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Australia is a large country (with a small population) which has lots of coal reserves, quite a lot of natural gas, and virtually no oil.

Back in the 1980’s after the first Middle East oil embargo and against the continuing backdrop of Middle East political unrest, the Australian Department of Primary Industries decided to study whether and how Australia’s abundant coal reserves might be used to produce synthetic liquid fuels (e.g. diesel, jet fuel, gasoline, etc.) in case imported oil became scarce or unavailable.

DPIE (never, we were told, to be pronounced “dopie” ;) ) commissioned Broken Hill Proprietary’s R&D arm to develop a pilot-scale coal liquefaction process and run experiments on the various coals available in Australia. My recollection is that they looked at coals from the Victoria, New South Wales, and Queensland.

For those unfamiliar with Australia, Broken Hill Proprietary (or BHP) is the 800 lb gorilla of the Australian economy. Not only is it a huge company but is also the primary player in terms of industrial R & D. In a US context, it is as if you combined IBM, GM, GE, and Microsoft into a single entity.

So BHP set up pilot plant facilities at their R&D campus in a suburb of Melbourne and began running tests on the various domestic coals. The actual liquefaction process was largely based on what had already been shown to work in the US and Europe.

I don’t remember the BHP process in any detail but, like all coal liquefaction processes, it involved processing pulverized coal with coal-derived liquids and hydrogen under high pressure and high temperature. This then produced two streams, an ash residue stream and a liquid roughly comparable to crude oil. It was this synthetic crude oil that was intended for additional processing to produce synthetic diesel, kerosene, and gasoline. A fraction would also be recycled back to liquefy additional coal.

Of course, the pilot plant process was intended to collect data on the process and the immediate synthetic crude product. It did not provide any directly useful information on the overall process economics.

So DPIE commissioned us (AspenTech) to develop a simulation of the complete process including coal pre-processing, coal hydroliquefaction (based on the BHP pilot-plant data), the synfuel refining section, and all the other support sections (e.g. hydrogen production).

The simulation was intended to represent an actual commercial-scale plant, its operating costs, and capital costs with a view to determining what the net cost of the final transport fuels would be in equivalent dollars per barrel. This would then give one idea of how high world oil prices would have to be for a coal-based synfuel plant to be competitive.

The other purpose of the modeling effort was to ensure that BHP was collecting enough consistent data to support such a study.

The process side simulation was challenging (this was a large model with a lot of distillation columns, reactors, and recycle streams) and the economic side required a lot of assumptions. For example, databases used to estimate capital equipment costs were US-based, no Australian capital equipment cost data was available.

It was a very interesting, challenging project and I enjoyed my stay in Australia (I was out there for a total of 6 months) and it was fun working with my colleagues at BHP.

The conclusion of the project was rather bemusing and, I suppose, shows how naive engineers are. One of the things we’d been asked for in the RFP was a comparison of the process economics for the different Aussie coals (Victoria, New South Wales, and Queensland). So our final report had a table comparing the results and we had text discussing this… Basically, the model showed that Queensland coal had the best economics and our conclusions said as much. But DPIE kept delaying approval of the report and, since our final payment was dependent on the report being accepted, we were getting a bit anxious. But no one was giving us any specifics on why the report was not being accepted.

Eventually, one of the BHP managers had to give us a little explanation of Australian politics… That Victoria was a much more populous state than Queensland and therefore had more MPs and more clout in the Federal bureaucracy than Queensland did… And that DPIE did not want to approve our report while it explicitly stated that the Queensland coal was a better choice than the Victoria coal. (Neither were they willing to tell us that directly.. ;) )

So we changed the text of the conclusions… The comparison tables still showed that the Queensland coal produced less expensive synthetic fuels but we didn’t explicitly mention that in the final conclusion. And… The revised report was accepted.

Now that world oil prices are up around $60 a barrel, I wonder if anyone in Australia is revisiting this area to see what the current synfuel economics look like.

One of my strangest (and scariest) experiences was my visit to the SASOL plant at Secunda. This is the largest synthetic fuels plant in the world and is situated on an open grassy plain a few hours drive east of Johannesburg.

My recollection was that my plane arrived in Johannesburg around dawn after an overnight flight from London so I was pretty exhausted and jet-lagged. I had to get a rental car and then drive for hours across the Veldte (on the wrong side of the road… South Africa is an ex-British colony). The scenery was pretty spectacular… Definitely “big sky” country although it was strikingly different from anything I have seen in the US or Australia.

Eventually I arrived at Secunda and that’s where things got surreal. I had been checked into Graceland Hotel Casino & Country Club (see photo). I drove up the sweeping drive surrounded on both sides by a treeless, windswept, and totally empty golf course to the hotel casino itself which was a fantastic thing like something out of a Disney theme park.

Under the entrance portico I was met by a tall, thin black man dressed up as Uncle Sam (all in red, white, and blue satin with a top hat, tail coat, and brightly colored suspenders… Braces if you are from the UK.).

Inside, the theme was 1800’s New Orleans and the Mississippi… The staff were dressed up like saloon keepers with straw boater hats and sleeve garters. The hotel was quite luxurious and new but it seemed very odd to find all this pseudo-Americana in the depths of Africa.

The next morning I drove out the SASOL plant and that also was more than a bit surreal. The synthetic fuel plant had been developed to circumvent the oil embargo imposed by the world community during the apartheid era and, inevitably, was a target for the anti-apartheid guerrillas. On the morning I drove out, a huge thunder storm was drifting in from the west, looming over the plant… And the plant was heavily fortified with armored watch towers. The overall impression that morning was like something out of a high-tech, industrial Lord of the Rings.

This visit took place a few years after the collapse of apartheid. Unfortunately, the end of apartheid has made South Africa, if anything, even more dangerous than when there was an ongoing civil war. All the South African engineers I worked with routinely carried guns when they drove to and from work… There were lockers at the gatehouse where you left you gun while at the plant. As a visitor and not being familiar with the local modus vivendi, I was pretty worried. Rather like a Japanese tourist who got parachuted into the South Bronx or Watts.