Legislature(2009 - 2010)Anch LIO Rm 220
10/13/2010 01:30 PM House ENERGY
| Audio | Topic |
|---|---|
| Start | |
| Overview(s): Coal to Liquids Technology | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
ALASKA STATE LEGISLATURE
JOINT MEETING
HOUSE SPECIAL COMMITTEE ON ENERGY
SENATE SPECIAL COMMITTEE ON ENERGY
Anchorage, Alaska
October 13, 2010
1:41 p.m.
MEMBERS PRESENT
HOUSE SPECIAL COMMITTEE ON ENERGY
Representative Charisse Millett, Co-Chair
Representative Kyle Johansen
Representative Pete Petersen
Representative Chris Tuck
SENATE SPECIAL COMMITTEE ON ENERGY
Senator Lesil McGuire, Chair
Senator Bill Wielechowski
MEMBERS ABSENT
HOUSE SPECIAL COMMITTEE ON ENERGY
Representative Bryce Edgmon, Co-Chair
Representative Nancy Dahlstrom (Resigned 5/31/10)
Representative Jay Ramras
SENATE SPECIAL COMMITTEE ON ENERGY
Senator Lyman Hoffman
Senator Albert Kookesh
Senator Bert Stedman
OTHER LEGISLATORS PRESENT
Representative Paul Seaton (via teleconference)
Representative Bill Stoltze
Representative Craig Johnson
COMMITTEE CALENDAR
OVERVIEW(S): COAL TO LIQUIDS TECHNOLOGY
- HEARD
PREVIOUS COMMITTEE ACTION
No previous action to record
WITNESS REGISTER
JOHN D. McCLELLAN, P.E., Consultant
JDM Consultants, LLC;
Director
Tyonek Enterprise Development, Inc. (TEDI)
Tyonek Native Corporation ("Tyonek")
Anchorage, Alaska
POSITION STATEMENT: Presented a portion of the overview
regarding coal-to-liquids technology.
ROCCO FIATO, Ph.D., Chief Technology Officer;
Vice President;
General Manager of Business Development & Planning
Accelergy Corporation
Houston, Texas
POSITION STATEMENT: Presented a portion of the overview
regarding coal-to-liquids technology.
ACTION NARRATIVE
1:41:27 PM
CHAIR LESIL McGUIRE called the joint meeting of the House
Special Committee on Energy and the Senate Special Committee on
Energy to order at 1:41 p.m. Present at the call to order from
the House Special Committee on Energy were Representatives
Millett, Petersen, and Johansen; Representative Tuck arrived as
the meeting was in progress. Present from the Senate Special
Committee on Energy was Senator McGuire; Senator Wielechowski
arrived as the meeting was in progress. Representatives Seaton
(via teleconference), Stoltze, and Johnson were also in
attendance.
^Overview(s): Coal to Liquids Technology
Overview(s): Coal to Liquids Technology
1:42:16 PM
CHAIR McGUIRE announced that the only order of business would be
an overview regarding coal-to-liquids (CTL) technology.
1:42:40 PM
JOHN D. McCLELLAN, P.E., Consultant, JDM Consultants, LLC;
Director, Tyonek Enterprise Development, Inc. (TEDI), Tyonek
Native Corporation ("Tyonek"), relayed that he would be speaking
about a coal-to-liquids (CTL) project in the Cook Inlet -
Susitna Province, which contains the second largest bituminous
coal deposit in the world, and about how the legislature could
help enable that project. Referring to his PowerPoint
presentation, he noted that it contained maps and information
about the area's coal resources and reserves. The coal with the
highest value lies on Tyonek's property, and the coal leases
around Tyonek contain over 2 billion tons of bituminous coal.
The proposed CTL plant would be located at the existing
industrial park and dock at North Foreland, and is estimated to
produce 80,000 barrels [of equivalent liquids] per day using the
coal from a lease located about 10 miles from the village of
Tyonek, and the plant's resultant waste heat, once it's
converted [to electricity], could produce about 400 megawatts of
power per day, which is over half of what the Railbelt uses, and
could essentially replace the output of an existing outdated
power plant in the area. The typical cost of a waste-heat
conversion plant is about $.05 per kilowatt hour (kWh).
MR. McCLELLAN relayed that even as recently as 2008, back when
the United States Air Force had announced that half of its jet-
fuel needs would be met by CTL products by the year 2016, Tyonek
was considered to be the most cost-effective CTL site in North
America due to the fact that both the fuel source and the plant
would be at "tidewater." Federal legislation and a lack of
suitable investors, however, prevented a Tyonek project from
moving forward at that time. Since then, a company called
Accelergy Corporation ("Accelergy"), which has the best CTL
technology available and which is currently working on a
Pennsylvania CTL project, has expressed enthusiastic interest in
a CTL project with Tyonek. The first step necessary for such a
project would be to obtain a matching grant of $500,000 from the
State of Alaska in order to certify Tyonek's coal for the Air
Force. He offered his understanding that any future royalty
payments would make the Department of Natural Resources (DNR)
the real beneficiary of certifying Tyonek coal, since most of
that coal is owned by the DNR. Furthermore, legislation passed
in 2010 - SB 220 - authorized the creation of an emerging energy
technology fund, which could be used for the certification
process, and Tyonek is prepared to submit a proposal to the
State requesting funding for that certification. In conclusion,
Mr. McClellan relayed that Tyonek is looking forward to seeing
enabling regulations, the appointment of a board, and the
request for proposals (RFP) that would start the process.
CHAIR McGUIRE asked for an estimate of how many jobs would be
created with Tyonek's CTL project.
MR. McCLELLAN relayed that even back in 2008, Tyonek estimated
that such a CTL project could result in several thousand jobs
during the construction phase, and several hundred jobs after
construction was complete. In response to comments and further
questions, he explained that Tyonek would only be seeking
$125,000 of the amount it needs for certification to come from
the aforementioned emerging energy technology fund; that one of
the coal leases being developed in the Tyonek area has been
transferred over to the [Alaska Mental Health Trust Authority
(AMHTA)], as was the contract with the DNR for royalties; that
only the coal mines on State land would pay royalty to the DNR,
whereas the CTL plant itself would simply pay taxes, similar to
any other industrial user; and that Accelergy's CTL technology
is much more efficient than petroleum refining.
2:06:50 PM
ROCCO FIATO, Ph.D., Chief Technology Officer; Vice President;
General Manager of Business Development & Planning, Accelergy
Corporation ("Accelergy"), explained that when researching new
alternative-fuel technology, Accelergy considers four
performance parameters. The first parameter is energy security:
specifically, the ability to provide energy security to the U.S.
via the use of domestic resources - primarily coal supplemented
with biomass and/or natural gas. The second parameter is
resource sustainability: specifically, land use, the impact on
land use, water use, the amount of water necessary to produce a
barrel of alternative fuel, and the ability to institute a new
technology and sustain it over a long period of time such that
national energy volumes are impacted. The third parameter is
environmental impact: specifically, the ability to produce an
alternative fuel with a greenhouse-gas footprint at least as
small as, if not smaller than, that occurring when refining
petroleum into an analogous product - under federal law, any
product that doesn't meet that criteria cannot be sold to the
U.S. Air Force. The fourth parameter is economic viability:
specifically, the ability to compete with crude oil at natural
crude oil prices. Without ensuring that those four parameters
are met, successfully instituting new energy technology is
unrealistic, he opined.
DR. FIATO relayed that he's heard there are three rules to
follow when [turning to] alternative fuels, with the first rule
being that if it can't make money, the other two rules don't
matter. Alaska, therefore, must ensure that any alternative-
energy technology it pursues must be capable of standing on its
own financially, as well as meet the other three aforementioned
parameters. When that's the case, then such technology should
be pursued by the State in order to help the country move
forward and be competitive with the rest of the world. He
referred to [integrated Coal-Biomass-to-Liquids (ICBTL)
technology], and said that Accelergy is developing [this] new
technology - based upon coal/biomass conversion - and indicated
that China, for example, is already putting modern technology
comparable with Accelergy's in place, and is very interested in
Accelergy's technology, not only for itself but also for
offshore applications as an investor. Furthermore,
Pennsylvania, which has taken a bipartisan approach to resource
development, is helping Accelergy promote an ICBTL [pilot]
project in that state.
2:13:52 PM
DR. FIATO opined that Alaska should become involved with an
ICBTL project as well. And because Accelergy has sufficient
financial backing, the aforementioned desired matching grant, he
assured the committee, would merely demonstrate the State of
Alaska's interest, sincerity, and seriousness regarding ICBTL
technologies. Accelergy is the leader in [ICBTL] technology,
and has "licensed out" technologies from companies that are
developing what he termed "indirect conversion," and biomass
conversion technologies. He offered his belief that the U.S.
Department of Defense (DOD) would agree that Accelergy has
state-of-the-art "platforms" in those individual areas of
technology. Furthermore, Accelergy is integrating those
technologies into a novel, efficient platform for converting the
resource into clean gasoline, diesel, or jet fuel, with the
latter providing Alaska with a unique opportunity, given that
over 65,000 barrels/day of jet fuel are consumed in Alaska.
Accelergy has been aligning itself with what he called "clean
coal project developers," and has started discussions with
Tyonek and others. Accelergy, he explained, is a technology
provider that will bring in project developers to help advance
some of its concepts. Accelergy is supported by the U.S.
Department of Energy (DOE), [the DOD], and several leading
investors.
DR. FIATO said that according to the Stanford Research Institute
International's (SRI International's) most recent assessment of
global energy use, [over] 3 cubic miles of oil equivalents are
used each year - just one cubic mile equals the landmass of
Washington, D.C., filled eight feet deep with oil - with as much
as .8 cubic miles of that oil equivalent being derived from
coal. Substituting that amount of coal with some other form of
energy would come at a cost of more than $7 trillion, so it's
therefore unrealistic to think that coal could simply be
dismissed as not being an important world energy source.
Furthermore, coal is more abundant and more strategically
located than oil or gas, with the coal reserves in North America
alone exceeding the Middle East's combined oil and gas reserves,
and with roughly half of North America's coal reserves being
located in Alaska. Referring to his PowerPoint presentation, he
indicated that through the use of ICBTL technology, and by using
algae as the biomass, less than 820 acres of land would be
needed to produce 10 percent of the U.S.'s liquid fuel needs -
or the amount of jet fuel consumed in one day - but that it
would be prohibitive, in terms of the land mass needed, to
attempt to meet those fuel needs using any other form of
biomass, such as palm [plants], corn, or soybean, or just algae
alone. With ICBTL technology, the resultant carbon dioxide
(CO2) from processing coal would be used to grow the algae that
would then be converted into either fuel or synthetic
fertilizer, both of which are a [byproduct] of traditional
petroleum and natural gas production technologies.
2:18:04 PM
DR. FIATO said that through the use of sunlight, ICBTL
technology can achieve a thermal-efficiency-to-product rate in
excess of 90 percent; in other words, over 90 percent of the
feedstock can be turned into useful product. In contrast, other
forms of technology are still relatively expensive, have low
thermal efficiency, don't produce an optimal product mix, have
severe greenhouse-gas emission problems, and require a lot of
land. He explained that ICBTL technology involves three steps,
allowing the coal to be turned into cycloparaffinic fuel, and
the algae biomass into triglyceride fatty acids which can then
be converted into isoparaffinic fuels. Ultimately, via this
ICBTL process, more fuel could be produced with less CO2
emissions than can be produced by refining petroleum or coal by
itself. After again referring to China's interest in conversion
technology, he relayed that the focus in North America is on
high-performance, fighter aircraft fuel; on the Air Force's
basic fuel requirements; on regular jet fuel such as that used
by commercial aircraft; and on fuel that could address the needs
of "next-generation" military aircraft. Accelergy's interest in
an Alaska project arises largely from the company's relationship
with the Air Force, which has a base in Alaska, and with various
commercial air carriers. Such a project presents a terrific
opportunity, one that could provide various entities in Alaska,
such as the Anchorage International Airport - Alaska's largest
consumer of jet fuel - with a long term, sustainable resource;
Alaska could become "the" low-cost producer of jet fuel, if done
correctly.
DR. FIATO, referring to his PowerPoint presentation, indicated
that ICBTL technology is going to provide Accelergy with the
ability to produce fuels uniquely suited - in terms of molecular
composition - for military applications, both as fuel and for
weapons; hence, [the DOD's] interest in such technology and in
having Tyonek coal certified. However, in order to appease
private investors, financial involvement by the State of Alaska
in the Tyonek project is critical, he remarked, adding that such
is already occurring with the other states in which Accelergy
has [or will have] projects. Again referring to his PowerPoint
presentation, he then provided some information about
Accelergy's other CTL projects around the U.S and in China, and
mentioned that it would be helpful if [federal law] could get
changed such that the military would be able to enter into 20-
year purchase agreements, for example; that the CTL plants in
China have proven successful at producing clean fuel [in an
environmentally-friendly fashion]; and that other countries are
also expressing interest in what China and Accelergy are doing,
because the economics are very attractive.
2:36:40 PM
DR. FIATO, referring to the aforementioned Pennsylvania project,
indicated that among the advantages of Accelergy's ICBTL
technology are that it utilizes domestic resources while
allowing for the sustainable use of land, water, and feedstock;
avoids the need for carbon capture and storage, which is
prohibitively expensive and requires an additional energy
expenditure; meets federal standards; is thermally efficient;
and beneficially uses CO2 as well as waste coal and coal bed
methane (CBM). Referring to his PowerPoint presentation, he
then mentioned some of the major objectives Pennsylvania has for
its proposed ICBTL project, and opined that pursuing such
technology is worthwhile regardless that some of the nation's
past experiences with coal have left a lot of people with a
negative view of coal as an energy source. For example, ICBTL
technology would allow CO2 to be used for producing algae,
cycloparaffinic fuel, and bio-fertilizer; furthermore, studies
indicate that the bio-fertilizer-production component of the
ICBTL process could enable minimal land usage and increased food
production. He then spoke further about Pennsylvania's proposed
ICBTL project, but acknowledged that some of the specifics of
that project wouldn't apply in Alaska. Spreadsheets included in
the PowerPoint presentation illustrate the type and number of
jobs estimated to be generated by the proposed Pennsylvania
project.
DR. FIATO offered his belief that compared with other forms of
CTL technology, ICBTL technology would allow for the production
of twice as much fuel but only half as much CO2 per ton of
domestic coal. Under typical performance measurements, this is
a pretty good deal, he opined. The basic ICBTL platform employs
state-of-the-art technology for coal conversion; it is
economically viable and environmentally sensitive, producing
[several] usable byproducts even from less-than-optimum
feedstock. With regard to the proposed Tyonek ICBTL project, he
explained that Accelergy believes that that project would meet
the aforementioned four performance parameters; will be working
with the DOD to formalize the plan in Alaska; is willing to take
the Alaska project forward as far as it can be taken; is looking
forward to involvement by the State of Alaska; already has a
memorandum of understanding (MOU) in place with Tyonek; and has
already established liaisons between Tyonek and entities in the
Lower 48. Furthermore, Accelergy is planning to work towards
having jet fuel produced in Alaska be used by the DOD in one of
its programs, and is committed to the concept of training and
hiring Alaskans. A positive response from the State of Alaska,
he concluded, would help Accelergy justify and accelerate its
focus on [an ICBTL project in Alaska], the objective being to
have Tyonek's coal succeed - in terms of having the proper
molecular makeup - in all three phases of the anticipated
testing required for certification.
2:55:09 PM
CHAIR McGUIRE expressed interest in supporting an ICBTL project
in Alaska, and in providing help with potential regulatory
burdens.
DR. FIATO, in response to questions, indicated that Accelergy's
ICBTL technology produces environmentally-safe effluent and
byproducts, though long-term storage of such could still be
problematic; that for the proposed Pennsylvania project,
Accelergy is intending to work further with environmental-
protection agencies/groups to ensure that the public is informed
about how environmentally safe the ICBTL process is; that
Accelergy hopes to be as successful in Alaska as it has been in
other states; that Accelergy welcomes input from the Alaska
State Legislature, believing it will play a critical role; that
the aforementioned certification process should address the fuel
needs/restrictions of four different types of military aircraft;
that if a fuel meets the specifications for military aircraft,
it also meets those of commercial aircraft; and that the final
certification of Tyonek fuel might not be completed until 2013.
3:09:16 PM
ADJOURNMENT
There being no further business before the committees, the joint
meeting between the House Special Committee on Energy and the
Senate Special Committee on Energy was adjourned at 3:09 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| Tyonek Joint (H) (S) ENE 10132010.pdf |
HENE 10/13/2010 1:30:00 PM |