLC Southern Illinois Coal to SNG project plans to convert 4 million short tons/year of coal to 50 billion cubic feet synthetic natural gas Bottom line: It may be feasible to produce SNG from coal in Asia. BETTER AIR QUALITY 2006

13. SYNTHETIC MOTOR VEHICLE FUELS Converting coal to synthetic natural gas for use as CNG in motor vehicles is one way for Asian countries to use local coal as an indirect motor vehicle energy source. Another way is to produce liquid synthetic fuels (synthetic diesel and gasoline) from coal. This option requires totally new and capital intensive facilities. Capital costs are in the billions of U.S.$ for a commercial-size facility. Profit potential can be attractive when oil prices are high, since feedstock is not crude oil but coal or natural gas. U.S. EIA now predicts oil prices to remain above US $47/bbl through 2030. • Synthetic fuels contain little or no sulfur. This is their biggest advantage in environmental terms. • Using natural gas to make synthetic fuels may be feasible only for areas with huge stranded natural gas reserves, like Siberia or Qatar. • In most of Asia (especially China and India), coal is the more economically feasible feedstock for synthetic fuels. BETTER AIR QUALITY 2006

14. COAL LIQUEFACTION – COAL TO LIQUIDS (CTL) There are two possible coal liquefaction routes: Direct coal liquefaction (DCL) - produces good quality naphtha, but low quality diesel (low cetane number). DCL more energy-efficient than indirect coal liquefaction. The direct process feeds the ash/coke from the liquefaction reactor to a gasifier, and coverts it to hydrogen for the liquefaction reaction. Indirect coal liquefaction (ICL) – produces high quality diesel, but low-octane naphtha. Coal is gasified with water to produce syngas, which is further reacted with a catalyst to produce motor fuel components. (SASOL plants in South Africa) Hybrid plant (combination of direct and indirect liquefaction) being proposed. Asian CTL project underway in Shenhua, China (DCL). Studies currently on-going in India and the Philippines (Headwaters Technology). Bottom line: Coal liquefaction may be economically feasible when crude oil prices are above US$35 per barrel (Boyce, Peabody Energy, October 2005). For the first time, US EIA predicts production of CTL fuels in the US before 2030. BETTER AIR QUALITY 2006

15. ENGINEERING BETTER AIR QUALITY Summary: • Coal Gasification is a cleaner alternative to coal combustion. • The first commercial coal-fed Integrated Gasification Combined Cycle plants for power generation are in the front end design stage and will start to come on-line around 2010 in the U.S. and Europe. • Coal can also be gasified and converted to synthetic natural gas for use in power generation and in compressed natural gas vehicles. High natural gas prices have made this technology more feasible. • Coal gasification can also be used in direct and indirect coal liquefaction to produce gasoline and diesel for motor vehicles. High oil prices have made this technology more feasible as well. • Coal gasification can be used as a bridge to a future Hydrogen Economy. END BETTER AIR QUALITY 2006