Transcript No Slide Title

WHY ARE UTILITIES
AFRAID OF PETCOKE?
McCloskey’s Petcoke Conference
July 19-20, 2004
John Hanou, Vice President
Hill & Associates, Inc.
HILL & ASSOCIATES, INC.
DISCUSSION TOPICS

Hill & Associates, Inc.

Petcoke Basics
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Technical Issues

Political / Legal Concerns

Other Concerns

Conclusions
HILL & ASSOCIATES, INC.
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Who or What is
Hill & Associates, Inc.?


Management Consultants
Energy Issues - Forecasts



Coal Supply/Demand/Price
Electricity Supply/Demand/Price
Energy Publishing Affiliate

Petcoke Newsletter
HILL & ASSOCIATES, INC.
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Petcoke Basics
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Increased use of heavier grades of crude, coupled
with technological advances in oil refining processes,
has led to increased supplies of petroleum coke.
Its high heat and low ash content and relatively low
cost make it attractive fuel for power generation
but…
It is high in sulfur and high in heavy metals and, has
a low volatile matter content, which pose some
technical and environmental challenges.
HILL & ASSOCIATES, INC.
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Petcoke Basics (Continued)

World production is 65+ mmt and growing
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U.S. consumption is about 9 mmt
USA is the biggest producer of petcoke
Venezuela is second
Japan is the largest consumer
Cement industry has used it for years
HILL & ASSOCIATES, INC.
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Petcoke Basics (Continued)

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Can be used as a primary or secondary fuel in a
new grassroots plant or for co-firing in an
existing coal-fired power plant.
Four power generation technologies that can use
petroleum coke as a combustion fuel are:
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Pulverized coal (PC) boiler
Circulating fluidized bed (CFB) boiler
Pressurized fluidized bed combustion (PFBC)
Coke gasification combined cycle (CGCC)
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Technical Issues

Contains high levels of heavy metals (Va, Ni),
thus there are environmental concerns regarding
fugitive dust.
 Link between elevated levels of coke dust in
the air and respiratory illness.
 Arrangements for transferring and storage
must be considered.
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Technical Issues

(Continued)
The measured hardness can be higher than
coal
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Mills may require additional grinding capacity when
used in an existing pulverized coal (PC) plant.
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Blending must be consistent.
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Can be capital intensive.
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Technical Issues
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(Continued)
Low volatile content
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Poor ignition and burnout characteristics in PCs.
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Unburned carbon content in the fly ash.
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Hurts plant efficiency
May require fly-ash recycle
May lose ash customers as a result
Higher levels of excess air required.
HILL & ASSOCIATES, INC.
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Technical Issues
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Low volatile content

(Continued)
May require co-firing with gas, oil or coal (20% blend
common in coal plants).
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(Continued)
To ensure stable flame and preclude ignition problems.
Higher Blending Costs
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If pre-blended – higher transport and handling
Capital to be added.
Room for second stockpile?
Covered storage may not be possible.
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Technical Issues
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(Continued)
High vanadium levels in the ash and the
high sulfur levels in the fuel result in high
SO3 levels.
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Sulfuric acid corrodes walls lining stacks.
“Blue haze” problem.
Opacity issues…can give false readings on
opacity.
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Technical Issues
(Continued)
 Because
of higher sulfur levels, petcoke is
generally fired only in plants containing FGD
scrubbers or plants with circulating fluidized bed
boilers.
 While
capable of removing +95% of SO2, only
20% of SO3 is scrubbed by FGDs.
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SO3 increases the flue gas dew point.
Air heater exit gas temperatures must be kept above the
dew point, thus higher sulfur content adversely affects
the boiler efficiency.
May require a wet precipitator in addition to a dry
electrostatic precipitator (ESP) and wet FGD.
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Technical Issues
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NOx emissions are higher than coal
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(Continued)
Impact of petcoke on SCR catalyst life unknown
Important during OTAG season (May-Sept.) Can
plants comply? No history yet.
More difficult to handle than coal.
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It doesn’t stack well.
Can roll like BBs.
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Political / Legal Concerns
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Approval must be given and permits must be
secured from the various state air quality
boards.
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This can be a time-intensive process.
Internal politics
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Power plant managers resistance to change
Fuel costs can be passed through…not higher
operating costs!!
Why disrupt a smooth operation?
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Political / Legal Concerns
(Continued)
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“Not in my backyard “
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Must respond to community concerns by local community and
environmental groups….even coal groups!
Bills have been passed to force enclosures
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May require petcoke piles and vehicles used to transport the
coke to be fully enclosed.
Install covered, telescoping loading chutes and conveyors;
Construct containment structures for truck and rail car unloading
operations;
Clean up adjacent roadways; pave onsite roads to enable easy
cleanup of spilled materials; and
Use wind screens to reduce blowing dust and water sprayers to
clean trucks.
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Political / Legal Concerns
(Continued)
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Coal-producing states may not support use of petcoke
that displaces coal
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KY waste law (HB 159) pushed by WKY producers created a
"special" exemption from the definition of "special wastes" to
mandate to treat utility waste from combustion of petcoke as a
solid waste rather than a "special waste."
Testimony suggested that petcoke generates much less ash, and
leaches lower levels of all hazardous metals than coal, (with
higher levels of vanadium and nickel), and reflected that the
intent of the bill was actually to raise the waste management
costs of petcoke use in order to give cost advantage to western
Kentucky coal. The bill did not pass the Senate.
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Other Concerns
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Transportation
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Most easily delivered to barge-served plants
or those located close to refineries.
Hard to get unit train rates – single car rates
in effect.
Railroads resistance to single cars.
Covered trucks may be necessary.
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Other Concerns (Continued)
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Supply concerns
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Petroleum coke will be produced regardless of
its market price.
Venezuela strike disrupted supply in 2003.
Large swings in availability due to inconsistent
international demand.
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Other Concerns (Continued)
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Price Volatility
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Price not indexed to crude oil prices.
Price normally below price of high sulfur coal
because of its poorer environmental
characteristics.
Big variation in price depending on coal price
(foreign) and the produced amount of
petcoke.
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Delivered Coal and Petcoke Prices to U.S. Utilities
1997-2004
140
140
120
100
100
Petcoke Price
80
80
60
60
Delivered Cents/mmBtu
120
Source: Energy Publishing CoalBase CD
Cents/mmBtu PETCOKE
HILL & ASSOCIATES, INC.
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
Jan-00
Jul-99
Jan-99
Jul-98
Jan-98
40
Jul-97
40
Jan-97
Delivered Cents\mmBtu
Coal Price
Cents/mmBtu COAL
20
CONCLUSIONS
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LOW PRICE IS ATTRACTIVE
ISSUES EXIST BUT ARE NOT
INSURMOUNTABLE
PETCOKE USE WILL EXPAND IN US
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