Release Date: May 22, 2007

MORGANTOWN, WV — A report recently issued by the U.S. Department of Energy’s National Energy Technology Laboratory investigates the feasibility of a commercial 10,000 barrel per day coal-to-liquids (CTL) facility in the Appalachian coal basin. The analysis illustrates that small-scale CTL facilities may provide a practical and much-needed alternative to the increasing costs of non-domestic energy sources.

As the United States seeks out solutions towards energy independence, liquefaction technologies, such as Fischer-Tropsch, that can produce liquid fuels from coal are becoming more and more attractive. Rising oil prices continue to make coal— America’s most abundant resource—a viable alternative for transportation fuels. It also offers a homegrown alternative to non-domestic liquid fuels and the national security issues associated with them.

CTL facilities that are smaller in scale offer more financing opportunities for developers, making them more feasible for commercial development. Technical and Economic Assessment of Small-Scale Fischer-Tropsch Liquids Facilities presents two options for a commercially feasible facility to be built in southern West Virginia. Both options are self-sufficient in terms of electric power requirements and may produce extra power to be exported to the grid.

The first option is a stand-alone CTL facility that would be similar in scale to nominal 600 MWe Integrated Gasification Combined Cycle (IGCC) plants. This design includes two gasifiers and will produce the following from 4,254 tons per day of high-sulfur bituminous coal:

• 5,347 barrels per day of diesel fuel
• 4,262 barrels per day of naptha
• 39.5 MWe per day, which will be available to the electric grid

The second CTL option explored in the report involves co-siting a CTL facility with an IGCC facility. This is an advantageous pairing because electricity providers must lower the output of their power production facilities during nighttime hours to account for the lower electricity demand. One potential way to turn down an IGCC would be to send a portion of the syngas generated by the IGCC system away from the power producing section of the IGCC to a CTL facility located on the same site. The CTL facility would consist of one gasifier and contain sufficient liquids production and upgrading capability to convert the syngas from a dedicated gasifier plus the extra syngas received from the IGCC plant. During peak nighttime production the CTL facility is projected to consume 2,631 tons per day of coal and generate the following products:

• 4,630 barrels per day of diesel
• 3,690 barrels per day of naphtha
• 29.7 MWe per day sold to the electricity grid

Both designs incorporate environmental controls and comply with “best available control technology” guidelines for sulfur, nitrous oxides, particulate matter, and mercury.

In addition to the financial benefits the small-scale offers to developers, the CTL facilities examined in the study project significant economic returns. In fact, the stand-alone CTL plant configuration (which has the higher capacity factor of both configurations used in the study) promises over a 14 percent return on investment, based on current crude oil prices of over $57 per barrel. This represents a net present value of more than $80 million and a payback period of 7 years at full plant capacity.

The feasibility analysis updates information generated by the Energy Department in the 1990s. The full report was released in February 2007 and is available on the National Energy Technology Laboratory’s energy analyses reference shelf.

Technology is transforming coal into a clean source of energy, and CTL facilities will help capitalize on America’s most promising resource.