TEXACO PRESSES PROJECTS FOR GASIFICATION PROCESS

Texaco Inc. continues to press international ventures for its gasification process.

A combine of Italian companies plans an $800 million integrated gasification/combined cycle power plant at a refinery in Sicily that will use Texaco's process to gasify refinery residuals to produce electrical power. Other Italian refiners are expected to follow suit with similar projects.

Meanwhile, Texaco and Biter America Corp. have signed a letter of agreement to develop integrated gasification/combined cycle electrical power generation projects. The venture plans to use Texaco's gasification process and Orimulsion, a boiler fuel that is an emulsion of Venezuelan heavy crude, water, and surfactant, as feedstock. Bitor, Boca Raton, Fla., and its parent, Bitumenes Orinoco SA, are units of Venezuela's state oil company Petroleos de Venezuela SA.

Texaco recently signed agreements covering application of its proprietary gasification process in coal based power projects in China (OGJ, Apr. 27, p. 20). The company has demonstrated the technology since June 1984 at the Cool Water plant at Daggett, Calif., the first commercial scale integrated coal gasification/combined cycle power plant in the U.S. (OGJ, May 9, 1988, p. 26).

SICILIAN PROJECT

ISAB SpA, Genoa, signed an agreement with Italy's power monopoly ENEL covering sales of surplus electrical power from the 500,000 kw resid gasification/combined cycle cogeneration complex it plans at its 220,000 b/d Priolo Gargallo refinery near Syracuse, Sicily.

Interests in ISAB are held by Erg SpA, Genoa, 60%, Agip Petroli SpA, Rome, 20%, and Cameli 20%. ISAB, which produces 220,000 b/d of refined products, holds 14% of the Iralian market.

ISAB will sell ENEL 4 billion kw-hr/year of power generated by gasifying resid. The 220,000 b/d Priolo refinery produces 3 million metric tons/year of waste residuals via visbreaking that yields fuel oil, heavy gas oil, and asphalt.

ISAB in May earmarked $4 million for initial license rights to the gasification process and a feasibility study for the project, likely to be conducted by a joint venture of Texaco and an Italian engineering company. Choice of gas turbine technology likely will be made in the next few weeks.

PROJECT ECONOMICS

ENEL will purchase surplus electric power from ISAB at a price of 117 lire (10cts)/kw-hr. That compares with a price of 72 lire/kw-hr ENEL pays other power producers.

But ENEL likely would otherwise incur costs greater than that differential because of massive investments needed to comply with new European Economic Community regulations on air emissions. Beginning in 1997, EEC member countries will no longer be able to burn fuel oil with sulfur levels greater than 0.25-0.3 wt %. ENEL is Europe's biggest consumer of fuel oil, half of which is high sulfur.

ISAB will earn $416 million/year from the sale of electrical power, with the 45 lire/kw-hr differential guaranteed the first 8 years of a 15-20/year contract to begin in spring 1997.

To finance the project, EBEL and Erg will form a joint venture company capitalized at $250 million.

ISAB Managing Director Domenico D'Arpizio said the two have received many proposals from investors and merchant banks to provide financing for the new company. Erg Pres. Riccardo Garrone said, however, that participation in the new company will be oriented toward industrial partners. Details are being ironed out.

D'Arpizio noted the project's economic feasibility will depend heavily on the quality of project financing.

"It's not an easy job, because amortizing the investment will take 10 years for a return of 12%," he said.

"We hope the banks will participate in the project, but we'll have to take stock of the fact that Italian banks are not used to project financing. The alternative would be to bring in capital from institutional investors through merchant banks."

OTHER ITALIAN PROJECTS

ENEL is negotiating similar agreements with:

Saras SpA for a 450,000 kw project at its 285,000 b/d Sarroch, Sardinia, refinery, possibly to be expanded later to 1 million kw.
Anonima Petroli Italiana for a 250,000-300,000 kw project at its 63,000 b/d Falconara, Marittima, refinery.
Agip Raffinazione SpA for an 800,000 kw project at its 70,000 b/d Porto Marghera refinery.
An undisclosed company for a 700,000 kw project.

The gasification process recovers 99% of the resid's sulfur and all nickel and vanadium, which will be marketed, and produces no significant air emissions.

The combined cycle technology was developed by General Electric Co., Nuevo Pignone, Siemens, and Asea Brown Boveri.

TEXACO-BITOR

The Texaco-Bitor agreement calls for a supply of as much as 1.6 million metric tons/year of Orimulsion for 25 years.

Texaco called Orimulsion "an attractive energy source" for its gasification process because of its vast supply, conventional transportability, high heating value of 12,600 BTU/lb, and low viscosity.

Texaco considers its gasification process in tandem with a combined cycle power unit the cleanest, most efficient technology to generate electricity from Orimulsion and other hydrocarbon feedstocks such as coal, petroleum coke, and heavy oil. Emissions of sulfur dioxide and nitrogen oxides will be below U.S. government standards and a fraction of those of conventional coal fired plants.

In addition, Texaco said, gasification of Orimulsion generates less carbon dioxide emissions than conventional coal burning because of the higher efficiency of the gasification/combined cycle process and lower carbon content of Orimulsion.

Texaco has conducted tests at its Montebello, Calif., research laboratory, demonstrating the "excellent performance" of Orimulsion as a feedstock in its gasification process.

Texaco and Bitor, along with potential partners, are exploring project opportunities in a number of places.