Coal - Bridge to the Hydrogen Economy

Keynote presentation at the

Eighteenth Annual International

Pittsburgh Coal Conference

December 4, 2001
Newcastle, NSW, Australia
by

Dale Simbeck
SFA Pacific, Inc.

444 Castro Street, Suite 720 phone: 1-650-969-8876

Mountain View, California 94041 fax: 1-650-969-1317
web home page: www.sfapacific.com e-mail: simbeck@sfapacific.com
SFA Pacific, Inc.
 Presentation Overview
Hydrogen as a fuel - some ugly properties
Then why hydrogen?
• Began as a nuclear agenda
• Required for fuel cells to “make it”
Industrial hydrogen economics & markets are well established
The “Holy Grail” of the hydrogen economy
The future of hydrogen
• Power generation & the global climate change (GHG) issue are keys
• Coal gasification with CO2 capture for H2 to power & polygeneration
Conclusions
SFA Pacific, Inc.
 Hydrogen as a Fuel - Some Ugly Properties
H2 is not a naturally occurring fuel like NG, oil, coal & biomass
H2 is expensive & its production is inefficient
H2 is one of the lowest energy density fuels - 1/3 NG
H2 is difficult & expensive to compress, transport & store
H2 is dangerous to use - big explosive range & invisible flame
H2 is an inefficient fuel due to the large water formations & its
energy lost in the flue gas - LHV/HHV is 84.6% - 15.4% losses
H2 is a poor fuel for traditional engines (RE or GT) due to:
• High NOx emissions of high flame temperature
• Reduced power from the low mass flow of fuel per million Btu
SFA Pacific, Inc.
 Then Why Hydrogen?
Began as a nuclear agenda
• When nuclear was considered “too cheap to meter” H2 electrolysis
was a way to expand nuclear markets beyond just electricity
• When nuclear became “too expensive to compete” H2 was viewed as a
way to save nuclear via advanced gas cooled H2O splitting
Required for fuel cells to “make it”
• Fuel cells only work on H2 - fuel cells are only indirectly fuel flexible
• Unique advantage of fuel cells is the electrochemical reaction that
could lead to innovative regenerative H2, O2 & electric storage
• Fuel cells will have to demonstrate good performance & reliability in
stationary power applications before they can “make it” in vehicles
• Electricity is the major energy growth market at twice that of vehicles

SFA Pacific, Inc.

 Hydrogen Economics
Control the Future of Fuel Cells
Simply separate the cost & efficiency of NG to H2 & H2 to kWh
Delivered industrial power price in U.S. is 4.4 cents/kWh
To make 4 cents/kWh baseload electricity for NG based fuel cell
• Assuming Fuel Cell has a 60% efficiency (LHV) & only $400/kW
• Requires H2 @ $5.27/million Btu (LHV) or $1.45/1,000 scf

If fuel cell advocates can really make H2 at < $5.27/million Btu,

they should forget fuel cells for now & make their fortune
selling H2 to oil refineries & ammonia fertilizer plants
• Higher profit relative to existing H2 manufacturing & NGCC power
• Larger well established markets that are growing
SFA Pacific, Inc.
Cost of Industrial Hydrogen from Natural Gas
State of the art 60 million scf/d H2 steam methane reformer
• 200 MWth (LHV) or 120 MWe equivalent for fuel cell power thinking
• Capital cost of $60-90 million or $1-1.5 per scf/d H2 , assume $75 MM
• Efficiency of 360 Btu NG (LHV) per scf H2 or 76.1% (LHV)
Economics @ low cost of capital $/M scf $/MM Btu LHV
Capital charges @ 15% per yr. of capital 0.60 2.19
Non-fuel O&M @ 5% per yr. of capital 0.20 0.73
NG @ $3.33/MM Btu LHV ($3.00 HHV) 1.20 4.38
Total 2.00 7.30
Howe-Baker makes a small (2 - 6 million scf/d) standardized
SMR at higher H2 unit costs & lower efficiency (68.5% LHV)
SFA Pacific, Inc.
 Current Industrial Hydrogen Markets
World ammonia & methanol consume > 15 billion scf/d H2 or
50,000 MWth energy & growing at 2-4%/yr
World oil refineries consume > 10 billion scf/d H2 or 33,000
MWth & growing at 5-10%/yr due to reformulated cleaner fuels
• Less catalytic naphtha reforming byproduct H2 & octane barrels
• More hydrotreating & hydrocracking to make octane & cleaner fuels
• More heavier crude oil require significant H2 to convert to light liquids
• The oil refinery of the future will be much like California refineries
today with H2 consumption of over 1,000 scf per barrel of product

Worldwide over 10,000 miles of H2 pipelines the longest being

250 miles from Antwerp to Normandy @ 100 atm. pressure
SFA Pacific, Inc.
 The “Holy Grail” of the Hydrogen Economy
Based on several key assumptions
• The logical progression of time & higher standard of living shows we
move from solid to liquid to gaseous fuels, each cleaner & lower CO2
• Small renewables are beautiful, cheap, efficient, clean & “honorable”
• Must look beyond the fossil fuel age to a “sustainable” energy world
based on hydrogen for renewables & biomass
Hydrogen zealots believe this transition must begin now
• Believe they are “on a mission from God” or are the “forces of good”
• However, you cannot rationally discuss religion with a religious zealot

Hydrogen economy - renewable making electricity & H2 for fuel

cells is quite possible when the fossil fuel age peaks in 50-
100 years, making fossil fuels increasingly expensive
SFA Pacific, Inc.
SFA Pacific’s Projection of the Fossil Age Peak
20
Total IS92a
18
Carbon Emissions GtC/y

16
14
12
10
8 Oil Coal
6
Gas S550
4
2
0
1900 1950 2000 2050 2100 2150 2200
Source: SFA Pacific, Inc. Year
SFA Pacific, Inc.
 Many Issues & Challenges Yet to Resolve
Except for “opportunity” waste biomass which is quite limited,
biomass requires cheap land & cheap labor to be economical
Solar & wind turbines suffer from low annual load factors and
need for backup power when they are not available
Small may be beautiful, but usually not cheap, efficient or clean
• Small energy consumers have very low annual load requirements yet
very high peak demands, why residential energy is 2-3 times industrial
• Permitting, fuel prices, O&M & emissions are problems at small scale
• Small scale hydrogen is more expensive to make, move & store
Favors existing energy infrastructure & fossil fuels to start
• Power generation & global climate change (GHG) are the keys

SFA Pacific, Inc.

 Hydrogen Zealots have a Burden to Carry
Which is likely to have the
lowest unit costs of: permitting,
fuel, capital, O&M, emissions &
project development costs?

Oil, NG, syngas or H2 for a

50,000 kW gas turbine

or

Something to H2 for a
50 kW fuel cell

SFA Pacific, Inc.

 The Future of Hydrogen
Continue subsidies, capacity off-sets & half-truths promotions
of both fuel cell & renewables - the “Holy Grail” is sacred
• Advanced “leap frog” & breakthroughs technologies are the only
“truths” researchers, government technocrats & promoters hear
• This helps existing industries slow mandates against their highly
profitable yet dirty & inefficient SUVs & existing coal power plants
• If cheap regenerative fuel cells & hydrogen generators can really be
developed, the “Holy Grail” hydrogen economy is quite interesting
Expect coal gasification with CO2 capture for H2 to power
• Assuming GHG is a big problem & we can stomach the real costs
• Much cheaper than renewables & matches existing infrastructure
• Requires incentive to get existing coal-fired power plants to repower

SFA Pacific, Inc.

 United States CO2 Emissions
by Sector and Fuels in 1998
Millions of metric tons per year carbon equivalent
600

500

400
Natural Gas
300
Petroleum
200 Coal

100

0
Residential Commercial Industrial Transportation Electric Utiliites
Source: U.S. EPA Inventory of Greenhouse Gas Emissions, April 2000
SFA Pacific, Inc.
 Power Generation Will Be Forced to Meet a
Disproportionate Share of Any CO2 Reductions
Transportation fuel users have more votes than CO2 intensive
industries as demonstrated last summer in the US & Europe
Power plants can not move to China, as other CO2 intensive
industries in Annex 1 nations, if faced with carbon taxes
Large potential for efficiency improvements in power gen.
• However efficiency usually just reduces CO2 growth rate, still grows

Large point sources of power gen reduce CO2 avoidance costs

• Key to addressing the global warming issue is CO2 capture & storage
for new, but especially existing coal-fired power plants

SFA Pacific, Inc.

 CO2 Mitigation - Existing Coal Power Plants
>300,000 MW of big dirty “grandfathered” coal unit in the US
• 35% of the US & 9% of the entire world’s man-made CO2 emissions

Strategic grid locations, cheap coal & easy permitting to

expand capacity if reduce emissions & increase efficiency
Best options
• NG repowering without CO2 control if moderate NG price
• CGCC repowering with CO2 capture, especially if nearby EOR or CBM
Gasification repowering increases both capacity & efficiency
while reducing all emissions to near zero & staying on coal
• This H2 based power appears to be one the best options for massive
CO2 reduction at minimal costs, especially if CO2 can be utilized
SFA Pacific, Inc.
 CO2 Storage with Utilization Value
Already over 30 million metric tons per year (mt/yr.) of CO2
stored via enhanced oil recovery (EOR) in North America
• Equal to the CO2 generated by 4,000 MW of coal-fired power plants
• Six projects - totaling 6 million mt/yr. of CO2 recovered from process
plants that would otherwise vent this CO2 to the atmosphere
– Includes 1.8 million mt/yr. CO 2 from the Dakota coal gasification plant

• Already 2 CO2 emission credit trades of CO2 EOR from process plants
• Typical EOR uses 6,000 scf (or 0.3 mt) CO2 per incremental bbl (0.14
mt) crude oil production at a CO2 price of $0.60/1,000 scf (or $11/mt)
– At 8,500 scf CO 2 per incremental bbl oil, the oil produced is carbon neutral

Expect large growth in CO2 storage for EOR & CBM

SFA Pacific, Inc.
 Status of Gasification for Combined Cycle
Power Generation & H2 + CO2 Generation
Worldwide commercial gasification capacity is almost 50,000
MWth (syngas) operating & growing at 5,000 MWth /yr.
• New projects are mostly petroleum coke or pitch gasification in oil
refineries for polygeneration

Extensive successful commercial experience with coal, coke &

heavy oil gasification producing pure H2 & CO2 streams
• Over 15 commercial gasification based ammonia fertilizer plants,
most in China, but a few in US, Germany, Japan & India

General Electric has tested & will give commercial

performance guarantees for H2 fired gas turbines
SFA Pacific, Inc.
 Polygeneration
Defined as gasification to make synthesis gas (H2 & CO) for GT-
based cogen steam/power + syngas chemicals & fuels
Shell Pernis refinery project is a good example, no subsidies
• Pitch gasification - 3 units total 640 MWth with 2 gasifiers for refinery H2
& 1 gasifier for GCC cogeneration steam & power
Great potential for polygeneration in the future due to ongoing
deregulation of electric power generation
• Use of low value “opportunity fuels” high in metals, nitrogen & sulfur
• Even attractive for CO2 recovery (will likely add this at Pernis)
• Offers greater flexibility than traditional power plant relative to fuels,
products, revenues, emissions, efficiency & annual capacity factors
• Coke is the bridge to future coal gasification based polygeneration

SFA Pacific, Inc.

 Gasification Technology Trends
Texaco - about 75% of the market the last 5 years
• Simple direct water quench designs well suited for polygeneration
• Aggressive marketing including equity participation in 6 projects
• Extensive successful operating experience on various feedstocks
• Texaco is the most aggressive in reducing capital costs by working
with GE & Praxair on improved standardized GT integrated designs
• Innovative H2-CGCC with CO2 capture design by Texaco/GE/Jacobs
Challengers to Texaco - mostly entrained slagging processes
• Simple, flexible & clean - any feedstock to just: syngas, sulfur & slag
• Shell - now taking equity positions: Sinopec coal to ammonia project
• E-Gas (Destec) - operation with pet coke & “over-the-fence” syngas
• Lurgi MPG & Noell KRC - operations with “nasty” waste fuels
SFA Pacific, Inc.
 Conclusions
The future of hydrogen
• Short-term is the global warming issue & large, low-cost CO2
reductions that could favor H2-CGCC power with CO2 storage,
especially for existing coal-fired power plants via CGCC repowering
• Mid-term is improved fuel cells, especially if cheap regenerative fuel
cells & improved hydrogen generation, handling & storage
• Long-term the “Holy Grail” of the hydrogen economy is quite
interesting, especially if the hydrogen zealots become more rational,
objective & flexible regarding the use of existing energy infrastructure
The hydrogen economy will have to start with fossil fuels
• Coal is the world’s largest & cheapest fuel source & power generators
• Key to addressing the global warming issue is CO2 capture & storage
• Clearly favors coal gasification with CO2 capture for H2 in IGCC power
generation repowering & polygeneration of various clean fuels

SFA Pacific, Inc.