Petroleum coke and the coal industry:

Petroleum coke has made significant inroads into the steam coal industry over the last few years and will continue to do so for a variety of reasons. Chief among them is that petcoke can serve as an excellent, inexpensive product to blend with coal in traditional coal fired boilers, and, in some newer boilers, can even replace coal entirely .

What is it?
Petroleum coke is a byproduct of the Coker refinery process which upgrades fuel oil by heating it and cracking it to higher valued gasoline, jet and diesel components.

How does it compare physically to coal?
Generally there is lower ash (<0.5%), lower moisture (8-10%) and lower Volatiles (8-10%) than steam coal, resulting in a much higher heating value, on the order of 14,000 Btu/lb. There is generally higher sulfur, ranging from about 4 % to 7 %, while the HGI varies from 35 to 75. Most coke produced is fuel grade, meaning it competes with coal. Some coke is very low in Iron, Nickel and Vanadium, thereby achieving a higher value in the aluminum anode industry.

How does fuel grade coke compare economically to coal?
Production costs associated with petcoke are minimal because it is a byproduct of the refining process, and prices are generally determined by the competitive steam coal price. Pricing is also generally discounted to compensate for sulfur, HGI and the extra difficulties of the end user managing both coal and coke inputs. Historical $/ BTU prices of delivered coke vs coal in North West Europe show coke running about 75% of steam coal, but there is a lot of variation.

How do refineries value it?
Because coke is a byproduct and the refinery gets such a boost from the light products from the Coker, refineries would be willing to run the coker even if they had to pay to dispose of it. This could continue until the net income from the light products boost and the petcoke loss, fell well below the value of fuel oil, a point that is reached when coke loss falls below $10/ton at the refinery gate.

How much coke is there and where does it go?
As of early 2012 there was about 100 million metric tons of pet coke produced worldwide, much of it in coastal refineries in the Americas.  The fuel grade portion,  (about 75 million metric tons)  is mostly used it is used in steam coal importing areas such as China and India (the 2 largest coal consuming nations in the world), Japan,   Northern Europe and other developing countries with ability to import.  Most US produced fuel grade pet coke (especially from coastal refineries)  is exported, but there are a few  domestic  US cement plants and power plants that can handle the pet coke higher sulfur.

Who buys coke?
Cement plants and power plants are the 2 greatest consumers of pet coke. There is some limited use as space heating and in commercial brick kilns in Europe, and a small but emerging market for met coal blending component for the steel industry. While the higher sulfur may limit the coke in a coal/petcoke blend in a plant designed for coal, more recently designed Circulating Fluidizd Bed (CFB) boilers can burn 100% high sulfur coke.

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