Gasification of lignite coalin North America; Pastexperience and futureopportunitiesByMichael L. Jones, Ph.DVP for Research and DevelopmentLignite Energy Council5/31/20121

Outline Key Properties of North AmericanLignite History of Lignite Gasification inNorth America Technology Options Current Activities Future Opportunities5/31/20122

Unique Properties Molecular and physical structurehigh moisture contentlow heating valuedissimilar contents and forms of oxygenSulfur and nitrogenhigher porosity and surface areahigher reactivity in oxidizing and reducingatmospheres high gas and low tar yields in pyrolysis distinctive (alkaline) inorganic forms and mineralcontents uniquely different physical and chemicaltransformations of char and inorganic intermediates incombustion and gasification systems; and distinctiveash deposition mechanisms, slag viscosity behavior,and corrosion mechanisms.5/31/20123

Enhanced ReactivityRelative Reactivity FactorReactivity Organic structure Inorganic componentsIncludedMineralsNa Ca Mg ls0.6Anthracite0.2708090Carbon Content of Raw Coal,% d .a.f.Catalytic ActivityNa, Ca, Mg5/31/2012SteamO24

Fate of Lignite Impurities5/31/20125

History of Gasification ofLigniteTechnologies that have been applied togasify lignite for over 100 years. Retorts Fixed bed Catalytic Entrained flow Fluidized bed Transport reactor5/31/20126

Current Commercial LigniteGasification Facilities Dakota Gasification Company Kemper County IGCC5/31/20127

A Look at the Past Plant origin: ‘70s energy shortages 2.1 billion costFirst Synthetic Natural Gas (SNG) produced inJuly 1984Dakota Gasification Company (DGC) beganoperating facility in 1988 as a subsidiary ofBasin Electric Power Cooperative

Great Plains Synfuels Plant Today

l GasLiquid enols

Lurgi Mark IV Gasifier


Ammonium Sulfate Started in 1996 Created to utilize the sulfur removedfrom the plant boiler flue gas inorder to be compliant with the CleanAir Act of 1990 Capacity to produce 60,000 tons per year DGC’s flue gas desulfurization unit is removing93% of the sulfur On site storage for 40,000 tonsTruck loading facilityAmmonia: 21% as NSulfur: 24% as S

Naphtha Started in 1993 Capacity of 8 million gallons per year Used as:Gasoline blend stockPaint thinner & other solventsFeedstock for benzene production

Anhydrous Ammonia Capacity to produce 400,000 tonsannually Truck loading facility Fertilizer for farming &as chemical feedstock

DGC and CO2Weyburn and Midale, Saskatchewan12.6 Million Metric Tons Net Sequestered Through The End of 2010240 mmscf/dPipeline capacityCO2 PIPELINECompressorsCO2Current flow rate:153 mmscf/dWorld’s Largest Carbon Captureand Sequestration Project

DGC’s CO2 Pipeline 205 miles Featured on theHistory Channel’s“Modern Marvels” 14” & 12” carbon steelpipe Strategically routed throughWilliston Basin oil fields Pipeline take offs alreadyinstalled

Kemper County IGCC Project Overview 2x1 Integrated Gasification Combined Cycle(IGCC) 2 TRansport Integrated Gasifiers (TRIG ) 2 Siemens SGT6 - 5000F CTs 1 Toshiba Steam Turbine (TandemCompound Double Flow) 582 MW peak and 524 MW on syngas Heat Rate 11,708 Btu/kWh (29.5% HHVEfficiency w/ CO2 control and 40 % moisturecoal) Selexol for H2S and CO2 removal 65 % CO2 capture ( 800 lb/mWh emissionrate) Mine Mouth Lignite 5/31/2012Owner & Operator: Mississippi PowerOver 2 billion capital investmentCommercial Operating Date: May 2014Use treated effluent from Meridian as makeupwaterBy-Products (TPY) 3,000,000 - Carbon dioxide used for EORComposition 135,000 - Sulfuric acid Kemper LigniteAverageMinMaxHeat Contentbtu/lb5,2904,7655,870 20,000 - Ammonia lant Site

Kemper CountyIGCC Project MapPlant SiteMeridian 70 miles transmission 60 miles CO2 pipeline (for EOR) 5 miles natural gas pipeline 31,000 acre mine site 2,900 acres plant site 30 miles treated effluent line5/31/2012New CO2Pipeline19

Visual Comparison of Main Gasifier Types(Not to Scale)GEPhillips 66 Shell ir - or O2 -blown-blownOxygenOxygen-blownblownBurnerBurner- rnerNonNon-slaggingslagging

Development of the TRIG for Power and ChemicalProductionTRIGTM Leverages Long History of KBR Fluid Catalytic Cracking (FCC) ExpertiseFirstCommercialFCC Unitfor ExxonLate30'sOrthoflow A Design1942Orthoflow C Design1951ResidFCCsOrthoflow FDesignEarly1960's19761980'sDesign Based onFCC Technology5/31/20121990Pilot PlantTech Center1996Grand Forks, ND2,600 Hours Test Run211996PSDF at Wilsonville,AL. 14,600 hrs ingasification 2,200hrs on MississippiLignite thru Dec ‘09China 2011 USA 2014TRIGTM In KemperCounty, MS, USA &Dong Guan, China

TRIGTM Attributes / AdvantagesPresalter CyclonesyngasSimple, well established design –Based on technology in use for 70 yearsEither Air- or Oxygen-blownStandpipe CycloneAir for power– Oxygen for liquid fuels and chemicals–High Reliability Design –RiserNon-slagging design: Provides 10-20 year refractory life,Eliminates black water systemProvides non-fouling syngas cooler operationNo burners to fail and be replaced– Dry dust removal eliminates gray watersystem–MixingZonecoalSeal Legair/O2steamStartupBurnerStandpipeLower Fuel Costs –J-legsyash –ngasFewer, lower power pulverizers, andLess drying than other dry-feed gasifiersCost-effective using high moisture, high-ash,low rank coals (PRB and lignite).Excellent Environmental Performance Lower water use compared to pulverized coal(PC)– Excellent emissions performance–5/31/2012Coarse, dry coal feed allows:22

Kemper Construction March 20125/31/201223

Kemper Construction - March 2012Completed Facility Superimposed5/31/201224

What’s next in Lignite Gasificationin North America? Coal Drying SHED (South Heart EnergyDevelopment) E-STR Gasifier Pratt-Whitney Rocketdyne Gasifier5/31/201225

DryFiningCoalBag HouseFinesTo SilosDryerRefined CoalRejectsWaste Energy5/31/201226To SilosTo Pyrite Disposal

Lignite Drying and GasificationAs-Received LigniteHot water(37.5% moisture) LP Steam35,000 STPD330 MWth5,300 MWth HHVH2O N2 airDryFining x 22Pulverizer x 9 130% N2 70% airASU x 4As-Fed Lignite(8% moisture)23,800 STPDGasifier x 9 15/31/201227CO H21,000 MMSCFD4,000 MWthHHV

GRE dryer/segregator5/31/20122828

South Heart Overview2 1 BGL Hydrogen PowerOUTPUTS Power Production‒ 167 MW net‒ 200 Pounds CO2/MWhr net; approaches renewable standard CO2 Captured:‒ 100 MMSCF/day, 2,000,000 tons/yr.‒ Translates into over 10,000 barrels of oil per day (from EOR)‒ 94% of carbon from coal‒ Can achieve zero net CO2 emissions with approximately 10% biomassfeedINPUTS Lignite – 5,144 tons/day raw lignite; 3,464 tons/day briquettedlignite Oxygen – 1,600 tons/day5/31/20122929

Why the BGL Gasifier? BGL Gasifier is based on the lignite proven Lurgi Gasifier(Over 75% of global gasification is based on Lurgitechnology) British Gas and Lurgi spent over 25 years and 500 millionimproving the efficiency, reliability and environmentalfootprint of the original Lurgi design The BGL Gasifier has been in commercial operation since2000 at the SVZ facility in Schwarze Pumpe, Germany The BGL Gasifier predecessor, the Lurgi Mark IV gasifier,has been in commercial operation at the Dakota Gas plantfor nearly 25 years and in Sasol’s Secunda facility for 40years Commercially demonstrated and bankable (Schwartz Pumpeand Dakota Gas)5/31/201230

BGL Gasifier Differencesfrom Lurgi Mk IV Gasifier Higher conversion efficiency of coal to gas Increased fines tolerance Higher plant throughput Significantly lower steam (water) usage Lower aqueous liquor production Recycling of by-products to extinction viatuyeres Less CO2 in the syngas Ash converted to non-leachable vitrified slag5/31/201231

South Heart Project Status Feasibility & Development‒ Preliminary development work substantially complete‒ Conceptual design complete‒ Mine plan complete Major Technologies Have Been Selected Incorporated GTL Coal Beneficiation Technology Into PlantConfiguration Transmission‒ Multiple interconnect options available with little or noupgrades required Pre-FEED performed for the Hydrogen Power Configuration Mine permit is underway with expected issuance of finalpermit in 4Q 201232

E‐STR Gasifier ConfigurationINTERNAL FEEDSTOCKUPGRADERNo syngas coolerNoresidencevesselLower temp 2ndstage, 400‐750CResidenceVesselSyngasCoolerSyngasUp to 100%slurry to 2ndstageCatalytic tarconversion & COshiftSlurryCylindricalfor Hi‐pressureCharO2Dry feed1st stageSlag5/31/201233

E-STR Technology Advantages Reduced CAPEX Elimination of Residence Vessel and Syngas Cooler Up to 40% smaller ASU from dry feeding 1st stage Up to 20% smaller downstream systems due to higher syngas andmethane yield from gasifier Low cost slurry-based feed system; dry solid recycle to 1st stage withno lock-hoppers Reduced OPEX Lower fuel and oxygen consumption Lower maintenance cost Improved Operability Less equipment; simpler design Simple and reliable slurry-based feed system High pressure cylindrical gasifier design and slurry-based feed systemallows delivery of SNG at pipeline pressure without added compressors5/31/201234

PWR Gasifier 5/31/201290 percent size reduction (gasifier)50 percent lower cost (gasificationsystem)80-85 percent cold gas efficiency99 percent carbon conversion99 percent availability(gasification system)Capability for near-zero emissions35

Conclusions Lignite properties need to be considered in selectionof gasification Lignite reactivity Moisture levels Inorganics content Long history of gasification New options that take advantage of the uniqueproperties of lignite coal are being developed Critical challenge is having government policies inplace that will allow lignite gasification to continue tomove forward5/31/201236

Fertilizer for farming & as chemical feedstock. Weyburn and Midale, Saskatchewan 12.6 Million Metric Tons Net Sequestered Through The End of 2010 CO 2 PIPELINE 240 mmscf/d Pipeline capacity Current flow rate: 153 mmscf/d .