1

Coal and Natural Gas

2

2005 Annual Production in ZettaJoules

Data Source: World Energy Council: 2007 Survey of World Energy Reserves

Total Annual Production 0.459 ZettaJoules

Coal

32%

Crude Oil

40%

Shale Oil

0%

Natural Bitumen

0%

Extra Heavy Oil

0%Natural Gas

23%

Uranium

5%

Coal

Crude Oil

Shale Oil

Natural Bitumen

Extra Heavy Oil

Natural Gas

Uranium

Production of non Renewable

Energy Resources

Source: K. Gaughan calculation from World Energy Council data

3

World Primary Energy Production

including Renewables

Source: World Coal Institute http://www.worldcoal.org/pages/content/index.asp?PageID=188

accessed 12 Nov 2007

4

Reserves:

122

0.459

55.94

All Non Renewables

79

0.025

1.95

Uranium

63

0.107

6.71

Natural Gas

261

0.001

0.37

Extra Heavy Oil

665

0.002

1.51

Natural Bitumen

565200

0.000

17.29

Shale Oil

41

0.181

7.43

Crude Oil

145

0.142

20.68

Coal

Years

left at

current

producti

on

Annual

Production

in

ZettaJoules

Reserves in

ZettaJoules

(10E21J)

Resource

5

Coal

•History of Coal

•Where is coal found?

•Coal Reserves

•Combustion of Coal

•Uses of Coal

•Coal Prices

•Reference: Boyle , Everett, RamageEnergy Systems and Sustainability

•Reference: World Coal Institute: http://www.worldcoal.org

6

“Coal is a fossil fuel. It is a combustible, sedimentary,

organic rock, which is composed mainly of carbon,

hydrogen and oxygen. It is formed from vegetation,

which has been consolidated between other rock strata

and altered by the combined effects of pressure and heat

over millions of years to form coal seams.”

World Coal Institute: http://www.worldcoal.org

7

Brief History of Coal Use

•From Bronze Age times coal has been used as a fuel for heating, cooking and

lighting

•In Elizabethan times the poularityof coal grew alongside the poularityof brick

buildings. From 17thcentury concerns about atmospheric pollution from coal

fires.

•1709 –Darby’s use of coke (coal product) as a substitute for charcoal in

smelting of iron.

•Industrial revolution (circa 1700 –1850) explosive rise in demand for coal as

fuel and as input to smelting of iron.

•Coal remained the dominant worlwidecommercially traded fuel source right

up to 1960’s when oil overtook coal primarily due to rise in transportationuse.

•Although the relative importance of coal fell coal production continued to

grow steadily up to 1990.

•The 1990’s were a period of stable coal production but has grown rapidly since

2000 due to the explosive growth in demand of the Chinese economy China

since entry to WTO in 2001.

8

From: Boyle , Everett, RamageEnergy Systems and Sustainability

9

Which Countries have Coal?

10

Source: World Coal Institute

http://www.worldcoal.org

2006 Hard Coal Production Total Global Consumption: 5370Mt (estimate)

PR China

49%

USA

19%

India

8%

Australia

6%

South Africa

5%

Russia

5%

Rest of World

8%

PR China

USA

India

Australia

South Africa

Russia

Rest of World

Note in 2006 Brown Coal / Lignite accounts

for an additional 914Mt

11

Comment

•Coal Reserves are far more widespread than

Oil reserves

•On an energy basis coal reserves are far

greater than conventional oil reserves (not

including shale).

12

Chemistry and combustion of coal

•Ash Content varies from 10% to 30%. Ash is inert and remains behind

after combustion

•Typical dry Ash Free Coal by mass: Carbon 88%, Hydrogen 5%,

Oxygen 5%, Nitrogen 1%, Sulphur 1%

•Sulphur content varies up to 5%

•Combustion Products

–Carbon + Oxygen →Carbon Dioxide (C02). Incomplete combustion give

Carbon Monoxide (CO)

–Hydrogen + Oxygen →Water (H2O)

–Sulphur and nitrogen give rise to polluting sulphurous (SO2) and nitrous

oxides (NOX).

•On an equal energy basis Coal combustion produces significantly more

greenhouse gas than Oil or Natural gas.

13

Emission Factors

(From SEI ENergyin Ireland 1990-2005)

14

Uses of Coal

•Electricity Generation: Approx 66%

•Iron and Steel: Approx 20%

•Direct use & Smokeless fuels: approx 10%

Source of estimates: Boyle Everett and Ramage.

15

World Coal Institute: http://www.worldcoal.orgaccessed 12/11/07

16

Secondary Fuels Derived From Coal

•Coal Gas –a mixture of H2, CO and CH4 was a by-product of coke

production for the iron and steel industry. In the 19thcentury and first

half of the 20thcentury coal derived gas was widely used in the public

gas supply, in street lighting and for domestic use. Coal gas

distribution has been almost entirely supplanted by natural gas

(methane: CH4) but it is still used within the steel works.

•Pure methane can be produced from coal but there has been little

economic incentive to pursue this

•There are a number of liquefaction processes available which aimto

make a petrol substitute from coal: Fischer TropschProcess (used in

South African Sasol plants to produce 10000 barrels per day). Bergius

process extensively used in Nazi Germany (estimated 80000 barrels

per day).

17

Natural Gas

•History of fuel gases

•Location and Reserves of Natural Gas

•Chemistry of Natural Gas

•Uses of Natural Gas

Useful Reference:

Energy Information Administration Intern

ational Energy

outlook 2007: Chapter 4 N

atura

l Gas available online

http://www.eia.doe.gov/oiaf/ieo/nat_gas.html

18

Natural Gas Reserves

Images taken from: Energy Information Administration Intern

ational Energy outlook 2007: Chapter 4

Natura

l Gas available online http://www.eia.doe.gov/oiaf/ieo/nat_gas.htmlaccessed 12 Nov 2007

19

Natural Gas Production and

Consumption

20

Questions

•Natural Gas was formed million of years ago. How come the graph of

natural gas reserves shows a continually increasing trend?

•Are there reasons why we may be further away from the time of “peak

gas”than from the time of peak oil?

•Is there a disparity between consumers of gas and producers of gas?

•Gas fields are often but not always found in conjunction with oil fields.

Are there similarities between the location of gas reserves and oil

reserves?

•Gas consumption is more concentrated in developed nations than oil

consumption. Why is this? What infrastructure is required for oil

consumption? What infrastructure is required for gas consumption?

•Is natural gas more likely to be used in an urban economy or a rural

economy?

21

History of Gas use

•Beginning of 19thcentury coal gas (town gas) a by product of coke

production for Iron and Steel industries was initallyused for street

lighting and eventually for domestic lighting, cooking and heating.

Soon dedicated gasworks were constructed to generate coal gas for

urban populations.

•In first half of 20thcentury electricity replaced gas for lighting but coal

gas was still in widespread use for domestic heating and cooking

•Natural Gas deposits originally discovered in conjunction with Oil.

•Natural Gas networks were established in USA in 1950’s and in

Europe in the 1960’s.

•Natural gas requires no conversion process and was adopted as a clean

/ safe replacement for coal gas. Coal gas rapidly fell out of favour.

•Natural gas use rose dramatically in later half of 20thcentury for

residential heating, for industrial heating and for electricity generation.

22

Chemistry of Natural Gas

•Raw Natural Gas: 70-90% Methane CH4 5-15% Ethane

C2H6+ other impurities

•Raw Gas is processed to remove impurities (including

some commercial by products) and increase the

percentage of methane for fuel use (Pipeline Quality Gas).

•Methane+Oxygen→CarbonDioxide (CO2) and Water

(H2O)

•Methane and its combustion products are odourless and

colourless but as a safety precaution minute amounts of

odourant(mercaptan) may be added.

23

Source: EIA The Cru

cial Link Between N

atura

l Gas Production

and Its Tra

nsp

ortation to M

arket available online at http://www.eia.doe.gov

24

Usage of Natural Gas

25

Electricity Generation From Gas

•In many countries Gas has displaced Oil from electricity

GenerationThekey drivers are:

–Cost: Gas is historically cheaper than oil. It is considerably dearer than

coal but some of that difference is offset by efficiency.

–Efficiency: Combined cycle gas turbines offer efficiencies approaching

60% while tradionalopen cyleplants are closer to 40% efficient

–Cleanliness –Natural gas has lower emissions than oil and significantly

lower emissions than coal.

•Example

–Open Cycle Gas Turbine firing temperature 1200°C final exhaust

temperature 500°.Theoretical maximum Efficiency (Carnot Efficiency) =

47%

–Combined Cycle Turbine Firing temperature 1200°C, Final Exhaust

temperature 100°C. Theoretical Maximum Efficiency (Carnot Efficiency)

= 74%

–

26

Fossil Fuel Price Trends

27

Source: World Coal Organisation

28

Questions

•Give possible reasons why the price of Oil

Risen dramatically since 2000

•Investigate why the price of gas is closely

linked to the price of oil

•Why is the price of coal not linked more

closely to the price of oil?

29

Gas / Oil Price Links

•The price of gas tracks the price of oil closely.

•Economics would suggest that if the market is operating efficiently then this

close tracking would indicate that gas and oil are close substitutes for each

other.

–Both fluid fuels: can both be used in turbines and boilers

–The replacement of oil by gas in electricity generation indicates that gas can indeed

substitute for oil in many cases

–Natural Gas cannot be used in transportation –which may explain the slight

premium that oil has historically attracted on an equal energy basis

•The price of coal does not track the price of oil as closely as natural gas.

Possible reasons include:

–Conversion Efficiency –Gas and oil combustion is generally more efficient than

coal combustion

–Environmental “externalities”being reflected in the price of coal

–Possible Reasons for Market Failure:

•High Switching costs (coal is not a fluid)

•Possible seller collusion (the sellers of gas and sellers of oilare closely related)