Saturday, November 26, 2005

Accelon in US$6 billion Indonesia project

Canadian energy firm Accelon Energy System has reached a deal with Indonesia's state oil and gas firm Pertamina to jointly build a synthetic diesel factory worth 6 billion US dollars in East Kalimantan, an executive said Friday.
The factory is expected to begin production by 2008 with estimated capacity of 28 million barrels of synthetic diesel a year. Under the agreement, Accelon must sell the synthetic diesel only to Pertamina for a 15-year period. The locally produced diesel would help cut the company's import by some 30 percent.
That would be the largest coal-to-liquid (CTL) project in the world and the largest energy investment ever made in Indonesia. But no details of how both companies would finance the huge project. That would also be the largest CTL plant in the world with 76,000 barrels per day.
SASOL, the world's largest producer of CTL-based synthetic diesel, is building a 34,000 bpd CTL plant in Qatar and conducting feasibility study to build 2 x 80,000 bpd CTL plant in China. These China projects would cost US$6 billion. In September, SASOL visited Montana, USA to study the possibility of building a US$5 billion CTL plant in the country.
No information on why Pertamina chose Accelon Energy System with no commercial CTL plant in the world and why the cost of Accelon-Pertamina project is higher than SASOL China projects.
Sasol has produced almost 1,5 billion barrels of synthetic fuel from about 800 million tonnes of coal since the first sample of synthetic oil from coal was produced fifty years ago at its Sasolburg plant near Johannesburg in South Africa on 23 August 1955.
Regarded as a world technology leader in the production of coal-to-liquids (CTL), Sasol operates the world's only commercial scale synthetic plant at Secunda, where it produces 150 000 barrels of liquid fuel per day.
Sasol currently supplies about 28% of South Africa’s fuel needs from coal, saving the country more than R29 billion (US5,1 billion) a year in foreign exchange.

Amid continuing violence in the Middle East, the issue of energy security is again on the front burner. With oil prices rising to a peak of $80 a barrel, countries have been looking at alternative energy with a greater urgency.
This heightened sense of urgency, fortunately, has come at a time when there is evidence that a new approach using existing resources and technology can provide alternative energy to many countries.

A glimmer of good news recently appeared: China signed an agreement with Sasol, a South African energy and chemicals firm, to build two coal-to-liquid fuel plants in China. These plants, costing $3 bn each, are reported to jointly produce 60 mm tons of liquid fuel (440 mm barrels) a year. Since China imported 100 mm tons of oil last year, these plants would give China much control over its domestic energy situation, though its demand is growing fast. The raw material and capital costs of a barrel of fuel would fall under $10 and other costs would not bring total costs over $15.
Coal resources of 1 tn tons are widely distributed around the world. Many countries, including China, India, Indonesia, Russia, Ukraine, Germany, Poland, South Africa, the United States and Australia have extensive coal deposits that would last 100 years or more at current rates of exploitation. But coal is a highly polluting fuel when burned directly and also emits a lot of global-warming carbon dioxide.

Indonesia has coal reserves at around 50 billion tones with total production in 2004 at 127 million tones and export 97 million tones.
Analysts are pegging the threshold for the commercial viability of CTL technology at about US$35 per barrel of crude oil. With the oil price hovering around US$60 per barrel, CTL plants could significantly cut Indonesia's import of fuels.

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