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Sep 2008 - Diesel Fuel

Diesel Fuel Alternatives

The rising price of diesel fuel at one stage raised the cost of diesel power stations to the 35USc/Kwh to 38USc/Kwh region, prompting remote company operations to seek (where possible) alternative fuel sources to reduce power costs.

In the past month of August 2008, we encountered four alternatives to diesel fuel, namely solar-power, hfo (heavy fuel-oil or bunker oil), jatropha and algae. We also heard about biogas, however, that version had only small scale applicability.

In their on-site presentation at Diggers, Independence (IGO) referred to solar-power being examined as a possible power source for their ~5.5mtpa to 6.0mtpa Tropicana joint venture with Anglogold Ashanti. Because of Tropicana’s location ~330km NE of Kalgoorlie, ways to reduce power costs were being examined such as HPGR (high pressure grinding rolls [which can reputedly reduce costs by ~30%), and hybrid solar-gas/diesel power.

There is apparently an operating hybrid solar(/diesel?) 11MW (and growing as more fields of panels are installed) power station in Spain, and some smaller operating 2MW to 4MW solar power stations in NSW (with funding being sought to build a 20MW unit). The Tropicana JVs intention would be to have a power company construct the possibly “tower” station and buy the power from them. Operating costs for the hybrid unit were reputedly expected to be in the 25c to 30USc/Kwh vicinity.

On a visit to Mineral Deposits’ (MDL’s) Sabodala mine in Senegal, West Africa in mid-August we saw MDL’s almost completed 30MW power station that uses 6 x 5MW Finnish Wärtsilä generators as shown in Figure 1, that are designed to use hfo (heavy fuel oil) at an expected cost of ~20USc/Kwh. MDL bought 3 x 10MW second-hand power stations in Turkey, refurbished them and installed new electrics for a resultant cost of ~US$28m (compared to ~US$40m new and an 18 to 20-month lead time for new alternators).

There are apparently a number of these old power stations in Turkey and other parts of the world, that were subsidised, but were later abandoned as their countries moved to cheaper forms of grid power, Turkey reputedly now being ~8.5USc/Kwh. These power stations also apparently need scrubbers if they are to meet Europe’s emission standards, which further raises the operating costs.

Only 4 of the 6 Wärtsilä generators are required to turn over the Sabodala mills, with 3 of the generators maintaining the 2mtpa hard throughput rating. The 5th generator was spare, and the 6th generator was also to be spare or for Grand Côte, but it made sense to store it in working condition at Sabodala with the others.

The Wärtsilä generators are started on diesel fuel and periodically flushed/cleaned with diesel fuel such that diesel comprises about 1% to 2% of the fuel consumption. The hfo is centrifuged to remove any water and other rubbish, and then heated to ~ 70º to 80ºC before being fed into the engines.

Any waste product from the hfo is being taken care of by a major oil company which wants to further the progress being made with jatropha.

Jatropha has become BIG business with about 250 projects in progress world-wide in the past 2 years. The name is derived from Greek meaning doctor-food, and it was used for skin ailments, as a purgative if ingested, and cauterising or blood-clotting agent. More recently its oil was used for village oil-lamps and when combined with soda ash, it can produce an anti-fungal soap.

Jatropha has also been used as natural fencing, because it contains nematodes that cause animals to avoid it. Jatropha is currently banned in Australia and South Africa, being classified as a noxious weed, although it really needs planting to be harvested properly. As shown inset in Figure 1 it is a green maple-leaf shaped plant that apparently grows to about 4m high in about 2 years and fruits twice per year for up to 50 years with its peak production being after about 5 years.

The growth rate is relatively fast, with these over 1m high specimens in the photo having grown to that height in about 4 months. The photo is from a trial plot at Sabodala, currently showing that fertilizer makes no difference, and that they do (like most plants) like water, the unirrigated row being only ~0.4m high.

The plants can grow in very weak soil and areas unfit for food and forestry crops, in fact the latest GEXSI (global exchange for social investment) jatropha platform (www.jatropha-platform.org) contains extensive detail including a recent world study showing that its replacement impact on food and forestry areas is only about 2% or 3%. Sabodala intends to initially grow the plants on the edge of its tailings dam.

The jatropha plant has a husk-like fruit that contains the seeds as shown inset in Figure1. The seeds when crushed produce about 30% to 35% oil and a seed cake. The seed cake when mixed 4-parts to 1 with rock phosphate results in an all-purpose fertiliser. The jatropha plants do vary – just because they look lush does not necessarily mean that they have the highest oil yield per hectare, and some of the plants can grow to 6m high (which makes them difficult to harvest).

There are significant programmes underway in Zambia, Indonesia, the America’s (north, south and central), the Phillipines, China, Asia and parts of West Africa (like Senegal). Jatropha oil is already being refined and used in biofuel to replace the more costly palm oil. A trial power plant in Belgium has been successful for the past 6 months, leading to a 15MW to 18MW version due to be commissioned by the end of 2008.

While in Zambia we heard of a well established jatropha farm about 20km from Lusaka’s airport that supplies jatropha products to a number of customers, an extensive programme operating south of Albidon’s Munali mine, and a number of programmes on the Zambian copperbelt.

Theoretically jatropha could replace hfo at Sabodala, again being centrifuged and then heated before being fed to the engines, although, it is expected to be phased in after the plants have grown in about 2 years’ time. The operating costs for jatropha are apparently in the 12USc to 15USc/Kwh vicinity.

However, jatropha requires land area for growth, and the next buzz-word alternative biofuel is algae. We encountered algae as another consideration that is growing in popularity and which has a higher yield than jatropha, since it can be grown/evolve in vertical sheets or columns in large warehouses. The algae like carbon dioxide, steam and heat, feeding off the CO2, to result in various biofuels. There are a number of projects and companies forming around theuse of algae, mostly in the US.

Consequently although diesel fuel prices have soared, there is a growing number of alternative apparently very viable solutions that are being developed to result in a diesel/usable biofuel. Such solutions appear capable of significantly reducing fuel and hence the power costs for remote operations. Possibly even some of the vast areas of Australia or South Africa can be put to some use, growing biofuel.

Disclosure and Disclaimer: This article has been written by Keith Goode, the Managing Director of Eagle Research Advisory Pty Ltd, (an independent research company) who is an Authorised Representative with Taylor Collison Ltd, and with his associates, may hold interests in some of the stocks mentioned in this article. The opinions expressed in this article should not be taken as investment advice, but are based on observations by the author. The author does not warrant the accuracy or completeness of any information and is not liable for any loss or damage suffered through any reliance on its contents.

Figure 1. A Wärtsilä Power Station Generator, and inset : Jatropha plants and seedsGDNsep08

  • Written by: Keith Goode
  • Monday, 01 September 2008

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