Coal Gasification –Today's Technology of Choice and Tomorrow's

Bright Promise

AIChE – East TN SectionOctober 29, 2003

David L. DentonBusiness Development Manager

Eastman Gasification Services Company

Why Coal?• The U.S. has lots of it …

– U.S. recoverable reserves of 297 Billion tons = 250+ years of supply

• We can distribute it …– Existing infrastructure in rail, barge, mine mouth

• It costs less and is less volatile in price …– $1.25/MMBtu vs. > $3.50-5.00/MMBtu for Natural Gas

• We’re familiar with it …– 50% of current U.S. power is from coal

• It broadens our national fuel portfolio …– Insulates against price and availability shock of oil and

natural gas

Coal Gasification Delivers Fuel Diversity and Energy SecurityCoal Gasification Delivers Fuel Diversity and Energy Security

Slide provided by ChevronTexaco

U.S. Natural Gas SupplyHow Much is Left ?

U.S. Nat gas reserves:Proven: 183.5 trillion cubic feetUnproven: 1105.4 trillion cubic feet

Nat gas consumption: 22.6 trillion cubic feet/year and growing significantly

Years remaining at current usage:Proven reserves: 8.1 yearsUnproven reserves: 48.9 years

Source: DOE – Energy Information Administration 2003 Annual Energy Outlookhttp://www.eia.doe.gov/oiaf/aeo/pdf/trend_4.pdf

NG Prices for the Past Year

Coal Breakeven

LNG maycap average NG price at $4-5/MM Btu

long-term

Many analysts are now predicting a severe NG crisis this winter and several predict prices > $4-5/MM Btu for remainder of the decade !!!

$1.50/MM BtuHigher ThanLast Sept.!

How Much Coal is Left ?

Coal Reserves:Demonstrated Reserve Base: 508 billion tonsEstimated % Recoverable: 54%Estimated recoverable: 274 billion tons

2002 Production: 1.093 billion tonsSource: DOE – Energy Information Administration

“US Coal Reserves 1997 update”http://www.eia.doe.gov/cneaf/coal/reserves/chapter3p1.html

Years remaining at current levels: 251 yearsOther source: National Mining Association

http://www.nma.org/pdf/c_most_requested.pdf

Coal Supply

Coal needs to return as a key feedstock and energy

source in the U.S. !!!Gasification is the technology of choice for

converting coal to clean and efficient power, chemicals, fertilizers, and fuels.

Why Gasification?• It is the cleanest coal technology …

– Inherently lower SOX , NOX , and PM– Lowest collateral solid wastes and wastewater– Potential for lowest cost removal of mercury and CO2

• It is proven technology …– 20 years of successful commercial operation at Eastman– Multiple commercial IGCC’s (e.g., TECO Polk, Wabash)

• It is becoming increasingly competitive … – Capital cost at parity with other clean coal and dropping– Lowest variable cost of all fossil fuel technologies

• It is gaining acceptance …– Gaining support of environmental groups (e.g., NRDC, CATF)– Numerous state and federal initiatives and incentives

• It provides great promise for the future …– Flexible feedstocks, process options, and products– Opens new markets for coal (synfuels, chemicals, fertilizers)– It provides the only feasible bridge from coal to hydrogen

(directly converts coal to hydrogen)

Oxygen

Coal

Water

What is Gasification?

Products (syngas):

CO (Carbon Monoxide)

H2 (Hydrogen)

[CO/H2 ratio can be adjusted]

By-products:

H2S (Hydrogen Sulfide)

CO2 (Carbon Dioxide)

Slag (Minerals from coal)

Extreme Conditions: • Up to 1,000 psig or more• Nominal 2,600 Deg F• Corrosive slag and H2S gas

GasClean-Up

BeforeProduct

Use!

Acid Gas (Sulfur) Removal Technology

Choices• MDEA (methyldiethanolamine) – chemical

absorbent, 98+% removal, large CO2 slip, moderate temperature, lowest capital cost

• Selexol tm (primarily dimethyl ethers of polyethylene glycol –DEPE) – 99+% removal, moderate CO2 slip, moderate cost (+$20 M)

• Rectisol tm (methanol) - 99.9+% removal, complete CO2 removal, cold temperatures, highest cost (+$40 M), needed for most chemicals, H2, and fuels applications

So what can you do with CO and H2 ?

Syngas

Transportation Fuels

Building Blocks for Chemical

Industry

Clean Electricity

CO2

Electricity

Steam

Combustion Turbine

SteamTurbine

Natural Gas

NGCC: Natural Gas Combined-Cycle Plant

Air

Most new power plants in the United States in the last 10 to 15 years have been natural gas

based

Electricity

Steam

Combustion Turbine

SteamTurbine

Natural Gas

Air

Syngas from Coal Gasification(adjacent or via pipeline)

X

Integrated Gasification Combined-Cycle (IGCC): Replace NG Feed With Syngas

CO2

Integrated Gasification Combined-Cycle (IGCC)

Contaminants Removed

Pre-Combustion !!!

Air SeparationUnit (ASU)

GasificationBlock

Gas Clean-UpBlock

Combined-Cycle

Power Block

Coal(or otherCarbonSource)

Water

Air

Oxygen

VolatileMercury

PureSulfur

CO2 Capture (ready for sequestration) Electricity

CrudeSyngas

CleanSyngas

Nitrogen

90+%Removal

98+%Removal

Slag

Electricity

Steam

Syngas

Particulate Removal

Gasifier

Slag/Soot

Steam

Combustion Turbine

SteamTurbine

Solids Co-products

Sulfur

Integrated Gasification Combined Cycle

(IGCC) ConfigurationOxygen

Hg Removal

Coal

Petroleum Coke

Refinery Co-products

Biomass

Wastes

CO2 & Sulfur

Removal

CO2

Air

Contaminants Removed

Pre-Combustion !!!Water

CO2

Electricity

Natural Gas

and/or Oil

Gasification-Based Polygeneration:Replace NG and/or Oil With Coal

Syngas from Coal Gasification(adjacent or via pipeline)

Combined-CyclePower Plant

X

ChemicalFacilities

Chemicals,Synfuels,

Fertilizers,and/or Hydrogen

+

Bac

k-up

/ Pe

a kin

g F u

el

Electricity

Steam

Syngas

Particulate Removal

Syngas Conversion

Gasification-Based Polygeneration

(Ultimate Flexibility)

Gasifier

Slag/Soot

Steam

Combustion Turbine

SteamTurbine

Solids Co-products

Sulfur

CO2 & Sulfur

Removal

CO2

ChemicalsOr Fuels or H2

Oxygen

IGCC: Integrated

GasificationCombined

Cycle

Coal

Petroleum Coke

Refinery Co-products

Biomass

Wastes

Water

Air

OptionalShift

Reactors

Hg Removal

CO2

Coal

Dimethyl EtherMethanol

Fischer-Tropsch Liquids

Town gasPower & Steam

Acetic AcidEthylene

&Propylene

Methyl acetate

VAM

Acetic Anhydride

Ketene

Diketene & Derivatives

PVAPolyolefins

FT Diesel

Polygeneration Potential of Gasification

Ammonia& UreaH2

Oxo Chemicals

Synthesis Gas

Car Fuel

Waxes

GasificationNaphtha

Acetate Esters

Why Gasification?Environmental Factors

Basis: ChevronTexaco White Paper (3/03)

And DOE Report (5/99)

Power Plant Typical Emissions by Technology Type

0 0.015 0.06 0.16 0.270 0.025

0.47

1.19

3.1

0.2 0.20.5

0.72

4.1

0.796

1.506 1.5061.679

1.846

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

NGCC IGCCw/Rectisol

IGCCw/Scrubber

AdvancedSCPC

Traditional Pulv. Coal (PC)

Type of Power Plant

lb/M

W-h

r

ParticulatesSO2NOxCO2/1,000

• Mercury Removal• CO2 Sequestration(at fraction of cost for PC)

IGCC Upside Potential:

~ ~

0

100

200

300

400

500

600

700

Lb/M

W-h

r (D

ry B

asis

)

Pulverized Coal Circulating Fluid Bed IGCC

Slag/ Ash Sludge Sulfur CO2

Collateral WastesCaCO3 + SO2 + ½O2 => CaSO4+CO2

No Add’l CO2 Associated with Sulfur Removal for IGCCNo Add’l CO2 Associated with Sulfur Removal for IGCC

Leachable Leachable Vitrified

Useful Sulfur

SludgeSludge

Slide provided by G.E. Power Systems

Pulverized Coal Circulating Fluid Bed IGCC

DOE Report "Major Environmental Aspects of Gasification-Based Power Generation Technologies", December 2002

Vapor-PhaseMercury Removal

Demonstrated for 20 years at Eastman !

Low-Cost Volatile Mercury Removal for IGCCAn order of magnitude less expensive for IGCC

(COE = Cost of Electricity)

PCIGCCTechnology

$37,800/pound$3,412/poundCost of removal, $/pound Hg

~ 9%< 1%Fraction of COE

$3.10/MWh$0.254/MWhCost of Hg removal, $/MWh

1601.0Relative volumetric gas flow

Stack gasSyngas (ahead of AGR)Mercury (Hg) removal location

PCIGCCTechnology

$37,800/pound$3,412/poundCost of removal, $/pound Hg

~ 9%< 1%Fraction of COE

$3.10/MWh$0.254/MWhCost of Hg removal, $/MWh

1601.0Relative volumetric gas flow

Stack gasSyngas (ahead of AGR)Mercury (Hg) removal location

DOE Report, "The Cost of Mercury Removal in an IGCC Plant", September, 2002

DOE Report "Major Environmental Aspects of Gasification-Based Power Generation Technologies", December 2002

IGCC Economics are Increasingly Competitive

• Lowest Total Variable Costs:– IGCC Variable Costs (O&M + Fuel +

Materials & By-products) are the lowest of all fossil fuel technologies.

• Capital Costs Near Parity with PC Plants:– Capital costs of pulverized coal plants have

been increasing to ~ $1200-1400/KW as emissions requirements have tightened.

– Capital costs of IGCC have been falling (currently projected as ~ $1200-1400/KW) as multiple plants are built and improved.

Cost of Electricity Comparison

0

0.5

1

1.5

2

2.5

3

3.5

4

4.5

5

Natural Gas Coal Combustion Coal Gasification

Relative Busbar Cost of Energy in Cents/Kwh

Capital Expenses Fuel Costs Materials/Byproducts O&M Costs

Assumptions: Nat. Gas - 65% capacity factor w/ fuel costs of $4/MM Btu and capital costs of $500/kW;Coal Combustion - SCPC plant at 85% capacity factor w/ fuel costs of $1.25/MM Btu and capital costs of $1,200/kW;

Coal Gas - IGCC plant at 85% capacity factor w/fuel costs of $1.25/MM Btu and capital costs of $1,250/KW.Data extrapolated from DOE Report "Market-Based Advanced Coal Power Systems", May 1999.

LowestTotal

Variable Costs

IGCC Capital Cost Improvement

Source: GE Power Systems, Power-Gen 2002 Presentation

TargetRange

For IGCC

x

Recent Clean Coal PCPlants

x

IGCC Capital Cost Breakdown

Overall cost (EPC) = $1200 - $1400 per KW[Can be significantly less if purchase and retrofit an existing NGCC plant at a discounted price!]

Combined Cycle Plant

CT/HRSG/ST43%

Gasifier Block25%

ASU15%

Coal Prep10%

AGR/SRU7%

Proven Technology

• First U.S. commercial coal gasification facility in 1983 at Eastman Chemical Company –ACS National Historic Chemical Landmark.

• First IGCC plant demonstrated in 1984 at Cool Water site in California.

• 14 current IGCC plants globally, including TECO’s Polk Plant and Global Energy’s Wabash Plant. (~ 130 total global gasifiers)

• Eastman has achieved world-class success in coal gasification for almost 20 years.

Eastman’s Experience with Gasification• We were a pioneer in coal gasification …

– First commercial U.S. coal gasification facility in 1983– Designated as ACS National Historic Chemical Landmark

• Industry leading operating performance …– > 98% on-stream time since 1984– < 1% forced outage rate– Highest production rate per unit of capacity– Single-train reliability of ~90%

• Excellent safety record …– OSHA recordable rate of 1.0; no lost time in over 11 yrs

• Exceptional environmental performance …– Remove >99.9% of sulfur– Patented sulfur-free start-up process– Volatile mercury removal for almost 20 years

• Continual process improvement …– Reduced maintenance costs > 40% in past 6 years– Patented feed injector designs for longer run life

Coal

CleanSyngas

Particulate Removal

Syngas Conversion

Texaco Gasifier

(1 + spare)

Slag/Soot

Steam

SolidsCo-products

Sulfur

CO2

Eastman’s Gasification Configuration

Chemicals (Ac20, HOAc, MeOH,

MeOAc)Oxygen

REC

TISO

L

Sulfur Recovery

SCOT/Claus

Air

Prod

ucts

CO

CO/H2Separation

(Linde)

CO2/H2S Removal

Hg Removal

H2

Water

Shift Reactors

RawSyngas

Syn Gas (CO + H2)

Carbon Monoxide (CO)

Chemicals from Coal – The Chemistry

Methyl Acetate Plant

Methyl Acetate

CH3OH+ CH3COOH CH3CO2CH3 (methyl acetate)Acetic

Anhydride

CO + CH3CO2CH3 (CH3CO)2O (acetic anhydride)Acetic Acid

Carbonylation Plant

CH3OH + CO CH3COOH (acetic acid)

MethanolPlant

Methanol

CO + H2 CH3OH (methanol)

Primary Reactions:

Tennessee Eastman Coal Gas Product Flow

Gasification Area

SalesSales

Sales

Sales

Sales

Acetic AnhydrideAcetic AcidCoal

Eastman Chemicals from Coal – The Big Picture

It’s likely you have a product in your home based on coal gasification from Eastman’s facility!

Several major products are single-sourced from Eastman's coal gasification process!!!

Operating StatisticsThree-Year Cycle (Sept 2000 - Sept 2003)

including planned shutdown

On-Stream98.12 %

Unplanned1.10%

Planned0.78%

Not Needed0.0%

Industry-Leading Performance !!!

Operating StatisticsOne-Year Cycle (Sept 2002 - Sept 2003)

On-Stream98.91 %

Unplanned1.09%

Planned0.0%

Not Needed0.0%

Eastman Operating StatisticsEastman Gasification Plant

Historical Forced Outage Rate

0

1

2

3

4

5

6

7

8

9

10

1984 1986 1988 1990 1992 1994 1996 1998 2000 2002

% F

orce

d O

utag

e R

ate

Forced Outage Rate has Averaged < 2% since 1984 !!!

Gasifier Run Data1983-2002

0

5

10

15

20

25

30

35

40

45

50

55

60

65

70

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

No

of D

ays

Time Between ShutdownsTime Between Switches

Eastman Operating Statistics

Feed InjectorImprovements

Recently Set 122-Day Run Record (4 x baseline)!

2x

Eastman Operating Statistics

Continual Process ImprovementGasifier Average Production Rate

80

90

100

110

120

130

140

150

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Nor

mal

ized

Pro

duct

ion

Rat

e

Eastman Operating Statistics% On-stream Time and Maintenance costs

40%

50%

60%

70%

80%

90%

100%

110%

1996 1997 1998 1999 2000 2001 2002

On-stream

Normalized to 1996

Eastman’s Value Proposition

Eastman's 20-yrs experience can enable faster start-ups

Time to Capacity

Eastman works with industry and government to understand & plan for uncertainties

Economic & Environmental Uncertainties

Eastman can help offer adequate warranties

Financing of Projects

Eastman has the best operating performance in the industry; offering O&M services

Reliability Concerns

Eastman knows gasification (20 yrs experience); O&M services

Unfamiliarity to Utilities

Eastman helps owners make intelligent design choices

High Capital Costs

Eastman Value CreationMarket Need

Eastman will help gasifier owners get more out of their plants, including faster

start-ups and improved long-term availability and reliability

• World-class operational performance

• Intelligent design choices to limit capital costs

• Patented technology improvements

• Exceptional safety and environmental records

Service Offerings:h Operations & maintenance contractsh Technical servicesh Critical spare parts fabricationh Specific technology licensingh Cooperative services agreement with

ChevronTexaco

The Promise of the Present and of the Future for Gasification:

• Competitive cost of electricity (superior variable cost -lowest for all fossil fuels)

• Exceptional environmental performance, including cost effective volatile mercury removal and potential for lowest-cost CO2 capture and sequestration

• Retrofit of NGCC plants (replacing NG with coal)• Production of hydrogen to fuel the coming economy

(FutureGen Initiative)• Promise of new markets for coal - potential for

transformation of the chemical, fuels, and fertilizer industries

•• Gasification is Gasification is thethe future for coal !!!future for coal !!!

The Future Looks Bright for Coal Gasification!!!