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Sunday, October 28, 2007

South Africa's coal-to-liquids (CTL) plants have relied exclusively on coarse coal

Hitherto, South Africa's coal-to-liquids (CTL) plants have relied exclusively on coarse coal for their feed material, with Sasol either stockpiling the fines or selling them to power utility Eskom for use in their coal-fired power stations. Some of the coal has, nevertheless, found application in its boilers.

But South Africa energy cluster head Benny Mokaba tells Engineering News that the feedstock for the multibillion expansion, which forms part of a multibillion-rand expenditure profile for the cluster over the next nine years will be a blend of gas (15%) imported from Mozambique and fine coals (5%).

"This is a different type of coal technology. We will, for the first time, be seeking to gasify, on a commercial basis, fine coal, which is a material that we had been stock-piling," Mokaba explains.

He contends that the ability to exploit the fines has both commercial benefits and environmental virtue.

"It elongates the life expect- ancy of our mine and the Secunda plant enables us to add to our production profile. In addition, we will deal with an above-ground resource that has, until now, been an environmental hazard."

Further, the integration of additional gas-to-liquids capacity at the sprawling Secunda complex for the 15% balance of the expansion will offer foreign-exchange earnings for impoverished Mozambique, the originator of the feedstock, while lowering the overall emission profile at Secunda on a per-ton-of-product basis.

This environmental angle is central, with the expansion having also been coupled with two other programmes:

a 300-MW cogeneration project, which would reduce Secunda's gas-flaring as well as its reliance on the power grid at a time when Eskom is struggling to keep pace with electricity demand growth; and

a R4,5-billion environmental remediation programme, which aims to help support Secunda in meeting its target of reducing greenhouse-gas emissions (on a per-ton basis) by 10% by 2015.

Mokaba says it is in advanced negotiations for the securing of specially designed turbines that will enable Secunda to convert flared gas from Secunda into electricity ' the petrochemicals complex currently draws about 1 200 MW of electricity from the national grid.

"In all, there are something like nine key elements to the expansion and we are accelerating our discussions with various contractors and suppliers with the intention of being able to bring on the new capacity and the cogeneration by 2009," he explains.

This 30 000-bl/d expansion will be introduced ahead of a proposed 80 000-bl/d greenfield inland CTL facility, dubbed 'Project Mafutha', which is also seen as necessary, owing to material demand growth for transport fuels in South Africa, leading to rising import levels.

Sites in the Free State and the coal-rich Waterberg, in Limpopo province, are being studied simultaneously, with the type and quality of coal likely to be the crucial factor in deciding where to locate the plant.

Should the fines technology prove commercially successful, it could also have an influence on the technology chosen at Mafutha, which Sasol also aims to make its most environmentally acceptable CTL facility yet.

The group accepts that its current genera-tion of CTL plants still adds significantly to greenhouse-gas flows and remains water intensive. But the group is reportedly working on a range of new technologies that could reduce the environmental footprint of the current and future fleet.

Mokaba indicates that carbon-capture and sequestration techniques may even be incorporated into the Project Mafutha design, with Sasol scientists evaluating the possibility of storage in deep-level mines, as well as deposition into other deep geological formations, such as deep-saline reservoirs, and coal bed methane recovery opportunities.

Mafutha could also create employ- ment for up to 13 000 South Africans across the cluster, from mining to marketing, while the 20% Secunda expansion could add thousands more.

For this reason, the group is sharpening its focus on growing its skills base in anticipation of project and operational growth.

A programme known as ' Project TalentGro' has been initiated by executive director Nolitha Fakude as part of a multipronged approach to developing and raising the level of internal skills.

A new division has been created to recruit and train new employees, while the scale of Sasol's learnership and appren- tice training has already increased by 233% between 2004 and 2007. The group has also set aside R140-million specifically for artisan training.

High-level project manage- ment and technical skills are also receiving priority attention, with Sasol Technology having already increased its staff complement by 400 people, a 25% increase, in a bid to mitigate the constraints emerging in the global project economy.

Mokaba acknowledges that these actions will have cost implications for the cluster, echoing CFO Christine Ramon's recent warning that expenses related to the expansion programme locally and abroad will have to increase.

'These costs have to be seen in the context of preparing for a material expansion,' Mokaba argues, adding that financial resources are having to be directed towards project studies, human- resources development and the retention of key personnel.

Overall, the company has plans to invest up to R65-billion over the next three years on replacement and expansionary capital, with only R10-billion of that having been approved.

About half of this capital will be spent by businesses within Mokaba's cluster, including mining, synfuels, oil and gas, with a heavy weighting being given to growth projects.

Underpinning these aggressive expansion plans is the surging market demand for liquid fuels.

South African Petroleum Industry Association figures show that the sale of liquid fuels has been rising steadily from about 20,8-billion litres in 2000 to over 24-billion litres last year, with that growth trend continuing strongly in 2007.

There have already been some short-term supply challenges, and it is now also widely accepted that fuel imports are now a permanent feature of South Africa's energy economy.

It is also accepted that a key limitation on the creation of additional crude-based refineries is the scale of the investment required to make these commercially and technically viable. These refineries typically require a minimal scale of about 300 000 bbl/d, which could have a destabilising effect on a modestly sized market such as South Africa's.

Mokaba believes the addition of a fine-coal-conversion technology to the technology mix could further magnify the attractiveness of CTL as a possible solution.

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