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The promise of synthetic fuel: coal-to-liquid technologies, pioneered almost 80 years ago, have the potential to free America from its dependence on foreign oil.

On September 19, a B-52 bomber lined up for takeoff on Runway 22 at Edwards Air Force Base. That, in and of itself, was unremarkable. B-52 bombers have been flying missions for the Air Force since 1954. But this time the huge jet would not be powered by standard JP-8 jet fuel alone. Instead, it would test a new synthetic fuel developed by Syntroleum Corp. Though the plane would have to return to base with a problem unrelated to the fuel system, the flight was a huge success. "This test sets the stage for a more comprehensive plan the Air Force has toward conservation," said Undersecretary of the Air Force Donald M. Sega, who flew aboard the plane. "This test fits into this overall vision and is the first step in a long process for looking at the viability of alternative fuels."

The success of the test should have come as no surprise. The synthetic fuel used aboard the bomber was made by Syntroleum using the Fischer-Tropsch process to make liquefied fuel from natural gas. That process was one of two developed in Germany after World War I. The German scientists who developed the process hoped to make coal-rich but oil-starved Germany independent of foreign sources of oil by converting coal into synthetic liquid fuels that could take the place of gasoline refined from crude oil. The process worked so well that it became of major strategic importance to Nazi Germany in World War II (see article page 36). But after World War II, the long era of cheap and plentiful crude oil kept synthetic-fuel technology on the shelf.

As the Air Force tests show, however, synthetic fuels are ready to stage a big comeback. With demand for conventional refined fuels expected to remain strong in future years, there is a growing need to supplement foreign sources with homegrown alternatives. Synthetic-fuel technology has the potential to turn America's enormous deposits of coal into cost-effective fuels--enough to power America deep into the 21st century and beyond.


If synthetic-fuel technologies are going to play a significant role in America's future energy equation, they will be made from the nation's supply of coal. The United States has the largest coal reserves in the world. According to the Energy Information Agency, the United States has 508 billion short tons of coal, with 274 billion tons classified as recoverable reserves, meaning they can be recovered economically using current technology. Commenting on the magnitude of the nation's coal reserves, the Congressional Research Service reports: "U.S. recoverable reserves are estimated at 25% of total world reserves."

This is an enormous energy resource that could play a huge role in ensuring America's energy independence for many, many years to come. Traditionally, this coal has been used to power electricity generation and heavy industry. But coal liquefaction and gasification technologies could be used to convert much of this coal to liquid fuel. In 2005, Secretary of Energy Samuel W. Bodman contacted the National Coal Council, a Federal Advisory Committee to the secretary of energy, requesting that the council draft a report detailing the role coal can play in the near future. The council found that "application of coal-to-liquids technologies would move the United States toward greater energy security and relieve cost and supply pressures on transportation fuels by producing 2.6 MMbbl/d [2.6 million barrels per day] of liquids. These steps would enhance U.S. oil supply by 10 percent and utilize an additional 475 million tons of coal per year."

The coal-to-liquids (CTL) technology utilizes one of the two methods of synthetic-fuel technologies first pioneered by German scientists in the 1920s. These are characterized as either direct (the Bergius process used by I.G. Farben in Nazi Germany) or indirect (the Fischer-Tropsch process used by Syntroleum and others). Technical advances since the end of World War II have made modern coal-to-liquids technology much more efficient than in the past. Moreover, the fuel that is produced is generally of a higher quality than fuel from traditional refineries. "Rentech Corporation," says the National Coal Council report, "has indicated that CTL technologies produce fuel that is of higher quality and is environmentally cleaner than a standard petroleum product."

On April 24, Hunt Ramsbottom, president and CEO of Rentech, brought his clean fuel to a heating of the Senate Committee on Energy & Natural Resources and passed it around. "I'm passing around a sample of Rentech's ultra-clean diesel," he said. "Please look at it closely--it is very different than the diesel made from petroleum. This is clear, refined to a high degree of purity, and has almost no particulates--which is what causes the belching cloud you see when a diesel truck or bus starts to accelerate. When the Air Force tested our fuels and similar fuels made by competitors, the tests showed reductions in particulates of up to and over 80%."

The fuel, he said, was cleaner in other ways too. "The Rentech fuel is also extremely low in sulfur--less than 1 part per million, far under the new EPA standard of 15 ppm. The finished fuel can be used with no engine modifications in any standard diesel engine--including trucks, buses, and barges. It can even be processed into jet fuel." Moreover, he continued: "You should also smell the product. It has none of the typical odor of diesel. There are two other critical differences between this and typical diesel. Our fuel has a shelf-life of at least 8 years, rather than 3-4 months for petroleum diesel --meaning that for the strategic reserve, for emergency first-responders, and the military, our fuel has incredible advantages. Next, our fuel is biodegradable. If it spills, it does not cause irreparable damage to waterways or wells."

The major stumbling block on the way to implementing this technology on a wide scale in the United States has, until now, been price. Traditional petroleum products have been relatively inexpensive, making it impossible for synthetic fuels to compete unless they received subsidies from the government. This was the problem that plagued Synthetic Fuels Corp., a massive public-private partnership created in 1980 when President Carter signed the Energy Security Act. That 1980 legislation earmarked $5 billion for synthetic fuels projects. But even that gigantic socialist wealth-transfer scheme was not enough to make synthetic fuel attractive when the price of crude oil stabilized at low levels during the 1980s.

For the time being, however, and perhaps for the foreseeable future, the price equation may have changed. According to a MoneyWeek report, "Breakeven for a coal-to-liquids plant in the U.S. would be in the range $39-44 a barrel, assuming no tax incentives." Crude oil prices have remained at or above this level since 2004, making investment in CTL technologies attractive and spurring investment.

Building the CTL Infrastructure

Hunt Ramsbottom's Rentech Corp. is one of the companies that is moving most aggressively to build CTL facilities in the United States. In Commerce City, Colorado, the company has constructed a CTL product-development facility that is designed "to produce 10-15 barrels per day of ultra-clean FT [Fischer-Tropsch] diesel, naphtha and jet fuel" for demonstration purposes. The company has much more aggressive projects started in other states. Among the most exciting is the company's Midwest facility in East Dubuque, Iowa. Originally a fertilizer plant, Rentech intends to update the facility so that in the future it will produce not only fertilizer, but also "1,800 barrels [per day] of ultra clean, ultra low sulfur fuels ... and 76 megawatts of electric power for the local grid."

A much larger project using Rentech technology is in the works for Montana. A partnership led by DKRW Advanced Fuels of Houston, Texas, has begun exploring the feasibility of building a $2 billion CTL plant in Montana that, if constructed as intended, would produce 22,000 barrels of diesel fuel per day, using coal from a local mine. The technology is not in question, but getting financing for the massive project is the chief obstacle, according to one Rentech official. "The tougher nut to crack is the (plant) permitting and the financing," said Rentech's Mark Koenig. "Those are items that can really slow down a project." The Montana project may take years, but supporters remain hopeful. "I think (this one) is the real deal," said Montana state representative Alan Olson. "But it's going to take time. (We've) been in here for the long haul. Projects like this don't happen in 20 months."

Indeed, it's taken many decades for CTL technology to be implemented on a wide scale in the United States, but now may be the time for the nation to embrace this promising technology. "We have as much energy in coal as the rest of the world has in oil," Rutgers University professor of chemistry and CTL researcher Alan Goldman recently told MIT's Technology Review. "That's enough to last us the next hundred years or so." That's the kind of energy independence the nation desperately needs.
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Title Annotation:ENERGY
Author:Behreandt, Dennis
Publication:The New American
Date:Nov 27, 2006
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