NEWS RELEASE OCTOBER 2014
Why More Coal Is Going To Increase the Gas Turbine Market
Europe and the U.S. have been reducing coal burning power capacity and as a result need to increase gas turbine capacity. But there is one area of the world where increased use of coal rather than decreased use of coal will result in increased gas turbine capacity and increased use of gas for home heating. This counter intuitive program is being tracked in a number of McIlvaine market reports and databases.
One way that increased coal use leads to more gas turbines is in integrated gasification combined cycle plants (IGCC). There is one such plant under construction in the U.S. The Kemper County plant is now projected to cost almost $5.6 billion. Initially the project was estimated to cost $2.4 billion. Start up is now slated for May 2015.
The plant will capture 65 percent of CO2 and deliver 3 million tons of liquid CO2 to oil companies for use in enhanced oil recovery.
This program has been subsidized by the U.S. government. The high cost can be offset where there are enhanced oil recovery opportunities. However, there are not many generation sites which are convenient to oil and gas extraction sites where EOR would be justifiable.
The one area of the world where increased coal will lead to very large increases in gas use is China. In northern and western China, 700 million tons of coal will be gasified. The gas will then be piped to the big cities. Six hundred thousand coal-fired industrial boilers will be replaced by new gas turbine systems as well as home and residential gas heating units.
The Chinese government has launched a fast track $260 billion program to eliminate the smog in the large cities. The foundation of this program is clean gas for heating and power.
The magnitude of this effort is demonstrated by a comparison to the U.S. Gas turbine plants in the U.S. deliver power equivalent to coal-fired boilers consuming 400 million tons of coal per year. The Chinese program will, therefore, generate enough gas to fuel nearly twice the entire U.S. gas turbine capacity.
This program is generating outrage among environmentalists around the world. But the outrage is failing to have any effect. The smog problem in the major Chinese cities is causing huge health problems now. The average Shanghai citizen is less concerned about creating a pleasant life for his grandchildren fifty years from now than he is about eliminating the asthma risk for his children this year. He is less interested in the fate of the polar bears than he is in eliminating haze so severe that the sun is not visible.
The economic argument is equally persuasive. Coal gas is estimated to cost as low as $4.50/MMBtu. Imported LNG is $15 /MMBtu.
This attitude is widely shared throughout Asia. Australia has eliminated the carbon tax and completely reversed its position on global warming. In both Australia and Korea there is considerable movement toward converting coal to LNG. Posco is building a coal to gas plant to replace the LNG it is now buying on the international market. India is considering following the Chinese lead. It has coal reserves but little gas.
More information on these initiatives can be found in: