Showing posts with label synthetic. Show all posts
Showing posts with label synthetic. Show all posts

Sunday, March 14, 2021

How India's dream to make petrol from coal died

For decades, different committees proposed this path to energy self-sufficiency, but governments disagreed

Sasol plant in Secunda
When petrol crossed the Rs 100 mark on February 17, Prime Minister Narendra Modi blamed previous governments for India’s dependence on imported oil. He might have a point. Around the time India became independent, the technology to turn coal into liquid fuel was in the news. Government of India showed interest in it. Foreign companies made pitches. Indian scientists made a plan. Then, nothing.

This happened several times over the decades, and it’s only in recent years that talk of turning coal into petrol has died out. This is a story of shortsightedness and official lethargy bound in red tape.

Hitler’s oil

Coal fed the steam age, but the 20th century belonged to internal combustion engines that ran on petrol and diesel. Ironically, Germany, whose inventors made the first petrol and diesel engines, had no oil of its own. It had plenty of coal, though.

In 1935, German engineers showed that converting coal into petrol and diesel was commercially “feasible”. Although costlier than imported fuel, it could save the country in a crisis. By the time WW-II started in 1939, Germany had built nine plants based on the Fischer-Tropsch conversion process with a total annual capacity of 740,000 metric tonnes of synthetic oil. In 1944, German synthetic oil capacity peaked at 4 million tonnes per annum. It was this capacity to make oil that kept Hitler’s tanks, trucks and planes moving even after the Allies had cut off his other oil supplies.

Indian interest

The war ended in 1945 with Hitler’s defeat but the interest in synthetic oil did not die. The December 31, 1947 edition of The New York Times reported that a big American chemical company called Koppers planned to “devote a considerable amount of research during 1948 to development of processes for making synthetic liquid fuels and other chemicals from coal.”

In time, Koppers and other companies pitched the technology to India. In July 1952, science minister KD Malaviya confirmed in the Lok Sabha that the director general of industries had made plans for a synthetic oil plant as early as 1950 and negotiated with a foreign firm to set it up.

The government’s own Fuel Research Institute in Dhanbad had set up an experimental Fischer-Tropsch unit “producing about one gallon of liquid product per day” and a “small high pressure hydrogenation plant for production of aviation spirit.” But Malaviya said the plan had been abandoned because of “cost.”

Prime Minister Jawaharlal Nehru elaborated on the cost aspect in December 1953: “This particular matter of synthetic petrol has been examined very thoroughly. In fact, it was not merely examined, but schemes were worked out, but due to various reasons, one of them being the heavy cost of this project – it is a very, very expensive project – it could not be undertaken. I cannot say that it has been given up, but for the present it is not being undertaken.”

Yet, two years later, in March 1955, Malaviya said Koppers had submitted a report to the government “two years ago”, indicating interest in synthetic oil had revived soon after his 1952 reply. He said, “steps are being taken to obtain project reports” from reputed international firms for setting up a synthetic oil plant. The government was looking to use lignite from southern mines for making oil.

South Africa

While India dillied and dallied on synthetic oil, South Africa went right ahead and turned it into a major industry in 1955. A 1980 report by the US Environmental Protection Agency (EPA) says Sasol (South African Coal, Oil and Gas Corporation) had been running the “world’s only oil-from-coal plant... since 1955,” and after expansion it would produce 112,000 barrels of oil per day – “about half of South Africa’s needs.”

While India rejected synthetic oil in the 1950s on grounds of cost, the EPA report says Sasol’s production cost in 1979 averaged $17 per barrel, well below the $20 that imported oil cost at the time. And, South Africans paid “about $0.63/litre of gasoline at the pump.” The low price was thanks to cheap labour in South Africa. The EPA estimated that synthetic oil in the US would cost at least $27 per barrel, and the price could go up to $45. But India had no dearth of cheap labour then, so perhaps our doubts about viability were misplaced.

Sasol is still very much in the business of synthetic oil, and a 2017 Financial Times report says “its Secunda plant east of Johannesburg is the world’s largest coal-to-liquids facility.”

More experiments

But the question of synthetic oil was still alive in India. Many MPs pushed for it on grounds of energy security. The government-appointed Ghosh committee submitted its report on synthetic oil in February 1956. It recommended starting with a Rs 20 crore plant in the Jambad Kajora area of West Bengal’s Raniganj coalfield that would yield 120,000-125,000 tonnes of motor fuel from 1.2 million tonnes of non-coking coal. The report was rejected because “natural oil was cheaper and foreign exchange was scarce.”

Yet, experiments continued. In September 1960, science minister Humayun Kabir told Lok Sabha about IIT Kharagpur’s pilot project to make synthetic fuel from coal. Over 20 days, the small unit with a designed capacity of 100 gallons per day made 64 gallons per day. The Central Fuel Research Institute (CFRI) in Hyderabad was also engaged in similar research, Kabir said.

Nine years went by, and in December 1969 education minister VKRV Rao said experiments conducted at CFRI “showed encouraging results for conversion of Neyveli lignite to oil by direct hydrogenation or by Fischer-Tropsch synthesis. Further work is in progress.”

Six years on, rattled by the steep rise in oil prices after the 1973 Arab-Israel war, another committee was studying the subject. Deputy energy minister Siddheshwar Prasad told Lok Sabha in March 1975: “The matter of conversion of coal into synthetic oil is under consideration of the ‘Expert Group on Synthetic Oil’ recently constituted by the central government.”

The committee gave its report in 1977, recommending a synthetic oil plant with a capacity of 1 million tonnes per annum. The plant was expected to cost Rs 1,140 crore, so the government rejected it citing low international prices. The government’s argument: synthetic oil would cost Rs 809 per tonne without duties, and Rs 997 with duties and taxes, but imported crude cost only Rs 909 per tonne (1977 price). Couldn’t the government have exempted synthetic fuel from taxes, to start the industry?

US attempt

Koppers and synthetic fuel were back in the news in 1980. The US wanted to insulate its oil supply from Arab-Israel conflict and it decided to set up an independent agency called ‘Synthetic Fuels Corporation’ for this. Fletcher L Byrom, chairman of Koppers at the time, was a frontrunner to head the corporation. The NYT on July 23, 1980 reported that the SFC would “dwarf the programs that took America to the moon and built the interstate highway system.”

The SFC’s task was to spur the production of oil from coal, shale and tar sands, so that within two years, 10% of the US oil consumption would come from these sources. Over the next few years, it spent almost a billion dollars on four synthetic fuel projects, none of which survive today. The SFC itself was wound up in 1986 because President Reagan chose to leave the matter of oil supply to market forces.

More committees

Meanwhile, India appointed another committee – the Sidhu Committee – to examine the question of synthetic oil. In February 1986, energy minister Vasant Sathe told Lok Sabha that the cost of setting up a 1 million tonne synthetic oil plant had risen to Rs 2,800 crore. “Resource constraints and adverse economics” prevailed again – no synthetic oil plant was set up.

After that, as India liberalised, synthetic oil and self-reliance ceased to matter. The next mention of synthetic oil in Lok Sabha occured 20 years ago in February 2001. And it was a passing mention: “the issue of production of synthetic oil from coal can be transferred to one or other of the fuel research agencies.”

In October 2008, Rajya Sabha member B K Hariprasad asked “whether private players have evinced interest in setting up such coal-to-liquid projects”. The government replied, “28 applications were received from 22 applicants,” who had proposed to get know-how from foreign firms.

At last, India seemed to be on the verge of unlocking its synthetic oil potential, but five years passed with no action on the ground, and in March 2013 BJP member Piyush Goyal asked, “whether the central government has any proposal to extract oil from coal”. The government replied coal liquefaction was “one of the specified end uses for the purpose of allotment of captive coal/lignite blocks to the entrepreneurs.”

Jindal Steel and Power was one of the companies that had proposed to build a synthetic oil plant in India. But when the Supreme Court cancelled the allocation of 214 coalfields to private players in September 2014, Jindal aborted its $10-billion, 80,000 barrels-per-day coal-to-diesel project in Odisha.

Meanwhile, 85 years after Germany and 65 years after South Africa, India’s science establishment still talks about synthetic oil as though it is a technology of the future. A 2017 blog post on the mygov.in website says: “Very recently, CSIR-CIMFR has successfully installed and commissioned an integrated coal-to-liquid pilot plant… (which) produces 5 litres per day liquid hydrocarbon.”

IIT Kharagpur was making 64 gallons per day in 1960!

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