The soaring cost of oil and the volatility of natural gas prices in the U.S. are prompting chemical makers to take a look at alternative sources of feedstock and energy. In particular, there is a resurgence of interest in projects that use synthesis gas (syngas) obtained from coal as a source of petrochemicals. There is also growing interest in using hydrocarbon sources such as Canadian oil sands as a feedstock source. Some firms are also looking to cut their dependence on fossil fuels by developing projects that use renewable raw materials, such as corn, to produce chemicals.
Several U.S. fertilizer makers are eyeing projects to convert production of ammonia from natural gas to coal; a number of ammonia plants have recently been idled or are running below capacity because of high natural gas prices. Agrium recently announced that it is studying the potential use of coal gasification to provide feedstock for its 1.5-million tons/year nitrogen facility at Kenai, AK, which is facing a gas supply shortfall (CW, Nov. 23, 2005, p. 6). The proposed gasification plant would use local low-sulfur coal, and would also produce energy that could be sold into the Alaska grid.
"This project would create an off-take gas agreement opportunity for Agrium and generate a source of competitively priced electricity," says Bill Boycott, general manager/Kenai nitrogen operations. "It would also provide excess CO[2] for use in the exploration of oil and gas," Boycott says. Agrium is in discussion to license coal gasification technology from Shell. The coal would be sourced from the Beluga Coal Field, which contains more than 2 billion tons of proven reserves. The facility could be in operation as early as 2011 if results from the study are positive, Agrium says.
Agrium's recent purchase of Royster-Clark will also give it access to fertilizer from a plant at East Dubuque, IL that is being converted from natural gas to coal. Royster-Clark is in the process of selling that plant to process technology firm Rentech (Denver), which is carrying out the conversion, but will retain rights to market fertilizer from the unit. Rentech is also installing its Fischer-Tropsch technology that will convert syngas to produce liquid fuels. The co-production of fertilizer, fuels, and electricity is expected to "significantly improve" the efficiency of the overall process, Rentech says.
Production of fertilizer and chemicals from coal is not new, of course. There are two other coal-based fertilizer and fuels facilities in the U.S.; Coffeyville Resources' plant at Coffeyville, KS, and North Dakota Gasification's unit at Beulah, ND. Most of China's nitrogen fertilizer industry is based on coal, and the country has many coal-based chemical facilities. Sasol has coal-based chemical production in South Africa, and Eastman Chemical has long operated coal-based acetyl chemicals production at Kingsport, TN. However, the rising price of oil and gas means that more chemical firms are examining a switch.
"The chemical industry appears to be at a turning point that augurs well for the use of coal to produce chemicals," says Edward S. Glatzer, director/technology at Nexant Chem Systems (Tarrytown, NY). "Coal pricing has been very stable while other hydrocarbons have shot through the roof," Glatzer says. "There's a lot of interest in the U.S. fertilizer industry for coal gasification for production of ammonia, and growing signs of interest from the chemical sector," he says. "It's already a very competitive route for making products including acetic acid and formaldehyde in the U.S.," he adds.
Eastman produces a range of acetyl chemicals, made from methanol derived from the gasification process at Kingsport, and it is keen to expand on that position. The company says it is in discussions with several power companies about coal gasification projects that would coproduce chemical raw materials. They include a power project being evaluated by The Erora Group (Louisville, KY) at Taylorville, IL. The Taylorville facility is expected to begin commercial operations in late 2009 or early 2010, Eastman says. The project would use gasification technology licensed from GE Energy.
VALUABLE FEEDSTOCKS. "The Taylorville facility was originally intended to be a standard coal-fired power plant -- we showed that if gasification is used, it would improve the environmental performance through lower CO[2] emissions, and have the additional advantage of coproducing valuable chemical feedstocks," says Brenda Barnicki, managing director of Eastman Gasification Services. That unit provides services to companies that license coal gasification technology. "There is a lot of interest from chemical companies in coal gasification because of the high prices of other raw materials," Barnicki says.
Sasol says it evaluating several potential ventures in the U.S. using its Fischer-Tropsch process to produce liquid fuels from coal (CW, Oct. 19, p. 6). The company is in talks to supply its technology to Waste Management Processors (Gilberton, PA), a firm developing a coal-to-fuels plant at Gilberton. Shell and Eastman are also involved in the talks, reports say. Sasol's unit at Secunda, South Africa converts coal-based syngas to gasoline, diesel, liquefied petroleum gas, and petrochemical feedstocks that are used for a 450,000-m.t./year ethylene unit.
Methanol derived from syngas can also be converted to olefins, but that is not expected to be a viable route in the U.S.," Glatzer says. A recent Chem Systems study found that the cost of producing polyethylene from coal would be more expensive than conventional routes via a steam cracker, even with the expected increases in natural gas prices (top chart, p. 21). "The relatively high cost of ethylene for methanol produced from coal cannot compete with that produced from conventional cracker processes in the U.S., and will not be able to in the foreseeable future," he says.
The economics of coal-to-chemicals production are a lot different in regions with an abundance of low-cost coal, such as South Africa, Eastern Europe, and China, however, Glatzer says. In addition to its coal-based ammonia industry, China already has competitive production of vinyl chloride monomer from coal-derived acetylene (bottom chart), and production of olefins there from methanol via coal gasification would likely be cheaper than production via a conventional cracker. "China's lack of crude oil, its abundance of coal, and a shortage of ethylene make the economics work," he says.
Several coal-to-chemical projects are under development in China, some of which will include olefins production. Amec recently said it had been awarded a contract to build a coal-to-chemicals facility that would include methanol-based propylene production for Ningxia Coal Industry Group at Yinchuan, China. The unit is expected to use the Lurgi methanol-to-olefins technology. Coal producers Tianji Coal Chemical Industry (Changzhi, China) and Huating Coal Group (Pingliang, China) have announced separate plans for major methanol projects; Huating's also includes plans for propylene production (CW, Feb. 1, p. 21).
Chinese chemical makers are also looking at gasification plants as a means to reduce their dependence on imported feedstocks. Sinopec recently signed a licensing agreement to use GE's gasification technology at a Sinopec Qilu chemical plant at Shandong, China to produce syngas from coal and petroleum coke for chemical production. Qilu will be the fourth Sinopec facility to utilize GE's gasification technology, the company says. Licensing agreements were signed for Sinopec's Zhenhai plant in 1978, its Jinling facility in 2002, and its Nanjing site in 2003, GE says.
"The biggest activity in gasification technology is China -- we have obtained five orders since we acquired the licensing business from ChevronTexaco in 2004," says Edward Lowe, general manager/gasification at GE Energy. "China continues to be pressured on natural gas supply, and is looking at alternatives for power generation and coproduction of chemicals, including methanol and ammonia," Lowe says. "In the U.S. too we see a significant move towards the use of coal to produce power. There is also growing interest in coproduction of chemicals or liquid fuels to better monetize coal reserves, particularly in the Western U.S.," he says.
Dow Chemical is involved in a study for a coal-based chemical complex in China that would include olefins production. Dow signed a latter of intent last year with state-owned Shenhua Group (Beijing), the largest coal producer in China, to jointly study a large-scale coal-to-olefins projects in the country (CW, Jan. 12, 2005, p. 15). Dow says the study will determine which technology would be most suitable for the project, and which product mix and capacities will be the most profitable. The companies have identified the area around Yulin, China as the most likely location for the facility, Dow says.
Dow is interested in petchem projects where it can take advantage of "distressed" feedstocks, whether it is low-cost ethane in the Mideast, or coal at a remote location in China," says John Dearborn, v.p./energy at Dow. "We have launched a prefeasibility study for the China project that is looking at converting coal to syngas and via alcohols to olefins," Dearborn says. There is also salt available, and that combined with production of power would also make chlor-alkali production possible. If it goes ahead, the project "would provide Dow with a significant footprint in China," he says. The study is expected to be concluded by end of this year.
"Coal is going to be a growing source of fertilizers and chemicals in China to help meet the trade deficit in those products," says Ron Smith, a consultant at SRI Consulting (Menlo Park, CA). "In the U.S., the emphasis is currently on power generation, but there is also a lot of opportunity for chemical co-production, particularly acetyls," Smith says. "The government has made these kinds of projects more attractive through tax breaks and other financial incentives in the new energy bill. A number of chemical firms are currently looking at U.S. projects, but no one has made any firm commitments yet."
OIL SANDS OPPORTUNITIES. Meanwhile, there is also rising interest in the use of Canadian oil sands, a form of heavy, sour crude oil, as a source of petchem raw materials. Offgases from Suncor Energy's oil sands upgrader at Fort McMurray, AB is already processed to 125 million lbs/year polymer-grade propylene by Williams at Redwater, AB. The Industrial Heartland Association (Calgary), which promotes investment in Alberta, is marketing a potential 400,000 m.t./year polypropylene plant in Alberta that would use expanded supply from the Williams fractionator, says Larry Wall, executive director at Industrial Heartland.
Williams' approach is to aggregate the offgases from the Suncor plant with chemical-grade propylene from petrochemical facilities operated by Dow and Nova Chemicals in Alberta, as well as propylene from area refineries, which could potentially raise polymer-grade propylene output from the fractionator to 1 billion lbs/year, says Ron Hutchings, director/Canadian olefins business at Williams. There is potential for even more propylene production as the result of the growing interest in upgrading oil sands, Hutchings says. As many as 10 new upgraders or expansions are being planned, which could provide for up to an additional 1 billion lbs/year of propylene, he says.
Meanwhile, Alberta's energy ministry and a group of oil and petchem firms including Nova are studying a $ 7 billion-plus oil sands-based bitumen refinery and petchem complex at Redwater that would also include a gasification project. The facility would produce up to 450,000 bbl/day of fuels, as well as petrochemical feedstocks, hydrogen, ammonia, and electricity. Petrochemicals would account for about 15% of the project's output, reports say.
Development of oil sands also provide an opportunity for industrial gas firms to supply hydrogen, says Mark Gulley, an analyst at Soleil Securities (New York), Hydrogen is used to hydrotreat the heavy crude oil. "Canadian oil sands should account for 25%-30% of the growth of the total 'make-or-buy' global refinery hydrogen market through 2010," Gulley says. "Visibility should get better when an industrial gas company wins the first hydrogen plant order. Thus far, all hydrogen capacity for Canadian oil sands is "make," but industrial gas companies are working overtime to convert this market to "buy."
HYDROGEN POTENTIAL. There is also the potential for companies to use surplus hydrogen from their operations to power fuel cells to supply some of their energy needs. Dow is working on a project with General Motors (GM) that involves the installation of fuel cells at its Freeport, TX plant. "We are working with GM to refine fuel cell technology as we move toward the production of 1 megawatt (MW) of power" says Gordon Slack, business director/energy at Dow. The fuel cell project could eventually supply up to 35 MW, or 2% of Dow's power needs at the site, but "the real question is whether we can significantly upgrade the value of hydrogen," Slack says.
Meanwhile, a growing number of chemical companies as well as agribusiness firms are working on the use of renewable agricultural raw materials such as corn to feed chemical production. DuPont's goal is to have 25% of its revenues derived from products made using renewable materials by 2015. The company's first big project is commercializing a bioprocess to make 1,3-propanediol, a monomer used to make its Sorona polytrimethylene terephthalate polyester. DuPont is working with Tate & Lyle (London) to scale up a process developed in partnership with enzyme firm Genencor.
DuPont, Cargill, and others are also working on "biorefineries" that would use sugars derived from agricultural products to make chemicals. The attraction is that, like coal, corn prices have remained stable while the price of hydrocarbon raw materials has soared, making products such as Cargill's polylactic acid competitive with polymers derived from fossil fuels. However, the true step-change in economics is awaiting the successful development of enzymes that can utilize low-cost biomass, such as corn stover, rather than corn. If that route can be made competitive, experts say that the U.S. could quickly develop a significant agricultural-based petchem industry.Chemical Week
