Towards a sustainable energy basket: Petrotech 2014 hosts USIBC Gasification Mission

Petrotech in collaboration with the US-India Business Council (USIBC) organized the second pre-conference event of Petrotech 2014 on ‘Gasification Mission to India’ on September 9, 2013 at Delhi. The executive business event which had senior management and key technical representatives from some of the leading players in the US gasification space besides some of the top technical leaders and keen proponents of gasification from the Indian oil & gas sector comes at a time when the energy import bill of the country has become a cause of serious concern not just among the policymakers in the government but the industry as well and the growing reality of sustainability in the oil & gas sector is inducing remarkable changes in the ways energy is harnessed across the spectrum.

During the day long discussions and presentations that marked the Petrotech-USIBC Gasification initiative, eclectic views and opinions from across the gamut of the domestic oil & gas industry as well as the US gasification contingent represented by the likes of GE, Westinghouse Plasma Corp (Alter NRG), Aerojet Rocketdyne and CB&I, to name a few, moved the mainstream discourse on gasification in the country in the right direction by bringing together perspectives from the different elements of the gasification project chain – the technology and equipment providers, large-scale EPC contractors and the end-users or the plant operators. In doing so, preliminary mobilization requisite for pushing the agenda of gasification in the Indian context has been set in motion by delineating the broad boundaries and devising the basic template centered on which potential long-term partnerships between Indian and US players could be established through an evolved understanding of the domestic ‘wish-list’ and the technology offerings that the global players bring to the table – a ‘mutual fit’ of sorts.

(Left) Ajay Deshpande from EIL and Daniel Tse from GE Power & Energy during their presentations

It also stands testimony to Petrotech 2014’s super-ordinate goal of promoting and facilitating long-term intellectual capacity building in the Indian hydrocarbon sector by provoking dialogues and creating

engagement in areas that are considered to be on the threshold in terms of being key determinants in the quest for energy security of the country and the emerging global energy basket configuration in face of the tremendous flux that the industry as a whole is currently undergoing. And in these time crude market volatility and rising environmental concerns, gasification with its cleaner emission profile compared to conventional technologies and use of low-cost abundant local resources is a debate worth having in the present context.

According to industry experts and analysts, Gasification as an industry has not taken off in India as it should have for a convergence of quite a few factors and circumstances – environmental concerns, techno-economic feasibility, policy regulations, infrastructure creation and a lack of multi-party stakeholder partnerships for optimally leveraging the high degree of value-multiplication that the capital-intensive gasification setup makes possible. China, on the other hand, has made giant leaps and has been the one of the major drivers of global growth of this industry with huge projects in chemicals, fertilizers and coal-to-liquid industries.

Director (Offshore) & Chairman, Technical Committee, Petrotech 2014 PK Borthakur during the meet

Mr Ajay Deshpande, Director (Technical), EIL, one of the keynote speakers of the inaugural session, highlighted finding the right partners in a gasification project being crucial to long-term sustainability of any gasification venture. He also stressed the critical role that gasification could play in terms of mitigating the current account deficit crisis precipitated by the costly oil import regime that the country is in the grip of. Mr. Deshpande reckoned that proven, well-demonstrated, robust and low-risk technologies that are suitable to a wide variety of feedstock and the low-grade high-ash content coal of the country is also central to making any major investments in the gasification segment of the country as considerable uncertainty still persists and, are sometimes unavoidable, in the areas of emission regulations, costs structure, global oil and gas prices and financial instruments for supporting multi-

billion dollar major projects. As an example for the multi-party partnership that he was advocating, Mr Deshpande cited the RCF-GAIL-CIL coal gasification project at Talchar in Orissa as a starter in that direction.

(Left) Walter Howard from Alter NRG and B P Das from IOCL

Environmental issues arising out of the need for gasification plants to be located in close proximity to mining sites and vital issues of land and water availability could be some of the teething problems that a gasification project in India would do well to consider in detail in its project plan, Mr. Deshpande also noted. He was quick to add that - ‘But with the right intentions and a holistic outlook, participating parties can overcome these constraints through thorough negotiations and a transparent dispensation mechanism in place’.

In fact, when India as a country has taken to LNG imports for meeting the domestic gas needs in a big manner, gasification merits a more strategic and holistic relook in terms of allowing for some diversification of the energy supply basket as well as to take advantage of the voluminous coal reserves of the country to provide cleaner and more affordable ‘synthesis gas’ (syngas) for power generation. Add to this the capacity of producing value-added products, gasification could well turn out to be a game-changer in the country’s downstream segment by bringing in new streams of revenue and improving operating margins. This perception was further reinforced when B P Das, Executive Director (R&D), IOCL informed the house that gasification fits well within the ambit of energy security of the country premised on the twin precepts of affordability and sustainability and that IOCL has initiated steps to integrate gasification with its refining configuration.

Walter Howard, CEO (Altern NRG) and Daniel Tse, Leader (GE Power & Energy Gasification Solutions), elaborated on the techno-economical benefits of gasification for an emerging economy as India. The former pitched the cutting-edge technologies that GE had to offer to the fledgling Indian gasification market and also impressed upon the low-value of the feedstock that gasifiers require and the gasification-based power generation that produces CO2 which can be used for EOR operation in the E&P industry.

Notwithstanding the enormous reserves of coal that India possesses, Walter Howard stressed on the desirability of moving the ‘wish-list’ beyond coal to also include bio-mass, sludge and bio-waste so that projects are not constrained by the location preferences and can deliver a more approximate translation of the waste to energy concept that gasification hinges on. He also stated that the country needs to find a way to monetize the enormous potential of the highly disorganized and unregulated waste disposal sector. He admitted that the high costs associated with the setting up of a gasification plant compares poorly with the near zero-cost municipal waste disposal in place to the extent of almost disincentivizing any such enterprise venture but in a power-starved and inadequately electrified country like India gasification presents a tremendous opportunity to leapfrog in the biomass and waste-to-energy areas as these local area plants would be smaller in scale, easier to finance and take less time to construct.

A dialogue for future partnerships in Gasification

According to Phil Amick, Director (Gasification Business Development, CB&I), the success of gasification in a country like India will come down to striking a neat balance between derivative benefits of having a gasification plant, environmental concerns and cost models of operating a gasification plant. To that effect, he reckoned, consensus can be developed among contending parties only on the basis of significant amount of education on gasification and its economic and environmental impact with facts and figures, something which the Gasification Technological Council does in the US. However, like everything else in the current global oil & gas industry, he conceded, even the gasification industry has been impacted by the advent and the phenomenal success of Shale Gas in the US and the story here is not encouraging. The industry which gained momentum post the 1970 oil crisis and the subsequent insecurity around supply and prices of crude, has found the going tough domestically in the US in the age of shale which has seen gas prices in the US plummet to as low $3-4/mbtu. But in India where LNG imports routinely range between $14-18/mbtu, gasification finds itself on a much a more promising ground as even replacement of 20 per cent of LNG imports through syngas could result in substantial savings to the economy, he added.

To have polygeneration as part of the overall gasification plans is something that was not missed by many; in fact, it was the one single unifying strand of thought that was voiced with emphasis by the participants of the day when it came to marking down parameters for long-term sustainability and

locking in on the high-value monetization that products other than syngas has to offer to plant operators. China is a sterling example of this – where most of the mega-gasification projects that have come on stream since 2004 are geared towards production of value-added products such as fertilizers, CTL, chemicals, fertilizers and vitrified slag or incinerator ash.