Document Type

Working Paper

Date of this Version

4-2012

Abstract

This report describes a process to convert coal and natural gas to a mixture of liquid hydrocarbons, which is intended to be sold as a feedstock for a refinery. Given that the region has a large amount of coal production and sits atop the Marcellus shale with its expanding natural gas production, as well as the proximity to refineries in Ohio, southwestern Pennsylvania is a natural location for such a venture.

2600 tons per day of coal and 66 million standard cubic feet per day of natural gas are converted to syngas in separate, parallel process trains. The hydrogen rich natural gas syngas is mixed with the hydrogen lean coal syngas to give the desired syngas composition. Fischer-Tropsch chemistry is used to convert syngas with a 2 to 1 H2:CO molar ratio to a distribution of alkanes. The alkanes are separated to give 15,500 barrels per day of liquid product.

The total capital investment of the project was estimated to be $1,308 million. Using the EIA baseline projection for the price of oil and a 15% discount rate, the project is expected to have a net present value of -$258 million, with an internal rate of return of 11%. The profitability of the project is especially dependent on the price of oil and the total capital investment.

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Date Posted: 20 August 2012