Proposal: Direct Coal Liquefaction (DCL) Facility for Mongolia (10,000 Barrels/Day)
Executive Summary
Geodyn Solutions proposes a 10,000 barrels/day Direct Coal Liquefaction (DCL) facility for Mongolia, transforming the nation’s abundant coal reserves into valuable liquid fuels (e.g., diesel, gasoline). Compared to Indirect Coal Liquefaction (ICL), DCL delivers higher efficiency, lower capital costs, and competitive revenue potential, making it the optimal choice for a scalable, economical energy solution. This project will enhance Mongolia’s energy security, create significant employment opportunities, and offer a robust return on investment (ROI), provided hydrogen supply and crude oil market dynamics are effectively managed.
Process Description
Direct Coal Liquefaction (DCL) converts coal directly into liquid hydrocarbons by hydrogenating it under high pressure and temperature, avoiding the energy-intensive gasification step required in ICL. This streamlined process achieves superior efficiency and produces 10,000 barrels/day of synthetic fuels, aligning with Mongolia’s need for affordable, domestically produced energy.
Economic Analysis
| Factor | Details |
|---|---|
| Capital Cost | $1.5-2 billion USD for a 10,000 barrels/day DCL facility, significantly less than ICL ($2-2.5 billion) due to simpler infrastructure and fewer processing units. |
| Operational Cost | Annual expenses of $150-200 million, including coal feedstock ($50-70/ton, ~$50-60 million/year), hydrogen supply ($20-30 million/year), labor, and maintenance. Costs are moderated by DCL’s efficiency gains. |
| Efficiency | 40%-50% conversion efficiency (versus ICL’s 30%-40%), maximizing fuel output per ton of coal and reducing waste. |
| Revenue Potential | At $70/barrel (conservative estimate), fuel sales generate $255 million annually (10,000 barrels/day × 365 days × $70). |
| Return on Investment (ROI) | Net annual profits of $55-100 million after operational costs, yielding an ROI of 3%-6% per year. Breakeven is achievable in 15-20 years, with potential acceleration via government incentives or higher oil prices. |
Job Creation
| Phase | Number of Jobs | Job Roles |
|---|---|---|
| Construction Phase | 800-1,200 (over 3-4 years) | Engineers, construction workers, logistics staff. |
| Operational Phase | 150-200 (permanent) | Plant operators, technicians, administrative personnel. |
| Indirect Jobs | 500-800 | Jobs in coal mining, hydrogen production, and fuel distribution networks. |
| Total Economic Impact | 1,450-2,200 | Significant boost to Mongolia’s workforce and rural economies. |
Advantages of DCL
| Advantage | Details |
|---|---|
| Superior Efficiency | 40%-50% efficiency outperforms ICL, optimizing coal use and lowering production costs. |
| Reduced Capital Costs | $1.5-2 billion investment is more manageable than ICL, ideal for a pilot-scale project with expansion potential. |
| Competitive Revenue | Produces 3.65 million barrels/year, offering a cost-effective alternative to imported fuels. |
| Scalability | A 10,000 barrels/day plant serves as a proof-of-concept, paving the way for larger facilities if successful. |
| Energy Sovereignty | Reduces Mongolia’s $2-3 billion annual fuel import burden with domestic production. |
Challenges and Dependencies
| Challenge | Details |
|---|---|
| Hydrogen Dependency | Requires ~100-200 tons/day of hydrogen (1-2 tons/barrel), necessitating a reliable source (e.g., electrolysis or natural gas reforming). Costs could escalate without local infrastructure. |
| Crude Oil Market Sensitivity | Profitability hinges on oil prices; a sustained drop below $50/barrel could challenge viability unless mitigated by subsidies or fixed-price contracts. |
| Environmental Considerations | Emissions-intensive process requires carbon capture and storage (CCS), adding $150-200 million to capital costs. |
Strategic Fit for Mongolia
– Fuel Demand: Mongolia’s reliance on imported fuels (over 90%) creates a $2-3 billion/year market, even at smaller scales like 10,000 barrels/day.
– Coal Abundance: With 170 billion tons of reserves, Mongolia has a secure, low-cost feedstock for DCL.
– Economic Development: Job creation and revenue align with national priorities for industrialization and self-reliance.
– Pilot Potential: A 10,000 barrels/day facility tests DCL’s feasibility, offering insights for future expansion to 100,000+ barrels/day.
Proposed Implementation
| Key Factor | Details |
|---|---|
| Site Selection | Proximity to Tavan Tolgoi coal basin, with access to rail, water, and power infrastructure. |
| Capacity | 10,000 barrels/day of liquid fuels, meeting ~10%-15% of Mongolia’s current fuel demand. |
| Hydrogen Supply | Develop an on-site electrolysis unit powered by Mongolia’s solar or wind resources, or secure imports via regional partners. |
| Financing | $1.5-2 billion via government equity (25%), international loans (50%), and private investment (25%). |
| Sustainability | CCS to capture 0.5-0.7 million tons CO₂/year, balancing economic and environmental goals. |
| Timeline | Feasibility study (9 months), financing (12 months), construction (3 years), operational launch by 2029. |
The 10,000 barrels/day DCL facility represents a strategic, cost-effective entry into coal liquefaction for Mongolia. With a $1.5-2 billion investment, it delivers $55-100 million in annual profits, creates 1,450-2,200 jobs, and achieves a 3%-6% ROI—outpacing ICL in efficiency and affordability. While hydrogen supply and oil market conditions require careful management, this project positions Mongolia as a leader in domestic energy production. Geodyn Solutions is committed to partnering with Mongolia to realize this vision, combining cutting-edge technology with sustainable innovation.
