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New Technology Turns Coal into Clean, High-Powered Gas

by | published November 19th, 2009

A new fuel technology – unveiled just two weeks ago – is about to revolutionize the energy business.

I saw it firsthand.

General Electric Co. (NYSE:GE) asked me to present “The Future of Natural Gas” at the company's Gas Turbine Symposium in Greenville, S.C. That's where GE revealed a new generation of its market-leading turbine technology.

Most of GE's major North American power-production end users attended the event. And the proceedings were simulcast to GE research centers in Munich, Bangalore, and Shanghai.

They made a fuss about this new technology for a reason: A change is coming to electricity production – a big one. The power-plant managers, technicians and government observers at the symposium knew this.

A confluence of market conditions, technical advances and politics right now is ushering in the next generation of power stations. The low price of natural gas – combined with the unlocking of unconventional gas production in the United States – is one reason. But the ongoing concerns over the role played by carbon emission caps and trade provisions in pending legislation may be a more pressing consideration.

The U.S. Senate is reviewing the Clean Energy Jobs and American Power Act, better known as the “Climate Bill.” It will no doubt impact coal-powered generation. That, of course, makes gas turbines a more significant energy option.

And GE knows turbines.

Indeed, its turbine center in Greenville is the largest in the world. And the “integrated gasification combined-cycle” (IGCC) technology GE is making now is changing everything.

It's even creating opportunities for other businesses – companies developing, fabricating and servicing/supplying turbines. They're becoming compelling targets for investors.

First, here's why GE's technology is so significant…

The Energy is Clean and Powerful

IGCC technology is a product of GE's “ecomagination” overture.

It takes low-value fuel – coal, petroleum coke, extra-heavy oil or bitumen (also called orimulsion), biomass or even municipal waste – and turns it into a high-hydrogen-content gas. The gas is then used as fuel in a turbine system to generate power.

The transition removes fuel sources having a high carbon footprint and replaces them with a less environmentally suspect source of power.
This is huge, since most people in the industry see the writing on the wall.

While coal and natural gas each provide about 23% of total current U.S. energy, coal is under greater pressure as carbon emissions face greater scrutiny by lawmakers.

With the U.N. Copenhagen energy summit approaching next month, there may just be enough political pressure from the White House for the passage of the Climate Bill. Yet even if there is a delay in the legislation, carbon concerns will remain. Coal-state senators are busy trying to grandfather existing coal power plants at home under whatever provisions emerge in the law – another clear indication higher carbon accountability is on the horizon.

That's great news for the IGCC market, of course, which GE's been in for two decades now. Business is picking up – big time.

On Oct. 29, the company announced the signing of a technical agreement for a new 250-megawatt IGCC power plant in Kern County, Calif., near Bakersfield. The plant will be built by a joint venture of the BP PLC (NYSE:BP) Alternative Energy division and the hydrogen project unit of international mining major Rio Tinto PLC (NYSE:RTP). It is also the first of five worldwide to result from a 2007 joint venture between GE and BP.

Expect more of these ventures globally as environmentally friendly technologies obtain political support.

The new plant will join IGCC facilities GE already built in California (Coolwater in Barstow) and Florida (Polk in Tampa). The company is also providing the technology for the Duke Energy Corp. (NYSE:DUK) plant in Edwardsport, Ind., which will be the largest IGCC facility in the world upon reaching commercial operation in 2012.

In total, GE has constructed some 70 gasification facilities of various types worldwide – so far. About 40 of these are already separating carbon using available commercial technology.

This market will be growing quickly.

A Range of New Investment Options

While I was in Greenville, I had a chance to see the new gas turbine technologies in development and review operations at the GE manufacturing and testing plants. I also discussed the technical breakthroughs and challenges with GE's top turbine executives.

We are just beginning to see some of the potential for this new direction in power production. And it is going to bring with it a range of new investment options.

First, in addition to a more positive environmental impact, there are profitable secondary applications resulting from IGCC and related gas turbine uses. For example, the Kern County plant will capture 90% of its carbon emissions and pipe them to enhance recovery at nearby oil fields. Word is, this plant will be the first in a new generation of IGCC applications to generate additional revenue streams from the carbon capture and sequestration process. The carbon dioxide will increase production (and therefore profitability) at what are now mature crude oil extraction sites.

Second, the new IGCC applications will spawn a number of new spin-off opportunities. The process significantly reduces emissions such as sulfur dioxide, nitrous oxide, mercury and particulate matter, while at the same time decreasing water consumption by as much as 30% in comparison to conventional coal-powered plants. Each of these advances will provide markets for a range of new, smaller, more-focused, technically based service, application and new product providers. What used to be waste is now a value-added product stream.

Third, the increasing market presence will assist companies in addition to GE and the electricity providers. New targeted applications are quickly developing in support of the transition to IGCC and other turbine applications. Providing services and parts (the so-called “aftermarket”) is currently controlled by the big boys – GE and its main turbine-producing competitors: Pratt & Whitney [a division of United Technologies Corp. (NYSE:UTX)], Rolls-Royce Group PLC (OTC:RYCEY) and Siemens AG (NYSE:SI).

However, several smaller companies will profit from the turbine breakthroughs.

At the head of this list are upstarts like Gas Turbine Efficiency PLC (PINK: GTBEF). It's an Orlando-based company specializing in customer products and services for the entire line of GE gas turbines, including the Frame 7EA and newly unveiled 7FA lines – certain to be the center for an expansion of turbine usage worldwide.

Another is Dynamic Turbine LLC of Norcross, Ga. The company makes turbine blades, already approaching a $4 billon-a-year parts-and-services market to the turbine industry. Currently a privately held company, my sources tell me Dynamic Turbine is likely to expand into an integrated outfit by acquiring a recently closed foundry outside Phoenix. That will require a working capital infusion, which means an initial public offering (IPO) or private placement.

This is rapidly developing into an exciting “next stage” in energy. Now that the technology is available – and companies are employing it – there's considerable upside potential. All the way from product development to service and support.

Kent

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  1. William Powell
    October 30th, 2010 at 05:46 | #1

    Coal, basically Carbon, C, becomes methane, CH4 in GE’s IGCC process. It burns to make energy with less CO2 release mainly because each CH4 molecule is oxidized to make two H2O (water)molecules and heat. Only one C is converted to CO2 and heat. This in contrast to burning coal where all the heat is produced by oxidizing C to CO2. So clearly less CO2 is produced for same heat production; BUT

    Where does the hydrogen come from to make the H in CH4? Does that process not release a lot of CO2? Perhaps someday, nuclear power can run the electrolysis process that I assume makes the H (hydrogen) but now nuclear energy makes only a small fraction of the H.

    Also there seems to be a “catch 22″ here: If we had more nuclear power to make the H without CO2 release, why would we need coal or GE’s IGCC process?

    Please comment on this instead of just “sweep the problem under the table” or ignore it.

  2. January 28th, 2011 at 13:54 | #2

    The problems of making hydrogen available for the IGCC process may not have any inexpensive answers. Any electrolytic cell with water and a salt will produce hydrogen at one electrode and oxygen at the other. Then there is the energy expended to move the reaction forward. If it was inexpensive, we could simply extract the two gasses and run automobiles with it. Hydrogen also has limited BTU output compared to long-chain carbons. Leland

  3. jack gordon
    January 28th, 2011 at 16:41 | #3

    mr. powell =
    the gasification process owned by GE (formerly owned by Texaco) uses coal (or other carbonaceous feedstock), oxygen & steam to produce a fuel gas consisting mostly of CO, H2 & very little methane. at the high temperatures of this process, most of the CH4 is incinerated to CO and additional steam.
    other gasification processes (such as destec’s process used at terre haute IN) produce a gas richer in CH4 and consume less O2 as a result. O2 is expensive.
    the fuel gas can be treated to remove acid gases (H2S) resulting from the S in the coal. the polk county plant was designed to use a hot metal=oxide based sorbent for the H2S but the attempted operation was unsuccessful, they had to fall back to a well-proven low temperature system using liquid organic solvents.
    > jack

  4. David Engle
    January 29th, 2011 at 11:55 | #4

    @William Powell
    A very good question!

  5. Bill Butler
    March 11th, 2011 at 14:08 | #5

    Please check Bixby Energy of Minnesota

  6. Jan Boblenz
    April 15th, 2011 at 18:31 | #6

    @Bill Butler
    IT LOOKS GOOD PLEASE CHECK IT Bixby

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