Jul-2009

Coal liquids as refinery feedstock

Is the refining industry ready for coal liquids processing? Case study shows potential benefits of processing upgraded coal liquids in a high complexity refinery

Katerina Deem and Scott Sayles, KBC Advanced Technologies

Article Summary

Economic and political considerations are affecting how industry and governmental policymakers consider the best way to meet future transportation fuel requirements. The volatility that currently governs the transportation fuels market is caused by many different factors: conventional crude oil sources are constrained, biological fuel sources are in competition with human food sources, and other potential options are not chosen for many different reasons. Limited transportation fuel resources cause market instability and uncertainty, with prices recently rising above and falling below historical averages. This economic uncertainty makes other sources of carbon fuels economically attractive for refinery feeds.

Coal can be a possible source for alternative refinery feed that can contribute to energy independence. This is not a new concept, but the view requires updating with new technology. The process of upgrading coal to transportation fuel must incur the costs of the environmental, processing and operational needs.

Understanding this effort involves a four-fold purpose that centres on the opportunities and challenges that coal offers to refiners, including:
• Understand the coal mining supply chain
• Describe different coal liquefaction processes to frame the opportunity in terms of environmental, processing and operational needs
• Consider the environmental impact of coal-to-liquids processes
• Understand the economic benefits of processing coal and/or incorporating coal liquefaction byproducts into refinery blending pools.

Current situation
Currently, coal does not significantly contribute to the transportation fuels market. For example, in the early 1970s, the US Department of Energy (DOE) initiated a programme that aimed to explore the ability to convert coal to transportation fuels. This work has continued with several small pilot programmes exploring coal’s potential and commercialisation in China.

Several different commercial plants were designed during the DOE studies, and the resulting liquids were treated in pilot refinery operations. The ultimate conclusion of the DOE research work was that transportation fuels could be feasibly produced at a higher severity operation than was required relative to petroleum crudes.1 Further development of the liquefaction processes has produced coal-derived synthetic crude, with improved quality requiring a lower severity to produce final transportation fuels.

Refinery configurations from the 1990s and today differ greatly from those of refineries 20–30 years ago. Today, refineries have additional installed equipment that allows them to meet ultra-low-sulphur fuel standards. This is a fundamental shift in the severity of refinery operations. Hydrotreating capacity was increased to upgrade poorer quality crudes, which potentially provides the opportunity to process coal liquids. The question is whether this fundamental change in refining infrastructure can provide an opportunity to integrate coal liquids and, if so, at what level. 

To explore the potential benefits of coal liquids, KBC developed a case study using upgraded coal from the western US and processed in a high complexity refinery. The basis for the coal upgrader was obtained from work conducted in the late 1990s. The refinery operation was modelled with KBC’s Petro-SIM process simulator.

Coal mining supply chain
Coal is currently produced either from surface (strip mining) or underground mines. Both types of mines have unique challenges and environmental impacts. Actual coal production techniques are outside the scope of this article. However, the environmental impacts are considered in a later section, as they are a potential constraint to further coal production. The resulting coal supply chain steps are from mining to delivery to the upgrader or refinery.

Today, nearly all coal production is transported via rail to the end user. In the future, the coal supply chain would include a coal upgrader and coal liquids processing capability in an existing oil refinery. Figure 1 outlines the supply train options to bring coal from the mine to an upgrader or refinery.

The supply train begins with the coal mine and, in the future, no changes are anticipated. Rail or barge shipment of coal requires that the coal fines are removed via water wash and that the coal is crushed to a reasonable size. No changes are anticipated in coal rail shipments given their relatively low cost. In addition, existing mines already have investment in their facilities; thus, no further changes are anticipated. Combining the coal upgrader and the mine offers some savings in coal pretreatment, waste water treatment, utilities, labour, management and transportation. Location of the coal liquefaction or upgrading plant also depends on other factors, such as:
• Mountainous terrain requires several acres of flat land
• Water supply
• Logistical (ship coal or oil?)
• Skilled labour (remote locations)
• Disposal of ash or slag from gasifier
• Construction costs
   ν Remote locations will require construction of all utilities
   ν  Higher mobilisation costs.

The upgrader location also needs to consider the operational costs between shipping coal via rail to the refinery vs the upgrader at the mine site and shipping coal oil via pipeline or rail. A location close to the refinery also provides advantages of nearby industrial partners such as a hydrogen pipeline, skilled maintenance and repair shops. 

KBC did not choose a location for the coal upgrader. Instead, the coal price was freight on-board (FOB) to the upgrader, and the coal liquids were FOB to the refinery. The following discussion will assume that the upgrader will be self-contained, incorporating all of the required utilities.