(SNL, August 23) – The vast majority of coal currently consumed in the U.S. goes into the power plants that run the nation’s electric grid, but some see that as a waste of the black rock that is currently falling out of favor as a domestic fuel source.
George Skoptsov, president and CEO of Pennsylvania-based H Quest Vanguard Inc., recently described his efforts to promote coal technology to a crowd at the American Coal Council’s Coal Market Strategies conference in Utah. Skoptsov said readily available coal, alongside rapid technological development, fueled the industrial revolution before its role as a primary chemical feedstock was bumped by cheap oil decades ago.
“The coal industry must once again embrace technology development and reinvent itself,” Skoptsov told attendees.
While coal markets appear to be experiencing an uptick in 2016, the long-term prognosis for the industry is largely flat or negative in the medium and longer term. If the country continues to act on climate change, lagging development in carbon dioxide mitigation technologies could mean significant drops in coal demand as generators shift to other fuels.
On the other hand, Skoptsov said, the U.S. Energy Information Administration is predicting continued liquid-fuel demand growth. With oil no longer cheap or easy to extract in many places outside of the Middle East, Skoptsov said there are opportunities for converting coal into liquid fuel.
The problem is that many coal conversion projects have proven costly; they have historically required high pressure and temperatures, high carbon dioxide emissions, high energy consumption and large scales of production to operate. H Quest Vanguard’s Wave Liquefaction technology, he said, has virtually no carbon dioxide emissions, requires relatively little capital and production expense, and is profitable even at smaller scales.
The process uses rapid microwave conversion to combine natural gas with coal to create fuels, chemicals and carbon products. Using prices and figures from 2012, before coal demand collapsed and prices fell sharply, the estimated all-in cost was just $35 per barrel of oil produced.
The Defense Advanced Research Project Agency funded the technology in an effort to create military jet fuel from domestic coal resources. Now, Skoptsov said the technology can be commercialized for a wide range of applications.
He pointed to a quote he attributed to famed scientist Dmitry Mendeleev who said burning petroleum as a fuel “would be akin to firing up a kitchen stove with bank notes.”
“The same thing can be said about coal,” Skoptsov said. “Coal is also a source of complicated hydrocarbon molecules. If we can only convert the coal into a form where it can be easily processed into our products, that will increase its value immensely.”
The technology caught the attention of coal industry veteran Fred Palmer, a former executive with Peabody Energy Corp., who told S&P Global Market Intelligence that he has become involved with the project. Palmer said the technology was “very exciting” as he predicts a near-term opportunity for coal-to-oil technology and medium- and long-term opportunities in using coal as a chemical feedstock.
Palmer said coal companies have been working for years to progress carbon-capture technology, but “for a lot of different reasons, it didn’t work.” He sees widespread use of coal as a chemical feedstock as a potential path forward for coal use.
“It absolutely works,” Palmer said. “They’re sitting there making oil right now out of coal and natural gas.”
Globally, Skoptsov said, there will be opportunities for growth in coal, even if domestic consumption declines. Using the technology, he said, coal can serve markets for platform chemicals, graphitic and other high-value carbons, and carbon fiber.
“The real question is where that transition is going to take place,” he said. “Is it going to take place in China or Japan? Or is it going to take place here in the United States?”