July 30, 2008

Alter NRG plans Canada’s first coal-to-liquid fuel plant

RICHARD GILBERT

staff writer

It may not be as miraculous as making wine out of water, but an Alberta-based company is planning to make fuel from coal.

Alter NRG Corp. plans to develop coal reserves in the Fox Creek area of Alberta by building Canada’s first plant to convert coal into liquid fuel.

The company holds the lease to four Crown coal fields located north of Fox Creek township (about 27 kilometres northeast of Fox Creek), between Edmonton and Grande Prairie.

A Public Disclosure document shows that the company proposes to mine a reserve of about 301 million tonnes of coal using established surface mining technology, and then through gasification and other processes, to produce diesel fuel and other flammable liquids.

The $4.5 billion plant would be the first facility in Canada to combine the use of Coal to Liquids (CTL) technology with carbon dioxide (CO2) capture.

“Alter NRG is concerned about reducing the energy industry’s carbon footprint. As the first coal to liquids project in Canada, the project will be a significant, long-term contributor to Alberta’s economy as well as set a precedent for clean energy solutions,” said Mark Montemurro, president and CEO of Alter NRG.

One of the main reasons Alter NRG decided to develop their Fox Creek coal field was that it is close to infrastructure and mature oil fields that could benefit from enhanced oil recovery (EOR) by the injection of CO2.

“The project intends to seek sales opportunities for produced CO2 into the anticipated EOR market,” states the disclosure document.

“In the event that not all CO2 can be disposed of in this way, the project plans to sequester remaining CO2 in deep saline aquifers or in depleted oil or gas pools.”

The company said it plans to capture and sequester more than 85 per cent of the CO2 produced in the proposed project.

Engineering and environmental studies will be carried out during the remainder of 2008 and all of 2009.

The studies will form the basis of the Environmental Impact Assessment for the project.

It is anticipated that submission of the application will be followed by an 18 month regulatory review period.

Construction of the CTL plant is scheduled to begin soon after receipt of all necessary approvals.

Gasification allows for the removal of harmful contaminants from the coal, which helps produce cleaner energy.

The gasifier will convert solid coal feedstock into synthesis gas, which is a mixture of carbon monoxide and hydrogen, and is commonly referred to as syngas.

The syngas will be further processed into liquids, with an emphasis on low sulphur, high-cetane diesel, but will also co-produce naphtha.

This part of the project will also use established CTL technology.

The project will be developed in at least two stages, with the first stage producing about 20,000 bbls/d.

It is anticipated that a capital investment of about $4.5 billion (2007 dollars) will eventually produce 40,000 bbls/d for more than 50 years.

The CTL plant will require a longer engineering design and construction period than the mine.

Alter NRG plans to start up mining operations by the fall of 2013, to pre-build coal supply for startup of the CTL plant in early 2014.

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