Italy to use clean gasification for power

Feb 10, 1997 01:00 AM

New clean power plants have found private finance in energy-short Italy where three large projects will be up and running by the turn of the millennium. Italian oil refiners have decided to forge ahead with gasification -- using unwanted sludgy oil refinery residues to produce gases burned to generate power. "In other regions these would not be economic options," said a consultant. "Gasification is a way of providing some energy diversification, with added environmental benefits."A Rome-based consultant assessed total capital costs of Italy's gasification projects at $ 2.5 billion. This works out at around $ 2 million per megawatt of capacity, compared with $ 800,000-$ 1 million per megawatt for small natural gas fired stations. "Gasification is expensive, of course," he said. "But there are advantages. This technology allows refiners to enter the most alluring energy business in Europe - electricity."
Three projects are planned:Saras SpA will turn 20,000 bpd of residue from its huge Sardinian refinery into gas, producing 500 MW of electricity. Anonima Petroli Italiana SpA (API) will gasify 9,000 bpd at its Falconara refinery for 260 MW while Isab energy will gasify 20,000 bpd at Mellile to produce around 450 MW. The plants are expected to be ready by 1999-2000 and their combined output will cater for around 5 % of Italy's electricity demand.
Italian state power utility ENEL burned just over 22 million tonnes of fuel oil last year. But tighter European anti-pollution legislation has obliged Italy to reduce its dependence on oil for power generation and embrace cleaner fuels -- particularly natural gas. Analysts say Italy, heavily reliant on oil imports for power generation, is prepared to pay a premium to develop homegrown resources which meet tough new European environmental standards Italy's gas imports from Algeria are rising but political instability in North Africa has encouraged Rome to develop homegrown supplies. Gasification project finance has been eased because of fixed priceelectricity supply contracts with ENEL. Contracts will be valid for a minimum of eight years even though ENEL is slated for privatisation. Embedded in the contracts is a subsidy, which Tabarelli said was worth around a third of the agreed electricity price.The fledgling natural gas contract at the International Petroleum Exchange (IPE) in London is currently trading at around 12 pence (19 $ cents) a therm. Gas demand is growing rapidly but gas prices would have to rise to 20-25 pence a therm to make gasification economically feasible across Europe, said Griffiths.
Gasification will significantly alter the mixture of oil products produced by the three refineries. Unwanted heavy refinery residue is traditionally blended with expensive "cutter stocks" such as heavy gas oil, to produce marketable fuel oil which is then sold for use in power stations and to power ships. The gasification process will eliminate the need for this blending, boosting output of products such as heavy gas oil. Refinery output of sparefuel oil is reduced to zero, Birch said, while pollutants like sulphur are removed.

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