(EnergyAsia, August 22 2013, Thursday) — Australia’s Altona Energy said it will add a coal-to-methanol (CTM) unit to its earlier proposal to build a plant to convert coal to liquid fuels and generate electricity in South Australia state.

The company, which has been working with China’s state-owned CNOOC to build a coal-to-liquids (CTL) and power plant project at their jointly owned Arckaringa deposit, announced its decision after receiving confirmation that the proposed CTM project would be feasible.

Altona said its board had commissioned the UK branch of an international engineering firm to undertake the feasibility study in view of strong global demand for methanol. The study found that the product is being used increasingly in Asia as a fuel additive and feedstock for high value products including acetic acid, di-methyl ether, formaldehyde, olefins and gasoline. Methanol prices have been averaging more than US$400/tonne in recent years.

With the use of a range of well-proven and commercially available coal-to-methanol (CTM) technology, the company said the project represents an opportunity to enhance the inherently low in-situ value and cost of converting Arckaringa’s coal to liquids and power.

“The high returns and diverse markets for methanol, combined with Arckaringa’s coal resource, which is capable of sustaining a wide range of coal conversion options or projects for a hundred years or more, make CTM a potentially valuable additional option for the Project. Furthermore methanol production could also provide a hedge against oil and gas price volatility in the future,” it said.

The recently completed study demonstrated that CTM could be a viable project capable of augmenting the bankable feasibility study (BFS) for Altona’s flagship Arckaringa Clean Energy CTL and Power Project.

The original proposal called for the development of a 45,000 b/d CTL plant in three phases of 15,000 b/d each together with a 280MW power plant over a 10-year period.

The new study has proposed the simultaneous construction of a 15,000 b/d CTL plant and a 6,200 tonne/day methanol unit, which will replace of one of three planned CTL trains.

Altona said it will present the CTM project to CNOOC for evaluation and approval.

Altona’s executive director for technology, Peter Fagiano, said:

“CTM offers a real opportunity to further enhance the already favourable project economics at Arckaringa. The study has confirmed our preliminary views, and Altona will now present the project to the joint venture for evaluation at the BFS level and potentially to other external parties with a special interest in the growing market for methanol production.”