Conoco Phillips and Pet Coke

ConocoPhillips Looks at Pet Coke, Bitumen to Fuel IGCCs
28 May 2004Natural Gas Week(c) 2004 Energy Intelligence Group. All rights reserved
Bottom-of-the-barrel refinery-waste products and coal have been the traditional fuels for integrated gasification combined cycle (IGCC) projects, but recently attention has turned to petroleum coke and raw bitumen from oilsands as primary feedstocks, especially in areas where natural gas prices have soared.

The potential attracted ConocoPhillips, which produces 17% of the world's fuel-grade petroleum coke, largely from its Venezuelan operations, and has interests in the Canadian oilsands. The oilsands projects consume vast amounts of natural gas to generate electricity and steam for use in recovering the heavy, viscous bitumen and for power, steam and hydrogen used in the upgrading operations.

ConocoPhillips purchased the technology and licensing rights for the well-established E-Gas gasification process last year not so much to use in internal projects, but as a business opportunity created by the combination of higher natural gas prices and a growing supply of pet coke, bitumen and refinery-waste products, especially in North America.
The company plans to license the technology and provide engineering and related services to third parties, said Brian G. Evans, manager of ConocoPhillips' technology solutions division. The concept of taking poor-quality fuels and upgrading them into clean electricity while reducing emissions of a multitude of harmful gases and particulates also fit well with the company's sustainable development policies.

"Somebody should do that in a clean and responsible way, and we think that that should be ConocoPhillips," Evans told Natural Gas Week.

Recently the company took a long stride toward its goal. ConocoPhillips and engineering-construction giant Fluor signed a worldwide alliance agreement to facilitate the development, design and construction of new projects that would use the E-Gas technology.
The pact calls for the two companies to work cooperatively to provide a comprehensive package of services including licensing, development, engineering, procurement, construction and operations and maintenance of integrated gas facilities. The plants could produce a range of energy and chemical products.

Evans said the alliance with Fluor is the first step toward ConocoPhillips' broader goal to promote the use of the E-Gas process.

IGCC plants have comparable capital and operating costs to conventional coal units, but they can use lower-priced feedstocks while delivering superior environmental performance. The gasification process reduces significantly, if not eliminating completely, the amount of carbon dioxide, sulfur dioxide, nitrous oxide and mercury emitted, making them comparable to natural gas-fired plants in environmental quality.

The company received "a deluge of interest" from the market, "far more" than had been anticipated, he said. Almost all the interest came from North America, where natural gas prices are several dollars higher than predicted only a few years back when the boom in new gas-fired power plants began.

Among the interested parties are independent power producers, utilities, chemical companies and fertilizer manufacturers. Some are looking at repowering conventional coal-fired electricity generation units that don't meet current environmental standards while others are interested in retrofitting uncompleted natural gas-fueled facilities.

The chemical and fertilizer producers also are interested in the steam and hydrogen that are byproducts of the gasification process.

ConocoPhillips' role in these projects would be primarily that of a technology and services provider on a fee basis, Evans said. It does not intend to be an equity investor in third-party projects though it would facilitate relationships between financing sources and project developers as part of its services.

The company is close to signing its first contracts. Though Evans wouldn't disclose the customers' names, he stressed the North American nature of the business.

This suggests that Canadian oilsands producers are considering the ConocoPhillips IGCC option to produce electricity, steam, and hydrogen for their bitumen recovery and upgrading operations.

Another business option would be for ConocoPhillips to be a fuel provider to a project with off-take arrangements for electricity, steam and/or hydrogen for use in its own facilities. The only IGCC projects in which the company would invest would be in conjunction with its own downstream facilities, Evans said.

Further out could be integration of an IGCC with a Fischer-Tropsch plant that would use a portion of the synthesis gas produced by the IGCC as feedstock to produce ultra-clean diesel and other products. Evans declined to comment on any plans Conoco might have in this area, but he acknowledged that ConocoPhillips is developing its own Fischer-Tropsch technology.

As ConocoPhillips prepares a major push into the IGCC sector, a long-time player is getting out. ChevronTexaco is selling the Texaco-heritage IGCC technology business to General Electric's GE Energy. Texaco and GE have worked together on a number of IGCC projects around the world in the last 50 years, as GE is a primary supplier of gas turbines to the sector.

ChevronTexaco indicated that it was disposing of the IGCC business to focus on natural gas-related efforts, especially LNG and natural gas-to-liquids (GTL). GE Energy said the acquisition of the technology will enhance the portfolio of products and services that it could provide customers.
Industry sources told NGW that they looked at GE's action as "buying a market" for turbines that may have been intended for natural gas-fueled projects before the collapse of the energy merchant sector and economic downturn and natural gas price spike combined to reduce the need for more power plants.

--Barbara Shook