Nitrogen+Syngas 385 Sept-Oct 2023
30 September 2023
Fuel uses for syngas derivatives
FUEL MARKETS
Fuel uses for syngas derivatives
Low carbon production is attracting considerable attention to using syngas derivatives as fuels, but there are considerable logistical and commercial barriers to overcome.
Decarbonising the fuels used for vehicles and power production is of prime concern for tackling climate change. Renewable energy and battery technology play a part, but for many vehicles, especially ships and aircraft, liquid fuels remain the most efficient means of propulsion. Using hydrogen derived from low carbon sources is a possibility, but while it is possible to generate hydrogen directly via electrolysis or partial oxidation of natural gas with carbon capture and storage, hydrogen is a difficult substance to use for vehicle applications because of its very low density, even when compressed or cooled to cryogenic temperatures. Various approaches have been tried for using hydrogen as a vehicle fuel, from fuel cells to using metal hydrides as a carrying medium, but for the moment it is other syngas derivatives like ammonia, methanol and Fischer-Tropsch hydrocarbons which are looking like the most viable ways of converting renewable hydrogen into widely used fuels.
Maritime fuel
Much of the interest is coming from potential uses as a fuel for shipping. The International Maritime Organisation (IMO) originally set a goal of reducing total greenhouse gas (GHG) emissions from international shipping by 50% by 2050, compared to 2008 levels. However, this year it adopted new, more stringent targets to reduce emissions by 40% by 2030 compared to 2008, have 5-10% of all shipping be zero carbon by that time, and to be carbon neutral as close to 2050 as possible. Given the lead times on building and deploying ships and their length of service, this has seen the shipping industry scrambling to pick winners among the various candidate fuels as soon as possible.
At the moment methanol seems to have a clear lead in this field. Methanol is no stranger to being used as a shipping fuel. Methanex subsidiary Waterfront Shipping, which ships methanol around the world, investigated using some of that methanol as a fuel on cost grounds, and began operating a duel-fuelled tanker in 2016. It has now built or converted 18 vessels to run on methanol. This has given methanol a head start as a green fuel, as the engines to use it are already commercially available (and require less modification than fuels like ammonia). Proman have also now taken delivery of four methanol fuelled tankers and have two more on order.
But undoubtedly the greatest boost to methanol as a shipping fuel has come from its adoption by Danish shipping giant Maersk, which is responsible for 14% of world cargo transport. In 2021 Maersk decided to acquire a methanol fuelled carbon neutral container vessel, and then later that year added another eight large (16,000 ten-foot equivalent unit – TEU) container ships at a cost of $175 million each. Last year it ordered an additional six 17,000 TEU methanol dual-fuel vessels, and the total has now risen to 19 ships, with delivery between 2023 and 2025. Each ship will require 35,000-40,000 tons of methanol annually, or a total of 500,000 t/a of low carbon methanol. The company says that by 2030 it is aiming to run 25% of its 700+ vessel fleet on renewable methanol, which will take its annual requirement to 6 million t/a. Maersk says that it has picked methanol because it is a mature technology as regards shipping engines.
Sourcing this amount of low carbon methanol is a potential issue, which has led Maersk to begin looking for strategic partners to supply them. It has now secured agreements with ten methanol producers, including Proman, Orsted, European Energy, Wastefuel, and SunGas Renewables, with the intent of sourcing at least 730,000 t/a of green methanol by end of 2025. Methanex believes that demand for low carbon methanol could be 3-6 million t/a by 2027 (see Figure 1).
Ammonia
There has been much discussion of using ammonia as a maritime fuel, and considerable research into its potential. Engine manufacturer Wärtsilä has been working on four-stroke ammonia internal combustion engine designs, and MAN Energy Solutions is working on a two-stroke ammonia engine. Japanese trading house Itochu and Dutch oil storage and terminal operator Vopak have conducted feasibility studies on the development of ammonia supply infrastructure for use as a marine fuel for vessels in Singapore, and Japanese shipping company NYK Line, shipbuilder Japan Marine United Corporation (JMU), and ClassNK have been developing an ammonia-fuelled ammonia gas carrier that would use ammonia as the main fuel. MOL and Mitsui also recently announced that they had received approval from Class-NK for the design of a large ammonia-powered bulk carrier. At present, however, there are no commercially available ammonia shipping engines, and ammonia has barriers to its adoption as a marine fuel.
In theory, ammonia burns cleanly to produce nitrogen and water. In practice, however there are several issues with ammonia combustion. Firstly, ammonia has a very high ignition temperature. It is possible to overcome this by mixing it with conventional fuels such as gasoline, diesel, LPG, etc whose combustion can supply heat to ignite the ammonia. This can reduce the need to engine modification. However, it does reduce ammonia’s green credentials. Ammonia combustion does also produce lower power. Ammonia has a lower flame speed than traditional fuels which restrains temperature diffusion in the cylinder during the combustion stroke and causes the power reduction. These two aspects combined; high ignition temperature and low flame velocity lead to a slower chemical reaction rate which can lead to ammonia being discharged from the exhaust without burning. The common way to enhance the chemical reaction rate of ammonia combustion is to use a promoter in an ammonia-air mixture.
Beyond this, however, there are also often side reactions which lead to NOx formation in ammonia combustion. The biggest issue is N2O formation, as nitrous oxide has a global warming potential 265 times that of CO2. Currently, N2O emissions are not regulated by the IMO, but they will need to be if ammonia is to become a widely used shipping fuel. There are various strategies for reducing NOx formation well known to nitric acid producers and removal of nitrogen oxides from an exhaust stream is already a well understood and proven technology, but it does add extra cost and complexity to ammonia-based ships.
The shipping industry is also concerned about safe handling of ammonia during bunkering operations. Ammonia in gaseous form is highly toxic if breathed in, and in order to maintain it as a liquid it must be cooled and stored below -33°C at atmospheric pressure or compressed to around 10 bar (raising the boiling point to about 25°C), or some combination of the two, increasing both the dangers and costs of its transport and storage.
Maersk, whose push for methanol has been behind much of the early lead for that option, did say a couple of years ago that it considered ammonia a potential option, but more recently it has appeared to get cold feet. At a recent shipping industry conference, Maersk Group head of future fuels Maria Strandesen, said: “Ammonia is still on the ‘perhaps list’ for us. It is by no means off the table, but we are not yet comfortable enough to order the first pilot vessel to run on ammonia.”
In spite of these issues, some are still optimistic for ammonia’s use as a shipping fuel if green/blue production can be scaled up and costs reduced. Ammonia process licensors are working on conversion and revamping of existing plants from grey to green production, and Yara Clean Ammonia have suggested that shipping could become a magnet for green ammonia supplies in the same way that it has green methanol, while the International Energy Agency (IEA) has suggested that ammonia’s use for shipping could reach 130 million t/a tonnes by 2070 – on the same scale as its use for fertilizer. At the moment, however, methanol is the clear leader.
Road vehicles
Aside from some abortive experiments with ammonia as a vehicle fuel in the 1920s and 30s, most demand for road fuels from syngas-derived products has come from two sources; Fischer-Tropsch hydrocarbons, and methanol. Fischer-Tropsch fuels were pioneered by South Africa’s Sasol, where there is still considerable production, and took off for a while in the 1990s as a use for stranded gas resources, including large plants in Malaysia, Qatar and, somewhat less successfully, Nigeria and Trinidad. But the rapidly growing LNG market became the preferred use for new gas finds and since then only Uzbekistan has completed a GTL plant.
Methanol, conversely, after a false start in California, achieved a degree of market penetration as a road vehicle fuel in China, where coal-producing provinces saw it as a way of extending expensive gasoline pools. Methanol as a blendstock represents around 10% of Chinese fuel demand. Experiments with converting methanol to gasoline (MTG) using ExxonMobil’s process were also tried in New Zealand and China but did not catch on more widely.
Now that the focus is back on low carbon vehicle operation, there has been renewed interest in using green hydrogen and captured CO2 to make green methanol or synthetic diesel for road vehicle use, but little practical movement so far, and battery or battery-hybrid vehicles remain the most popular option for decarbonising road transport.
Aviation fuel
Aviation is recognised as one of the most difficult sectors to decarbonise. As with shipping the cost of individual airliners means that they are often kept in service almost continuously for long periods in order to recover and amortise this cost. An aircraft, unlike road vehicles, cannot be electrified, certainly not for long haul flights – in order to store the same energy that an airliner can carry in its fuel tanks, it would need batteries that weight 30 or so times the weight of aviation fuel, while hydrogen fuel tanks would take up most of the fuselage as well as the wings even if it were liquid. The assumption therefore is that aircraft will be using liquid hydrocarbon-based fuels similar to the ones they currently use for the foreseeable future. This leads to the concept of so-called sustainable aviation fuels (SAF). The main way that SAF is produced at the moment is via what are known as hydrotreated esters and fatty acids (HEFA), which has come to be known as ‘biojet’. Around 2 million t/a of capacity is already operational or under construction. However, although HEFA is the most widely used SAF pathway today, it is regarded the least scalable one in the long term because of the limitation on sufficient vegetable oil feedstock. A recent industry report suggested it might only be capable of providing 10% SAF by 2050 due to feedstock limitations. For large scale decarbonisation other options are needed.
Renewable methanol is a possibility for aircraft but again the lower energy density means that the fuel tanks would have to be larger. At the moment, the main alternatives to biofuels are Fischer-Tropsch synthesis or gasification of lower carbon solid feedstocks such as municipal solid waste (MSW), or biomass, e.g. from paper mills or other plant processing. Current International Civil Aviation Organisation (ICAO) projections are that alcohols and Fisher Tropsch pathways will for about 40% of the remaining total and the other 50% from ‘Power-to-Liquid’ (CO2 and renewable hydrogen), identified as being the most scalable in the future in terms of feedstock availability.
Power generation
Outside of vehicle applications, the other major fuel application is for power generation. This has been of particular interest in Japan, where there are plans to introduce ammonia into the fuel mix for thermal power generation to cut CO2 emissions. As part of its Green Growth Strategy, the government is targeting ammonia imports either for conversion back to hydrogen and nitrogen (using ammonia as a hydrogen carrier) or by burning ammonia directly in power production. Pilot studies have successfully burned ammonia in coal-fired power stations at up to 20% of the feed and there have been subsidies to demonstration projects via IHI, JERA, Chiyoda and MHI. Japan wants to use this to try and prolong the life of its coal-fired power stations, which generate around 30% of its electricity. India and South Korea have also shown some interest in similar schemes.
The strategy has attracted criticism, not least from Bloomberg New Energy Finance (BNEF). A study last year pointed out that the cost of imported green or even blue ammonia could push the cost of power generation at such facilities higher than that for offshore wind at high levels of blending (50% or more). As with ammonia combustion in vehicle engines, there also are NOx emissions to deal with through some kind of scrubbing process, though part of the ammonia feed could be diverted to a SCR system. The Centre for Research on Clean Energy and Air also calculates that ammonia co-firing will increase emissions of particulates, especially PM2.5, by up to 160%.
Nevertheless, work continues. JERA, responsible for 30% of Japan’s power generation, is looking to overseas partnerships with the likes of Yara for blue ammonia supply from Australia. There is also research on the use of ammonia-fired gas turbines. Mitsubishi Power, part of Mitsubishi Heavy Industries (MHI), has begun development work on a 40 MW 100% ammonia powered gas turbine system. The company says that it is targeting commercialisation in or around 2025. IHI is also partnering General Electric in a similar scheme.
Japan’s Green Ammonia Consortium says that it expects 1% of Japan’s electricity to come from blue and green ammonia combustion by 2030, potentially rising to 10% by 2050. JERA says that it will convert its 1 GW Hekinan coal-fired power station in Aichi, central Japan, to a 20% ammonia feed during 2024-25. By 2030, Japan hopes to be importing an extra 3 million t/a of ammonia for power generation.
Costs and availability
While safety and environmental concerns and some of the technical challenges in developing ammonia engines are factors that could delay its adoption, they are not insurmountable obstacles, though they explain why methanol has had such a head start. However, the wider use of green and blue methanol, ammonia and F-T liquids depends very much upon two factors; cost and availability.
Cost of manufacture is obviously highest for green production and depends upon the cost of the solar and wind electricity being used and the electrolysers. Platts estimates that the current cost of green ammonia production is between $750-800/t delivered c.fr to Japan/South Korea. A year ago this was below the cost of production, but ammonia prices have fallen dramatically this year and are currently less than half of that. In the absence of a gas price crisis caused by a major European war, financial viability for green ammonia currently depends both upon a premium for green production over grey and possibly regulatory or government incentives like the US Inflation Reduction Act. Costs of production will continue to come down as electrolysers become cheaper and green production is able to take advantage of economies of scale – costs have already dropped remarkably – but that in turn depends upon there being sufficient guaranteed demand for green ammonia. There seems no short term prospect of that emerging from maritime demand at present, but possibly Japan’s ammonia blending programme may give sufficient impetus, even if it means that Japanese electricity consumers may end up paying the premium for it.
Blue ammonia may be a more realistic prospect. CRU estimates that the costs of carbon capture and storage for ammonia to be between $20-45/t, depending upon the close availability of a suitable reservoir for carbon storage, which ought to be easily covered by current EU carbon costs or US IRA production incentives.
While methanol already has an established a rapidly growing demand for low carbon production, it too has not been without its own problems. Maersk recently completed fuelling of its new Agility container ship in Ulsan, South Korea with green methanol produced by OCI Global in the Netherlands, and OCI says that it is in the process of gaining permits for methanol bunkering in various locations along the ship’s route to Copenhagen, including Singapore, Egypt and Rotterdam. However, falling methanol prices are now reportedly below OCI’s cost of production, with a small net loss reported in the company’s recent Q2 results. OCI has stressed the importance of long-term cooperation between producers and consumers over green methanol supply, and presumably this means long term guaranteed price contracts.
Finally, however, there is an open question as to whether sufficient green or blue ammonia or methanol will be available to meet some of the higher end projections for demand out to 2050, which are for tens of millions of tonnes of both green ammonia and methanol. Even if there were enough renewable energy available to feed this production, just as ammonia production must currently compete with the power industry for natural gas and coal feedstocks, so in future it might have to compete with the power industry for renewable electricity. Blue production can help to bridge the gap, but the long term path ahead remains an uncertain one.
