Canadian alternative 
energy supplier Alter NRG’s first coal-to-
liquids (CTL) project has slowed significantly owing to the economic slowdown.

Alter NRG cofounder and chairperson Michael Heier says that, although the Fox Creek project, in Alberta, Canada, is continuing, the company is 
re-evaluating the overall scope of the project and the timeline for a renewed process of development.

Heier explains that a number of Western Canadian energy projects have been delayed or shelved as a result of three factors. 
Firstly, from 2003 to 2007, a number of large projects experienced significant cost overruns owing to price escalations of materials, as well as labour-cost escalations in a highly skilled 
labour market.

“Secondly, the remote locations of most of these projects did not lend themselves to many cost efficiencies that would be 
experienced nearer to large 
population bases. 
Although it is the same labour pool, there is no requirement for large camps and infrastructure related to construction stores and transport. 
“

Thirdly, the financial crisis that began in April 2008, 
although improving, is still somewhat entrenched. This effectively removed the ability of most 
energy firms to engage in new project development or continue 
with projects that were in the middle of construction,” says Heier.

One such project is private Canadian oil sands developer BA Energy that was advancing a 75 000-bl/d bitumen upgrading facility near Edmonton, Alberta, which is now in an 
auction process.

Heier reports that Alter NRG was involved in a partner selection process in April 2008 and interest in the project was high. However, simultaneously, the global economic crisis started affecting industry players that were willing or able to participate in the project.

Owing to the size of the Fox Creek project, Alter NRG has not yet selected a new partner, as it would require a few large, or a number of smaller, partners, to complete the project which needs to produce 40 000 bbl/d to 
50 000 bbl/d of fuel for decades.

Fox Creek is currently in the early stages of a three-year 
regulatory and environmental approval process. “At this point, final project scoping, project 
engineering and baseline environmental studies are required to formally initiate the process,” 
says Heier.

He says that Fox Creek has economic and environmental advantages over competing oil sands projects.

“One of the key environmental advantages is that the coal leases and the subsequent CTL project are in very close proximity 
to some of the largest conven-
tional oilfields in Western Canada. These fields are in their twilight years of production and require a source of carbon dioxide (CO2) to conduct miscible flooding. This is a later stage of the enhanced oil recovery pro-
cess that improves the overall 
recovery factor and extends the life of the fields. Fox Creek would be the nearest source of CO2 to these fields in terms of time and distance. Therefore, the CO2 offtake would be another profit 
centre for the CTL project,” 
explains Heier.

Also, Fox Creek is currently scoped as capturing more than 90% of the CO2 produced. As it would be supplying pre-existing oilfields, it has a proven capture mechanism as it has stored oil and gas for millions of years.

Heier says that the CO2 and, to a lesser extent, the hydrogen sulphide, would be removed from the synthetic gas stream in the gas clean-up phase after gasification and prior to the Fischer-Tröpsch (FT) process. Those gases would then be compressed into a pipeline for delivery to the various oilfields requiring the gases for the collective miscible projects.

Currently, there is only one project in North America that is using this system. The Dakota gasification facility, located in North Dakota, pipes CO2 from its facility to south-east Saskatchewan, Canada, about 300 km away, into a large oilfield operated by Canadian oil and gas company Encana.

“The CO2 is used in a miscible flood, which has showed dramatic 
success in terms of incremental oil recovery, as well as in extending the field life by a few decades. The CO2 will also be fully sequestered once the project is com-
pleted,” says Heier.

Fox Creek is modelled after this project and ultimately has the potential to be over twice the size with the surrounding oilfields 10 km to 60 km away. 
This is another economic and environmental potential for Fox Creek.

It is envisioned that Fox Creek will supply a high-value diesel product.

“Currently, the quality of Western Canadian diesel is relatively low by some global standards as it has a higher sulphur content and particulates, as well as a relatively low 
cetane value in the sub-50 range,” says Heier.

CTL diesel products are virtually devoid of sulphur and particulates and also have a cetane value in the 70 range, which would mean that the diesel output from the facility could improve the environmental performance of the diesel output from a number of refiners.

Heier says that Alter NRG 
remains excited about the potential that Fox Creek offers in the long term for its investors. Fox Creek has just under a one-billion-ton resource in place and a National Instrument 43-101 
reserve determination of 468-million tons based on current mining costs. At 1,5 bbl of FT product for each ton of coal, it supports a 40 000-bl/d to 50 000-bl/d project for up to 50 years without getting to inferred reserves. “To put that into perspective, that makes Fox Creek an almost 750-million- 
barrel reserve,” explains Heier.