As indicated in Part 1 and in this article, the increased price of oil and electrical power should result in new opportunities within the industry. Use of power will still be critical and any process that is not operating optimally will be wasting valuable power and resources. The trend to ensure that all process plant is operating efficiently will be a global one.
Despite all the doom and gloom there is positive potential for local industry, this being in terms of energy intensive smelting and other operations as mentioned above and in the transfer of Sasol technology throughout the world in which it is hoped that local I&C expertise will be involved. Further to that is South Africa's lead in the development of the PBMR nuclear reactor, which not only will provide a safe source of electrical power but may also be the power source for hydrogen production for automotive use.
Sasol
Once regarded as an apartheid era white elephant, Sasol today possesses the technology that may extend the deadline for the world's liquid fuel crisis. Sasol picked up the technology from Germany in the aftermath of World War 2, where Hitler had tried unsuccessfully to produce oil for his war machine from coal. Sasol succeeded where other countries (including the USA) failed and through its proprietary Fischer-Tropsch technology, successfully converted low-grade coal into liquid fuels and high-end petrochemicals. Today Sasol is the world's largest producer of synthetic fuel and meets almost 40% of South Africa's needs. The Sasol I and II plants produce 168 000 bpd from coal, while PetroSA (Mossel Bay) produces a further 47 000 bpd using offshore natural gas and Sasol's technology. Although there are no existing plans for Sasol to transfer its oil from coal technology to other countries, opportunities must exist for the process application in other coal rich countries such as China, Australia and the USA. Such developments could dramatically reduce dependence on OPEC production and significantly increase 'effective reserves' of liquid fuel. While Sasol once received a subsidy from government when oil prices fell below about $16 a barrel it is a highly profitable venture at today's oil prices, and perhaps government could persuade the company to sell fuel locally below the official oil price, a tactic that would be a major boom for our developing economy. Alternatively and more plausible for a listed company like Sasol, government, through the IDC or other instruments, could invest in Sasol (and PetroSA) to expand its local liquid fuel capacity, reducing our dependence on natural oil.
Strategically more important to Sasol is its gas-to-liquids (GTL) technology. This is a much more cost-effective and more environmentally friendly process and is geared towards the production of low sulphur diesel. While oil reserves might be dwindling there are huge uncommitted gas reserves worldwide in countries such as Africa, South America, the Far East, Australia and even the Middle East. The demand for diesel is also increasing and is expected to reach at least 18 million bpd by 2020. According to 2004 information from Sasol, operating, under construction and planned GTL facilities already have a capacity in excess of 0,75 million bpd and naturally the local company is involved in several of these ventures. Notable amongst these is the Oryx GTL facility in Qatar which is being expanded from its planned 34 000 bpd to 100 000 bpd. In addition to this Sasol has signed an agreement with Qatar Petroleum to develop another integrated GTL facility with an output of 130 000 bpd.
Note should also be made here that PetroSA is also involved in the further development of GTL technologies and has partnered with Norway's Statoil. Between Sasol and PetroSA South Africa should command a leading position in the implementation of this technology worldwide. Sasol and PetroSA recently signed an agreement that will see them collaborate in joint projects relating to natural gas and chemical operations.
In terms of GTL conversion, conservative estimates of proven uncommitted gas reserves (new gas reserves are being discovered on a regular basis) indicate that some 22 million bpd of diesel could be produced over a 30-year period.
The pebble bed modular reactor
Although Eskom is heavily focused on coal-fired power generation it has for several years been looking at alternatives, including wind, natural gas, biomass and solar energy generation. It has also implemented pumped storage systems whereby in off-peak periods water can be pumped back up to reservoirs from which hydroelectric power can be generated to meet peak power demands. It is, however, its focus on cheap coal, mined in close proximity to the power station, that has allowed it to achieve the title of the lowest cost power utility in the world. In any world energy crisis Eskom's huge power generation capacity using local resources, will prove a boon for our economy. The only drawback to the power generation scenario is that the vast majority of the power is generated in the northern parts of the country and there are huge power losses when this has to be transmitted to the south.
Although we have only a single nuclear power plant, Eskom has for several years been investing in the development of the nuclear pebble bed modular reactor (PMBR) and at this point is ready for the manufacture of a pilot plant (110 to 120 MW) at Koeberg using local (IST and NECSA) and overseas skills. The PMBR has received massive interest from overseas countries and Eskom's partners include British Nuclear Fuel and the IDC, with rumours that both the French and Japanese nuclear corporations would be willing to come in as joint venture partners. South Africa leads the rest of the world in the development of PBMR technology but continued government procrastination in terms of environmental issues and additional funding could result in us being overtaken by other countries such as China.
The PBMR is inherently safe with no possibility of a meltdown situation, faulty control systems instead resulting in a closing down of the reactor. The term 'Modular' is deliberate as the reactor can cost-effectively be manufactured and operated at low outputs (such as 120 MW) in close proximity to the major user(s) of the power. Where higher power is demanded more modules can be added to increase output into the GW range if required. World interest and market studies have shown that up to 900 PMBRs could be sold between now and 2027, with North America being particularly interested, not least for using these safe reactors to generate hydrogen for its fuel cell programmes.
Obviously manufacture of these reactors within South Africa would be of major importance for the I&C industry, as control in this case is always critical. As a country we cannot afford to lose this opportunity, which could result in even more global business if we are hit with a new energy crisis.
The vanadium oxide battery
One of the major problems with renewable energy is the storage of power to provide constant load. This problem is being addressed by a Canadian company, VRB Power Systems, through its successful development of a vanadium redox battery. South Africa has been closely involved in this development where Eskom partnered with VRB to develop a programmable power electronics device for the battery system. A field trial of the technology was also carried out at the University of Stellenbosch where a 250/520 kW battery was evaluated. VRB now has several of its units operational, the largest being a 2 MWh unit installed in North America. This technology obviously has tremendous potential for rural areas of South Africa and it is hoped that the local industry will continue to be involved in development and installation through Eskom.
In fact, on its website, VRB lists two South African companies as its strategic partners, these being Highveld Steel and Vanadium and Eskom. With Highveld it is a 50:50 strategic alliance to secure the future supply of the key vanadium and manufacture the electrolyte (Highveld produces 30% of the world's supply of vanadium). In the case of Eskom the agreement is that it will supply the power electronics and systems and in a tripartite agreement VRB, Highveld and Eskom will participate in the further development of the technology.
Other opportunities
The Ibhubesi gas field located some 280 km NW of Saldanha Bay has estimated reserves in excess of 700 trillion litres of natural gas. The proposed pipeline for this field will come ashore close to Saldanha and will from there run to Cape Town, Mossel Bay and Coega. PetroSA has indicated that access to this new resource could be used to significantly increase production of synfuels thus further reducing our dependence on imported fuels. There are also plans to build an 800 MW gas-fired power plant in the Saldanha area while the Athlone power station could be converted from coal to gas. At the same time Saldanha Steel has plans to double its capacity once this gas becomes available and to process iron ore on-site so that it can be exported in a more concentrated value-added form.
In terms of the use of alternative fuels the local cement industry is playing a leading role. While it currently uses some 1,3 million tons of coal a year, Holcim has indicated that as a country we produce some 50 million tons of combustible waste in the same period. They intend to convert their kilns to use this waste, which could be in the form of wood chips, solvents and scrap tyres. The latter appears particularly attractive as 100 000 tons of scrap rubber tyres are generated every year and the rubber recycling industry uses only about 15%.
South Africa may even have a role to play in the manufacture of hydrogen fuel cells. We certainly have the power available to generate hydrogen and the fuel cell as with conventional autocatalytic convertors requires platinum as a catalyst. Just as there is a booming local industry in regard to the latter, fuel cell manufacture may follow suit.
Conclusion
It is obvious that there are many ways in which an energy crisis can be avoided and South Africa should survive such an event better than most countries. The local I&C industry will benefit from many of the new initiatives and from the essential construction of conventional power stations, the mothballing and upgrading of older coal-fired stations, the PBMR, as well as the required development of renewable energy resources. The predicted higher electrical power costs in the developed world should give South Africa further advantages in the metals market through aluminium, steel and ferrochrome and construction of new plants will benefit the local I&C industry. As the rest of Africa moves towards the essential generation of more electrical power (if not supplied by a grid originating in South Africa) significant opportunities for the local industry should also open up.
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Dr Maurice McDowell has many years' experience as a technical journalist, editor, business manager and research scientist. His third party analyses of world-class companies and processes, as well as his insight into industry and technology trends are well respected.
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