By Steve Blankinship, Associate Editor

Regardless how much the environmental establishment hates coal, the United States is not likely to reduce using its most abundant and least expensive fuel. Nor will any other coal-producing nation. In part, that’s because in addition to “most abundant” and “least expensive” you can add “highly versatile” to coal’s attributes. All are reasons why coal stays in the picture, in a very big way for a very long time to come.

Expansion of the U.S. coal-fired sector continues with more than a dozen new projects permitted, under construction or coming on line. Current Energy Information Administration figures project the United States will need 145 GW of new coal capacity by 2030. Under that scenario, the percentage of U.S. electric generation from coal over that period will increase from the present 50 percent to 57 percent. In terms of consumption, that means a 59 percent increase in the use of coal compared to today. The United States has an approximate 250-year supply of domestic coal reserves.

But the issue of carbon dioxide (CO2) is stunting a boom in new coal plant development that was well underway as recently as 24 months ago. That applies to pulverized coal plants (PC) - even those that achieve ultra-high efficiencies and ultra-low emissions - as well as integrated gasification combined cycle (IGCC) plants, which until recently appeared to be the predominant alternative to pulverized coal.

But environmental opponents now demand that IGCC plants be built to capture and sequester CO2 from the day they start operating. Such demands make it impossible for any kind of coal plant to operate, not so much because of the demand to capture CO2, but because of the demand to sequester it. No infrastructure yet exists to sequester CO2 from power plants, nor will one for many years.

Regardless of how many new coal power projects move forward, projects that use coal but produce no power hold tremendous potential for the resource. While new IGCC plants may not start producing power as soon as some thought a few years ago, several pure gasification projects are moving ahead. These projects gasify coal to produce substitute natural gas (SNG) for injection into the natural gas transmission pipeline system.

Coal by pipe instead of coal by wire makes sense, in part because it eliminates the need to choreograph the interaction of a gasifier train with a power train, something that can prove problematic for a power plant that must cycle, turn down and follow electric load. Illinois, for example, with its large coal deposits and location near a confluence of existing and proposed natural gas pipelines, is the site of several such projects. An air permit had been issued and construction started on a $250 million coal-to-SNG plant in Decatur, Ill., developed by St. Louis-based Secure Energy. The project will initially convert up to 1.4 million tons a year of high sulfur Illinois coal into 45,000 MMBtu/day of pipeline-quality natural gas. The Decatur facility will eventually increase its output to 67,000 MMBtu/day and will serve as Secure Energy’s reference plant, which the company intends to replicate elsewhere.

Additionally, Peabody Energy and ConocoPhillips have announced plans to build a commercial-scale coal-to-SNG facility using ConocoPhillips E-GAS technology. The project would be a mine-mouth facility where Peabody has access to large coal reserves and existing infrastructure. It would produce 50 billion to 70 billion cubic feet of pipeline-quality SNG annually from more than 3.5 million tons of Midwest coal. Other coal-to-SNG projects are in various stages of development in Illinois and Kentucky.

Then there’s coal-to-liquids (CTL) - a technology the U.S. was moving rapidly toward developing after World War II. Germany waged its war with tanks and planes fueled by coal. Some of the original CTL technology was developed in Germany in 1917. CTL technology was on track to keep the United States operating on transportation fuels derived from coal until 1952, when massive oil reserves were discovered in Saudi Arabia. Were it not for that event, we might well today be driving cars and riding in planes fueled by coal. It’s equally likely that someday we will be doing just that. In fact, if you ever fly from Australia or South Africa in a commercial jet, it is almost certainly fueled with coal. Both countries have well-developed CTL industries.

“Any product than can be made from oil can be made from coal,” notes John Ward, vice president of Headwaters Inc., one of the largest providers of technology and chemical reagents to the coal-based synthetic fuels industry. Ward says no one knows when it will happen, but it’s just a matter of time before oil prices reach a certain sustained level that causes the pain of relying on oil from politically unstable nations to become unbearable. He also says that although CTL produces even more carbon than power generation from coal, it does so in such a concentrated state that capture is relatively easy. And sequestering captured carbon from a handful of CTL refineries is probably more practical than sequestering carbon from dozens of IGCC power plants.

A March 2006 report by the National Coal Council said the United States could produce at least 2.6 million barrels a day of liquid fuels from coal by 2025. To date 18 states have expressed private and/or public interest in CTL project development. Projects are already underway or proposed in such coal producing countries as China, India, Mongolia, the Philippines, Indonesia and Germany as well as Australia and South Africa.

Coal remains the world’s most abundant fossil fuel. And its potential uses for stationary power, transportation fuels, chemicals and industrial products such as naphtha and ammonium nitrate will keep it in the picture: Today, tomorrow and for decades to come.

What a Year

By David Wagman, Managing Editor

Energy is having one of its periodic flings atop the public interest agenda. This doesn’t mean the public necessarily is well informed as a result. For example, an environmental group last month put out results of a survey that said the public is generally “clueless” (their word) when it comes to details about energy.

With the industry in the public spotlight, at least five major events this year stand out as likely to shape the power generation industry into the future. Disagree? Send you own list to pe-editor@pennwell.com. In December we’ll publish the lists we receive in our e-newsletter. Here is my list:

1. NRG Energy COLA - The power producer and South Texas Project Nuclear Operating Co. filed a Combined Construction and Operating License Application with the Nuclear Regulatory Commission on September 24 to build and operate two new nuclear units. NRG expects to bring the 2,700 MW on line in 2014 and 2015. The application - by a merchant power producer, no less - is proof that the power industry is serious about its plans to order, license and build new nuclear power plants. Cost escalation, possible delivery problems, regulatory approval delays and waste disposal issues still could deflate the new-build momentum. But milestones continue to be met. The NRG Energy COLA is a big one.

2. TXU coal plant reversal - Just a year ago TXU (now rebranded “Energy Future Holdings Corp.”) captivated the industry with talk about 11 coal-fired power plants that could be built for $1,500/kW (and even cheaper!) It would keep costs low using its massive buying power, thus ensuring record delivery timetables. The utility also figured it had the Texas regulatory approval process sewn up. But it misjudged public sentiment. And not just anti-coal environmentalists in Dallas and Austin, but business leaders like Trammel Crow, Garrett Boone and David Litman. The three co-chaired a group called Texas Business for Clean Air (TBCA) and wrote last May, “We must give a backhanded compliment to TXU, which we believe triggered this change in attitude with its cavalier announcement that it would build 11 new coal-fired generating plants across Texas with little regard for the quality of life for those downwind. Their plans triggered the formation of TBCA.” A private equity buyout group launched a successful $45 billion deal to acquire TXU and scrapped eight of the 11 plants. The new owners also quickly began work to paint the utility green.

3. Natural gas resurgence - Electricity demand continues to grow as reserve margins shrink in many NERC regions. But, if it takes 10 years to permit and build a nuclear plant and seven years to permit and build a coal plant, how are power providers going to meet baseload demand in the near-term? As my colleague Steve Blankinship wrote in our October cover story and as Brian Schimmoller argues in this issue, the logical choice seems to be natural gas. The fossil fuel is perceived as environmentally friendly, relatively easy to permit, relatively cheap to build and relatively quick to bring on line. Trouble is, as we saw in the 1990s construction boom, natural gas prices can also be relatively volatile and domestic supplies continue to dwindle. But it appears that telling that story can wait a year or two.

4.No-coal pushback - TXU’s (sorry, Energy Future Holdings Corp.’s) reversal heartened opponents to new coal-fired generation. The no-coal trend actually started earlier, notably in Nevada and Idaho, where Sempra Generation in March 2006 scrapped plans and exited the power plant development business altogether, a victim of local opposition. Not only has conventional coal-fired generation been opposed, but so too has integrated gasification combined cycle. IGCC briefly saw favor due to its as yet unproven ability to capture and sequester carbon. Once the environmental community realized IGCC offers no panacea for carbon, it rapidly fell out of favor. In early October, Tampa Electric - an early IGCC adopter - dropped plans for a new IGCC facility and opted instead for…you guessed it…natural gas. IGCC’s near-term fortune may hinge on its ability to create synthetic natural gas and help fuel a new natural gas generation construction boom (see item #3 above).

5. FPL Energy renewable energy initiatives - The renewable energy developer continues to be a major wind energy player. But it also committed in late September to develop more than $1.5 billion worth of solar resources, punctuating other announcements from developers around the country to build additional solar capacity. Large investments and big projects both are critical in helping new generation sources gain market acceptance and drive down costs. The scale of FPL Energy’s plans may be the boost that solar energy has needed.

Visit Us Online

Another notable development in 2007 has been the growth in Power Engineering magazine’s online presence at www.power-eng.com. My colleagues Teresa Hansen, Steve Blankinship and Chris Posey have produced numerous podcasts and webcasts, which are available there for your use. We also publish a free semi-monthly e-newsletter and three custom-tailored (and equally free) quarterly e-newsletters on renewables, coal and nuclear generation. Search past issues and topics of interest in our online research library. And check our online Calendar of Events regularly. News briefs on the electric power generation industry from around the world are posted daily at the Power Engineering magazine home page, with contributions coming from both our United Kingdom and United States editorial offices.