Wyoming, China dream of a coal-chemical bridge to future energy

By Dustin Bleizeffer
— August 19, 2014

Standing in the center of one of China’s new “coal chemical” complexes, it’s difficult to comprehend the scale of the operation. You’d have to see it from 5,000 feet. Each complex is an industrial megalopolis. City block-sized components made up of pipes, vessels, buildings, cooling towers and smokestacks create a sort of giant circuit board.

To help visitors understand the scope, officials recreated the complexes at model scale. Imagine shrinking 1/3 of Cheyenne into a model display completed in rich detail with blinking lights and moving pieces. Each model is about half the size of a basketball court for visitors to marvel at.

Not included in the Ningdong Energy and Chemical Industry base (located in China’s Ningxia Hui Autonomous Region) scale model is a series of newly constructed water reservoirs — water is a major feedstock for converting coal to gas and liquids. The water is supplied by the nearby Yellow River. The chain of reservoirs stretches for several miles. All of the water is consumed in the process.

Now imagine one of these complexes in southwest Wyoming.

Wyoming and its counterparts in coal-rich central China want to use these coal-to-chemical complexes as a sort of bridge, deriving gas- and liquid-fuels, chemicals, plastics, building materials and other products from coal (and also from oil shale, natural gas, and other minerals).

Wyoming leaders see two advantages to establishing a new coal-to-chemicals industry here. First, it would help keep coal in demand and therefore help support the state’s mining industry as it faces flat or declining demand among U.S. utilities. Second, it would supposedly provide a revenue-positive way of driving coal technology to a point where coal-based carbon capture and utilization/sequestration (CCU/S) can one day be deployed at commercial utility scale.

Critics say it’s a dangerous proposition that would only prolong reliance on the world’s dirtiest fuel: coal. While converting coal to gas and liquids can help reduce CO2 emissions per energy unit, building such complexes would result in net increases of man-caused CO2 emissions — the driver of accelerated climate change — because the technology still does not exist to capture and store CO2 in large quantities at commercial scale.

“There are other ways to generate energy that doesn’t require fossil fuels,” said Jeremy Nichols, climate and energy program director for WildEarth Guardians. “It’s not like Wyoming is starving for sunshine or wind. … It does seem like this is just about propping up fossil fuels at any (cost).”

Much of Wyoming’s elected leadership might agree with that last statement. They say they don’t understand climate science, and therefore see no urgency to reduce overall CO2 emissions. Also, no other state in the nation is more reliant on the extraction of coal, oil and natural gas for its economy than Wyoming, according to the U.S. Energy Information Administration.

Outgoing Wyoming Speaker of the House Tom Lubnau (R-Gillette) led a group of four Wyoming lawmakers to China in June to tour coal facilities and discuss technologies and policies with Chinese officials. He said both the U.S. and China are so reliant on coal that neither nation can significantly cut its reliance on the fuel. He suggested that investing in coal conversion technologies is just as important as investing in wind, solar and energy efficiencies.

“It’s all well and good to be high-minded right up until the air conditioner doesn’t work,” Lubnau told WyoFile upon returning to the U.S.

Mega campus

When it comes to energy, Wyoming leaders tend to think big — as in scale. A group of legislators have recently discussed the idea of an “energy mega campus” — a one-stop shop for commercial-scale industries. The vision is an amalgamation of coal-to-chemical complexes in China and the Industrial Heartland complex in Alberta, Canada.

“Canada successfully leveraged many of its natural resources to create one of the world’s most attractive locations for chemical, petrochemical, oil, and gas investment. Nearly sixteen years after the project launched, the region is now home to over 40 companies with over $25 billion in investments,” a March 5, 2014, legislative press release stated.

Proponents say all of the resources exist in southwest Wyoming to build such a complex. It could even include coal-to-chemical conversion. The idea is to create efficiencies through shared infrastructure. It could be built upon existing infrastructure in the region’s massive trona mining and processing industry, natural gas production, processing and transportation pipelines, coal mines, a major railroad artery, coal-fired power generation and a tantalizing prospect for carbon sequestration in the Rock Springs Uplift formation. There’s also a huge untapped oil shale resource and plenty of water, promoters claim, as coal conversion and other industrial processes require a lot of water.

While visiting with officials at the Shanxi Coal and Chemical Research Institute laboratories in June, outgoing Wyoming Speaker of the House Tom Lubnau (R-Gillette) said, “Where John (Rep. John Freeman) lives there’s the Green River where there’s lots of water that’s not being used.”

Lubnau has also noted that if CO2 were pumped into the Rock Springs Uplift formation for sequestration, it would bring large volumes of briny water to the surface for potential industrial use.

To kickstart the “energy mega campus” effort, Wyoming legislators have made a proposal to the X Prize Foundation, asking the organization to offer a $10 million prize to researchers who can develop commercial uses for anthropogenic CO2 and other effluents that come off the smokestack of an existing coal-fired power plant in Wyoming.

This year the Wyoming legislature appropriated $15 million toward the construction of a research and laboratory facility to be located at an existing coal plant. So far, the state has garnered tentative interest from Basin Electric Power Cooperative and Black Hills Power.

“This is one of many options the Legislature is looking at to bolster and sustain our energy economy for the long-term,” House Majority Floor Leader Kermit Brown stated in the March 5 press release. “This is only a conceptual idea right now. But if Wyoming is going to get beyond being seen as a colony only mined for it’s resources, we have to find ways to add value to our production chain.”

State Rep. John Freeman (D-Green River), who also toured China in June, told WyoFile he didn’t understand all of the science behind the coal conversion processes underway in China, but he certainly understood the motivation and what it might mean for Wyoming.

“I think that’s the way to stabilize Wyoming’s economy, bottomline,” Freeman said. “We need to be making multiple products — same idea the Chinese have; ‘we’re going to take this product and maximize everything we can do with it.’ And that’s their goal.”

China’s coal complexes

A Wyoming delegation of four legislators visited the Ningdong Energy and Chemical Industry base in China’s Ningxia Hui Autonomous Region, and the Yanchang Coal and Petroleum Chemical Industry Park in neighboring Shaanxi Province during its 10-day tour of the inner coal regions of China in June. The focus of these efforts is to convert coal to liquid and gaseous fuels, as well as marketable chemical products and construction materials.

At Ningdong they rely mostly on coal as a feedstock. At Yanchang, they use a sort of coal- oil- and natural gas-soup as a feedstock to produce methanol, ethanol and propylene. The advantage of the Yanchang coal chemical facility, its promoters said, is that its fossil fuel soup feedstock takes advantage of molecular strings for a much more efficient conversion process, reducing CO2 output by 68 percent per unit compared to China’s other coal chemical plants.

The overall goal of these coal-chemical refineries is to utilize the region’s vast coal reserves and to transform poor communities into prosperous economies that feed China’s and other developing nations’ demand for their material and economic building blocks. These complexes are also testing grounds to realize efficiencies and reducing waste and pollution throughout other industries.

The facilities are designed with a use-every-part-of-the-buffalo approach; coal ash and coal slag are converted into several different industrial and construction products. The same approach is applied to smokestack emissions, although, so far, very little CO2 is captured, sequestered or put to commercial use.

“The most advantage of the technologies used at the coal/petro-chemical industry park we visited at Northern Shaanxi (the Yanchang complex) is to increase the conversion efficiency and reduce CO2 emission by balancing carbon and hydrogen elements from feedstock coal, natural gas and oil residual from refining facilities,” said Zunsheng “John” Jiao, chief geologist of the University of Wyoming’s Carbon Management Institute, who joined the Wyoming delegation tour of China in June. The products from this complex include methanol, ethanol, olefin, polyethylene, propylene, ammonia, sulfur and high-concentration CO2.

Chinese officials say they’re eager to work with Dow, Dupont, General Electric and other petrochemical heavyweights. They want Wyoming and other U.S. partners to collaborate in advancing the coal-chemical industry.

The Chinese government touts these facilities as a way to find new uses and new markets for its abundant coal, at the same time pushing technologies that will help China and the rest of the world cut more airborne toxins and CO2 from coal. But both the U.S. and China are stuck; China has the economic and policy structure to build these complexes that spin coal into myriad products, but they don’t capture CO2 at scale, and the process is a huge suck on water resources.

Wyoming, where many leaders would love to build a similar coal-chemical industry, lives within an entirely different set of economic, political and regulatory circumstances. The U.S. government’s support of “advanced coal” research and development has been tentative, while the Obama administration has moved forward with a regulatory approach to limit CO2 from coal facilities.

Trials

Throughout the 10-day tour of three Chinese provinces in June, Speaker of the House Tom Lubnau offered Wyoming’s $10 million X Prize idea (which Wyoming has submitted to the X Prize Foundation, and still awaits feedback from the organization) as evidence of Wyoming’s eagerness to partner with China to advance coal conversion technologies.

Chinese officials seemed pleased with the idea, yet they understand that the reason commercial-scale CCU/S for electric utilities remains unattainable today isn’t for lack of financial motivation. It has everything to do with technology limitations, economics and regulatory considerations — not the least of which is mounting pressure to address coal’s contribution to climate change now — not in 10 to 15 years.

How far must a coal-chemical bridge stretch? How far away is CCU/S for commercial coal-fueled power plants (which would emit next to zero CO2 emissions)? “I think we’re a couple of Nobel Peace Prizes away,” said Matt Targett, vice president of research and development for LP Amina, an American company working with utilities around the world to reduce coal emissions.

Amina is currently conducting research in partnership with the Laramie-based Western Research Institute through an Advanced Conversion Technology grant in cooperation with the University of Wyoming. Targett joined the Wyoming delegation during its tour of Shanxi Province, and spent one morning in Taiyuan briefing the delegation on the company’s work.

Targett, who worked for DuPont, accepted his first assignment to China in 1997 to oversee the installation of a new polyester facility. He became interested in work by investors and researchers to help China meet new limits on nitrogen oxide (NOx) emissions. He joined Amina and went to work on “deNOx” solutions for coal-fired power plants in China.

“We’ve retrofitted 30 power plants in China, got another 30 on the schedule, and another 2,000 to go,” Targett told the delegation over late-morning tea at a Taiyuan hotel.

Amina is also intensely interested in China’s efforts to advance coal-to-chemical processes that reduce coal’s CO2 output at power plants. “We want to shift and widen our focus on coal-to-liquids rather than our single focus now on deNOx.”

Amina’s strategy is to go into new and existing coal-fired plants and produce coal liquid products at a small scale. It helps reduce CO2 emissions, but not enough to meet regulatory ambitions. But it does produce products to boost revenue, which can then be reinvested in the continued work in driving coal plants toward lower CO2 emissions.

“All we need to do is come along with a retrofit for the world’s coal fleet that makes them more efficient and more profitable,” said Targett.

In terms of addressing coal-fired power’s contribution to climate change, it doesn’t get coal-based utilities to commercial scale CCU/S anytime soon — as Targett said, he estimates that’s two Nobel Peace Prizes away and, at best, a 10 to 15 years journey across the coal-chemical bridge, assuming there is continued government and market support. But it puts the industry on the bridge toward that goal.

Amina’s approach is being tested in China. But whether it can be deployed in the U.S. remains a question. There are regulatory challenges in the U.S. to such bolt-on applications, and there are economic challenges.

Targett estimates the cost to bolt-on a coal-to-liquids component at an existing coal-fired power plant in the U.S. could be in the hundreds of millions of dollars. But that compares to the $2 billion-plus price tag for a greenfield coal-to-liquids project in the U.S., such as DKRW Advanced Fuel’s proposed Medicine Bow coal-to-gasoline plant in Carbon County. That project has floundered for nearly 10 years with little progress due to lack of market interest and lack of financing — not to mention its own set of regulatory challenges.

Criticisms

It’s not a stretch to describe Wyoming leadership’s ambition to build a mega energy/industrial complex as grandiose. Yet it’s no surprise that Wyoming, which has an economy that is two-thirds reliant on mineral extraction — a main pillar of which is coal — considers such a goal as a practical investment to catapult the state into an energy future that still relies heavily on coal. Even if it’s a vision of the energy future that is fading among the rest of the U.S.

To build it, Wyoming promoters say they may need some wriggle room on emissions, and a different regulatory permitting regime. For example, proponents have discussed consolidating multiple facilities under one air pollution emission permit. A mega energy campus will also require a good deal of water in a region where longterm water resources are dwindling and demand remains high.

Is a coal-to-chemical and industrial complex a worthy and sound investment in today’s political and economic realities? Some say Wyoming should begin transitioning away from coal rather than further entrenching its economy in a coal pit.

“By any measure, the clock is ticking toward a day when one pillar of the state’s income structure will crumble,” Scott Kane, co-owner of Lander-based Creative Energies, wrote in a recent column. “Our choice is this: do we spend the next decade investing our political capital and our research dollars to prolong the era of coal as long as possible, or do we use the next decade to invest in a new and different energy infrastructure?”

Jeremy Nichols of WildEarth Guardians said he supports cutting CO2 from fossil fuels. But he believes that converting coal to fuels and chemicals is too energy-intensive to be considered a prudent investment, especially if taxpayer dollars are leveraged.

“It’s crazy; the risks they’re willing to take and to do it with taxpayer dollars,” Nichols said.

Beyond the $10 million X Prize idea, and beyond the $15 million to go toward construction of an onsite research laboratory, Wyoming officials have not proposed how they might incentivize investment in coal-to-chemicals or an energy complex. But proponents say Wyoming should join China in coal conversion efforts rather than stand on the sidelines and allow China to develop and completely own a suite of technologies that will one day be deployed worldwide.

David Wendt, president of the Jackson Hole Center for Global Affairs, which organized the legislators’ trip to China, said the U.S. and China are not going to completely kick coal, so why not push carbon-cutting technology for coal?

“They (China) need our help and the world’s help. But you could actually turn that on its head and say we need their help — which is deployment,” Wendt told WyoFile. “They’re getting these technologies out there, bringing the costs down — that’s innovation, too. Innovating while you deploy. That’s what they’re doing and we’re not doing.”

Wendt said the Obama administration’s move to limit CO2 emissions at new coal-fired power plants beyond what is technologically achievable today threatens to kill innovation toward CCU/S. He said there needs to be some leeway for CO2 emissions as industry and government partners strive to improve the technology.

“I see a lot of potential here if we can just shake some of these old attitudes loose and get something done,” Wendt said.

For more on cooperations between Wyoming and China on coal and climate matters, read these WyoFile reports:
— Reasons differ, but Wyoming and China agree on cutting CO2 from coal, August 5
— Wyo-Sino: Formalities precede Wyoming-China coal tech exchange, June 25
— Wyoming lawmakers talk carbon cooperation in China summit, June 9

Dustin Bleizeffer is WyoFile editor-in-chief. He has covered energy and natural resource issues in Wyoming for 15 years. You can reach him at (307) 267-3327 or email dustin@wyofile.com. Follow Dustin on Twitter at @DBleizeffer

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