Sasol Seeks Carbon Capture Solution for Coal-to-Liquids Projects

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Researched by Industrial Info Resources (Sugar Land, Texas)--Sasol Limited (NYSE:SSL) (Johannesburg, South Africa) has three coal-to-liquids (CTL) projects in the pipeline in South Africa, China and Uzbekistan. The projects are at different stages in obtaining the final decision to begin construction.

Progress on Project Mafutha, the 80,000-barrel-per-day (BBL/d) CTL plant proposed for South Africa's northern Limpopo province, has been slowed. CEO Pat Davies said that the project would not progress into the feasibility phase within the originally envisaged timeline pending clarity on the large-scale coal gasification tests and the provision of a commercially viable carbon capture and storage (CCS) solution. Davies said, "Given Copenhagen (Climate Change Conference 2009), we have no choice: We have got to find a storage solution for Mafutha." A 170,000-ton coal sample has been delivered to Sasol's Secunda complex from Lephalale in Limpopo, and coal gasification trials are scheduled to be completed before the end of the year.

Another factor to be considered before a final decision can be made on the project is state-owned oil company PetroSA's project to develop the 400,000-BBL/d Mthombo refinery in the Coega Industrial Development Zone on South Africa's east coast, adjacent to Port Elizabeth. Sasol is waiting to see where the two fuel projects sit in the government's list of major energy project priorities. The Mthombo refinery has been criticized as potentially adding to the global fuel glut, but has also been defended as a means to give the country fuel security. It may come down to a decision on the government's allocation and terms for funding, as both projects require state support in the construction phase to proceed.

A project application report to build the $10 billion CTL plant in the Ningxia Hui Autonomous Region was submitted to the Chinese government in December 2009. A decision on the 90,000-BBL/d project, which is a 50:50 joint venture between Sasol and Shenhua Ningxia (Shanghai, China), could come in the second half of 2011. Chinese delegations have visited Sasol to inspect the technology and processes of Sasol's South African plant, which provides up to 40% of the country's automobile fuel, and favorable reactions have been reported. Chinese International Engineering Consultative Company has been appointed by the National Energy Administration to assist in a review of the application.

A final decision on the South African and Chinese projects may depend on Sasol's finding a viable and commercially applicable CCS solution in the face of growing regulatory strictures on emissions levels. If this problem is solved, a number of other CTL projects that have been mooted by Sasol around the world could move into the feasibility frame. The next project to move into the final decision phase would be an 80,000-BBL/d gas-to-liquids project in Uzbekistan, for which the current feasibility study could be completed by the end of 2010.

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