Modular CCUS upgrades for maximizing existing coal plant profitability

Modular CCUS upgrades for maximizing existing coal plant profitability: achieving chemical coproduction output and price-point goals through retrofit of proven conventional hydrocarbon processing technology.

By: Walter J. O’Brien, Industrial Cost Analysis

Making electricity plus chemicals is a primary component responsible for our nation’s economic growth and stability. DuPont de Nemours, Monsanto, Dow, BASF U.S.A. and other chemical giants of the last century advance the renown of their present world market standing through applying principles of chemical manufacture developed during that epoch. Crafting strategies for coal plant stack gas-derived conversion to coal-to-chemicals co-production therefore is but a modern continuation of a time hallowed industrial tradition.

This coal-based technology is by no means obsolete nor Luddite but rather well-proven and current whilst meeting new E.P.A. regulatory criteria. Three of many American exemplary reference coal plants producing both electrical power and chemicals (to include high-grade carbon dioxide for enhanced oil recovery projects) are available for your technical and fiscal review:

What are general procedures for retrofitting or building a new coal plant to accommodate CCUS?

The task of duplicating these coal plant successes through converting your power plant, either in whole or in part, can be divided into three preparatory components.

  1. Development of a fully-costed co-production retrofit business plan specific to your plant which would include a local and national co-product marketing strategy and timeline, including a co-product distribution, logistics and storage breakdown. This is done through developing multiple scenarios then selecting the configuration that works best relative to overall corporate and shareholder goals;
  2. Competitive selection through the RFP mechanism of an EPC contractor to engineer, procure and construct the envisioned plant. Happily many EPC’s in the hydrocarbon processing plant retrofit construction industry have the proven capability and experience in running the finished plant whilst training your staff to take over the EPC’s operations function at a pre-agreed point in time. This process is called BOT (build-operate-transfer); and
  3. Crafting of the financial mechanism for making your retrofit coal-to-chemicals co-production facility a reality.

The annually-updated engineer/contractor directory for the noted industry periodical Hydrocarbon Processing Magazine is a trusted guide for finding the process EPC which matches your coal plant’s CCUS retrofit needs.

Are there U.S. Federal legislative incentives for CCUS available?

Contrary to the pronouncements of the mainstream media, many members of the current Congress are very supportive of proposed cost-effective, private-sector and free market-based CCUS schemes. To help proceed with financing of the actual CCUS project RFP to startup-and-commissioning process, three legislators with the U.S. Federal government have submitted bills before Congress to enable the extension of amortizable tax credit offsets to CCUS projects on the same footing enjoyed by wind and solar projects minus the renewable energy industries’ direct subsidies.

The proposed legislation given below in full-text form likewise addresses natural-gas-fired, biomass and coal co-firing and hybrid-fired power plants. These incentives taken together address the demand for a turnkey solution under one tax credit collateralized financial umbrella.

Your support for these bills before Congress is needed to provide to the coal industry this zero out-of-pocket Federal financial assistance which has already bounteously provided to the renewables community.

How is a CCUS coal plant retrofit project initiated from a technical and engineering standpoint?

Please consult the schematic diagram entitled “Flowchart for a 30%-90% CCUS retrofit to an existing coal plant” which provides basic but non-quantified insight into the nature of the standard project similar to the Saskpower Boundary Dam CCS coal plant.

As a starting point for making a coal plant CCUS plant retrofit a reality, the process resembles any other chemical refinery project development. A pilot plant equal in capacity to one tenth or one twentieth of final output capacity is built then troubleshot to work the kinks out before scaling up the coal plant’s modular add-on flue gas refinery to the desired production target capability. Having a pilot plant to show potential investors and technical participants also serves the valuable marketing objective of being able to prove that this particular project has real-world potential for delivering what is promised investors.

Alternatively, existing plants can be “cloned” for technology, operations practices and engineering expertise to be applied on the proposed CCUS retrofit plant. The three reference plants mentioned, Dakota Gasification, Saskpower Boundary Dam CCS coal plant, and Eastman Chemical would welcome licensing their know how and expertise to be applied with the assistance of their staff to your new CCUS retrofit coal plant, and at all stages of the retrofit plant’s development.

How long once completed will it take for my retrofitted or new plant to start paying for itself?

Just as in conventional refinery startups, no CCUS operation will be expected nor is it practical to ramp up to full 90% capture and utilization of CO2 on the day commissioning is completed and full operations are green-lighted. The process is incremental. CCUS ramp-ups must be conducted in a manner which does not interfere with the coal utility’s core business: providing reliable electric power and steam to its consumer and industrial customers.

As a very general rule of thumb, once commissioning of the CCUS plant is completed and acceptance trials have approved and signed off, there is a minimum of a 90 to 120 day “burn-in” period where the processes and personnel issues are smoothed out, then another six months to a year are required to fully stabilize operations.

What ultimately determines the core viability of CCUS utility projects?

The key to success in co-produced chemical operations is astute, structured and disciplined marketing of the commodities the CCUS plant has for sale. A formal marketing study should be conducted to develop long-term strategies for co-product sales growth. It should be noted that throughout the past three national economic downturns, the industrial chemical industry overall displayed vigorous growth; current projections by sector indicate that the next decade will be no exception.

Sources for business intelligence supporting chemical marketing program development include IHS Inc. at http://www.ihs.com , ICIS Inc. at http://www.icis.com and Hydrocarbon Processing Magazine at http://www.hydrocarbonprocessing.com. As well, Energy Global’s Hydrocarbon Engineering Magazine at http://wwww.energyglobal.com provides excellent insight into market conditions over-all affecting both the chemical and energy markets.

Moving forward on co-production of chemical byproduct in the realm of CCUS brings the coal industry back up to the mark of the achievements of the Ford and Carnegie organizations and of their peers of bygone days. 19th and 20th century firms co-produced using byproducts and waste streams of their coal-fueled power plants in support of steelmaking and commodity chemical manufacturing. Thus through expanding this updated legacy to apply to our age’s power plants will profitability on a stabilized and growth driven basis be achieved.

Will these retrofit configurations pencil out at a significant profit for both the short and long term?

All factors considered, a reasonable and standard expectation in the hydrocarbon processing industry for stand-alone refineries which have to manufacture their own CO2 with an oil-fired CO2 generator module is a 20% to 60% IRR before taxes. In the instance of the proposed retrofits, this expected return would be the norm plus the CCUS refinery proposed would not have to pay for the CO2 needed plus the electrical power sales less what the CCUS refinery needs to operate are to be added to the profit mix.

Coal power plant co-production of merchantable commodities is how the American electric power industry survived the Depressions of 1893 and of the 1930’s while helping the U.S.A. to achieve mercantile dominance during and after the Second World War. This Carnegie and Ford inspired industrial methodology once again, if applied, shall enable us to roll up our sleeves to rebuild our hard fought land anew for the benefit of present and subsequent generations.

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13. June 2016 by Jason Hayes
Categories: CCS, CO2, Energy, Marketplace Information, Power Generation | Tags: , , , , , | Comments Off on Modular CCUS upgrades for maximizing existing coal plant profitability