Coal - Coal Gasification and the Coal Mining Industry

The demand for natural gas continues to increase at higher than anticipated rates, partly because of its widening price advantage over most other fossil fuels when the cost of air-pollution control is included. However, there are clear indications that the natural gas supply from the conliguous 48 states and continental shelves will not keep up with this rapid growth in demand indefinitely. Projections are presented which define the extent of potential deficiencies from the 1970's to the year 2000. Among the sources of supplemental gas - imported pipeline natural gas from Canada and Mexico, tanker import of liquefied natural gas, and synthetic pipeline gas from coal and oil shale -by far the most abundant at potentially competitive costs is pipeline gas from coal. The state of development and relative economics of the various coal gasification processes are reviewed. It is shown that synthetic pipeline gas could become a very substantial market for bituminous coal and lignite at current mine-mouth prices - 60-70 million tons of coal for each trillion cubic feet of synthetic pipeline gas produced. This corresponds to only slightly more than the current annual increase in gas demand. Although annual discoveries (gross additions to proved reserves) of natural gas in the United States are still on a general upward trend from the current level of 22 trillion cu ft annually, most forecasters do not expect this to increase substantially in the foreseeable future. For example, the updated (to include 1966 and 1967 data) mathematical model of natural gas discovery and production in the U.S. developed by the Institute of Gas Technology (IGT)' projects that discoveries will level out at about 25 trillion cu ft annually in the late 1970's and during the 1980's and then decline to about 21 trillion cu ft by the year 2000 (Fig. 1). This adds up to a new supply for the period 1968-2000 of about 790 trillion cu ft. Experts who usually reflect the producers' viewpoint, such as Radford L. Schantz of Foster Associates,* are relatively more pessimistic. In contrast, a forecast just made by the U.S. Dept. of the Interior is much more optimistic.3 It assumes an increase in gas discoveries of 2.2% per year over the period 1965-80, reaching about 30 trillion cu ft in 1980. If this rate of increase were extended to the year 2000, annual discoveries would reach 46 trillion cu ft at that time, for a total over the period 1968-2000 of about 1100 trillion cu ft. To these forecasts of new gas discoveries must be added proved reserves of roughly 290 trillion cu ft,4 bringing total U.S. supplies for the rest of the century to nearly 1100 trillion cu ft (IGT) and possibly as high as 1400 trillion cu ft (U.S. Dept. of the Interior). This is approximately the same range as that of two estimates of total remaining recoverable natural gas supply: Potential Gas Committee, 980 trillion cu ft5 and IGT, 1450 trillion cu ft.6 Only the 1965 estimate by the U.S. Geological Survey7 suggests that economically recoverable natural gas supplies will not be exhausted around the end of the century. These forecasts are, naturally, based on the assumption that changes in technological, economic, and regulatory environment as they affect the gas industry will be of an evolutionary, not revolutionary, nature. The various forecasts of potential natural gas supply must now be compared to forecasts of natural gas demand (Table I). The general consensus is that the recent Future Requirements Committee projection to 1990' (extended to the year 2000 by the most recent U.S. Bureau of Mines (USBM) projection9) represents the minimum gas requirements (Table 11). They add up to a total of 1030 trillion cu ft for the period 1968-2000. Even this minimum anticipated gas demand exceeds the total remaining supply estimate by the Potential Gas Committee and would nearly exhaust the proved reserves plus new discoveries projected by IGT. The supply situation would appear much tighter if the demand projections of the Texas Eastern Transmission Gorp.10 and the American Gas Assn.(A.GA.)'' were used (Table I). Yet, these higher forecasts probably do not include the effects of such new markets as gas fuel cells, use of liquefied natural gas as a transport fuel, etc. They also may not fully reflect the impact of air quality control on the fuel market. Obviously, the probable discrepancy between projected supply and demand can only be accommodated in four ways. 1) Rapid increase in exploration and drilling activity to provide new supplies in the amount projected by the optimistic U.S. Dept. of the Interior forecast, coupled with an increase in net pipeline imports from Canada and Mexico from the present 0.5 trillion cu ft per year