From wikipedia, coal gasification:
... is the process of producing coal gas, a type of syngas –a mixture of carbon monoxide and hydrogen gas – from coal. Carbon monoxide, which is a combustible gas, was traditionally used as a source of energy for municipal lighting and heat before the advent of industrial-scale production of natural gas, while the hydrogen obtained from gasification can be used for various purposes, such as making ammonia, powering a hydrogen economy, or upgrading fossil fuels. Alternatively, the coal gas (also known as "town gas") can be converted into transportation fuels such as gasoline and diesel through additional treatment. This latter purpose of coal gasification has been implemented by nations that have abundant sources of coal but little to no petroleum reserves, as well as by nations seeking to decrease their dependence on foreign sources of petroleum.There are also indications that a coal beneficiation plant will be built in the same area.
Briefly, coal beneficiation is a coal-drying process in which water and toxic chemicals found within coal seams (such as mercury and sulfur) are removed, producing a "better" coal. This coal can then be used in conventional coal-powered electrical plants. This coal can also be used for gasification.So, coal from the South Heart area --> beneficiation --> gasification. Or coal from the South Heart area directly to gasification.
Hopefully I have that correct; it is still somewhat confusing to me exactly which companies are doing what where.
Note: the correct spelling for this process appears to be "beneficiation," though even local and regional North Dakota newspapers spell it "benefaction." I, too, have misspelled it, but I'm going back and trying to find all errors to correct them.
Is the spread between WTI at $81 and ND sweet $65 expected to narrow as more pipeline capacity becomes available? Care to venture a guess as to the future spread once capacity and demand are balanced
ReplyDeleteThanks
For those interested, the comment above has to do with the CLR Earnings Conference Call yesterday (http://milliondollarway.blogspot.com/2010/11/clr-3q10-earnings-conference-call.html).
ReplyDeleteWith regard to the question above: I have no idea what the spread will be but the CLR Q&A explained a lot that I did not understand.
It is agreed that Bakken oil is some of the "sweetest" (best) (refinery-ready) oil there is -- comparable to the West Texas Intermediate (WTI). I never understood the full reason why Bakken oil warranged such a discount. Obviously it had something to do with distance they had to pipe the oil to the nearest refinery. But it turns out there is more to it than that. As poorer grades of oil are mixed in the pipeline carrying Bakken oil, the price folks are willing to pay for this mix, goes down, and thus another reason for the difference/spread between WTI and Bakken.
So, maybe it will be a wash.
Most of us follow price of oil since that's easiest to follow, but after EOG's very disappointing quarter, it is obvious that there are bigger factors.