The alchemy of oil from coal using vital start-up money from Bonn

The Berlin newspaper cartoon sums it up nicely: A prince charming bearing a glass slipper strides past the primped sisters of OPEC and the "Multis" (multinational corporations) toward the besmudged and disbelieving Cinderella of coal.

In the case West Germany's Cinderella the glass slipper is government seed money of up to 14 billion deutsche marks ($8 billion US) over the next dozen years to develop commercial-scale coal conversion. The Bonn government announced this program last January, and 14 coal reprocessing pilot projects are already vying to be chosen for scaling up.

The intent is twofold: to exploit the still rich ruhr and Saar coal reserves and substitute domestic coal for imported oil as much as possible in energy and chemical use, and to develop coal-conversion technology for export.

The latter goal will be easier to achieve than the former. Although West Germany has the largest anthracite and bituminous reserves in Europe -- economically recoverable deposits of 40 thousand megatons -- the best Ruhr hard coal is a thousand meters underground and getting deeper. It's expensive to bring up.

West German hard coal currently costs 270 DM ($150 US) a ton, as compared with American hard coal's 80 DM ($44 US) a ton, or West GErman soft coal's 20 DM ($11 US) a ton. West German anthracite is thus some 40 percent more expensive than the average price of industrial coal in France, 65 percent higher than the British average price, and more than double the average price of Australian and American coal imported into the Netherlands. And coal-derived fluid products still cost two to four times as much as comparable petroleum products.

Given these price differentials, domestic coal has been heavily subsidized by the West German government ever since cheap oil pushed coal down from a 74 percent share in Europe's energy in 1950 to 38 percent in 1965 -- and pushed West German production down from the annual 140 million tons of the early 1960s to last year's 87 million tons. Subsidies currently run to some 6 billion DM ($ 3.33 billion US) a year for anthracite. Only within the past few months have import restrictions been liberalized to allow cheaper coal imports to come into West Germany up to a volume matching domestic production.

West German hopes that hard coal may yet pay its own way now rest on the risig price of rival oil and gas -- and on commercial refinement of the pressure and catalysis processes that the Germans first began using to harvest oil from coal half a century ago.

West Germany's existing conversion projects aim at producing synthetic gas for the chemical branch (three facilities); coal gas for power plants (three); gas for the direct reduction of iron ore (one); synthetic "natural" gas (four); and liquid products (three).

Gasification of the much-poorer-quality soft coal is furthest along, but industry and government are also investing heavily in gasification and the more difficult liquefaction of hardcoal.

By the 1990s some 12 million tons of had coal and some 10 million tons of soft coal per year are slated for conversion, with the hard coal turning out four or five times the volume of end products as the soft coal.

In hard coal the leading experimenter is Ruhrkohle Joint Stock Company, the producer of 90 percent of this nation's anthracite, 20 percent of the world's coking coal, and 10 percent of all coal trade in the world. Ruhrkohle has several pilot plants going in West Germany, including a promising one using coal dust. It is also participating in three further projects in the United States, including construction of the world's first modern commercial-scale hydrogenation plant at Morgantown, W.VA.

For the late 80's, Ruhrkohle is exploring the possibility of using waste heat from nuclear reactors to save the 30 to 40 percent of raw coal that is used to fuel conversion.

For 1981, it is already constructing along with Yeba Oil an ambitious 300 million DM ($167 million) demonstration plant here in Bottrop that will liquefy a daily 200 tons of coal into 40 tons of gas, 30 tons of raw naphtha, and 70 tons of middle oil. With further processing, explains Dr. Gerhard Kurth of Ruhrkohle's special services department, these products can be used as chemical feedstocks, motor fuel, heating oil, or fuel for power plants.

Gasoline for autos will emerge from the Bottrop distilling tubes at a cost of 80 pfennigs (pretax) or 1.55 DM (post-tax) per liter. This compares with a current 1.14 DM tank price for gas from petroleum. Dr. Kurth suggests pointedly that if the standard oil taxes were not levied on this coal gas, then it would already be competitive. Realistically, Ruhrkohle economists expect coal gas and coal oil to be "economically" interesting" by the first half of the 1990s