Italy focusing on several gasification investment

Feb 26, 1997 01:00 AM

Italy, traditionally heavily dependent on fuel oil for power generation, sees environmentally friendly gasification projects as the technology of the future. "I am firmly convinced that in the new global energy scenario this fabulous new energy technique will take on a much more important role," Gian Marco Moratti, president of Italy's industry association Union Petrolifera, said, addressing the opening of a conference on "Gasification Technology in Practice".
New clean power plants are generally seen as too costly by most European countries but Italy, with private project finance, has three large projects which will be operational from 2000. Italian oil refiners, including Moratti's own Saras company, have decided to push ahead with gasification which uses refinery tar or residues to produce gases burned to generate electricity. Moratti said the three gasification plants planned by the Italian refineries for an overall cost of some 5.5 trillion lire ($ 3.3 bn) would be capable of producing atotal of over 10 bn kWh per year when fully operational. Their combined output is expected to cover some 5 % of Italy's electricity demand.
Moratti said that when the project was first launched some six years ago, the gasification process, although costly, was chosen over the alternatives of deep conversion, like hydrocracking, or radical sulphur reduction of fuel oils. Apart from producing a totally clean fuel gas, he said, "gasification is a balanced solution for the whole Italian oil industry and the country, in that by considerably reducing the problems linked to the production of low sulphur fuel oil it helps to avoid an upheaval in the national supply and production system."
But the enormous costs involved for the individual companies concerned could not be covered by normal financing procedures, he said, so they turned to project financing - a means almost unheard of for Italy. Three joint projects were set up - Anonima Petroli Italiana SpA (API) with multinational ABB forming API Energia, Erg SpA with Mission forming Isab Energy, and Saras SpA Raffinerie Sarde with Enron forming Sarlux. The three companies have been financed by pools formed by leading Italian and foreign banks and the plants are being built under key in hand contracts. "Construction proper finally got under way a few months ago. What seemed to be an impossible undertaking, and a commitment of extreme boldness and great risk, is becoming a reality," Moratti said. He said gasification plant investment costs looked like falling considerably over time. "And it is not just by chance that foreign attention is focused on these Italian initiatives. Interest in gasification is growing rapidly - not just in the US where the Clean Coal programme has been launched which envisages several gasification projects, but also in Europe."
Texaco has already built one gasification plant at its El Dorado plant in Texas. Other small gasification projects are also going ahead in Spain and the Netherlands, but Italy's investment is the world's largest.Moratti said by now gasification technology in its most general application was developed and tested "and is already the ideal solution for the joint production of energy and other chemical products, such as hydrogen. Up to now there's been a certain caution in using it, due essentially to the availability at low cost of "easy" fuels either for energy or environmental uses. But such an attitude is rapidly changing. It is becoming more and more difficult to find fuels required by the new environmental regulations, and their prices are also rising. Conversely, world resources of low cost fuels, treatable via gasification - like coal and oil residues - are enormous," he said.
"We are firmly convinced that gasification processes will be very important, recovering for world use an increasing quantity of utilisable resources which are environmentally friendly and safe," Moratti added.

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