A press release from the University of Texas at Arlington announced that researchers there have developed a process to convert lignite, a soft, and particularly form of coal into oil at a cost of $28.84/bbl. The breakthrough is not in turning coal into oil, a process that has been around since WW II, when Germany developed it to fuel its war machine, due to a lack of oil, but an abundance of coal, primarily in the Ruhr River valley. The same process was adopted and improved by Sasol of South Africa, and is still used today.
The breakthrough is in the cost of conversion, which under current techniques is substantially higher. According to the university researchers, who spent some 18 months on the project, so far, the key was the development of what they call "micro-fluidic reactors". The US has approved the construction of a pilot plant to assess the technology.
According to the Globe and Mail's article on the process:
"Texas lignite sells for $18 a tonne. The coal conversion technology uses one tonne of coal to produce 1.5 barrels of crude oil. One barrel of crude produces 42 US gallons of gasoline. In other words, $18 worth of coal yields 63 gallons of gasoline: 0.28 cents a gallon"
Rick Billo, the Dean of Engineering at UTA is quoted as saying:
"We're improving the cost every day. We started off some time ago at an uneconomical cost of $17,000 a barrel. Toady, we're at ...$28.84 a barrel".
Horn River News via Hedge Fund Network Group News @ LinkedIn
The Globe And Mail
If this process can live up to its promise, it has the potential to be a game-changer, as lignite is readily available globally, as the chart below shows.
|People's Republic of China||13.000||22.000||38.000||40.000||47.000|
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