Status of Korea IGCC Projects with Emphasis on the … · parsons 1 Status of Korea IGCC Projects with Emphasis on the YOSU Refinery IGCC Project by ... Maximum 37,290 39,510 51,660

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Status of Korea IGCC Projectswith Emphasis on the YOSU Refinery

IGCC Projectby

Yongkee AhnParsons Energy & Chemicals Group

Reading, Pennsylvaniaand

Hoil Ryu and I. S. KwakLG-Caltex Oil Corporation

Seoul, KoreaPresented at

2001 Gasification Technologies ConferenceSan Francisco, California

October 10, 2001

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Introduction

ObjectivesKorea’s power and demand supply to year 2015Recent KEPCO restructuring/privatizationEstablishment of Korea Power ExchangeKorea’s Alternate Energy LawActive Korea IGCC projects– KEPCO CCT program– LG-Caltex YOSU refinery IGCC project– IAE gasifier development program– KIER gasifier development program– SK Ulsan refinery IGCC project

Path forward for Korea IGCC program

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Objectives

This paper reviews the active Korea IGCC program inlight of the recent KEPCO restructuring, establishment ofKorea Power Exchange, and passage of AlternativeEnergy Law to determine the program’s future potentials

Emphasis will be placed on the recently completedLG-Caltex Yosu Refinery IGCC project

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Korea’s Power Demand and Supplyto Year 2015*

16.217.616.921.419.1ReserveMargin, %

79,06074,61061,61049,05046,980InstalledCapacity, MW

67,51060,72051,66039,51037,290MaximumDemand, MW

20152010200520001999

*The 5th Long-term power Construction Plan, Korea Monistry of Commerce, Industry & Energy, January 2001

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Korea’s Power Demand and Supplyto Year 2015 (cont’d)

Nuclear13,716 MW

28.3%

LNG12,689 MW

26.2% Coal14,031 MW

29%Oil4,866 MW

10%

Hydro 3,149 MW

6.5%

Installed Generation Capacityby Fuel (2000)

Electricity Consumptionby Sector (2000)

Industrial56%

Residential15%

Public and Service29%

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Recent KEPCO Restructuring

Spun-off all KEPCO generation plants into five regionalfossil and one nuclear/hydro companies

The five regional companies are to be sold toKorea/foreign investors, one at a time, starting next year

The nuclear/hydro company will not be privatized

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Recent KEPCO Restructuring (cont’d)

Each of the five regional fossil generation companies willhave approximately 8,200 to 9,500 MW total capacity by2015 with coal, oil, and LNG as fuels

These regional companies will now have to compete witheach other and with other potential IPP developers

All powers provided from these companies/developerswill have to sell through Korea Power Exchangecompetitively

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Korea Alternate Energy Law

Alternate feedstocks to include coal, petroleum coke andother petroleum residues

Gasification and liquefaction technologies

Government must establish selling price for electricityproduced from alternate feedstocks

If the proposed plants produce electricity that meets thegovernment established selling price, government mustgive first priority to purchase electricity from these plants

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KEPCO CCT Program

Plan to install 3 units of 300 MW CCT plant each forcommercial operation in 2007, 2013, and 2014

KEPCO has just completed detail feasibility studies forIGCC vs. PFBC and selected IGCC for the first CCTplant

Plant reliability and capability to meet stringentenvironmental resolutions were two important selectioncriteria

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KEPCO CCT Program (cont’d)

A detailed site-specific construction feasibility study is tobe initiated shortly

The construction FS will include a detailedimplementation schedule

The IGCC plant will be installed by Korea WesternPower Company (KOWEPO)

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LG-Caltex Yosu Refinery IGCC ProgramStudy Background and Objectives

Study performed under partial funding of USTDA grantwith the following project teams:– LG-Caltex Oil Corporation – Project owner– Parsons Energy & Chemicals Group – Prime contractor– LG Engineering and consortium – Local engineering

subcontractor– Bank of America – Financial advisor– Kim & Chang – Local legal consultant

Assessment of feasibility of 500 – 700 MW vacuumresidue based IGCC plant at an existing 650,000 BPDLG-Caltex Yosu Refinery

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LG-Caltex Yosu Refinery IGCC ProgramStudy Background and Objectives (cont’d)

Financial Analysis by Bank of America

Four cases were evaluated, including conceptual designand cost estimates– Case 1 – Heavy oil-fired conventional steam power plant

(Benchmark Case)– Case 2 – IGCC for power sales and steam sensitivity, but

without hydrogen– Case 3 – IGCC for power sales, steam sensitivity with hydrogen– Case 4 – IGCC for internal refinery power use, steam sensitivity

with hydrogen

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LG-Caltex Yosu Refinery IGCC Program

150150NoneNoneHydrogen, MMSCFD

None500500500Power to KEPCO, MW

89895252Power to Refinery, MW

200-500200-500200-500NoneSteam Export, tph

50,00050,00050,000N/AVacuum Residue Available, bpd4321Case

Feasibility Study Cases

10

70 (4)

70 (4)

20 (4)2005

101015ppmHydrogenSulfide

70 (4)250 (13)500 (13)ppmNO2

50 (4)120 (4)120 (4)ppmSO2

20 (4)40 (4)40 (4)Mg/Nm3Dust (TSP)Design Basis20001999UnitPollutant

( ) : % Oxygen

Yosu Refinery Emission Limits

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LG-Caltex Yosu Refinery IGCC Program (cont’d)

GE 6FAOxygen-blown, entrained type, andquench mode

4

GE 7FAOxygen-blown, entrained type, andquench mode

3

GE 7FAOxygen-blown, entrained type,both syangas cooler and quenchmode

2

Gas TurbineGasifierCase

Technology Selection

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Block Flow Diagram – Case 3

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Summary of Performances for all Four Cases

140249142633Sulfur, tpd65.751.142.438.8Thermal Efficiency, % HHV

95584571542Net Power, MW661329129Auxiliary Power, MW

161716662571Gross Power, MW313N/AN/AExpander Power, MW

150150N/AN/AHydrogen, MMSCFD200N/AN/AN/ASteam to Refinery, tph92394394N/AGas Turbine Power, MW

309

3

30,082

Case 3

268

2

17,141

Case 2

66571Steam Turbine Power, MW

2N/AGasifier No. of Trains16,91218,942Feed, BPD

Case 4Case 1

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Basis of Cost Estimate

Pricing year – 2002 dollars

Major equipment – vendor quotations

BOP – Parsons’ in-house database

Capital costs were initially developed on the basis ofU.S. gulf coast conditions and each estimate line itemsadjusted to Korean conditions

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Ocean freight, on-site shipping and start-up sparesincluded

Engineering, CM, start-up services, and contingencesincluded

O&M costs incorporated Korea productivity index

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Results of Capital, O&M Costs and Cost of Power(Relative to Base Cost)

+75,800

3+52,400

2-70,500Base$1,000 (2002 $)

41Case

-842

+11,714

3

-854

+4,943

2

-793BaseVariable Operating Costs, $/hr+2,154BaseFixed Operating Costs, 1,000$/year41Case

-20.91

3-8.08

2BaseROE of 11 % (Tariff at Won/kWh)1Case

Relative Capitol Cost Comparison

Relative Cost of Power Comparison

Relative Operating CostComparison

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Financial Analysis

Detailed financial modeling to determine the economicfeasibility of each case

Based on the two key financial indicators, DSCR and IRR,rank of competitiveness was in the order of 3, 4, 2, 1

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Financial Analysis

Analysis of commercial, economic and financialstrengths, risk, and mitigants

Four key risks aware analyzed, ranked in order ofimportance– Market risk– Offtake risk– Currency mismatch– Construction risk

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Financial Analysis

Potential sources of funds investigated included:– International commercial bank debt– Export credit agency– Multilateral debt– U.S. capital markets– Korean local bank debt– Korean local bond debt

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Path Forward for Korea IGCC Program

Korea Western Power Company (KOWEPO) 300 MWIGCC program– First of the three 300 MW CCT plant will be an IGCC plant for

2007 start-up– A detailed site-specific construction feasibility study to start

shortly– Passage of the Korea Alternative Energy Law may provide high

incentives for commercial plant implementation

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Path Forward for Korea IGCC Program (cont’d)

LG-Caltex Yosu refinery IGCC program– Variable KEPCO’s privatization plan and power market

liberalization plan– Currently analyzing various in-depth implementation scenarios– Alternate Energy Law may give an incentive to proceed with the

program

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Path Forward for Korea IGCC Program (cont’d)

Other Potential IGCC commercialization programs– SK Yukong Ulsan refinery IGCC program– IGCC repowering application to an existing oil-fired power plant

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Status of Korea IGCC Projects with Emphasis on the … · parsons 1 Status of Korea IGCC Projects with Emphasis on the YOSU Refinery IGCC Project by ... Maximum 37,290 39,510 51,660