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GTL Energy coal upgrading - Commercial plant proves technology • Working through the scale-up stages to reach commercial deployment of the Solid Energy plant in New Zealand • Addressing all key risks to guarantee success • Creating a platform for technology deployment in Asia through large scale project development
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Blake WilliamsBangkok, ThailandCoaltrans Emerging Asian Markets
COAL UPGRADING
COMMERCIALISATION
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 2
GTLE has developed a proprietary and patented technology to upgrade low rank coals (LRC) by
removal of moisture• 7 years of R&D and US$45 million have been spent developing the
technology
• GTLE process is unique relative to competitive technologieso Safe, robust, reliable and commercially viable
• Technology is at advanced stage of commercialisationo Commercial scale demo plant in North Dakota since July 2010
o 3rd party commercial facility in New Zealand commissioning now
o 1MMtpa Indonesian Plant under development
• Attractive economics and significant market opportunities
• Strong management team
Coal Drying Technology Being Deployed
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 3
Use of high mechanical pressure before drying:
1. Increases evaporation efficiency
2. Permanently transforms physical characteristics of coal by collapsing pore space where moisture resides
3. Produces a stable, transportable, high energy briquette suitable for power generation (PC) and coal chemicals (gasification)
The GTLE Process – Simple and Robust
GTLE’s unique patented process addresses the challenges of coal-drying safely and cost-effectively using tried and tested material handling equipment
Low Rank Coal/Lignite
Crush
Compaction
Drying
Briquetting
Wash (optional)
Dust
Product Storage
Low Temp Heat
Water
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 4
Compaction Reduces Pore Volume
4
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 5
Competitive Advantages for GTLE
Challenge Competitors* GTLE Technology Difference**
Temperature and Pressure:
Use high temperature, chemical or high pressure vessels. This has cost, safety and environmental challenges.
Uses a mechanical process followed by low temperature (coal <150F, 65C), ambient pressure. Only water removed, no post-treatment required.
Stability of Product:
Had problems with coal moisture stability (staying dry) and propensity for spontaneous combustion.
Mechanical processing collapses pore space: limits moisture reabsorption. Stockpile trials demonstrate stable product.
Economics
High CAPEX and OPEX – partly linked to complexity of process, high temp/energy, pressure process design or binders.
Feasibility review indicates attractive economics for target coals and markets.
Scale-UpNot proven at scale, or experienced problems in scale-up
Demonstration at relevant commercial scale in North Dakota / New Zealand. Modular development approach mitigates risk.*Anecdotal, discussions with customers and publicly available information.
** Based on test programs to date, to be proven in the field by large volume production (residual risk)
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 6
Sample Results Achieved To-Date (Kcal/Btu)
Source of coal Date Reduction in moisture Increase in thermal energy (Kcal/kg)
Indonesian Sub-bituminous 2008 33% to 10.0% TM (70%) 4,585 to 6,110 Kcal/Kg (33%)
Indonesian Bulk Trial (500t) 2011 44% to 14.0% TM
(68%)3,578 to 5,494 Kcal/Kg
(55%)
New Zealand Lignite 2006 46% to 12.5% TM (73%) 3,055 to 5,280 Kcal/Kg (73%)
New Zealand Bulk Trial (500t) 2010 41.1% to 14.2% TM
(65%)3,525 to 5,090 Kcal/Kg
(44%)
Texas Lignite 2006 35% to 12.5% TM (64%) 3,055 to 5,110 Kcal/Kg (67%)
North Dakota Lignite 1 2008 42.5% to 12.5% TM (71%)
3,335 to 5,110 Kcal/Kg (53%)
North Dakota Bulk Trial (200t) 2010 37% to 13% TM
(64%)3,920 to 5,335 Kcal/Kg
(36%)
PRB Sub-Bituminous 2009 30% to 10% TM (67%) 4,780 to 6,000 Kcal/Kg (25%)
Australian Brown Coal 2010 61% to 12.5% TM (80%) 2,610 to 5,750 Kcal/Kg (120%)
Bold indicates trials at South Heart, ND Data reported on a Gross As Received (GAR) basis.
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012
7
GTLE Adds Value to Low Rank Coal Assets
$0
$20
$40
$60
$80
$100
$120
2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,500 7,000
US
$/t
Kcal/kg
Argus CoalIndo Benchmark Pricing (FOBIndonesia)
Newcastle Benchmark Pricing (FOBAustralia)
China: 5800kcal (CFR Qinhuangdao)
AUS 60%TM
Value Uplift of between $30-$70/t*
pays for cost of upgrading and
license fees to GTLE
INDO 45%TM
PRB 27%TM
Brown Coal / Lignite
Sub-bituminous
Bituminous
*Price Arbitrage Concept Chart: Reference to prices as of Mar-2012 on GAR basis. Refer example economic slides for updated pricing analysis. Degree of upgrade is coal specific.
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 8
Following a program of lab testing, progressive scale-up, and bulk sample tests, GTLE is rolling out the technology with:
• 2 plants built
• 1 in engineering phase
• Others in the development phase
Ready for Commercial Roll-out
Projects Underway (Agreements Executed)
Advanced Interest/Negotiations
GTLE Operations (Pilot and Commercial Scale Demonstration)
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012
Commercial Scale Demonstration Facility (ND)
9
• Design capacity up to 250,000 tpa of dried coal product (Moisture reduction from 42% to 12%)
• Large volume trials on coal from NZ, US and Indonesia
• Training facility plus supports test programs for optimizing operational protocols, long term stockpiling and transportation studies
• Modular plant design – expansion possible by process train replication (addressed scale up risks)
• Additional production runs support specific coal analysis, engineering FEED studies
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 10
• Construction commenced September 2011 and completed in September 2012• Design capacity up to 100,000 tpa; single train modular plant – upscale by replication• Domestic NZ coal supply plus export test burns to support larger plant commitment
Underpins ability to have a continuous production plant – prove technology and market
Commercial Scale Facility (New Zealand)
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012
• BOP (including boiler acceptance test) and Dry Commissioning completed October 2012
• First coal introduced late October 2012 – wet coal (no heat) to test all material handling equipment
• Rigorous process of Hazid/Hazop plus Independent Safety Review October 2012
• As at 15 November, completing minor mods on material handling and bag-houses
11
NZ Plant Status
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012
• Desktop Economic Review
• Pilot Scale Trials
• Bulk Sample Trials (500t) in ND Stockpiling & Handling
Customer Trials
• Combustion Tests Pulverizer Performance
Boiler Performance
o Ignition, Flame Stability and Turndown Capability
o Burnout Efficiency, Ash Deposition and Heat Transfer
• FEED Studies support FID
• Consenting / Permitting – Stakeholder engagement
• License Agreement with Technology Warranty / Package
• Standard Operating Procedures (Commissioning, Start-up/Shutdown, Ops, Maintenance) & Training
12
Project Development Path – NZ Example
• Significant maturing of technology through process of design, build, commissioning
• Significant credibility to come from Operations
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 13
• Address “Technical Soundness, Economic & Financial Feasibility, Political & Institutional Predictability” (Per Nick Halkas, ANZ Coaltrans Presentation)
• Production Capability: Demonstrate continuous, safe long term reliable production
• Store and Ship Product: Large volume stockpile, transport demonstration reflecting real world conditions
• Customer Acceptance: Large volume PC plant test burns and product sales
• Technology Guarantees: Ability to provide performance warranties
• Engineering and Commissioning Package: Firm costing and engineering design, construction and commissioning service delivery. EPC Partnering, modular design and commissioning team.
• Operations Package: Service delivery model
• Finance: Opportunities to tie project finance with off-take arrangements and more traditional debt arrangements will change with technology maturity
NZ Plant Supports Commercialisation Path
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 14
• MOU signed for coal supply and site in Kalimantan Moisture reduced ~70%; Energy increase ~70% Existing production and transport infrastructure Value of $ margin ~$25/t product
• Pilot coal trials complete• Base Engineering Package complete
Moving to definitive cost estimate and Detailed Feasibility NZ Ops to support securing finance and off-take
arrangements Target project commitment 2H-2013, production
2014/2015
1MMtpa Plant Development (Indonesia)
GTL Energy is actively pursuing a 1MMtpa commercial scale plant in Indonesia:
Kalimantan Project
Wood Mackenzie Map of East Kalimantan
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012
Economics – What makes good Project?
15
• Economic viability for coal upgrading is dependent upon market and project specific variables:o Market prices (for raw and upgraded coal)o Properties of the raw coal
o Initial total moisture sets the feed:product (F:P) ratio o Higher the F:P ratio, the lower the required raw coal cost to stay
competitiveo A high ash content puts a ceiling on the ultimate calorific value
o Feed Coal Costs –alternative market value vs. fully loaded mining costo Transportation costs (from mine/GTLE plant to point of sale)
• GTLE analysis enables focused project assessment to identify market opportunitieso Focus towards high TM% (+40%TM) with “low” asho Stranded reserves - Can use mining costs instead of market price o Close to port/market - low cost (or low investment required) for transport
to market
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012
16
Indonesian Project Example
PILOT TRIAL COAL RESULTS
Raw Coal
Raw Coal
GTLE Product
AR Basis Dry Basis AR Basis
ProxAssay
Moisture 45.0% 0% 14.0%Ash 2.9% 5.3% 4.6%VM 29.4% 53.5% 46.0%FC 22.7% 41.2% 35.4%
Sulfur % 0.15% 0.3% 0.2%Kcal/kg HHV 3,500 6,365 5,475
Data reported on a Gross As Received (GAR) basis
LIFE OF MINE AVERAGE
Raw Coal
Raw Coal
GTLE Product
AR Basis Dry Basis AR Basis
ProxAssay
Moisture 49.0% 0% 14.0%Ash 4.6% 9.1% 7.8%VM 23.9% 46.8% 40.3%FC 22.1% 44.1% 37.2%
Sulfur % 0.4% 0.8% 0.7%Kcal/kg HHV 3,035 5,950 5,120
• Typical Indonesian target is upgrading from 3000-3500kcal to 5000-5500kcal
Can do higher/lower TM% - economics drive decision
• Using GTLE’s 1MMtpa project under development (as example):
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012
Indonesian Example – Price Sensitivity
17
INDO COAL (Based on 1MMtpa)– COASTAL EXAMPLE USING HPB ICI Formula
RECENT(AVE Mar-Jul)
2012CURRENT
(Oct 2012)LOW
(March 2009)
GTLE Upgrade of a 49%TM Coal to 14%TM Product (approx. 3,035 to 5,120kcal)
FOB Vessel Indonesia $80.00 $68.00 $58.00 Less Indonesian Truck/Barge Transport (est.) 5.00 5.00 5.00 FOB Mine Netback Price $75.00 $63.00 $53.00 Less Cost of Coal (Market $ Raw/t x 1.62 yield) 35.80 29.30 25.30 Less Process Costs (labor, power, steam, maint.) 11.00 11.00 11.00 GTLE Technology Value Add $28.20 $22.70 $16.70 Less GTLE License Fees (Base + ~% of uplift – indicative only) 4.70 4.00 3.00GTLE Plant Margin (EBITDA) 23.50 18.70 13.70 Less Depreciation (20 years) 3.00 3.00 3.00 GTLE Plant Owner Upgrade Margin (EBIT) $20.50 $15.70 $10.70
Unleveraged EBITDA ROI on Investment - % 38% 32% 22%Leveraged ROI (free-cash) on Investment - % 79% 62% 38%
FOB Raw Coal Cost - Transport = Coal Input Cost or Mining Cost $21.23 $17.36 (Floor) ~$15.00
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012
GTLE Business Strategy
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Geographic MarketsProduct Markets
Business Model
Current GTLE Focus
Seaborne thermal export
IndonesiaNew Zealand
USA
LicensingProject Development
ResourcesEquipment
India
Australia
Other Asia
Gasification
Biomass
Other Other
China
Coking
Operations
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 19
Summary
• Simple and Distinctive Approach: Unique technology, validated by SENZ, that works with a broad range of coals
• Global Opportunity for Value Generation: Technology converts uneconomic low rank coal reserves into valuable, marketable assets to meet rapidly growing demand.
• Capable Team: Strong board and management team with engineering, technology, mining, finance experience, developed across US, Asian, Australasian and European markets.
• Deployment In Progress: Commercialization underway with a demonstration plant in USA, a commercial scale plant nearing completion in NZ, and a commercial scale plant under development in Indonesia.
Copyright: GTL Energy Limited: COALTRANS 15-16 Nov 2012 20
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