The Air Force has been testing synfuels such as the Renjet(TM) synthetic jet fuel manufactured by Rentech, Inc. using a gasification and Rentech (TM) Fischer-Tropsch process. It was mandated by law EISA Section 526 that Federal agencies including the Department of Defense cannot purchase alternative synfuels unless the alternative fuels have lower GHG emissions than refined petroleum based fuels. Many organizations that oppose any use of coal applauded this law, because they thought it would be end of coal-to-liquids jet and diesel fuel for the U.S. Air Force.

The NETL conducted a comprehensive study of the GHG emissions for refined petroleum based fuels that considered the well-to-wheels life cycle of liquid fuel from crude feedstock from different sources. It evaluated on a well-to-wheels basis the three green house gases that are the result of petroleum processing: CO2, methane and nitrous oxide.

The NETL study demonstrates that the source of the crude feedstock is a significant factor for determining the quantity the wells-to-wheels GHG emissions. The data shows that when the sources of the feedstocks are taken into consideration, the GHG emissions vary significantly. Broad statements about GHG emissions from all refined fuels should not be made based on the characteristics for domestic crude oil such West Texas Intermediate.

The NETL study shows that coal-to-liquid fuel has lower GHG emissions than refined fuels that use feedstock from many foreign sources. The sources that contribute the most GHG emissions are Nigeria, Venezuela and the syncrude from the Canadian tar sands. Fuels from these sources of feedstock actually exceed the standards legislated by Section 526 and would not meet the test to be approved for purchase by the U.S. Air Force.

When the source of the feedstock is considered, coal-to-liquid fuels have a lower GHG emission profile. The GHG emissions for coal-to-liquid fuels is 5% to 12% lower than petroleum based fuels processed from many sources of import feedstocks.Liquid fuels derived from crude oil imported from Mexico, Venezuela, Angola and Canadian tar sands generate much more GHG emissions on a well-to-wheels basis than liquid fuel derived from coal gasification.

The Department of Defense can execute long term contracts for alternative synfuels, but only if the synfuel have lower GHG’s than conventional petroleum based fuel. The Department of Defense (DoD) has backers on Capitol Hill that support increasing the length of procurement contracts that the DoD can enter for supply of fuels. The current law was passed in September 2008 and permits the DoD to enter into contracts that are a maximum of 10 years in length. Senator John Thune (South Dakota) announced that the Senate approved the National Defense Authorization bill for Fiscal Year 2009. Recently the Senate Budget Committee voted unanimously to approve an amendment to the Fiscal Year 2010 Budget that will permit the Department of Defence to increase the contract length from 10 years to 20 years.

Senator Bunning (Kentucky) sponsored an amendment to the Fiscal Year 2010 Budget to increase the DoD contract term to 20 years and it was passed by the Senate Budget Committee.

The increased contract term length for fuel supply contracts is considered to be due to the US Air Force has been considering various coal-to-liquid proposals. The U.S. Air Force has a strategic objective to convert it’s fleet of aircraft to a domestic coal-to-liquids synfuel. Proponents of coal-to-liquid plants have noted that the U.S. Air Force must be able to enter long term contracts for developers to successfully negotiate lender funding to build the facilities. The Governor of Indiana recently signed legislation that allows the State to enter into 30 year contracts for this same reason.

A key requirement of any long term contract is that the alternative fuels are environmentally friendly. Section 526 of the Energy Independence and Security Act (EISA) was included in the 2007 energy bill to prohibit Federal agencies from procuring alternative synfuel unless its life cycle Green House Gas (GHG) emissions are less than those for conventional petroleum sources.

EISA Section 526 states: “No Federal agency shall enter into a contract for procurement of an alternative or synthetic fuel, including a fuel produced from nonconventional petroleum sources, for any mobility-related use, other than for research or testing, unless the contract specifies that the lifecycle greenhouse gas emissions associated with the production and combustion of the fuel supplied under the contract must, on an ongoing basis, be less than or equal to such emissions from the equivalent conventional fuel produced from conventional petroleum sources.”

Shenhua is announced they are going to construct an 80,000 bpd Coal-to-Liquids plant. Shenhua Group is a state owned company in China and has the largest coal reserves of any company in China.

Shenhua selected Sasol Fischer-Tropsch technology to produce diesel and naptha. Shenhua selected Foster Wheeler International Engineering and Consulting and it’s consortium partner, Wuhuan Engineering Company, to execute the feasibility study for the project.

The facility will convert coal to diesel, naptha and liquified petroleum gas when it is constructed. The plant will gasify coal to produce syngas. The syngas will be cleaned and polished to meet the specifications for the Sasol Fischer-Tropsch feed. Fischer-Tropsch processes typically require a specific carbon monoxide ratio. Then, the clean syngas will be converted to diesel and naptha.

The Ohio EPA awarded the final air permit for the Ohio River Clean Fuels project to Baard Energy. The Ohio River Clean Fuels LLC (ORCF) project is a 53,000 barrel alternative fuels coal-to-liquids project that will be located near Wellsville, Ohio. The estimated cost of the plant is $5 billion.

The plant will be built on 650 acres in cooperation with the Columbiana County Port Authority adjacent to the Wellsville Port Intermodal Facility. The site is near Wellsvile, Ohio close to the border of West Virginia and Pennsylvania in the Midwest coal corridor.

The project is expected to be built in three phases. Each phase will include two coal gasifier trains that feed syngas to one FT reactor unit. When all three phases are complete, the plant will convert 28,000 tons per day of coal and biomass. The coal will be Pitt #8, but other coals in the area can also be used for feedstock as well as biomass.

Baard Energy selected the Shell Gasification Process technology for the plant. The Shell Gasification Techonology is well proven. It’s in use in Europe and China projects. The Shell gasifiers have been operated successfully with up to 30% biomass blended into the coal feedstock at the coal gasification plant in Buggenum, The Netherlands.

The facility will have three Fischer-Tropsch trains and produce 50,000 barrels per day of ultra-clean diesel and jet fuel, 3,000 barrels per day of LPGs and 250 MW electricity. Baard’s presentation at the Coal Gasification Technology conference in 2005 referenced Rentech’s Fischer-Tropsch technology, but this has not been confirmed with a news release.

The CO2 will be removed using the Linde Rectisol process. Once the CO2 is removed it will be used for injection into existing oilfields for enhanced oil recovery (EOR). Baard has had discussions with Marathon Oil regarding an offtake agreement for the CO2. There are oil fields in production within 20 miles of the plant site that can utilize the CO2 for EOR.

Baard has discussed offtake agreements with the Air Force as well as local petroleum refining companies for the jet fuel, naptha and diesel. Civil and Environmental Consultants and CH2MHill assisted with the permitting process. AMEC Paragon performed the front end engineering and development (FEED). The City of Wellsville, the State of Ohio and local labor leaders support the project.

With the air permit issued, Baard will be able to finalize the lending requirements and proceed with the detailed engineering, procurement and construction.

The Air Force has announced that it’s goal is to derive 50% of it’s fuel needs from synfuel produced from coal by 2016. To move closer to this reality, the Air Force is seeking proposals from developers for constructing a coal gasification facility on the Malmstrom Air Force property near Great Falls, Montana.

The Malstrom Air Force base is 700 acres. The plan is that the successful developer will sign a long-term lease with the Air Force to use the property. The area has abundant coal reserves. The facility will use coal as feedstock, and gasifiy it to produce synthetic gas (syngas). The syngas will be converted to a clean jet fuel using the Fischer-Tropsch process.

The estimated cost for a 25,000 bbl per day CTL facility is $2 billion. The net cost of synfuel produced is estimated at $40 to $50 / bbl not including an additional $10 / bbl for disposal of CO2.