Analysis of the market and product costs for coal-derived high Btu gas: staff working paper

Abstract

The purpose of this paper is to analyze the market and product costs for coal-derived high Btu gas. This analysis is based upon supply and demand projections that reflect the effects of natural gas deregulation, recent large oil price increases, and new or pending legislation designed to reduce oil imports. Product economics are based upon estimates developed by staff of the Office of Plans and Technology Assessment using internal DOE studies and published data. While these data are believed to be representative of the costs to produce high Btu gas from coal using advanced gasification technology that is ready for technical demonstration at commercially relevant scales, they are not based upon detailed design studies. The analysis indicates that an increasingly large market for supplemental gas is expected to open up by 1990 and that high Btu gas from advanced technology is likely to be economically superior to gas imports over a wide range of alternative assumptions. While several studies suggest that there may be a considerable market for MBG, the potential supplemental gas demand is sufficiently large that significant markets will exist for both MBG and HBG from coal. HBG from advanced technology is especially important if synthetic fuels are to be produced in the East, since there is no data available to indicate that current coal gasification technology can economically use the abundant, moderate to highly caking Eastern coals.