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Resource and energy management of synfuels production with hydrogen and oxygen requirements from electrolysis
0360-3199/83 $3.00 + 0.00 Pergamon Press Ltd. International Association for Hydrogen Energy.
lnt. J. Hydrogen Energy, Vol. 8, No. 10, pp. 783-792, 1983. Printed in Great Britain.
RESOURCE AND ENERGY MANAGEMENT OF SYNFUELS PRODUCTION WITH HYDROGEN AND OXYGEN REQUIREMENTS FROM ELECTROLYSIS R. H. SHANNONand R. D. RICHARDSON C/O 59 Valecrest Drive, Islington, Ontario, Canada M9A 4P5
(Received for publication 2 February 1983) Abstract--The Resource and Energy Management System (REM) is an integrated self-sufficient system for the efficient and clean recovery of synthetic crudes at high yields from a variety of heavy hydrocarbon deposits. The system integrates the following: heavy oil/tar sand bitumen/shale oil/coal recovery; upgrading by "hydrogen addition"; residual oil/coal gasification; and combined cycle electricity generation for water electrolysis. Recovered heavy hydrocarbons are upgraded by "hydrogen addition". Hydrogen is available, in the REM system, from electrolysis, from gasifying the waste carbonaceous residues from upgrading and from gasifying coal. Gasification is efficiently carried out with oxygen, available from electrolysis. Gasifier synthesis gases are also used in a combined-cycle power system to generate power. Power, produced economically by this means, is used to electrolyse water which is the source of hydrogen for upgrading and of oxygen for gasification. Favourable technical and economic circumstances now prevail for the commercializationof large-scale electrolytic units in the synfuels industry according to a technical and economic analysis. The Government of Canada and the Province of Alberta through the Alberta Oil Sands Technology and Research Authority and Norcen Energy Resources Limited are jointly funding a feasibility study of the REM system, as applied to small-scale hydrogen addition synfuels plants on the Canadian tar sands and heavy oil deposits. Canadian Patent 1065780 and U.S. Patent 4 160 479 have been issued with patents pending in Venezuela and Mexico covering the REM system.
INTRODUCTION Hydrogen is essential to upgrade the world's abundant heavy oil supplies to replace depleting reserves of conventional oil. High purity electrolytic hydrogen is technically desirable for the hydrogenation and desulfurization processes of conversion. The novel use of the co-produced oxygen to gasify the low value residuals remaining after conversion for the purpose of producing additional volumes of hydrogen to augment that produced from electrolysis contributes substantially to the economic viability of electrolysis for such purposes. Coal may also be gasified along with the residuals or in place of them. Three basic factors contributing to the increasing market for hydrogen in the petroleum industry are as follows. 1. OPEC suppliers of oil have been selling a disproportionately high share of light crudes out of their total reserves, thus increasing the proportion of heavy crudes in their remaining reserves. They are correcting this imbalance; e.g. Saudi Arabia established a purchase requirement of a 35/65 ratio of heavy to light crudes. Other OPEC suppliers have imposed a similar purchase requirement and may also widen the price differential between light and heavy crudes to provide an incentive to purchase more heavy crudes. 2. There has been a reduction in the ratio of cracking processes to distillation capacity in world refining
capacity. A major refinery retrofit programme must proceed to provide for the processing of heavy crude. Virtually all of this will involve hydrogen addition processing. 3. The industry must adjust for the oversupply of high sulfur residuals in all major industrialized countries by installing future hydrogen processing equipment especially aimed at lightening the product barrel. Residuals became in oversupply due to industry conversion to coal and natural gas and the regulations on sulfur emissions. This paper describes the Resource and Energy Management System (REM), an integrated process using electrolytic hydrogen and oxygen, for the production of synthetic crudes and light oils from a variety of heavy hydrocarbons. A high yield of synthetic crude is achieved, and essential hydrogen and oxygen are produced at low cost by means of a self-sufficient, energy-efficient, environmentally acceptable method, applicable to many sites throughout the world. For purposes of this paper the term heavy hydrocarbons includes the following: heavy oils and tar sand bitumens from enhanced recovery and mining operations; heavy residual oils produced in refining; oil shale kerogens; coal liquefaction; coal liquids from pyrolysis.
783
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RESOURCE AND ENERGY MANAGEMENT OF SYNFUELS system. Recovered crude oil is delivered to the upgrader where between 1000 and 2000 standard cuft of hydrogen are added per barrel of product using catalysts and pressure. Three streams are produced: a synthetic crude, a light ends gas stream which can be used for energy or additional supplies of hydrogen and a residual unconvertible solid. Coal, residual oil and the unconvertible residual are feedstock to a gasifier. Feedstock blends depend on relative cost. The gasifier can process any of the above as well as natural gas if it is available at costs competitive with the other feedstocks. As both the hydrogen addition upgrader and the gasifier are pressure systems, all sulfur in the crude oil and coal is controlled and is produced as elemental sulfur for a potential credit to the operations. Gasifiers can be operated in different modes. The gasifiers in this scheme would be dedicated to production of a low BTU gas, using air, which is all that is necessary for combined cycle power generation. With the oxygen available from the electrolytic cells a hydrogen-rich synthesis gas can be produced in a gasifier for production of additional supplies of hydrogen of high purity. This would reduce the capital costs of the power system and the size of the electrolytic plant required for a given volume of hydrogen. Oxygen could also be used to "enrich" the air to the gasifiers used for steam and power generation. This would produce a higher BTU synthesis gas for the turbines than available from "air" gasification with a reduction in size and number of turbines or an increase in steam and power output for the synfuels complex. The power generated in the combined cycle is used to electrolyse water to produce hydrogen which is essential for any synfuels production from any heavy hydrocarbon. Electrolysis, fortuitously, co-produces oxygen which is highly desirable as a substitute for air in the gasification process and for other purposes in the synfuels complex. The hydrogen addition unit can operate in different modes depending on markets for heavy fuel oil, the price of synthetic crude and the nature of the heavy hydrocarbon feedstock. With a relatively low conversion of the heaviest fractions, i.e. 975°F plus, the heavy fraction is sufficiently improved that it could be blended into the balance of the light liquid fractions. By increasing the quantity of hydrogen the 975°F plus heavy fraction is upgraded to lighter products for a higher quality synthetic crude. These optional modes of operation are being designed into two hydrogen addition units under construction at the Texaco Refinery at Convent, Louisiana. A major development is taking place in California which, in our view, is highly relevant to synfuels technology world wide. We refer to the Cool Water project undertaken by Southern California Edison, EPRI, General Electric, Texaco and Bechtel. The significant feature is that the heart of the REM system is a Texaco gasifier and combined cycle system similar to that being installed at Cool Water. The Cool Water process units are being developed for utility use to gasify 1000 tons
785
per day of coal to produce lO0 MW of electricity. The same size units would support about a 12000 barrel per day synthetic crude recovery and upgrading operation. The Cool Water integrated gasifier and combined cycle facility, operating in its primary mode, is a closed circuit in which all gas and steam is used to generate electricity. In synfuels operations steam is required, particularly for enhanced oil and in situ bitumen recovery, and therefore the units would be used in an "open" circuit, with steam being used for field operations rather than for electricity. Previous studies by one of the world's largest engineering firms show that this system with its efficiencies results in a significant increase in oil delivered to the pipeline vs the output of the huge commercial plants now operating in Canada. Figure 2 is a process flow-sheet comparing the REM system to a typical large-scale tar sands synfuels project in Canada. Table 1 provides a comparison of the various unit operations of the REM system with present tar sand synfuels projects. Figure 3 is a typical block flow-diagram of the REM system process units.
O P E R A T I O N AND A D V A N T A G E S OF THE INTEGRATED GASIFIER-COMBINED-CYCLE P O W E R SYSTEM F O R ELECTROLYSIS UNITS IN SYNFUELS P R O D U C T I O N Canada is the free world's leading producer of synfuels with a production of 150 000 barrels per day. South Africa is second at 50 000 barrels per day, but by late this year will have 90 000 barrels of installed capacity [7-9]. The REM system provides a most favourable set of technical and economic cicrumstances for the commercial use of large-scale electrolytic units in the growing synfuels industry. Basically, the REM system approach has been to integrate the electrolytic units into the power system and synfuels complex. This reduces the cost of power to the electrolytic plant which correspondingly decreases the production costs of hydrogen and oxygen. While providing this feature the system also maximizes the value of hydrogen and oxygen by using electrolytic hydrogen and that derived from the use of the oxygen for chemical purposes, i.e. hydrocracking, hydrogenation and desulfurization. One of the better-known advantages of combined cycle and co-operation is the more efficient use of fuel: "The fuel savings for co-generation is usually on the order of 20 to 30% as compared with the generation of steam and electric power separately." (EPRI report EM 1996, 4-1 [1]). The technical and economic analysis showed a significant increase of 8-10% in yield of light oil to pipeline by comparison with present Canadian tar sands plants. Coal can be made available in Canada as gasifier fuel and its use would reduce the amount of oil feedstock consumed on site. This would raise the yield of synthetic crude to pipeline on bitumen feed to 100%,
786
R. H. SHANNON AND R. D. RICHARDSON
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Table 1. Key features of present processes and REM Present Process Hydrogen Source Process units
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which is an increase in yield of 25% over current plants in Canada. Efficient combined cycle production of power, as much as 45%, as compared to about 30% for conventional power production employing flue gas desulfurization, integrated with electrolysis, provides savings which can be realized in the form of lower hydrogen and oxygen costs. Reasons for the high yields of synthetic crude, and energy efficiencies, which contribute to the technical and economic viability of electrolysis and the REM system are the following. 1. The highest possible value for hydrogen is realized, that is for chemical purposes where the purity of electrolytic hydrogen can be appreciated and quantified in terms of (a) improved operating costs in the hydrogen addition unit, (b) reduced size of such equipment, (c) for co-mingling with low hydrogen content synthesis gas from the gasifier and light ends reformer, thus reducing the costs associated with the "shifting" of synthesis gas to hydrogen. 2. The highest possible values are realized for oxygen by its use to (a) produce additional supplies of hydrogen, (b) enrich air to the turbines for more power and steam (c) improve field operations. Oxygen could be used "down the hole" for substantial reductions in costs and improvements in field recovery as compared to compression of air for the in situ operations of combustion and carbon dioxide injection for miscible flood. 3. The fuel to the gasifier-combined-cycle power train can be lowest grade and lowest cost. In the Canadian studies waste unconvertible materials from the synfuels production and coals will be used. These savings are not available to utilities who are the usual source of power for electrolysis. 4. There are no electrical distribution costs built into the power system and total plant costs. 5. There are a number of synergisms which provide credits to the power train and electrolytic plant. The waste hot water from electrolytic cells can be used in tar sand flotation cells as it is at the temperature currently used. In Canada we have a successful nuclear program which uses deuterium oxide as the moderator. The large volumes of hydrogen are a source of D20. This is estimated to be a credit of US$1.00 to US$2.00 per barrel of oil. 6. Expensive environmental control costs are avoided for major savings. Coke stockpiling is avoided (existing Canadian synfuels plants stockpile about 2500 tons per day from the two plants). Less fuel is used, therefore, there are less emissions and as hydrogen addition and gasification units operate at high pressure, sulfur emissions are controlled. Flue gas desulfurization is not required. NOx emissions are at low levels from the synfuels complex by addition of available steam in the synthesis gas to the turbines. 7. Favourable fiscal regimes exist for synfuels complexes, such as investment tax credits, capital cost
and earned depletion allowances and outright grants from governments seeking synfuels. These have the effect of reducing substantially the capital charge component in the power supply and electrolysis units since they are included as an integral part of the complex. Fast write-offs are not available to utilities, therefore power purchased for electrolysis from utilities carries a higher capital charge than would onsite generation. 8. The operability of electrolytic units and the low-cost sources of power must be recognized and quantified over the life of the project in any technical and economic comparison of hydrogen sources, for instance: (a) the steam reformer hydrogen units have been critical units in the Canadian synfuels operations. This past winter both plants incurred major production interruptions due to operating difficulties, fires and explosions in the hydrogen units. The simplicity of the electrolytic operation, long life of the ceils, avoidance of the use of catalysts, turn down capability and the multiple units to maintain production ensuring a high on-line service factor are important technical and economic factors; (b) it should be noted that electrolytic hydrogen and oxygen sourced on water and coal (which can be high sulfur) will not escalate lock-step with crude oil as will the usual hydrocarbon sources of hydrogen, i.e. natural gas, petroleum light ends and naphthas. The relative lower escalation rates on coal and water, in favour of electrolysis, must be quantified in any project life comparison; (c) the potential for use of DC power, available off the shafts of the turbines for a reduction in power costs for electrolysis should be factored into the costs of hydrogen and oxygen, and will be in the current study; (d) large-scale electrolytic plants have the potential for cost reductions. This is not the case to the same extent in the technology of steam reforming of hydrocarbons [19]. Over the life of an expanding industry this factor can be substantial. In an integrated synfuels complex it is not the practice, nor is it required, nor is it possible without great difficulty, to isolate individual unit costs. To test the validity of the electrolysis approach, and with the assistance of an independent engineering firm engaged in a synfuels project based on methane as the source of hydrogen, a comparative economic analysis was made. On the basis of 1000 standard cuft of hydrogen, the unit of measurement and amount used in hydrogenation and desulfurization, the REM hybrid system cost of electrolytic hydrogen and hydrogen by gasification of low value fuels with the co-produced oxygen from electrolysis was 27.8% less than the cost of hydrogen from methane. This should not have been a surprise. Conversion of methane to hydrogen is chemically a "destructive process" in which a third of the energy in methane is consumed in dissociating the hydrogen from carbon in the methane molecule. Put another way, non-fossil hydrogen compared as a fuel to methane has a value of 33%. Non-fossil hydrogen compared as a chemical
RESOURCE AND ENERGY MANAGEMENT OF SYNFUELS
789
relation to the available capital and manpower resources in most instances.
Table 2. Relative values as fuels---BTU basis
Assume US$3.45/MMBTU of methane Value of methane/MMBTU Value MSCF of Hz/MMBTU
US$ 3.45 1.06
Relative values as chemicals--MSCF basis Value of methane at US$3.45/MMBTU as MSCF of H2 Non-fossil Hz/MSCF therefore has a value of
W O R L D SUPPLY A N D E C O N O M I C S O F SYNFUELS PR O D U C T I O N A N D T H E R O L E O F HYDROGEN
2.40
The world is not running out of crude oil and will not until into the middle of the next century. The United States Geological Survey estimates that the world's total in place heavy oil and tar sand resources which have not been included in reserves of light oils exceeds 4.4 trillion (4400 billion) barrels. More than half of the total is attributed to the Western Canadian provinces of Alberta and Saskatchewan, with 2670 billion barrels in place. The resources even if viewed conservatively, are exceedingly large and the heavy oil and bitumen is high in energy content, and is so ubiquitously distributed in the world as to hold hope for energy self-sufficiency to many now dependent nations. World reserves of heavy crude oil and tar sands have been estimated at in excess of 963 billion barrels by Richard F. Meyer of the United States Geological Survey. Assumptions with respect to the likely recovery rate of the resources in place will have a significant impact on the reserve estimate. Total reserve calculation estimates are that 21% of the known oil in place can be recovered. The total, 963 billion barrels, is scattered throughout 49 countries with two nations, Venezuala and Canada, having the bulk of the reserves. Table 3 provides a summary of heavy oil and tar sand reserves by country. Venezuela is by far the world's largest heavy oil producer at 1 440 000 barrels per day (bpd), followed by the U.S. at 638 000 bpd and Mexico at 372 500 bpd out of a world total of 3.9 million bpd. Putting this in perspective, OPEC exports of crude oil in 1980 are in the order of 7.5 billion barrels. World reserves of conventional oil are at 500 billion barrels in addition to the reserves of 963 billion barrels of heavy oil and tar sands. Conventional reserves will last into the early part of the next century, and heavy oil and tar sand resources into the middle of the next century. The world is not short of "oil". Reserves are depleting of conventional high-quality, low-sulfur oil with a gravity of greater than 2 1 A P I , which can be recovered without assistance or enhanced recovery methods. The diminishing reserves of this particular grade of oil, recovered for less than US$10 per barrel should not be confused with the abundance of heavy oils and tar sands which can be recovered with additional effort and cost. In respect to costs, the operating cost of the two largest synfuels plants in Canada, the world's largest, both based on tar sands, is in the range of US$15-22 per barrel. Both these operations make a good return at world prices for oil. This includes both the cost of recovery of the raw bitumen and the cost of upgrading to an oil equivalent to the best grades of oil available from OPEC. The U.S. has 63 field projects in which heavy oils and tar sands are recovered at a cost in the order of
2.40
on the basis of standard cu fl for hydrogen has nearly 2½ times increase in value to that when the comparison was on a fuel basis. The advantage of electrolytic hydrogen, and the hydrogen derived in the gasifier from the co-produced oxygen, will increase in relation to hydrogen from hydrocarbons. The price of methane, a premium fuel, will increase when the high costs of other replacement energy units are imposed on our society. Estimates have been made of replacement costs of methane in the early 1990s of US$20/MMBTU which would mean US$10/ MSCF for hydrogen. (See Table 2.) In the REM system, coal and water are the source of electrolytic hydrogen and oxygen, both are abundant, low cost and will not escalate relative to premium hydrocarbons. Attention should be drawn to the opportunity to use coal, not only as a gasifier feed but also for blending into the residual oil feed to the hydrogen addition unit. In this case a simple coal liquefaction process is undertaken, and yield of synthetic crude is increased to 130% on the basis of bitumen feed from the synfuels recovery operations. The step of simultaneously upgrading heavy oils and coal provides a number of economies as compared to coal liquefaction, and is simpler. For those areas where coal can be delivered to synfuels upgraders and where coal liquefaction is an ambitious endeavour, this simpler process should be examined. See U.S. Patent 4 054 504. MINI-UPGRADERS The commercial approach will be to build small "mini-upgraders" which will be self-contained. These would be constructed in modules in high productivity shops under rigid quality control rather than in the field. Current high inflation and interest charges and low productivity rates, all of which must be capitalized, particularly distress large mega-projects offsetting any apparent economies of scale. The shop fabricated "mini-upgraders" can be on stream years ahead of field constructed mega-projects with earlier cash flow and in total contribute more synthetic crude to the energy supplies of various countries than a single mega-project. The electrolytic units lend themselves to these small modular plants as do the hydrogen addition units, turbines and other associated units. Most heavy oil and tar sand deposits throughout the world are small, hence small upgrading units would be appropriate and in
790
R. H. SHANNON AND R. D. RICHARDSON Table 3. Heavy crude oil summary by country (million barrels) Country Albania Angola Argentina Australia Austria Brunei Bulgaria Burma Canada China Colombia Cuba Ecuador Egypt France Gabon Great Britain Hungary India Indonesia Iran Iraq Italy Japan Kuwait Malaysia Mexico Netherlands Neutral Zone (Divided Zone) Nigeria Oman Pakistan Peru Philippines Rumania Saudi Arabia Spain Syria Taiwan Thailand Trinidad Turkey USSR United States Venezuela West Germany Yugoslavia Current totals
Number of deposits
Original oil in place
2 2 2 1 3 1 2
n/a n/a n/a n/a n/a r~a n/a n/a 238 324 nfa n/a n/a n/a n/a n/a n/a 493 n/a n/a n/a 28 550 14 000 514 n/a n/a n/a n/a 186
1
88 1 17 1 4 5 5 4 2 1 12 10 8 10 12 8 3 1 33 5 2 7 4 1 10 1 2 1 2 3 1 2 9 10 10 599 53 8 1
n/a n/a 1300 n/a 912 n/a n/a n/a 126 1700 n/a n/a n/a 2800 n/s n/a 130 000 532 n/a 514 800
Annual production
Reserves
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104 20 36
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33 135
18
361 1 20 328 19 147 49 26
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136 3
2718 72
38 27 2 11
770 552 40 2 330
17 50 20 16
349 996 41 324
26 5 43 233 525
1 520 116 858 4927 28 712 112
1425
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United States Geological Survey (1982). US$16-20 per barrel. This includes operating costs and depreciation. Tile recovery costs in California are reported to be in the order of US$7.38--23.90 per barrel. (L. C. Marchant, Department of Energy; C. A. Koch, Consultant). Allowing for upgrading costs, which are not in Dr. Marchant's numbers, the costs for a barrel of synthetic crude from heavy reserves is in the order of US$22-25 per barrel.
The above refers to operating costs, excluding depreciation. The correct measurement of depreciation for synfuels production is the capital cost per barrel of recoverable synfuel processed in the facilities. In the case of the largest synfuels plant in the world, the Syncrude plant in Canada, this works out at US$2.30 per recoverable barrel of oil (a figure much lower than some offshore light oil projects). Canadian and U.S.
RESOURCE AND ENERGY MANAGEMENT OF SYNFUELS experience demonstrate favourable operating and depreciation costs as compared to the cost of imported oil, of US$32-36 per barrel. However, there is a third element of costs; that of royalties and taxes, imposed by free spending, cash-hungry governments. These are as much as the operating costs and leave insufficient funds for a rapid expansion of the synfuels industry. The synthetic crude from the South African Sasol coal liquefaction plants is sold in competition with international crude oil to local refineries with about a US$5 per barrel synfuels subsidy. The company reports substantial profits, based on coal with a cost of US$10 per ton. Shares in their company were oversubscribed many times recently when they went to the market for funds for expansions. A North American study on coal liquefaction, based on US$44 per ton coal, reports operating costs (excluding depreciation) of between US$30 and US$35 per barrel, depending on hydrogen Costs.
In summary, there is a diminishing supply of easily recovered and processed conventional oil of qualities over 21 API, which has been the supply to our industrial economies. However, there are huge reserves of hydrogen deficient, i.e. less than 21 API, heavy hydrocarbons. It has been proven technically and economically viable to recover and upgrade these reserves at the current international crude oil prices. We therefore do not see the need for hydrogen to replace depleting light oils, which will be replaced with synthetic crudes, but we do see the requirement for enormous quantities of hydrogen and oxygen to upgrade these massive reserves of hydrogen deficient heavy oils to usable synthetic crude oil. This would appear to us to be a more immediate and larger market for hydrogen and oxygen than the fuel market. Hydrogen and oxygen used in this manner will solve our energy problems more logically and economically than the direct use of hydrogen as a fuel. If a deficiency develops in supply of synthetic crude to replace supplies of the light conventional crude it will be the making of Western governments, not that of OPEC. OPEC imposed royalties on their production which provides them with large earnings to finance their development programs, Mismanaged Western governments also imposed taxes and royalties, while condemning OPEC for doing so, in an attempt to reduce their deficits. These Western governments are now imposing more royalties and taxes than OPEC, at about 40-60% of the cost of a gallon of gasoline. After OPEC takes their share, less than Western governments but still substantial, there is not sufficient cash flow left for the synfuels industry to finance the required immense undertakings. Western government resource and petroleum taxation is the greatest risk to a shortfall of supplies of synthetic crude by the misdirection of the revenue from synfuels to cover deficits incurred by a proliferation of programs, many ill-conceived, expensive, poorly managed, rather than using the funds to develop new supplies. Canada has imposed royalty and taxes which have greatly retarded new synfuels production. The United
791
States has taken a similar approach. Unnecessary regulatory matters also retard development. In one synfuels project over 15 000 permits are required in a superb demonstration of government interference and bureaucratic empire building the like of which has not been since man realized he needed heat for his cave. Unless Western government redirect more of the petroleum royalties and taxes which they are taking from petroleum consumers into replacement supplies for the diminishing light oils we will face a high risk of shortages of crude oil. But let us be clear that it was of our own making, not because of the technical or economic factors, or OPEC, or the lack of reserves, or the ability to recover them. If this self-made, selfdestruct Western government taxation and regulatory approach to synfuels production is moderated we can eliminate our dependence on OPEC and ensure crude oil supplies into the middle of the 22nd century. A huge market awaits hydrogen and oxygen except for this factor. CONCLUSIONS To replace the world's depleting supply of conventional oil, the enormous reserves of heavy oil, tar sands, shale and coal throughout the world will be upgraded to synthetic crudes to supply needs into the middle of the next century. Canada is now the world's leading synfuels producer at 150 000 barrels per day, with South Africa second with installed capacity this year of 90 000 barrels. A many-fold increase in synfuels production must be realized by the late 1980s. The Resource and Energy Management System (REM) is a system of commercially available upgrading units for recovery and upgrading of such heavy materials which employs electrolysis as the source of hydrogen and oxygen essential for synfuels production. An independent technical and economic study of the system indicated the following advantages over the existing commercial synfuels plants in Canada: (a) higher yield of synthetic crude to pipeline, (b) substantially reduced environmental impact, (c) higher energy efficiency, (d) capability for down scaling to "mini plants" without economic penalty. As a result, governments in Canada in cooperation with a major oil company have funded a feasibility study which will be conducted by the authors of the patent and the system, D and S Engineering (reservoir studies), Hydrocarbon Research Inc. (hydrogen addition upgrader), General Electric (power systems), Electrolyzer Inc. (electrolysis), Texaco (gasifier), with study coordination by SNC of Toronto. The study will be based on two Canadian sites which contain huge reserves of heavy oil and tar sands. One plant size will be 20 000 barrels per day, which will require between 100 and 200 MW of electrolytic equipment, depending on the operating mode. The other plant size will be 6000 barrels per day. Copies of the feasibility study can be purchased from the Alberta Oil Sands Technology and Research Authority of the Province of Alberta,
792
R. H. SHANNON AND R. D. RICHARDSON
E d m o n t o n , A l b e r t a or the authors. U p g r a d i n g will m e a n t h e r e will be little or no n e e d for h y d r o g e n to replace d e p l e t i n g light fuel oils. H o w e v e r , t h e r e will be a r e q u i r e m e n t for large quantities of h y d r o g e n a n d oxygen to u p g r a d e these massive reserves of h y d r o g e n deficient h e a v y oils a n d tar sands to synthetic crude oils.
Acknowledgements--To
Texaco Development Corporation who generously did the first lab. and other work on gasifying Western Canadian bitumens and coals and to Bill Crouch and Ted Childs, who have been a constant source of advice since. To Dr. Kim, Keith Chinnery and Roy Parry who were the first to quantify the merits of an integrated field recovery and upgrading system, and to Harry Whalen. To Sandy Stuart of Electrolyzer Inc. who has been on call for any help on electrolysis, and to John Yarnell for his special help. To the staff of Hydrocarbon Research Inc., who made the breakthrough in the summer of 1981 on high conversion of bitumen to synthetic crude to confirm the high yields possible in synthetic crude operations. To the General Electric staff in Canada and Schenectady who lent, with enthusiasm, their skills in combined cycle. To Mickey and Don of D and S, who are teaching us the mysteries of mother nature in these new oil deposits. To the ladies, Sandra who is so careful with all our work and our wives who have allowed our indulgence, time and money-wise, in this fascinating new industry. To Jim Bissett for his valued comments on this paper. REFERENCES 1. R. M. Rodden and J. L. Boyen, Cogeneration potentialenhanced oil recovery. Electric Power Research Institute, Report EM 1996 (1981). 2. Flour Engineers and Constructors Inc., Economic studies of coal gasification combined cycle systems for electric power generation. Electric Power Research Institute, Report AF 642 (1978). 3. Report of Committee F., Industrial and commercial utilization of gases. 14th World Gas Conference IGU/F-79 (1979). 4. Alsands Project Group, Application to the Alberta Energy Resources Conservation Board for an oil sands mining project (1978).
5. Imperial Oil Limited, The Cold Lake Project. A Report to the Alberta Energy Resources Conservation Board (1978). 6. H. Kim, A study of an integrated energy management system in recovery and upgrading of heavy oils. Report prepared for the REM joint venture (1979). 7. J. P. Prince, Enhanced recovery potential in Canada. Report of Canadian Energy Research Institute (1980). 8. W. L. Oliver, Fuels from tar sands. Symposium on tar sands, 26th Canadian Chem. Eng. Conf. (1976). 9. J. R. Lynn, The Syncrude Plant--the first years of operation. Second Int. Conf. on Heavy Crude and Tar Sands, Unitar/Petroleos de Venezuela S.A. (1982). 10. L. D. Marchant, U.S. tar sand recovery projects. Second Int. Conf. on Heavy Crude and Tar Sands, Unitar/Petroleos de Venezuela S.A. (1982). 11. R. F. Meyer and P. A. Fulton, Toward an estimate of world heavy crude oil and tar sand resources United States Geological Survey (1980). 12. R. Orchard, New process promises higher yield from heavy oil Canadian Petroleum (October 1980). 13. C. Law, The REM route to more syncrude Can. chem. Process. (September 1980). 14. R. D. Richardson and R. H. Shannon, Oil recovery process. U.S. Patent 4 160479 issued 10 July 1979 and Canadian Patent 1065780 issued 6 November 1979. 15. D. A. Redford and A. S. MacKay, Hydrocarbon steam process for recovery of bitumen from oil sands. Non-conventional oil technology symposium, Calgary, Alberta, 2 June 1980, Alberta Tar Sands Technology and Research Authority (1980). 16. J. Barnea, The future of heavy crude oil and tar sands-an overview. Second Int. Conf. on Heavy Crude and Tar Sands, Unitar/Petroleos de Venezuela S.A. (1982). 17. B. Cornils, J. Hibbel, P. Ruprecht, J. Langhoff and R. Durrfeld, Raw materials and energy from coal gasification. The Ruhrchemie/Ruhrkohle demonstration plant based on Texaco's coal gasification process. Chem. Econ. Engng. Rev. (June/July 1980). 18. R. M. Eccles, Converting heavy oil to dollars. H-OIL technology conference VI. Hydrocarbon Research Inc., internal papers (1981). 19. R. L. LeRoy and A. K. Stuart, Advanced unipolar electrolysis. Int. J. Hydrogen Energy 6, 589--599 (1981).
lnt. J. Hydrogen Energy, Vol. 8, No. 10, pp. 783-792, 1983. Printed in Great Britain.
RESOURCE AND ENERGY MANAGEMENT OF SYNFUELS PRODUCTION WITH HYDROGEN AND OXYGEN REQUIREMENTS FROM ELECTROLYSIS R. H. SHANNONand R. D. RICHARDSON C/O 59 Valecrest Drive, Islington, Ontario, Canada M9A 4P5
(Received for publication 2 February 1983) Abstract--The Resource and Energy Management System (REM) is an integrated self-sufficient system for the efficient and clean recovery of synthetic crudes at high yields from a variety of heavy hydrocarbon deposits. The system integrates the following: heavy oil/tar sand bitumen/shale oil/coal recovery; upgrading by "hydrogen addition"; residual oil/coal gasification; and combined cycle electricity generation for water electrolysis. Recovered heavy hydrocarbons are upgraded by "hydrogen addition". Hydrogen is available, in the REM system, from electrolysis, from gasifying the waste carbonaceous residues from upgrading and from gasifying coal. Gasification is efficiently carried out with oxygen, available from electrolysis. Gasifier synthesis gases are also used in a combined-cycle power system to generate power. Power, produced economically by this means, is used to electrolyse water which is the source of hydrogen for upgrading and of oxygen for gasification. Favourable technical and economic circumstances now prevail for the commercializationof large-scale electrolytic units in the synfuels industry according to a technical and economic analysis. The Government of Canada and the Province of Alberta through the Alberta Oil Sands Technology and Research Authority and Norcen Energy Resources Limited are jointly funding a feasibility study of the REM system, as applied to small-scale hydrogen addition synfuels plants on the Canadian tar sands and heavy oil deposits. Canadian Patent 1065780 and U.S. Patent 4 160 479 have been issued with patents pending in Venezuela and Mexico covering the REM system.
INTRODUCTION Hydrogen is essential to upgrade the world's abundant heavy oil supplies to replace depleting reserves of conventional oil. High purity electrolytic hydrogen is technically desirable for the hydrogenation and desulfurization processes of conversion. The novel use of the co-produced oxygen to gasify the low value residuals remaining after conversion for the purpose of producing additional volumes of hydrogen to augment that produced from electrolysis contributes substantially to the economic viability of electrolysis for such purposes. Coal may also be gasified along with the residuals or in place of them. Three basic factors contributing to the increasing market for hydrogen in the petroleum industry are as follows. 1. OPEC suppliers of oil have been selling a disproportionately high share of light crudes out of their total reserves, thus increasing the proportion of heavy crudes in their remaining reserves. They are correcting this imbalance; e.g. Saudi Arabia established a purchase requirement of a 35/65 ratio of heavy to light crudes. Other OPEC suppliers have imposed a similar purchase requirement and may also widen the price differential between light and heavy crudes to provide an incentive to purchase more heavy crudes. 2. There has been a reduction in the ratio of cracking processes to distillation capacity in world refining
capacity. A major refinery retrofit programme must proceed to provide for the processing of heavy crude. Virtually all of this will involve hydrogen addition processing. 3. The industry must adjust for the oversupply of high sulfur residuals in all major industrialized countries by installing future hydrogen processing equipment especially aimed at lightening the product barrel. Residuals became in oversupply due to industry conversion to coal and natural gas and the regulations on sulfur emissions. This paper describes the Resource and Energy Management System (REM), an integrated process using electrolytic hydrogen and oxygen, for the production of synthetic crudes and light oils from a variety of heavy hydrocarbons. A high yield of synthetic crude is achieved, and essential hydrogen and oxygen are produced at low cost by means of a self-sufficient, energy-efficient, environmentally acceptable method, applicable to many sites throughout the world. For purposes of this paper the term heavy hydrocarbons includes the following: heavy oils and tar sand bitumens from enhanced recovery and mining operations; heavy residual oils produced in refining; oil shale kerogens; coal liquefaction; coal liquids from pyrolysis.
783
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RESOURCE AND ENERGY MANAGEMENT OF SYNFUELS system. Recovered crude oil is delivered to the upgrader where between 1000 and 2000 standard cuft of hydrogen are added per barrel of product using catalysts and pressure. Three streams are produced: a synthetic crude, a light ends gas stream which can be used for energy or additional supplies of hydrogen and a residual unconvertible solid. Coal, residual oil and the unconvertible residual are feedstock to a gasifier. Feedstock blends depend on relative cost. The gasifier can process any of the above as well as natural gas if it is available at costs competitive with the other feedstocks. As both the hydrogen addition upgrader and the gasifier are pressure systems, all sulfur in the crude oil and coal is controlled and is produced as elemental sulfur for a potential credit to the operations. Gasifiers can be operated in different modes. The gasifiers in this scheme would be dedicated to production of a low BTU gas, using air, which is all that is necessary for combined cycle power generation. With the oxygen available from the electrolytic cells a hydrogen-rich synthesis gas can be produced in a gasifier for production of additional supplies of hydrogen of high purity. This would reduce the capital costs of the power system and the size of the electrolytic plant required for a given volume of hydrogen. Oxygen could also be used to "enrich" the air to the gasifiers used for steam and power generation. This would produce a higher BTU synthesis gas for the turbines than available from "air" gasification with a reduction in size and number of turbines or an increase in steam and power output for the synfuels complex. The power generated in the combined cycle is used to electrolyse water to produce hydrogen which is essential for any synfuels production from any heavy hydrocarbon. Electrolysis, fortuitously, co-produces oxygen which is highly desirable as a substitute for air in the gasification process and for other purposes in the synfuels complex. The hydrogen addition unit can operate in different modes depending on markets for heavy fuel oil, the price of synthetic crude and the nature of the heavy hydrocarbon feedstock. With a relatively low conversion of the heaviest fractions, i.e. 975°F plus, the heavy fraction is sufficiently improved that it could be blended into the balance of the light liquid fractions. By increasing the quantity of hydrogen the 975°F plus heavy fraction is upgraded to lighter products for a higher quality synthetic crude. These optional modes of operation are being designed into two hydrogen addition units under construction at the Texaco Refinery at Convent, Louisiana. A major development is taking place in California which, in our view, is highly relevant to synfuels technology world wide. We refer to the Cool Water project undertaken by Southern California Edison, EPRI, General Electric, Texaco and Bechtel. The significant feature is that the heart of the REM system is a Texaco gasifier and combined cycle system similar to that being installed at Cool Water. The Cool Water process units are being developed for utility use to gasify 1000 tons
785
per day of coal to produce lO0 MW of electricity. The same size units would support about a 12000 barrel per day synthetic crude recovery and upgrading operation. The Cool Water integrated gasifier and combined cycle facility, operating in its primary mode, is a closed circuit in which all gas and steam is used to generate electricity. In synfuels operations steam is required, particularly for enhanced oil and in situ bitumen recovery, and therefore the units would be used in an "open" circuit, with steam being used for field operations rather than for electricity. Previous studies by one of the world's largest engineering firms show that this system with its efficiencies results in a significant increase in oil delivered to the pipeline vs the output of the huge commercial plants now operating in Canada. Figure 2 is a process flow-sheet comparing the REM system to a typical large-scale tar sands synfuels project in Canada. Table 1 provides a comparison of the various unit operations of the REM system with present tar sand synfuels projects. Figure 3 is a typical block flow-diagram of the REM system process units.
O P E R A T I O N AND A D V A N T A G E S OF THE INTEGRATED GASIFIER-COMBINED-CYCLE P O W E R SYSTEM F O R ELECTROLYSIS UNITS IN SYNFUELS P R O D U C T I O N Canada is the free world's leading producer of synfuels with a production of 150 000 barrels per day. South Africa is second at 50 000 barrels per day, but by late this year will have 90 000 barrels of installed capacity [7-9]. The REM system provides a most favourable set of technical and economic cicrumstances for the commercial use of large-scale electrolytic units in the growing synfuels industry. Basically, the REM system approach has been to integrate the electrolytic units into the power system and synfuels complex. This reduces the cost of power to the electrolytic plant which correspondingly decreases the production costs of hydrogen and oxygen. While providing this feature the system also maximizes the value of hydrogen and oxygen by using electrolytic hydrogen and that derived from the use of the oxygen for chemical purposes, i.e. hydrocracking, hydrogenation and desulfurization. One of the better-known advantages of combined cycle and co-operation is the more efficient use of fuel: "The fuel savings for co-generation is usually on the order of 20 to 30% as compared with the generation of steam and electric power separately." (EPRI report EM 1996, 4-1 [1]). The technical and economic analysis showed a significant increase of 8-10% in yield of light oil to pipeline by comparison with present Canadian tar sands plants. Coal can be made available in Canada as gasifier fuel and its use would reduce the amount of oil feedstock consumed on site. This would raise the yield of synthetic crude to pipeline on bitumen feed to 100%,
786
R. H. SHANNON AND R. D. RICHARDSON
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Oxygen Fuel and power Fuel Process units Other Yield Sulfur control
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R. H. SHANNON AND R. D. RICHARDSON
which is an increase in yield of 25% over current plants in Canada. Efficient combined cycle production of power, as much as 45%, as compared to about 30% for conventional power production employing flue gas desulfurization, integrated with electrolysis, provides savings which can be realized in the form of lower hydrogen and oxygen costs. Reasons for the high yields of synthetic crude, and energy efficiencies, which contribute to the technical and economic viability of electrolysis and the REM system are the following. 1. The highest possible value for hydrogen is realized, that is for chemical purposes where the purity of electrolytic hydrogen can be appreciated and quantified in terms of (a) improved operating costs in the hydrogen addition unit, (b) reduced size of such equipment, (c) for co-mingling with low hydrogen content synthesis gas from the gasifier and light ends reformer, thus reducing the costs associated with the "shifting" of synthesis gas to hydrogen. 2. The highest possible values are realized for oxygen by its use to (a) produce additional supplies of hydrogen, (b) enrich air to the turbines for more power and steam (c) improve field operations. Oxygen could be used "down the hole" for substantial reductions in costs and improvements in field recovery as compared to compression of air for the in situ operations of combustion and carbon dioxide injection for miscible flood. 3. The fuel to the gasifier-combined-cycle power train can be lowest grade and lowest cost. In the Canadian studies waste unconvertible materials from the synfuels production and coals will be used. These savings are not available to utilities who are the usual source of power for electrolysis. 4. There are no electrical distribution costs built into the power system and total plant costs. 5. There are a number of synergisms which provide credits to the power train and electrolytic plant. The waste hot water from electrolytic cells can be used in tar sand flotation cells as it is at the temperature currently used. In Canada we have a successful nuclear program which uses deuterium oxide as the moderator. The large volumes of hydrogen are a source of D20. This is estimated to be a credit of US$1.00 to US$2.00 per barrel of oil. 6. Expensive environmental control costs are avoided for major savings. Coke stockpiling is avoided (existing Canadian synfuels plants stockpile about 2500 tons per day from the two plants). Less fuel is used, therefore, there are less emissions and as hydrogen addition and gasification units operate at high pressure, sulfur emissions are controlled. Flue gas desulfurization is not required. NOx emissions are at low levels from the synfuels complex by addition of available steam in the synthesis gas to the turbines. 7. Favourable fiscal regimes exist for synfuels complexes, such as investment tax credits, capital cost
and earned depletion allowances and outright grants from governments seeking synfuels. These have the effect of reducing substantially the capital charge component in the power supply and electrolysis units since they are included as an integral part of the complex. Fast write-offs are not available to utilities, therefore power purchased for electrolysis from utilities carries a higher capital charge than would onsite generation. 8. The operability of electrolytic units and the low-cost sources of power must be recognized and quantified over the life of the project in any technical and economic comparison of hydrogen sources, for instance: (a) the steam reformer hydrogen units have been critical units in the Canadian synfuels operations. This past winter both plants incurred major production interruptions due to operating difficulties, fires and explosions in the hydrogen units. The simplicity of the electrolytic operation, long life of the ceils, avoidance of the use of catalysts, turn down capability and the multiple units to maintain production ensuring a high on-line service factor are important technical and economic factors; (b) it should be noted that electrolytic hydrogen and oxygen sourced on water and coal (which can be high sulfur) will not escalate lock-step with crude oil as will the usual hydrocarbon sources of hydrogen, i.e. natural gas, petroleum light ends and naphthas. The relative lower escalation rates on coal and water, in favour of electrolysis, must be quantified in any project life comparison; (c) the potential for use of DC power, available off the shafts of the turbines for a reduction in power costs for electrolysis should be factored into the costs of hydrogen and oxygen, and will be in the current study; (d) large-scale electrolytic plants have the potential for cost reductions. This is not the case to the same extent in the technology of steam reforming of hydrocarbons [19]. Over the life of an expanding industry this factor can be substantial. In an integrated synfuels complex it is not the practice, nor is it required, nor is it possible without great difficulty, to isolate individual unit costs. To test the validity of the electrolysis approach, and with the assistance of an independent engineering firm engaged in a synfuels project based on methane as the source of hydrogen, a comparative economic analysis was made. On the basis of 1000 standard cuft of hydrogen, the unit of measurement and amount used in hydrogenation and desulfurization, the REM hybrid system cost of electrolytic hydrogen and hydrogen by gasification of low value fuels with the co-produced oxygen from electrolysis was 27.8% less than the cost of hydrogen from methane. This should not have been a surprise. Conversion of methane to hydrogen is chemically a "destructive process" in which a third of the energy in methane is consumed in dissociating the hydrogen from carbon in the methane molecule. Put another way, non-fossil hydrogen compared as a fuel to methane has a value of 33%. Non-fossil hydrogen compared as a chemical
RESOURCE AND ENERGY MANAGEMENT OF SYNFUELS
789
relation to the available capital and manpower resources in most instances.
Table 2. Relative values as fuels---BTU basis
Assume US$3.45/MMBTU of methane Value of methane/MMBTU Value MSCF of Hz/MMBTU
US$ 3.45 1.06
Relative values as chemicals--MSCF basis Value of methane at US$3.45/MMBTU as MSCF of H2 Non-fossil Hz/MSCF therefore has a value of
W O R L D SUPPLY A N D E C O N O M I C S O F SYNFUELS PR O D U C T I O N A N D T H E R O L E O F HYDROGEN
2.40
The world is not running out of crude oil and will not until into the middle of the next century. The United States Geological Survey estimates that the world's total in place heavy oil and tar sand resources which have not been included in reserves of light oils exceeds 4.4 trillion (4400 billion) barrels. More than half of the total is attributed to the Western Canadian provinces of Alberta and Saskatchewan, with 2670 billion barrels in place. The resources even if viewed conservatively, are exceedingly large and the heavy oil and bitumen is high in energy content, and is so ubiquitously distributed in the world as to hold hope for energy self-sufficiency to many now dependent nations. World reserves of heavy crude oil and tar sands have been estimated at in excess of 963 billion barrels by Richard F. Meyer of the United States Geological Survey. Assumptions with respect to the likely recovery rate of the resources in place will have a significant impact on the reserve estimate. Total reserve calculation estimates are that 21% of the known oil in place can be recovered. The total, 963 billion barrels, is scattered throughout 49 countries with two nations, Venezuala and Canada, having the bulk of the reserves. Table 3 provides a summary of heavy oil and tar sand reserves by country. Venezuela is by far the world's largest heavy oil producer at 1 440 000 barrels per day (bpd), followed by the U.S. at 638 000 bpd and Mexico at 372 500 bpd out of a world total of 3.9 million bpd. Putting this in perspective, OPEC exports of crude oil in 1980 are in the order of 7.5 billion barrels. World reserves of conventional oil are at 500 billion barrels in addition to the reserves of 963 billion barrels of heavy oil and tar sands. Conventional reserves will last into the early part of the next century, and heavy oil and tar sand resources into the middle of the next century. The world is not short of "oil". Reserves are depleting of conventional high-quality, low-sulfur oil with a gravity of greater than 2 1 A P I , which can be recovered without assistance or enhanced recovery methods. The diminishing reserves of this particular grade of oil, recovered for less than US$10 per barrel should not be confused with the abundance of heavy oils and tar sands which can be recovered with additional effort and cost. In respect to costs, the operating cost of the two largest synfuels plants in Canada, the world's largest, both based on tar sands, is in the range of US$15-22 per barrel. Both these operations make a good return at world prices for oil. This includes both the cost of recovery of the raw bitumen and the cost of upgrading to an oil equivalent to the best grades of oil available from OPEC. The U.S. has 63 field projects in which heavy oils and tar sands are recovered at a cost in the order of
2.40
on the basis of standard cu fl for hydrogen has nearly 2½ times increase in value to that when the comparison was on a fuel basis. The advantage of electrolytic hydrogen, and the hydrogen derived in the gasifier from the co-produced oxygen, will increase in relation to hydrogen from hydrocarbons. The price of methane, a premium fuel, will increase when the high costs of other replacement energy units are imposed on our society. Estimates have been made of replacement costs of methane in the early 1990s of US$20/MMBTU which would mean US$10/ MSCF for hydrogen. (See Table 2.) In the REM system, coal and water are the source of electrolytic hydrogen and oxygen, both are abundant, low cost and will not escalate relative to premium hydrocarbons. Attention should be drawn to the opportunity to use coal, not only as a gasifier feed but also for blending into the residual oil feed to the hydrogen addition unit. In this case a simple coal liquefaction process is undertaken, and yield of synthetic crude is increased to 130% on the basis of bitumen feed from the synfuels recovery operations. The step of simultaneously upgrading heavy oils and coal provides a number of economies as compared to coal liquefaction, and is simpler. For those areas where coal can be delivered to synfuels upgraders and where coal liquefaction is an ambitious endeavour, this simpler process should be examined. See U.S. Patent 4 054 504. MINI-UPGRADERS The commercial approach will be to build small "mini-upgraders" which will be self-contained. These would be constructed in modules in high productivity shops under rigid quality control rather than in the field. Current high inflation and interest charges and low productivity rates, all of which must be capitalized, particularly distress large mega-projects offsetting any apparent economies of scale. The shop fabricated "mini-upgraders" can be on stream years ahead of field constructed mega-projects with earlier cash flow and in total contribute more synthetic crude to the energy supplies of various countries than a single mega-project. The electrolytic units lend themselves to these small modular plants as do the hydrogen addition units, turbines and other associated units. Most heavy oil and tar sand deposits throughout the world are small, hence small upgrading units would be appropriate and in
790
R. H. SHANNON AND R. D. RICHARDSON Table 3. Heavy crude oil summary by country (million barrels) Country Albania Angola Argentina Australia Austria Brunei Bulgaria Burma Canada China Colombia Cuba Ecuador Egypt France Gabon Great Britain Hungary India Indonesia Iran Iraq Italy Japan Kuwait Malaysia Mexico Netherlands Neutral Zone (Divided Zone) Nigeria Oman Pakistan Peru Philippines Rumania Saudi Arabia Spain Syria Taiwan Thailand Trinidad Turkey USSR United States Venezuela West Germany Yugoslavia Current totals
Number of deposits
Original oil in place
2 2 2 1 3 1 2
n/a n/a n/a n/a n/a r~a n/a n/a 238 324 nfa n/a n/a n/a n/a n/a n/a 493 n/a n/a n/a 28 550 14 000 514 n/a n/a n/a n/a 186
1
88 1 17 1 4 5 5 4 2 1 12 10 8 10 12 8 3 1 33 5 2 7 4 1 10 1 2 1 2 3 1 2 9 10 10 599 53 8 1
n/a n/a 1300 n/a 912 n/a n/a n/a 126 1700 n/a n/a n/a 2800 n/s n/a 130 000 532 n/a 514 800
Annual production
Reserves
5 1 1
104 20 36
13
1800 5
20
33 135
18
361 1 20 328 19 147 49 26
1 16 1 7 1 18 13 48 2 7
370 5380 1768 45 6 152
136 3
2718 72
38 27 2 11
770 552 40 2 330
17 50 20 16
349 996 41 324
26 5 43 233 525
1 520 116 858 4927 28 712 112
1425
85 232
United States Geological Survey (1982). US$16-20 per barrel. This includes operating costs and depreciation. Tile recovery costs in California are reported to be in the order of US$7.38--23.90 per barrel. (L. C. Marchant, Department of Energy; C. A. Koch, Consultant). Allowing for upgrading costs, which are not in Dr. Marchant's numbers, the costs for a barrel of synthetic crude from heavy reserves is in the order of US$22-25 per barrel.
The above refers to operating costs, excluding depreciation. The correct measurement of depreciation for synfuels production is the capital cost per barrel of recoverable synfuel processed in the facilities. In the case of the largest synfuels plant in the world, the Syncrude plant in Canada, this works out at US$2.30 per recoverable barrel of oil (a figure much lower than some offshore light oil projects). Canadian and U.S.
RESOURCE AND ENERGY MANAGEMENT OF SYNFUELS experience demonstrate favourable operating and depreciation costs as compared to the cost of imported oil, of US$32-36 per barrel. However, there is a third element of costs; that of royalties and taxes, imposed by free spending, cash-hungry governments. These are as much as the operating costs and leave insufficient funds for a rapid expansion of the synfuels industry. The synthetic crude from the South African Sasol coal liquefaction plants is sold in competition with international crude oil to local refineries with about a US$5 per barrel synfuels subsidy. The company reports substantial profits, based on coal with a cost of US$10 per ton. Shares in their company were oversubscribed many times recently when they went to the market for funds for expansions. A North American study on coal liquefaction, based on US$44 per ton coal, reports operating costs (excluding depreciation) of between US$30 and US$35 per barrel, depending on hydrogen Costs.
In summary, there is a diminishing supply of easily recovered and processed conventional oil of qualities over 21 API, which has been the supply to our industrial economies. However, there are huge reserves of hydrogen deficient, i.e. less than 21 API, heavy hydrocarbons. It has been proven technically and economically viable to recover and upgrade these reserves at the current international crude oil prices. We therefore do not see the need for hydrogen to replace depleting light oils, which will be replaced with synthetic crudes, but we do see the requirement for enormous quantities of hydrogen and oxygen to upgrade these massive reserves of hydrogen deficient heavy oils to usable synthetic crude oil. This would appear to us to be a more immediate and larger market for hydrogen and oxygen than the fuel market. Hydrogen and oxygen used in this manner will solve our energy problems more logically and economically than the direct use of hydrogen as a fuel. If a deficiency develops in supply of synthetic crude to replace supplies of the light conventional crude it will be the making of Western governments, not that of OPEC. OPEC imposed royalties on their production which provides them with large earnings to finance their development programs, Mismanaged Western governments also imposed taxes and royalties, while condemning OPEC for doing so, in an attempt to reduce their deficits. These Western governments are now imposing more royalties and taxes than OPEC, at about 40-60% of the cost of a gallon of gasoline. After OPEC takes their share, less than Western governments but still substantial, there is not sufficient cash flow left for the synfuels industry to finance the required immense undertakings. Western government resource and petroleum taxation is the greatest risk to a shortfall of supplies of synthetic crude by the misdirection of the revenue from synfuels to cover deficits incurred by a proliferation of programs, many ill-conceived, expensive, poorly managed, rather than using the funds to develop new supplies. Canada has imposed royalty and taxes which have greatly retarded new synfuels production. The United
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States has taken a similar approach. Unnecessary regulatory matters also retard development. In one synfuels project over 15 000 permits are required in a superb demonstration of government interference and bureaucratic empire building the like of which has not been since man realized he needed heat for his cave. Unless Western government redirect more of the petroleum royalties and taxes which they are taking from petroleum consumers into replacement supplies for the diminishing light oils we will face a high risk of shortages of crude oil. But let us be clear that it was of our own making, not because of the technical or economic factors, or OPEC, or the lack of reserves, or the ability to recover them. If this self-made, selfdestruct Western government taxation and regulatory approach to synfuels production is moderated we can eliminate our dependence on OPEC and ensure crude oil supplies into the middle of the 22nd century. A huge market awaits hydrogen and oxygen except for this factor. CONCLUSIONS To replace the world's depleting supply of conventional oil, the enormous reserves of heavy oil, tar sands, shale and coal throughout the world will be upgraded to synthetic crudes to supply needs into the middle of the next century. Canada is now the world's leading synfuels producer at 150 000 barrels per day, with South Africa second with installed capacity this year of 90 000 barrels. A many-fold increase in synfuels production must be realized by the late 1980s. The Resource and Energy Management System (REM) is a system of commercially available upgrading units for recovery and upgrading of such heavy materials which employs electrolysis as the source of hydrogen and oxygen essential for synfuels production. An independent technical and economic study of the system indicated the following advantages over the existing commercial synfuels plants in Canada: (a) higher yield of synthetic crude to pipeline, (b) substantially reduced environmental impact, (c) higher energy efficiency, (d) capability for down scaling to "mini plants" without economic penalty. As a result, governments in Canada in cooperation with a major oil company have funded a feasibility study which will be conducted by the authors of the patent and the system, D and S Engineering (reservoir studies), Hydrocarbon Research Inc. (hydrogen addition upgrader), General Electric (power systems), Electrolyzer Inc. (electrolysis), Texaco (gasifier), with study coordination by SNC of Toronto. The study will be based on two Canadian sites which contain huge reserves of heavy oil and tar sands. One plant size will be 20 000 barrels per day, which will require between 100 and 200 MW of electrolytic equipment, depending on the operating mode. The other plant size will be 6000 barrels per day. Copies of the feasibility study can be purchased from the Alberta Oil Sands Technology and Research Authority of the Province of Alberta,
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E d m o n t o n , A l b e r t a or the authors. U p g r a d i n g will m e a n t h e r e will be little or no n e e d for h y d r o g e n to replace d e p l e t i n g light fuel oils. H o w e v e r , t h e r e will be a r e q u i r e m e n t for large quantities of h y d r o g e n a n d oxygen to u p g r a d e these massive reserves of h y d r o g e n deficient h e a v y oils a n d tar sands to synthetic crude oils.
Acknowledgements--To
Texaco Development Corporation who generously did the first lab. and other work on gasifying Western Canadian bitumens and coals and to Bill Crouch and Ted Childs, who have been a constant source of advice since. To Dr. Kim, Keith Chinnery and Roy Parry who were the first to quantify the merits of an integrated field recovery and upgrading system, and to Harry Whalen. To Sandy Stuart of Electrolyzer Inc. who has been on call for any help on electrolysis, and to John Yarnell for his special help. To the staff of Hydrocarbon Research Inc., who made the breakthrough in the summer of 1981 on high conversion of bitumen to synthetic crude to confirm the high yields possible in synthetic crude operations. To the General Electric staff in Canada and Schenectady who lent, with enthusiasm, their skills in combined cycle. To Mickey and Don of D and S, who are teaching us the mysteries of mother nature in these new oil deposits. To the ladies, Sandra who is so careful with all our work and our wives who have allowed our indulgence, time and money-wise, in this fascinating new industry. To Jim Bissett for his valued comments on this paper. REFERENCES 1. R. M. Rodden and J. L. Boyen, Cogeneration potentialenhanced oil recovery. Electric Power Research Institute, Report EM 1996 (1981). 2. Flour Engineers and Constructors Inc., Economic studies of coal gasification combined cycle systems for electric power generation. Electric Power Research Institute, Report AF 642 (1978). 3. Report of Committee F., Industrial and commercial utilization of gases. 14th World Gas Conference IGU/F-79 (1979). 4. Alsands Project Group, Application to the Alberta Energy Resources Conservation Board for an oil sands mining project (1978).
5. Imperial Oil Limited, The Cold Lake Project. A Report to the Alberta Energy Resources Conservation Board (1978). 6. H. Kim, A study of an integrated energy management system in recovery and upgrading of heavy oils. Report prepared for the REM joint venture (1979). 7. J. P. Prince, Enhanced recovery potential in Canada. Report of Canadian Energy Research Institute (1980). 8. W. L. Oliver, Fuels from tar sands. Symposium on tar sands, 26th Canadian Chem. Eng. Conf. (1976). 9. J. R. Lynn, The Syncrude Plant--the first years of operation. Second Int. Conf. on Heavy Crude and Tar Sands, Unitar/Petroleos de Venezuela S.A. (1982). 10. L. D. Marchant, U.S. tar sand recovery projects. Second Int. Conf. on Heavy Crude and Tar Sands, Unitar/Petroleos de Venezuela S.A. (1982). 11. R. F. Meyer and P. A. Fulton, Toward an estimate of world heavy crude oil and tar sand resources United States Geological Survey (1980). 12. R. Orchard, New process promises higher yield from heavy oil Canadian Petroleum (October 1980). 13. C. Law, The REM route to more syncrude Can. chem. Process. (September 1980). 14. R. D. Richardson and R. H. Shannon, Oil recovery process. U.S. Patent 4 160479 issued 10 July 1979 and Canadian Patent 1065780 issued 6 November 1979. 15. D. A. Redford and A. S. MacKay, Hydrocarbon steam process for recovery of bitumen from oil sands. Non-conventional oil technology symposium, Calgary, Alberta, 2 June 1980, Alberta Tar Sands Technology and Research Authority (1980). 16. J. Barnea, The future of heavy crude oil and tar sands-an overview. Second Int. Conf. on Heavy Crude and Tar Sands, Unitar/Petroleos de Venezuela S.A. (1982). 17. B. Cornils, J. Hibbel, P. Ruprecht, J. Langhoff and R. Durrfeld, Raw materials and energy from coal gasification. The Ruhrchemie/Ruhrkohle demonstration plant based on Texaco's coal gasification process. Chem. Econ. Engng. Rev. (June/July 1980). 18. R. M. Eccles, Converting heavy oil to dollars. H-OIL technology conference VI. Hydrocarbon Research Inc., internal papers (1981). 19. R. L. LeRoy and A. K. Stuart, Advanced unipolar electrolysis. Int. J. Hydrogen Energy 6, 589--599 (1981).