Calgary upstart to turn coal into liquid fuel
Alter NRG plans to build $4.5-billion coal-to-liquids plant that would produce 40,000 barrels a day of fuel by 2014
NORVAL SCOTT
July 23, 2008
CALGARY -- For most energy companies, figuring how to best turn Alberta's vast oil sands into lucrative gasoline is challenging enough. But Alter NRG Corp. is looking to go one better.
The Calgary-based upstart said yesterday that it's seeking to develop a project in Alberta that would turn coal into liquid petroleum fuels. The $4.5-billion plant, which will produce 40,000 barrels a day of fuel by 2014, would be the first of its kind in Canada.
"Local market conditions make producing diesel and naphtha [from coal] most attractive," Alter NRG chief executive officer Mark Montemurro said in an interview. "We'd be producing a very high-quality product."
Alter NRG, which is listed on the TSX Venture Exchange, plans to build its plant at the coal reserves it owns near Fox Creek, northwest of Edmonton.
In addition to producing diesel and naphtha - a heavy oil product used for paving roads, as well as for diluting bitumen from the oil sands - the project would produce carbon dioxide that could be used in mature oil fields to increase production.
Turning coal into liquid fuel is a technology that was first developed in the 1920s, and was used by coal-rich Germany to produce synthetic diesel during the Second World War.
South Africa, shunned during its apartheid years by potential trading partners, has also long used coal-to-liquids methods (CTL) to produce domestic fuel.
Although the technology, which involves gasifying the coal and then turning that product into a liquid, produces both a low level of emissions and a product that's effectively sulphur-free, the capital costs of development are expensive.
Each flowing barrel of CTL production would cost Alter NRG $110,000 to bring on stream, an amount comparable to the most expensive oil sands projects.
While Mr. Montemurro acknowledged that the upfront construction costs are steep, the operating costs of the CTL plant would be one-quarter of an oil sands mine and upgrader, creating a project with strong cash flows, he said, adding that the company expects to make announcements on operating and financial partners later this year.
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