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Eastman Gasification Overview
March 22, 2005
hFounded in 1920 as part of Eastman Kodak - wood to methanol plant hSpun off from Kodak - January 1, 1994hApproximately $6 B in annual saleshHeadquarters - Kingsport, TNhManufacturing sites around the world
Just the Basics
Gasification 101
Carbon + Oxygen + Water Carbon Monoxide + Hydrogen
C + O2 + H2O CO + H2
The partial oxidation of carbon to produce a "synthesis" gas
Gasification is not combustion!
Coal/Petcoke
Water
Gasification Basics – Slurry Prep
Coal/Petcoke Slurry
55% - 70% Solids
Gasification Basics – Air Separation
AirCompressor
Oxygen
Nitrogen
ArgonAS
U
Oxygen feed to gasifier 95% to 99+% purity
Co-production of N2 and Ar for liquid sales, NOX control,
general inerting
Cryogenic distillation
-180 Deg C
Oxygen
Coal or Petcoke
Water
What is Gasification?
Products (syngas):
CO (Carbon Monoxide)
H2 (Hydrogen)
[CO/H2 ratio can be adjusted]
By-products:
H2S (Hydrogen Sulfide)
CO2 (Carbon Dioxide)
Slag (Minerals from coal)
• Controlled Chemical Reaction• Up to 1,000 psig or more• Nominal 2,600 Deg F
GasClean-Up
BeforeProduct
Use!
Oxygen
Coal or Petcoke
Water
What is Gasification?
Products (syngas):
CO (Carbon Monoxide)
H2 (Hydrogen)
[CO/H2 ratio can be adjusted]
By-products:
H2S (Hydrogen Sulfide)
CO2 (Carbon Dioxide)
Slag (Minerals from coal)
• Controlled Chemical Reaction• Up to 1,000 psig or more• Nominal 2,600 Deg F
GasClean-Up
BeforeProduct
Use!
Advantages of GE Gasification:
• Lowest capital cost and COE (Quench)
• Straight forward design (Quench)
• Gas ready for shifting (Chemicals/H2/CO2 Seq.)
• High pressure operation (up to 1200 psig)
• High temp. gasification/Vitrified slag
• More experience (60 installed sites)
For higher efficiency, HP Steam – Quench/Radiant or Radiant + Convective
Gasification Basics – Gas Cooling
BFW
SteamHot Syngas
Water/Gas Separator
Cool Syngas
Water, recycled
Steam Turbine or process heating
"Dirty Syngas"CO,H2,CO2,H2S
Clean Solvent
Dirty Solvent
"Clean Syngas"CO, H2
Three Main Technologies:
• MDEA (methyldiethanolamine) – Chemical absorption, 98% to 99+% S removal, large CO2 slip (unless use a second stage for CO2 recovery), moderate operating temperature, lowest AGR capital cost
• Selexol tm (primarily dimethyl ethers of polyethylene glycol, DEPE) – Physical absorption, 99+% S removal, variable CO2 slip (based on design), higher AGR cost than MDEA but overall AGR/SRU system costs are similar
• Rectisol tm (methanol) - Physical absorption, 99.5% to 99.9+% S removal, complete CO2 removal possible, highest AGR cost, coldest operating temperatures
AGR Technologies Can Provide Near 100% Sulfur Removal If Required
(AGR = Acid Gas Removal)
Gasification Basics
Coal Water Slurry Prep
Gasification
Vitrified Slag
CO
H2
H2S
CO2
Steam
Cooling/Stm Gen
Gas Clean-up
Clean, Dry Syngas
Solvent/ Absorbent
Compressor Ar
N2
Oxygen
Air
Air Separation
Petcokeor
So what can you do with CO and H2 ?
Syngas
Transportation Fuels
Building Blocks for Chemical
Industry
Clean Electricity
CO2
Electricity
Steam
Combustion Turbine
SteamTurbine
Natural Gas
NGCC: Natural Gas Combined-Cycle Plant
Air
Most new power plants in the United States in the last 10 to 15 years have been natural gas
based
Electricity
Steam
Combustion Turbine
SteamTurbine
Natural Gas
Air
Syngas from Coal/Petcoke Gasification(adjacent or via pipeline)
X
Integrated Gasification Combined-Cycle (IGCC): Replace NG Feed With Syngas
CO2
Integrated Gasification Combined-Cycle (IGCC)
Contaminants Removed
Pre-Combustion !!!
Air SeparationUnit (ASU)
GasificationBlock
Coal(or otherCarbonSource)
Water
Air
Oxygen
VolatileMercury
PureSulfur
CO2 Capture (ready for sequestration) Electricity
CrudeSyngas
CleanSyngas
90+%Removal
98+%Removal
SlagCombined-
CyclePower Block
Gas Clean-UpBlock
Eastman Coal Gas Facility
Sulfur
CO2
Low Temp Gas Cooling
Shift Rx(option)
HgRemoval
ParticulateScrubber
GE"Quench"Gasifier
Slag/Frit
Coal
H2O
+
Air Separation Unit (ASU)
O2
Slurry
Acid Gas Removal
CO/H2
Fines/Char
What is IGCC?Flexibility for CO2
Sequestration (Concentrated Stream)
Sulfur RecoveryClaus/Scot
PRE-COMBUSTIONTreatment of Pollutants
•High pressure•Low Volume•Concentrated stream(easier to treat)
Air
Sulfur RecoveryClaus/Scot
Combustion Turbine
Compressed Air to ASU
HRSG
Steam Turbine
Electricity
Electricity
90+%Removal
98+%Removal
Electricity
Natural Gas
and/or Oil
Gasification-Based Polygeneration:Replace NG and/or Oil With Coal/Petcoke
Syngas from Coal/Petcoke Gasification(adjacent or via pipeline)
X
Chemicals,Synfuels,
Fertilizers,and/or Hydrogen
+
Combined-CyclePower Plant
ChemicalFacilities
Sulfur
CO2Low Temp Gas Cooling
Shift Reactor
MercuryRemoval
ParticulateScrubber
Texaco"Quench"Gasifier
Slag/Frit
Coal
H2O
+
Air Separation Unit
O2
Slurry
Acid Gas Removal
CO/H2
Fines/Char
Air
Combustion Turbine
HRSG
Steam Turbine
Electricity
ElectricityCO2
ChemicalPlant
Sales
Tail Gas Recycle to C.T.
CO/H2 to chemical plant
Peak or backup fuel to C.T.
Gasification-Based Polygeneration(Ultimate Flexibility)
Coal/Petcoke
Dimethyl EtherMethanol
Fischer-Tropsch Liquids
Fuel/Town GasPower & Steam
Acetic AcidEthylene
&Propylene
Methyl Acetate
VAM
Acetic Anhydride
Ketene
Diketene & Derivatives
PVAPolyolefins
FT Diesel
Polygeneration Potential of Gasification
Ammonia& UreaH2
Oxo Chemicals
Synthesis Gas
Car Fuel
Waxes
GasificationNaphtha
Acetate Esters
Iron Reduction
Benefits of Polygeneration• Higher overall value creation• Higher overall thermal efficiency and
feedstock utilization• Synergistic usage of low grade steam
and waste streams• Enhanced ability to load follow
(intermediate vs. baseload operation)• Higher employment for the community• Enhanced reliability, with potential to
store syngas as a liquid fuel
Trends Driving the Gasification Industry
• Steady Growing Demand for Electricity• U.S. Energy Security/Diversity (Coal vs. NG)• Growing Natural Gas (NG) Crisis• Environmental Drivers (Cleanest
Technology for Coal/Petcoke and Wastes)• Growing Environmental and Financial
Acceptance• Flexibility to Face an Uncertain Future and
to Open New Coal Markets
Growing Demand for Electricity
Steady demand growth of 1.5%
to 2.0% stillprojected thru2025 in U.S.;~ 4.3% China
demand growth.
Electric Power Demand - U.S. and China
0
1000
2000
3000
4000
5000
6000
2000 2005 2010 2015 2020 2025
Year
Dem
and
(bill
ion
kwh'
s) U.S.
China
Historical average reserve margin ~20%
Source: EIA International Energy Outlook 2003
Source: NERC 2004 Long-Term Reliability Assessment
Why Coal?• The U.S. has lots of it …
– U.S. recoverable reserves of 268 Billion tons = 250+ years of supply
• We can distribute it …– Existing infrastructure in rail, barge, mine mouth
• It costs less and is less volatile in price …– $0.75-1.75/MMBtu vs. > $4.00-6.00/MMBtu for NG
• We’re familiar with it …– 50% of current U.S. power is from coal
• It broadens our national fuel portfolio …– Insulates against price and availability shock of oil and
natural gas
IGCC Delivers Fuel Diversity and Energy SecurityIGCC Delivers Fuel Diversity and Energy SecuritySlide provided by ChevronTexaco
Power Generation in the U.S.
Source: DOE Energy Information Administration
Coal is still dominant!
U.S. Natural Gas SupplyHow Much is Left ?
U.S. Nat gas reserves:Proven: 186.9 trillion cubic feetUnproven: 1150.5 trillion cubic feet
Nat gas consumption: 27 trillion cubic feet/year(avg. over next 25 years)
Years remaining at current usage:Proven reserves: 8.0 yearsUnproven reserves: 42.6 years
Source: DOE – Energy Information Administration 2005 Annual Energy Outlookhttp://www.eia.doe.gov/oiaf/aeo/pdf/trend_4.pdf
NG Prices for the Past Year
Approximate Gasification
Breakeven NG Price
7 Drivers of Natural Gas Crisis• Return to more normal winters after
unusually mild recent winters• Steep drop in U.S. natural gas production
since early 2001• Continuing rapid growth in use of NG to
produce electricity• Rapid growth in number of gas-heated
homes• Declining imports from Canada• Increasing exports to MexicoAndrew D. Weissman, Energy Ventures Group
Vast New NG Construction Program
• More than 184 GW of gas-fired capacity brought into service since 2000
•• Enough new generation to serve more Enough new generation to serve more than than ½½ of Europe !!!of Europe !!!
• Average capacity factor of NGCC plants in 2003 was 32%, leaving over 3.3 Tcf/yr of overhang capacity for NG demand
William Rosenberg, National Gasification Strategy
More drilling, but less production;More reliance on imported LNG
How Much Coal is Left ?
Coal Reserves:Demonstrated Reserve Base: 508 billion tonsEstimated % Recoverable: 54%Estimated recoverable: 268 billion tons
2003 Production: 1.072 billion tonsSource: DOE – Energy Information Administration
“US Coal Reserves 1997 and 2003 Updates”http://www.eia.doe.gov/cneaf/coal/reserves/chapter3p1.html
Years remaining at current levels: 250 yearsOther source: National Mining Association
http://www.nma.org/pdf/c_most_requested.pdf
U.S. Coal Supply
Gasification is the technology of choice for converting coal to clean and efficient
power, chemicals, fertilizers, and fuels.
Coal needs to return as a key feedstock and energy
source in the U.S. !!!
Why Gasification?• It is the cleanest coal/petcoke technology …
– Inherently lower SOX , NOX , and PM– Lowest collateral solid wastes and wastewater– Potential for lowest cost removal of mercury and CO2
• It is proven technology …– 21+ years of successful commercial operation at Eastman– Multiple commercial IGCC’s (e.g., TECO Polk, Wabash)
• It is becoming increasingly competitive …– Capital cost at parity with other clean coal and dropping– Lowest dispatch cost of all fossil fuel technologies
• It is gaining acceptance …– Gaining support of environmental groups (e.g., NRDC, CATF)– Numerous state and federal initiatives and incentives
• It provides great promise for the future …– Flexible feedstocks, process options, and products– Opens new markets for coal (synfuels, chemicals, fertilizers)– It provides the only feasible bridge from coal to hydrogen
(directly converts coal/petcoke to hydrogen)
Why Gasification?Lowest Air Emissions (approaching NGCC)
Basis: ChevronTexaco White Paper (3/03),DOE Report (5/99), and Recent EPA Permit Data
Power Plant Typical Emissions by Technology Type
0.41
0.15
0.0850.057
0.019 0.015
0.31
0.17 0.165
0.053
0.0130.002
0.027 0.02 0.0180.007 0.004 0.01
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
Traditional PC Retrofit Older PC'sw/Scrubbers & SCR(using low-S Coal)
AdvancedPC/SCPC/CFB
IGCCw/MDEA Absorber
IGCCw/Rectisol & SCR
NGCC w/SCR
Type of Power Plant
lb/M
MB
tu
NOx
SO2
Particulates
• Mercury Removal• CO2 Sequestration(at fraction of cost for PC)
IGCC Upside Potential:
New NPRC/JGC IGCC is achieving < 2 ppm NOX and < 1 ppm SO2 !!!
0
100
200
300
400
500
600
700
Lb/M
W-h
r (D
ry B
asis
)
Pulverized Coal Circulating Fluid Bed IGCC
Slag/ Ash Sludge Sulfur CO2
IGCC: Lowest Collateral WastesCaCO3 + SO2 + ½O2 => CaSO4+CO2 [~ 2-4% add'l CO2]
No Add’l CO2 Associated with Sulfur Removal for IGCCNo Add’l CO2 Associated with Sulfur Removal for IGCC
Leachable Leachable Vitrified
Useful Sulfur
SludgeSludge
Slide provided by G.E. Power Systems
Pulverized Coal Circulating Fluid Bed IGCC
~ 5X Sulfur Byproducts
DOE Report "Major Environmental Aspects of Gasification-Based Power Generation Technologies", December 2002
~ 30% - 40% Less Water Usage with IGCC
Vapor-PhaseMercury Removal
Demonstrated for 21 years at Eastman !
IGCC: Low-Cost Option for Mercury ControlAn order of magnitude less expensive for IGCC
(COE = Cost of Electricity)
PCIGCCTechnology
$37,800/pound$3,412/poundCost of removal, $/pound Hg
~ 9%< 1%Fraction of COE
$3.10/MWh$0.254/MWhCost of Hg removal, $/MWh
1601.0Relative volumetric gas flow
Stack gasSyngas (ahead of AGR)Mercury (Hg) removal location
PCIGCCTechnology
$37,800/pound$3,412/poundCost of removal, $/pound Hg
~ 9%< 1%Fraction of COE
$3.10/MWh$0.254/MWhCost of Hg removal, $/MWh
1601.0Relative volumetric gas flow
Stack gasSyngas (ahead of AGR)Mercury (Hg) removal location
DOE Report, "The Cost of Mercury Removal in an IGCC Plant", September, 2002
DOE Report "Major Environmental Aspects of Gasification-Based Power Generation Technologies", December 2002
IGCC: Low-Risk Option for Carbon Capture
IGCC Minimizes Capital Cost Penalty of CO2 Capture
Proven Technology
• First U.S. commercial coal gasification facility in 1983 at Eastman Chemical Company
• First IGCC plant demonstrated in 1984 at Cool Water site in California.
• 14 current IGCC plants globally, including TECO’s Polk Plant and Global Energy’s Wabash Plant. (~ 130 total global gasifiers)
• Eastman has achieved world-class success in coal gasification for over 21 years.
Economic Drivers for IGCCIGCC Economic Project Drivers
560 MW Plant
-250 -200 -150 -100 -50 0 50 100 150 200
O & M (+/- 20%)
Heat Rate (+/- 20%)
Coal Price (+/- 20%)
Reliability (+/- 10%)
Capex (+/- 20%)
Elec. Price (+/- 20%)
NPV Change from Baseline, $M
CriticalDrivers
IGCC Economics are Increasingly Competitive
• EPC Capital Costs Near Parity with PC Plants:– Capital costs of pulverized coal plants have
been increasing to ~ $1100-1400/KW as emissions requirements have tightened.
– Capital costs of IGCC have been falling (currently projected as ~ $1200-1400/KW) as multiple plants are built and improved, with considerable additional downward potential.
• Lowest Dispatch Costs:– IGCC Dispatch Costs (fuel + variable O&M
+ environmental costs + consumables) are the lowest of all fossil fuel technologies.
IGCC Capital Cost BreakdownCombined Cycle Plant
CT/HRSG/ST43%
Gasifier Block25%
ASU15%
Coal Prep10%
AGR7%
Potential to reduce total capital cost by re-fueling existing idle NGCC turbines
IGCC Capital Cost Improvement
Source: GE Power Systems, Power-Gen 2002 Presentation
TargetRange
For IGCC
x
Recent Clean Coal PCPlants
x
Key Advantages of IGCC vs. PC BoilersEnvironmental:• Inherently lower air, water, and solids emissions• Pre-combustion treatment vs. post-combustion treatment
enables easier and lower removal of pollutants• Low-cost effective volatile mercury removal• Much lower costs for CO2 capture than with PC
Efficiency:• Combined cycle turbines or fuel cells vs. only steam turbines• IGCC capital costs falling while efficiency increases;
PC/SCPC capital costs increasing while efficiency falls
Flexibility:• Upgrade later at minimum cost for CO2 sequestration, mercury
removal, or to increase sulfur and NOx removal • Ability to co-produce chemicals, fertilizers, fuels, or hydrogen• Can handle variety of feedstocks including petcoke and biomass
Gasification – Ready for Prime Time !!• Competitive cost of electricity (superior dispatch cost -
lowest for all fossil fuels)
• Exceptional environmental performance, including cost effective volatile mercury removal and potential for lowest-cost CO2 capture and sequestration
• Refueling of NGCC plants (replacing NG with coal)
• Production of hydrogen to fuel the coming economy(FutureGen Initiative)
• Promise of new markets for coal - potential for transformation of the chemical, fuels, and fertilizer industries
•• Gasification is Gasification is thethe future for coal !!!future for coal !!!
Eastman’s Experience with Gasification• We were a pioneer in coal gasification …
– First commercial U.S. coal gasification facility in 1983– Designated as ACS National Historic Chemical Landmark
• Industry leading operating performance …– > 98% on-stream time since 1984– < 1-2% forced outage rate– Highest production rate per unit of capacity– Single-train reliability of ~88-90% (~94% excl. refractory change)
• Excellent safety record …– Plantwide OSHA recordable rate of ~1.0– No lost time in gasification area in over 12 yrs
• Exceptional environmental performance …– Remove >99.9% of sulfur– Patented sulfur-free start-up process– Volatile mercury removal for over 21 years
• Continual process improvement …– Reduced maintenance costs 20-30% in past 6 years– Patented feed injector designs for longer run life
Air
Oxy
gen
N2/ArA
SU
Compressor
Water
Coal
SlurryPump
Grinding Rod Mill
Lock Hopper
Particulate Scrubber
Solids Filtration
Water recycle
Flash drum
GEGasifier
(1 + Spare)
Shift Reactor
Hg Removal
Sulfur Recovery
Sulfur
CO2
Gas Clean-up (Rectisol) A
cid
Gas
es
COH2
CO/H2Separation (Cryogenic)
Syngas Conversion
Chemicals
Gasification at Eastman Basic Flow Diagram
Acetic AnhydrideAcetic AcidMethyl AcetateMethanol
Clean SyngasSteamAir Products
Syn Gas (CO + H2)
Carbon Monoxide (CO)
Chemicals from Coal – The Chemistry
Methyl Acetate Plant
Methyl Acetate
CH3OH+ CH3COOH CH3CO2CH3 (methyl acetate)Acetic
Anhydride
CO + CH3CO2CH3 (CH3CO)2O (acetic anhydride)Acetic Acid
Carbonylation Plant
CH3OH + CO CH3COOH (acetic acid)
MethanolPlant
Methanol
CO + H2 CH3OH (methanol)
Primary Reactions:
Acetic AnhydrideAcetic AcidMethanol
Methyl AcetateCoal
Eastman Chemicals from Coal – The Big Picture
Several major products are single-sourced from Eastman's coal gasification process!!
Thus, reliability is critical!!!
It’s likely you have used a product based on coal gasification from Eastman’s facility!
Reliable Gasification Operation
Yes, it can be done!
“The Devil is in the details.”
Eastman Operating StatisticsThree-Year Cycle (09/01 – 09/04)
including planned shutdown
On-Stream98.0 %
Unplanned1.2%
Planned0.8%
Not Needed0.0%
Industry-Leading Performance !!!
Eastman Operating StatisticsOne-Year Cycle (Sept 2002 - Sept 2003)
On-Stream98.9 %
Unplanned1.1%
Planned0.0%
Not Needed0.0%
Sustained Low Forced Outage RateEastman Gasification Plant
Historical Forced Outage Rate
0
1
2
3
4
5
6
7
8
9
10
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
% F
orce
d O
utag
e R
ate
Forced Outage Rate has Averaged < 2% since 1984 !!!
Industry Leading Gasifier Productivity!!!
Continual Process ImprovementHistorical Syngas Production Rate
15
17
19
21
23
25
27
2919
89
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
Syng
as P
rodu
ctio
n B
SCF
Capacity Factor = annual production/(design at full rates x 365 days/yr)
Annual loading factor = 127%
Annual Loading Factor
Safety
• Plantwide OSHA recordable injury rate ~ 1.0[Equates to one injury in over 15 years for a family of four!]
[OSHA injuries = injuries that require more than minor 1st aid]
• Last gasification area work day out case was over 12 years ago (sprained ankle stepping off a curb)
• Plant site received Tennessee OSHA “Volunteer Star”safety certification in 2001
Eastman Environmental Performance
• Cleanest U.S. coal gasification facility. • Sulfur removal is > 99.9% (with Rectisol);
<0.1 ppm sulfur in our syngas.• Eastman has a patented sulfur-free
start-up process (no SO2 from flare).• Eastman has practiced essentially
complete vapor-phase mercury removal from syngas since our initial plant start-up.
• Excellent environmental record and reputation.
Market Needs/Concerns for Gasification• High Capital Costs: need capital costs similar to
other coal-based technologies
• Unfamiliarity to Utilities: gasifiers are more like chemical processes than boilers
• Time to Capacity: previous IGCC plants have taken too long (several years) to get to full design capacity
• Reliability Concerns: need acceptable reliabilities and availabilities for facilities (90+%)
• Financing of Projects: bankers need guarantees or assurances that gasifiers will perform well
• Economic and Environmental Uncertainties: uncertainties regarding economic recovery, Enron fall-out, natural gas price forecasts, energy bill tax incentives, and multi-pollutant legislation
Eastman’s Value Proposition
Eastman's 21-yrs experience can enable faster start-ups
Time to Capacity
Eastman works with industry and government to understand & plan for uncertainties
Economic & Environmental Uncertainties
Eastman can help offer adequate warranties
Financing of Projects
Eastman has the best operating performance in the industry; offering O&M services
Reliability Concerns
Eastman knows gasification (21 yrs experience); O&M services
Unfamiliarity to Utilities
Eastman helps owners make intelligent design choices
High Capital Costs
Eastman Value CreationMarket Need
How Important is ReliabilityIGCC Economic Project Drivers
560 MW Plant
-250 -200 -150 -100 -50 0 50 100 150 200
O & M (+/- 20%)
Heat Rate (+/- 20%)
Coal Price (+/- 20%)
Reliability (+/- 10%)
Capex (+/- 20%)
Elec. Price (+/- 20%)
NPV Change from Baseline, $M
Eastman will help gasifier owners get more out of their plants, including faster
start-ups and improved long-term availability and reliability
• World-class operational performance
• Intelligent design choices to limit capital costs
• Patented technology improvements
• Exceptional safety and environmental records
• Best partner for polygeneration options
Eastman’s Value to Gasifier OwnersGasification Plant Start-up Schedule
0.0
20.0
40.0
60.0
80.0
100.0
120.0
0.00 0.25 0.50 0.75 1.00 1.25 1.50 1.75 2.00 2.25 2.50Time from Mechanical Completion
Cap
acity
Fac
tor (
% o
f Des
ign)
--- Eastman Potential--- Min. Required for Project--- Industry Past History
=$$$
$$$
Service Offerings:h Operations, maintenance, and management
contractsh Technical servicesh Critical spare parts fabricationh Specific technology licensingh Cooperative services agreement with
ChevronTexaco/GEh Project development
Eastman Gasification Services CompanyA subsidiary of Eastman Chemical Company
Building on Past Success
Use Eastman Gasification Services!
Don't leave your success to chance!
Together we can realize thefull potential of gasification!
QUESTIONS?www.gasificationservices.eastman.com