coal-to-liquids technology and its importance to the air force and civilian aviation presented at...
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COAL-TO-LIQUIDS TECHNOLOGY AND ITS IMPORTANCE TO THE AIR
FORCE AND CIVILIAN AVIATION
Presented at the Western Business
Roundtable Briefing on Coal-to-Liquids
Technology and Legislation
S-115, U.S. Capitol
February 27, 2007
Roger H. Bezdek. Ph.D., President
Management Information Services, Inc.
www.misi-net.com
THIS PRESENTATION
• Summarize U.S. energy dependence• Assess implications of increasing energy imports• Discuss key role of coal in enhancing U.S. energy
security• Describe coal-to-liquids (CTL) technology• Identify CTL advantages over alternate fuels• Estimate U.S. CTL potential• Discuss DOD and USAF interest in CTL fuels• Discuss U.S. commercial airlines’ interest in CTL fuels
U.S. ENERGY IMPORTS ARE INCREASING
EIA forecasts that by 2030 U.S. will be importing 2/3 of its oil and nearly 25% of its natural gas
Source: EIA, Annual Energy Outlook 2007, December 2006
0%
10%
20%
30%
40%
50%
60%
70%
Oil Natural Gas
Imp
ort
s
20052030
20052030
SECURITY CONCERNS: U.S. IMPORTS CONTINUE TO INCREASE
• Excessive dependence on imported oil from OPEC and others
• Potential of excessive dependence on imported natural gas
• World oil production may soon peak and begin to decline
• Record trade deficit ($764 billion in 2006) driven by energy prices
• Increased global competition from China, India, and others
• Supply disruptions by natural disasters or terrorism
• National security concerns
SERIOUS RISKS TO U.S. OFINCREASING ENERGY IMPORTS
PRESIDENT BUSH: “REDUCE OIL IMPORT DEPENDENCE”
First Thing to do: Stop Digging!Just to keep oil imports at current level will require an additional 5
MMbpd U.S. production of liquid fuels by 2025
Imports held at 2005
level
Projected Production
Supply Gap
0
5
10
15
20
25
30
millio
n b
arr
els
per
day
COAL IS KEY TO U.S. ENERGY SECURITY AND INDEPENDENCE
Eliminating U.S. oil imports by 2030 – Southern States Energy Board, 2006
Conventional Oil Production
CTL
Biomass
Oil Shale
EOR
Import Gap
Trans.Eff iciency
0
5
10
15
20
25
30
MM
bpd
15%
16%
24%
29%
16%
Coal-to-Liquids
Transportation Effiiency
Biomass
Oil Shale
Enhanced Oil Recovery
0
5
10
15
20
25
30
35
40
45
50
55
Oil5%
Gas10%
Coal85%
Ultimately recoverable demonstrated reserves on Btu basis. Source: USGS, National Assessment of United States Oil and Gas Resources, U.S. Coal Reserves; Energy Information Administration Monthly Energy Review, August 2006 Table 7.2b, 2005 data.
U.S. Fuel ResourcesU.S. Fuel Resources Electricity Fuel SourcesElectricity Fuel Sources
Co
al
Nu
clea
r
Gas
Hyd
ro
Oth
er
51.3%
20.1%17.4%
6.7%
3.0%P
erc
en
t o
f E
lec
tric
ity
Ge
ne
rati
on
COAL IS AMERICA’S MOSTABUNDANT FUEL
1.5%
Oil
LIQUID FUELS FROM COAL
U.S. Could Be the New Middle East1.55 Trillion Barrels of Coal Synfuel
Old Middle EastSaudi Arabia:
261.8 Billion BarrelsIraq:
112.5 Billion BarrelsUAE:
97.8 Billion BarrelsKuwait:
96.5 Billion BarrelsIran:
89.7 Billion Barrels Qatar:
15.2 Billion BarrelsOman:
5.5 Billion BarrelsYemen:
4.0 Billion BarrelsSyria:
2.5 Billion Barrels
TOTAL 686 Billion Barrels
Recoverable reserves 0.55 B Bbls
Demonstrated
reserve base 1.0 T Bbls
U.S. Domestic CoalU.S. Domestic Coal(oil equivalent)(oil equivalent)
TOTAL 1.55 T Bbls Equivalent
COAL-TO-LIQUIDS TECHNOLOGY
A Proven Technology Currently in Use World-Wide
1033UPGRADE
The FT liquid product is upgraded to ultra
high purity fuels33UPGRADE
The FT liquid produced is upgraded into
ultra clean synthetic fuels
22FT CONVERSION
Syngas passes through an FT catalyst and
is converted to an ultra-clean liquid22FT CONVERSION
Syngas passes through an FT catalyst and
is converted into hydrocarbon liquid
11GASIFICATION
Coal is converted into syngas11GASIFICATION
Coal is converted into syngas
Natural GasCoalPet CokeBiomassWastes
Synthesis GasProduction
OxygenPlant
Air
O2
FTLiquid
Synthesis
ProductRecovery
LiquidFuels
Transportation Fuels
TailGas
PowerGeneration
H2
HydrogenRecovery
WaxHydrocracking
Wax
Hydrogen Separation
Hydrogen
LiquidFuels
AnOption
FISCHER-TROPSCH TECHNOLOGY
COH2
ESTIMATES OF U.S. CTL POTENTIAL
• SSEB Study (July 2006): 5.6 MMBPD by 2030
• USDOE/National Energy Technology Laboratory Study (July 2006): 5.1 MMBPD by 2027
• U.S. National Coal Council Study (March 2006): 2.6 MMBPD by 2025
• USDOE Unconventional Fuels Task Force (November 2006): 2.5 MMBPD by 2035
• Bottom Line: All studies indicate huge potential for CTL in the USA
DOD ENERGY CONCERNS
ground fuels, 15.1%
marine fuels, 7.9%
jet fuels, 73.5%
Military DemandApprox 2% of US
ConsumptionApprox: 300,000 bbl/ day
of 20M bbl/day Total
Lack of secure & reliable sources of energy Dependent on foreign oil Becoming dependent on foreign refined fuels
Supply chain vulnerability Reliance on mega-refineries Vulnerable to terrorist threats and natural disasters
Need for cleaner fuels DoD exempt from some EPA regulations
Need for Better Fuels Thermal stability, advanced engines, fuel cells
Need for Fewer Fuels 9+ Fuels presently in use
Potential limits on deployments Possible conflict with EU rules
“DoD intends to catalyze the commercial industry to produce clean fuels for the military from secure domestic resources using environmentally sensitive processes to enable a bridge to the future.”
Theodore K. Barna, Ph.D.Assistant Deputy Under Secretary of Defense/Advanced Systems and Concepts
Fischer-TropschFuels
Hydrocarbon Rockets (RP-1 replacement)
Hypersonic Vehicles(JP-7 replacement)
Hydrocarbon reformers(fuel cell power generation)
low emissions, high stability
high stability, endotherm
No sulfur, no aromatics
High therm
al stability,
high H/C
ISP=362.5
1200 Btu/lb cooling
2.2X – 5X increase in cooling
DOD GOAL: SINGLE BATTLESPACE FUELFROM UNCONVENTIONAL RESOURCES
No poisoning, less coking
of reformer catalyst
high cetane, >74
reduced exhaust pollutants
Army and Marine Equipment
Single Fuel for the Navy
Ships(JP-5/F-76 replacement)
Current and advanced gas turbine aircraft(Jet A/JP-8 replacement)
U.S.U.S.
USG/DOD/AF FUEL UTILIZATION
(USAF USES 57% OF USG FUEL)
Gov’tGov’tOther Govt: 7.5%
DoD: 92.5%
Army: 9%Marines+other: 1%
DoDDoDAF: 57%($2.84B, 2.8B gal)
Navy: 33%
AFAF
Non Gov’tNon Gov’t98.1%98.1%
Gov’t 1.9%Gov’t 1.9%
% of 20.5M bbl/day US petroleum consumption (861M gal/day)[DOE]
% of U.S. government petroleum consumption [DOE]
% of DESC petroleum purchases
FY04 ($4.96B). Includes nat gas + missile fuels, but they are ~2% of
total.NOTE! FY04 JP-8=$0.91/gal.
FY06=$2.14/gal
4.4% Other
4.2%Trainers
30.1%Fighters
7.1%Bombers
54.2% Mobility:Tankers + Transports
% of AF fuel consumed by aircraft type (FY98-04)
DOD ENERGY USETOTAL SITE-DELIVERED ENERGY (BTU)
919 Trillion BTU
Nation’s single largest energy user (1% of total U.S. energy use & 78% of Federal energy use)
Application
Installations
Buildings22%
Vehicles74%
Industrial3%Exempt
1%
Commodity
$10.9B
Other0.8%
Coal1.6%
Steam 1%Auto Gas
0.7%
Electricity18%
Fuel Oil3%
Natural Gas 8%
Jet Fuel
71%
Diesel 2.3%
AIR FORCE ENERGY USE (COST)
AF Energy Bill (Fuel) exceeds $10M per day
Every $10/barrel increase drives up AF fuel costs $600M per year
Other6%
Aviation (Mobility)49%
Facilities3%
Ground Fuel2%
Aviation (Other)5%
Aviation (Trainer)3%
Aviation (Bomber)7%
Aviation (Fighter)25%
Grd Fuel2%
Aviation89%
Facilities3%
Other6%
ENERGY – THE USAF VIEWAF is, by far, Government’s Largest User of Fuel
• Energy is an Economic Security Issue– $5B/yr; 80% supports aviation operations– Costs have doubled since 9/11
• Energy is a National Security Issue – Flying hours cuts hurt training and combat readiness– Assured, domestic sources of supply required– Resilient & reliable energy distribution capability needed
• Post-Katrina/Rita crude oil prices remain high– Worldwide oil market remains jittery– Gulf of Mexico shut-in production capacity constrained– Energy price forecasts to remain elevated through 2007
• The Air Force’s energy problem is a subset of the Nation’s problem at large; the AF can demonstrate leadership
• While energy conservation can help, a more comprehensive Air Force energy strategy is required
• Develop “enough independence to have assured domestic supplies for aviation purposes “
$0.0$0.5
$1.0$1.5
$2.0$2.5$3.0
$3.5$4.0
$4.5$5.0
Bill
ion
s
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0.5
1.0
1.5
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lio
ns
USAF AVIATION FUEL COSTS & TRENDS
Aviation Fuel Consumption in Gallons Fuel Cost (TY$) and Gallons Per Flying Hour
Total aviation fuel costs (TY$) • Aviation fuel consumption-rate increased 6% during last 10-yrs
• Fuel CPFH has increased 144%
• Some factors
• Fuel consumption jumped in support of GWOT
• Standard price of aviation fuel increased dramatically FY04 & FY05
• AF is committed to reducing U.S. dependence on Middle Eastern oil by innovative practices and pursuit of latest technologies
$-
$500
$1,000
$1,500
$2,000
$2,500
Co
st
pe
r F
Ly
ing
Ho
ur
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llon
s p
er
Fly
ing
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ur
AIR FORCE PROGRAM
• AF Goals:
– Accelerate development and use of alternative fuels
– Increase use of synfuels to 100 million gallons in the next two years
– 50% of fuel will be synfuels by 2016
• Secretary of the Air Force request: Demonstration of F-T fuel in manned Air Force aircraft – accomplished in a B-52
• Air Force Materiel Command (AFMC) is lead organization
• AFMC to define steps after demo
• Partner with industry to facilitate development of U.S. synfuel industry
USAF SYNTHETIC FUEL PROGRAM PLAN
Continue to build consensus; signal intent to the industryAviation Flight Demonstration
Procure 100,000 gals Synfuel; distribute to TACOM, Pax River, WP-AFB, WR- ALC, OC-ALC & Edwards AFBConduct basic materials compatibility testing at WPAFB, TACOM-Detroit, Naval Fuels lab @ Pax River; publish resultsConduct diesel engine tests at TACOM- Detroit and SWRIConduct Solid Oxide Fuel Cell tests at WR-ALC, GA, publish resultsStatic ground engine runs at Tinker AFB, collect some science, publish resultsOn wing ground engine runs at Edwards AFB, collect some science, publish resultsB-52 Flight Test, collect some science, publish results
DESC (DLA) Request for Information (RFI)Seek industry response to a broad area questionnaire on the readiness/interest to
invest in large scale, long term Synfuel production capability in support of long- term defense contractsAnalyze results from RFI and other Studies
FISCHER-TROPSCH FUELS BENEFITS
-12% -13%
-33%
-41%
-57%
-68%
-78%
-25%-30%
-50%
-61%
-75%
-86%
-92%
-51%
-96%-100%
-75%
-50%
-25%
0%
12.5 25 37.5 50 62.5 75 87.5 100
% Volume of FT Fuel in JP-8
% C
ha
ng
e i
n P
art
icle
Nu
mb
er
De
ns
ity
Cruise
Idle
12.5 25 37.5 50 62.5 75 87.5 100
y
Significantly Reduced Emissions
Scanning Brookfield Viscosity
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50
100
150
200
-65 -60 -55 -50 -45 -40 -35 -30 -25 -20
Temperature, °C
Vis
co
sit
y (
cP
)
`
Superior Low TemperatureProperties
Relative Total Deposition – ECAT (6 Hrs)
De
po
sit
ion
, m
icro
gra
ms
/cc
Excellent Thermal Stabilityat High temperature
JP-8JP-7
S-5
S-8
SR-71
COMMERCIAL AIRLINES ARE ALSO CONCERNED ABOUT RISING FUEL PRICES
• Fuel has overtaken labor as the largest
operating expense for most U.S. airlines• Fuel now constitutes 25 – 30% of total airline
operating costs – twice the historical average• When the price per gallon of jet fuel increases
by just one cent/gal., it costs the industry an
additional $195 million in annual operating expenses• American Airlines, which uses more oil annually than the country of
Ireland, in 2005 paid $2.8 billion more for fuel costs than in 2003. • Unlike other modes of transport, aircraft currently have no
alternative source of energy
U.S. Airlines Costs in 2006
Fuel 27.4%
Labor 23.6%
Transport Related 13.9%
Rents 11%
Prof. Services
7.7%
Other 16.4%
JET FUEL PRICES HAVE RISEN EVENMORE RAPIDLY THAN CRUDE OIL
Jet fuel costs have tripled in 4 years
U.S. Airlines' Fuel Costs
$12.70$15.20
$22.70
$33.10
$38
$0
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2002 2003 2004 2005 2006
Bill
ion
s
U.S. AIRLINES CONCERNED ABOUTFUTURE FUEL AVAILABILITY
Fuel requirements for civilian aviation are increasing rapidly, and by 2030 will account for half of total U.S. domestic oil production
0
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Mil
lio
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Ba
rre
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ay
2030 U.S. Civilian AviationFuel Requirements
2030 Total U.S. Oil Production
CTL PROVIDES THE ANSWER
• Aircraft have highly specialized demands
for fuel that exceed the requirements for
most other petroleum products• Synthetic fuel using CTL technology offers
most promise as a alternative aviation fuel• It can meet current specifications and
no aircraft redesign is required• CTL can provide a “drop-in” replacement for jet fuel• Bio-fuels are not currently compatible with
aircraft requirements• Synthetic aviation fuels derived from coal
are currently being used in some parts
of the world
INDIVIDUAL AIRLINES ARE ENCOURAGINGSYNFUEL DEVELOPMENT
Air Transport Association of America & individual airlines are encouraging synfuel development
• David Neeleman, JetBlue
founder and CEO• Fred Smith, Federal Express
founder and CEO• Richard Branson, Virgin Airlines
founder and CEO• ATA Commercial Aviation Alternative Fuels Initiative begun in October 2006 to
assess alternative aviation fuels & address rising fuel prices & supply instability• Coal-based “JP900” fuel could be used in commercial jetliners. Superior performance
characteristics & could reduce U.S. requirements for petroleum-based aviation fuels by 75%
• Richard Branson, Virgin Airlines, advocates aviation bio-fuels• South African Airways has been utilizing coal-derived aviation fuel for the past decade
SUMMARY (1)
• U.S. oil imports are increasing, and may exceed 2/3 by 2030• U.S. energy dependence causing economic, foreign policy, and
national security problems• Coal can and must play a key role in reducing U.S. energy
imports and enhancing national security• U.S. coal reserves are twice the oil equivalent of the entire Mideast• CTL technology is well-proven and currently in use in other
nations• U.S. CTL potential is estimated to be up to 5 MMbpd within 23 years• DOD and USAF have immense liquid fuel needs and need to rely on
CTL fuel• U.S. airlines are concerned about future price and availability of jet fuel
and are interested in CTL fuels• U.S. must develop a viable CTL industry
SUMMARY (2)
• U.S. Air Force is serious about using synthetic fuel blends (near term goal: 50% synfuels by 2016)– B-52 Flight Demo completed– Future demonstrations are being investigated– Potential 100M gal purchase in 2008/09– Establish certification process
• Ongoing research into the development & use of fully synthetic fuel (far term)– Assess operability/durability impacts– Understand role of aromatics and materials– Maximizes benefits of synthetic jet fuel– Develop S&T tech base for Single Battlespace Fuel
• Work with industry to catalyze developmentof U.S. synfuel industry
SUMMARY (3)
• Fuel is now largest single cost for
U.S. airlines• Airlines concerned about future price, volatility,
and availability of fuel• Coal-based synfuels are only viable
alternative & can meet current specifications • Coal-based “JP900” fuel could reduce U.S.
requirements for petroleum-based aviation
fuels by 75%• Individual airlines are pursuing synfuel
initiatives and promoting federal legislation• Air Transport Association has begun the
Commercial Aviation Alternative Fuels Initiative
THANK YOU!
ROGER H. BEZDEK, PH.D.
PRESIDENT
MANAGEMENT INFORMATION SERVICES, INC.
202-889-1324
www.misi-net.com
LOCAL CONTACT INFORMATION
While in Australia through July 6,
Dr. Bezdek can be contacted via ASPO Australia
Association for the Study of Peak Oil and Gas
www.ASPO-Australia.org.au
International Australia