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Fischer-Fischer-TropschTropsch Diesel – Meeting Diesel – Meetingthe California Supply Challengethe California Supply Challenge
Alternative Diesel Fuels SymposiumAlternative Diesel Fuels SymposiumPresented by CEC/CARBPresented by CEC/CARBSacramento, CaliforniaSacramento, California
By Dennis L. By Dennis L. Yakobson YakobsonRentechRentech, Inc., Inc.
August 19, 2003August 19, 2003
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AgendaAgenda
• Quick Overview of RentechFischer-Tropsch Diesel (FTD)
• Viable FTD supply options
• Supplying California withCompetitively Priced FTD
• Where Do We Go From Here?
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Rentech BackgroundRentech Background
• Rentech was formed in 1981specifically to develop Fischer-Tropsch technology– Patented/proprietary technology– Iron catalyst development– Slurry bubble column– Synhytech commercial demonstration
• Became a public company in 1991– Traded as RTK on the AMEX
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“Hydrocarbons” to Liquids“Hydrocarbons” to Liquids
Fischer-TropschSynthesis
Fischer-TropschSynthesis
Product Separation& Upgrading
Product Separation& Upgrading
HydrocarbonsWater &Oxygenates
CO + H2Tail gas
• Natural gas
Carbon-BearingFeedstocks
Carbon-BearingFeedstocks
Synthesis GasGeneration
Synthesis GasGeneration
PowerSteam
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“Hydrocarbons” to Liquids“Hydrocarbons” to Liquids
Fischer-TropschSynthesis
Fischer-TropschSynthesis
Product Separation& Upgrading
Product Separation& Upgrading
HydrocarbonsWater &Oxygenates
CO + H2Tail gas
• Natural gas
• Coal
• Refinery bottoms
• Orimulsion™
• Heavy oil
• Biomass/RDF
Carbon-BearingFeedstocks
Carbon-BearingFeedstocks
Synthesis GasGeneration
Synthesis GasGeneration
PowerSteam
Note: FTD quality is notdependent on the type of feedused to generate the syngas
CO2
&
SOx
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Today’s Sources of FTD are Today’s Sources of FTD are notnot Domestic Domestic
SASOL SASOL (S. Africa)44 years commercial– 160,000 b/d+– Feedstock Coal
SASOL’S SOUTH AFRICAN FACILITYSASOL’S SOUTH AFRICAN FACILITY
MossGasMossGas (S. Africa)10 years commercial– 22,500 b/d+– Feedstock Natural
Gas
Shell Shell (Malaysia)7 years commercial– 15,000 b/d+– Feedstock Natural
Gas
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Examples of Viable Rentech GTLExamples of Viable Rentech GTLProjectsProjects
Bolivia Stranded Gas
10,000 B/D
Indonesian Methane Complex
16,500 B/D
IGCC / EECP Power Generation
1,000 – 10,000 B/D
Flared Gas FPSO
5,000-10,000 B/D
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Supplying CaliforniaSupplying CaliforniaWith Competitively Priced FTDWith Competitively Priced FTD
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Domestic FTD Feedstock AlternativesDomestic FTD Feedstock Alternatives
• Natural Gas
(>$3.50/mmbtu)
• Coal
(<$1.00/mmbtu)
• Refinery Bottoms
(<$1.00/mmbtu)
• Refuse Derived Fuel &Biomass
(?/mmbtu)
Wellhead Natural Gas Prices vs WY Coal Prices(As reported by DOE)
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02
$ pe
r mm
btu
Coal
Natural Gas
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Domestic FTD Feedstock AlternativesDomestic FTD Feedstock Alternatives
• Natural Gas
(>$3.50/mmbtu)
• Coal
(<$1.00/mmbtu)
• Refinery Bottoms
(<$1.00/mmbtu)
• Refuse Derived Fuel &Biomass
(?/mmbtu)
Wellhead Natural Gas Prices vs WY Coal Prices(As reported by DOE)
$-
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$8.00
Jan-90 Jan-92 Jan-94 Jan-96 Jan-98 Jan-00 Jan-02
$ pe
r mm
btu
Diesel
Natural Gas
Coal
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Why Not FTD from Coal?Why Not FTD from Coal?
• U.S. has over 275 billion tons of coal reserves– The world’s largest coal resource
– Equivalent to over 20 trillion gallons of FTD
• U.S. coal is inexpensive, price stable andavailable for long-term contract supply
• New coal-fired powerplants will be required tomeet growing needs
• H2 can be co-produced
• Carbon dioxide isextracted and can besequestered
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Plant Emissions with SequestrationPlant Emissions with Sequestration
Nat
ural
Gas
Com
bine
d Cy
cle
Conv
entio
nal
Pulv
eriz
ed C
oal
IGCC
w/o
Sequ
estr
atio
nIG
CC w
/
Sequ
estr
atio
nFT
w/o
Sequ
estr
atio
nFT
w/
Sequ
estr
atio
n
Nat
ural
Gas
FT
Type of Feed Gas Gas Coal Coal Coal Coal Coal
CO2 – pounds per Kwh 0.95 0.37 2.10 1.88 1.24 0.97 0.22 (equivalent basis)
NOx – parts per million 3 3 150 <9 <9 <9 <9
Sulfur Recovery - % - 99.9 95 98 98 >99.9 >99.9
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Cost Estimates for FTDCost Estimates for FTD
•Transportation to California market may range from $.08 to $.20/gal•The price of FTD from the CEC report is $0.10 per gallon above CARB Diesel
FOB
Die
sel C
ost
/ G
allo
n
Feedstock Cost / mmbtu
Natural Gas
Coal & Coke
$0.50
$1.00
$1.50
Current CARB Diesel
$1.00 $2.00 $3.00
Proposed Imported FTD
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Where Do We Go from Here?Where Do We Go from Here?
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California Needs & ChallengesCalifornia Needs & Challenges
• Reduced air emissions
• Non-petroleum sources oftransportation fuels
• Stable, competitive prices
• Reliable supplier
• Flexibility in supply
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FTD Provider Needs & ChallengesFTD Provider Needs & Challenges
• Reliable source of low-cost feedstock
– Price, quality and quantity
• Long-term product sales contract(>5 years)
• Stable production off-takes
– Steady growth from 350,000 gallons/day
– Minimum disruption to existing markets
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Proposed Wyoming Coal ProjectProposed Wyoming Coal Project
Build a next generation FTD plant sourced onlow-cost Wyoming coal– Phase 1 facility at 350,000 gallons per day (gpd)
• This represents less than 4% of CA’s diesel demand
• Ultimate capacity could be over 1 million gpd
– Secure long-term coal supply <= $0.50 per mmbtu
– Optimize co-produced electrical generation, steamand other ancillary products including sequesteredCO2
– Expedite construction to meet near-term Californianeeds at current CARB diesel prices
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Proposed ApproachProposed Approach
• Public-private partnership between FTDprovider and appropriate CA entity to expediteproject development– Government support mechanism to
enhance project attractiveness
– Tax parity with other alternative fuels
– State and local government supportthrough promotion of FTD use by their ownagencies
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Proposed ApproachProposed Approach
• Public-private partnership between FTD provider andappropriate CA entity to expedite project development
• Consortium of financially strong stakeholderscapable of moving forward in a timely manner– Secure long-term agreements for feedstock supply
and product off-takes– Develop an acceptable mechanism to allow for
logical market introduction leading to steady salesgrowth and stable pricing
– Obtain sufficient financial support to completeplanning and construction steps quickly
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Proposed ApproachProposed Approach
• Potential stakeholders– Investors familiar with energy
development projects– Fuel distributors and users willing to
sign long-term agreements– Coal mine operators– Electric utilities– Railroads– Local and State Governments– Federal Government– FT technology partners
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SummarySummary• FTD is Good!
– FTD – either straight run or blended - is superior to CARBdiesel
• FTD from coal is a viable low-cost alternative– The technology is proven
– Domestic coal available at or below $0.50 per mmbtu
– FTD from coal can be competitively priced with CARB diesel
• Public/private support needed to move anyproject forward– Long-term contracts needed for financing,
– Financial commitment by interested parties critical for rapidimplementation
• Rentech is ready to start a FTD project NOW!
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Contact Info:
Rentech, Inc.Richard O. Sheppard
Vice President - Marketing1331 17th Street, Suite 720
Denver, CO 80202303 298 – 8008 x120303 298 – 8010 fax