Pace Consultants Inc., Houston, has started a multiclient study of worldwide petroleum coke production, examining environmental initiatives and eventually forecasting prices of fuel grade coke.
U.S. coke exports increased to more than 14 million metric tons in 1992, Pace said. Most of those exports contain high sulfur or metals levels and are sold as fuel grade coke, mainly in Europe and Japan.
Delivered prices of high sulfur coke plummeted to 40% of coal prices in 1992, down from 61% in 1991 and an average of 83% in 1985-1990, says Pace.
For U.S. Gulf Coast refiners, this translates into an export price of about $5/metric ton, fob vessel, for 5% sulfur material. Netted back to the refinery, this equates to $2-5/metric ton.
Pace expects coker expansions, increased operating severity, and reduced cycle times to boost coke supply to more than 50 million metric tons/year in 2000, compared with 39.7 million metric tons in 1992. Increased supply and tightened environmental rules in countries consuming large amounts of petroleum coke will be the main factors affecting coke markets.
COKE QUALITY
The U.S. consumed about 4 million metric tons of fuel coke in 1992, compared with 3.5 million in Japan and 9.3 million in Europe. Relative to total fuel use, U.S. industry consumes far less coke than its counterparts in Europe and Japan because of inexpensive natural gas and transportation logistics for coke. Thus, offshore markets have traditionally absorbed incremental production.
These markets have been viewed by U.S. refiners as a sink for increasingly poor quality coke, Pace said. Reexamination of this view, however, has become necessary in fight of environmental initiatives in Europe and Japan.
Last year, Turkey announced a sulfur limit of 2% on imported coke. Although this law has since been rescinded, similar initiatives have been discussed in Italy, Germany, Netherlands, and Spain. As the European Community moves toward a "greener" economy, efforts to limit pollution-especially sulfur dioxide and carbon dioxide-will increase.
Another EC issue paralleling the U.S. is a carbon tax, being considered for the EC as a whole. If passed, this tax would likely be borne by coke producers.
JAPANESE MARKET
Japan's diet of coke is mainly fed by U.S. West Coast exports of low sulfur/high metals material. As Los Angeles area refiners begin to process incremental volumes of offshore California crude, coke quality will deteriorate.
Japan consumes more than 1.7 million metric tons of coke in industrial boilers with NOx limits. Any increase in coke nitrogen content, say the Japanese, could endanger this market. U.S. refiners know there always will be ample lower sulfur, lower nitrogen Australian coals available to Japan.
Pace also is studying potential new markets for coke, including cogeneration (OGJ, Apr. 12, p. 38), gasification, and increased use by U.S. heavy industry. Pace anticipates completion of the study in late spring.
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