First, for clarification, we note that many writers have begun classifying heavy-oil products as “synfuels”, as utilization of heavy oil requires chemical processes, such as hydrogenation, cracking, and alkylation (though these processes have been a mainstay in conventional oil processing for more than half a century). We prefer the traditional usage of “synfuels” as referring to products of a synthesis gas (H₂ + CO + CO₂). Some of the processes are known as coal-to-liquids (CTL), (natural) gas-to-liquids (GTL), methanol synthesis, and Fischer Tropsch Synthesis (FTS, usually from methane or coal, but sometimes from biomass).

The majority of the growth in GTL over the past several years has been in natural gas (NG) to diesel in Qatar and Indonesia, but scores of other large projects are either underway or in the planning stages all around the world – anywhere there are large NG reserves with limited gas-line access to large NG markets. The rapid rise in the price of oil might seem to be sufficient to drive explosive growth in GTL, but the rise in the cost of construction materials and skilled labor have dampened the enthusiasm. The projected costs of several large projects in Qatar, for example, have tripled over the past seven years. Moreover, the expected strong rise in the price of liquefied natural gas (LNG), and perhaps methanol, over the coming decade may create more attractive options for monetizing stranded NG. The investments required for LNG export and for NG-to-methanol are much less than for NG-to-diesel. As of late 2009, global GTL production was about 73,000 bbl/day, and it is projected to reach 210,000 bbl/day in mid 2011.

There has been increasing enthusiasm for diesel and gasoline synfuels from coal over the past five years, though it remains strongly opposed by environmental groups. Eventually, the enormous amount of co-produced CO₂ it generates will need to be sequestered, and the other wastes must also be dealt with. A modern coal-to-diesel FTS plant typically achieves about 50% efficiency and produces ~0.3 kg of liquid fuels along with ~2.2 kg of CO₂ per kg of coal. With sequestration of this CO₂, global coal reserves are sufficient to sustain global energy demand (assuming 1.5% annual growth) for less than 50 years. Other processes have recently been proposed that could achieve significantly higher efficiency, but enthusiasm for their development is limited, partly because recent research sees global peak coal coming in under 30 years. A longer range perspective is essential.

At least two fairly large coal-synfuels projects with on-site CO₂ sequestration are being planned in the U.S., and several are underway elsewhere, including China. Baard Energy, based in Vancouver, Washington, had been planning to begin building a 50,000 bbl/day plant in Wellsville, OH in late 2009. The NRDC and the Sierra Club have managed to stop this project http://www.baardenergy.com/press.htm. Rentech Inc, based in Los Angeles, CA, hopes to open a plant producing 30,000 bbl/day in Natchez MS in 2012. Both plants plan to sequester or sell their CO₂, and both plan to mix a little waste biomass with the coal, which may reduce their carbon footprints a little. However, the use of biomass in these processes will be severely limited by its costs as well as the other adverse effects of increased biomass usage, as discussed elsewhere.

Coal-to-methanol could be a significant wildcard in the future price of oil. It generates less on-site CO₂ than coal-to-diesel, and China has already begun transitioning in this direction to reduce their need for oil imports. Coal-based methanol production in China was about 3 MMT in 2007, and it is projected to increase to about 5.5 MMT by 2010. Still that will be the energy equivalent of only 25 M bbl of oil, or less than 0.1% of global oil production.

The price of most coals increased by a factor of 6 between 2002 and mid-2008. This should serve as a wake-up call that coal cannot be relied upon as a source of cheap energy for many years, even if ecosystem responsibility is ignored.

Heavy utilization of coal-to-methanol seems unlikely in any country other than China (and possibly Australia), partly because WindFuels should be embraced in time to prevent such environmentally disastrous decisions from being made elsewhere.

Twenty years ago, it was estimated that oil needed to be above $50/bbl for most coal-synfuels (gasoline and diesel) to be competitive, and that number is still often bandied about. Updated estimates published recently in Science indicate oil needs to be above $100/bbl for coal-synfuels with sequestration to be competitive. We believe the breakeven point will be over $160/bbl within 5 years (in current dollars) because of the rapidly rising cost of coal; and before the plants are one-third of the way through their expected lifetimes in 2020, oil will need to be over $250/bbl (in current dollars) for them to compete.

Coal-to-ethanol with on-site CO₂ sequestration is environmentally safer than fossil-methanol. However, neither coal-ethanol nor biogas-ethanol appears likely to be widely utilized, even though numerous advances are being made in mid-alcohols FTS. See FTS Perspective for some more comments on FTS variations.

The bottom line here is that the various fossil-FTS options are all more expensive and much more environmentally harmful than their advocates have been willing to admit. In all cases, even with on-site CO₂ sequestration, their use still contributes essentially as much GHGs as petroleum-based fuels; and without sequestration, they are environmentally disastrous. The use of fossil FTS-synfuels will undoubtedly increase over the next few decades. The IEA projects global contribution of fossil FTS-synfuels (which will mostly be NG based) will be less than 3% that of oil in 2030. We expect WindFuels to be more competitive as well as much better for the environment.

Best references:

1. AP Steynberg and ME Dry, eds. Studies in Surface Science and Catalysis 152, Fischer-Tropsch Technology, Elsevier, 2004.

2. PL Spath and DC Dayton, “Preliminary Screening – Technical and Economic Assessment of Synthesis Gas to Fuels and Chemicals with Emphasis on the Potential for Biomass-Derived Syngas”, http://www.fischer-tropsch.org/DOE/DOE_reports/510/510-34929/510-34929.pdf , NREL/TP-510-34929, 2003.

3. M Xiang, D Li, H Qi, W Li, B Zhong, Y Sun, “Mixed alcohols synthesis from CO hydrogenation over K-promoted b-Mo2C catalysts”, Fuel 86, 1298-1303, 2007.

4. X Li, L Feng, Z Liu, B Zhong, DB Dadyburjor, and DL Kugler, “Higher Alcohols from Synthesis Gas Using Carbon-Supported Doped Molybdenum-Based Catalysts”, Ind. Engr. Chem. Res. 37, 3853-3863, 1998.

5. JR Hensman, D Newton, “Fischer-Tropsch Synthesis Process”, US Pat #7,115,670, 2006.

6. AP Steynberg, JW De Boer, HG Nel, WS Ernst, JJ Liebenberg, “Process for Synthesizing Hydrocarbons”, Pending Pat. appl. pub. US 2007/0142481.

7. The Energy Blog, http://thefraserdomain.typepad.com/