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Mining Affairs Forum September 20, 2008

By Ken Thornberg

“Coal and Gas—a Good Mix Today”

Most everyone who reads this column knows that gasoline and diesel fuel are hydrocarbons. This name gives us a great clue as to how to convert coal to liquid fuel: combine hydrogen and carbon. Hydrocarbon fuels are designated by the number of carbon atoms in their molecules. This is why octane is the optimum for standard engines and cetane for dieself engine fuel. And I could go on with a science class about all this, but I think most readers would turn the page!

So some are probably wondering, “So what?” So glad you asked. It’s all about coal. The chemistry of coal still has not changed and it is still possible to synthesize fuel from coal, which ranges from about 65% to 95% pure carbon. All that is required is hydrogen, heat, and pressure. The country that is presently a significant producer of gasoline using coal is South Africa. Just as the Nazis were isolated from petroleum sources during WWII, South Africa’s policy of apartheid brought about an oil boycott from most sources—enough to force the nation to adopt what is called the Fischer-Tropsch process (FT) to convert their substantial coal reserves into gasoline and diesel fuel. Today they convert coal to 150,000 barrels of liquid fuel each day! That opened the door to a process that is even better today.

Why Isn’t More Coal Converted to Oil?

Cost used to be the major answer to that question. It cost quite a bit more than it cost to pump oil out of the ground (less than $1 a barrel to the Saudis). The Dept. of Energy’s spokesman Robert Wright said it was not feasible until oil prices were $40-50 a barrel. Now that we are being burned by costs at the gas pump, the only problem is the environmentalist. Their biggest fear is pollution and the issue of high-priced motor fuels does not matter to them.

This FT coal-to-liquid process has three reactions to yield hydrocarbon fuels, but they all require a great deal of heat. By the way, this is called indirect liquefaction. Since coal is needed to generate the heat in the process and convert to fuel, it is at a disadvantage. It produces obvious large amounts of ash, fly ash, sulfur dioxide and nitrogen oxides, not to mention a real waste of coal. The good news is that Friedrich Bergius, a Nobel Laureate, developed the direct liquefaction process that changes these steps and to avoid more science explanation for readers, it leaves the bulk of pollutants created in the making of hydrogen for the process. These pollutants can be greatly avoided by separating the hydrogen with heat from a new generation of super-safe nuclear reactors.

Posma Comes on the Scene

Meltdowns in nuclear reactors, the fear that most Americans have, are physically impossible today due to new nuclear technology. Therefore, these new plants are now able to help make coal-to-liquid (CTL) fuels financially possible without the polluting and old fears being realized. A Canadian businessman, Bonne Posma, owned a mining technology company and a company specializing in electronics for mining; in 1983, he expanded his company to the United States, became a U.S. citizen, and has a strong desire to see an America free of OPEC extortions (don’t we all?) and all the dangers that financing its terrorist members represents.

Posma and his Liquid coal, Inc. appear to have a common-sense plan to unleash American engineering and capital to cause a huge change in our current dependence on foreign energy suppliers (like Venezuela). He wants to use third-generation nuclear power to provide the heat to create oil from coal. Even global warming alarmists could buy into this process! It would leave a smaller “carbon footprint” than even electric cars! The reason is that the use of a reactor to run the Bergius coal-to-liquid process is nearly 100% efficient (for electric cars, it’s 35%). It produces fuel that is converted to propulsive energy and not waste heat, the opposite from older technologies.

The most efficient product it creates is diesel fuel, as it provides gas mileage twice that of ethanol and 40% higher than gasoline. But get this—it isn’t the dirty diesel fuel of years gone by! It is now virtually odorless and has only 5 parts per million of sulfur compared to what used to be 500 ppm! Wow, what a difference. Liquid coal’s projections indicate that it would require 200 CTL plants to produce 10 million barrels of oil per day, reducing our current dependence on imports of 12 million barrels per day by 83%. This number may seem large, but there are between 132 and 137 major coal-fired power plants currently under construction.

So, why not?

Tax dis-incentives and costly regulatory penalties are high hurdles that must be overcome to make something that makes such sense reasonable. Just licensing a reactor costs between $60-100 million. The good news is that Posma says the Nuclear Regulatory Commission’s attitude toward new applications has indeed improved. Litigation by enemies of any kind of nuclear energy, whether it makes sense or not, can be a gamble by firms attempting to obtain a Combined Operating License to move ahead also. But as American finds gasoline prices staying at extraordinarily high rates and blackmail in the wind, it is leading government agencies to become more reasonable. Then we go from the ridiculous to the sublime: government subsidies for wind generation amount to 1.9 cents per kWh alone—more than the cost of nuclear power production, including operations, fuel, depreciation, decommissioning, and spent-fuel storage! Solar-generation subsidies are off the charts. So where are the nuke subsidies? Yeah….sure.

So, our government, America’s citizens, and the business community need to ask themselves what are the most honorable goals. Do we want to have to take foreign oil fields by force someday, if it comes to that, or do we prefer to become energy independent? I’m sure you are with me and vote for CTL technology to move us towards independence. America is like the “Saudi Arabia of Coal” by holding 27% of known global reserves of coal today. With an annual production rate of 1.2 billion tons, nearly 250 years of use is currently available. Nuclear generated electric power could extend even that. And the list of possibilities and good news in coal goes on and on.

So let’s talk it up with our representatives. Let’s educate the public about these possibilities. We don’t have to have a science class to convince people, but just share some key ingredients of a successful change in direction for our economy and future. It’s time. Technology and reserves give us ample ammunition to convince an ignorant public that we are able to be independent and provide opportunities for our nation’s future that neither pollutes the environment nor reduces our standard of living. Will you help?