Review & Outlook for China Coal Chemical Industry in H1 (II)   

(Continued page 12, issue 21)

3. CTL projects: successive commissioning   

Shenhua Group's 1 million t/a direct CTL (coal-to-liquids) demonstration unit in Erdos of Inner Mongolia started up in January 2009 and has continuously operated for 303 hours before scheduled shut-down. The project will be commissioned once again in the third quarter 2009 for a trial operation of 1 000 hours, to collect technical and economic data necessary for an assessment by China Shenhua (SH: 601088), the listed arm of Shenhua Group. An officer of China Shenhua stated in June that if the assessment achieves positive conclusion, the listed company will consider acquiring this unit from the Shenhua Group to extend its business into the coal chemical industry. But so far no sufficient data have been collected to compute the cost of CTL production line.
    Inner Mongolia Yitai Co., Ltd. (Yitai) 's 160 000 t/a indirect CTL project, also located in Erdos, started up in March 2009, introduced a process developed by Synfuels China. At the end of this June, Lu'an 160 000 t/a CTL project also using the Synfuels process and Jincheng Coal Group's 100 000 t/a MTG (methanol-to-gasoline) plant using ExxonMobil process are in the commissioning progress and are scheduled to be completed in Q3 2009.
   According to ASIACHEM's data, Shenhua 180 000 t/a indirect CTL project at Erdos is scheduled to be completed by the end of 2009 and start up in 2010. The 1 million t/a indirect CTL unit by Yankuang Group using its self-developed process passed environment impact assessment held by the Ministry of Environment Protection in January 2009, which is subject to approval by the state authorities. The 3.6 million t/a indirect CTL project jointly developed by Shenhua Ningxia Coal Group and SASOL of South Africa has entered the second stage of feasibility study, with scheduled construction in October 2010.

4. CTO projects: attracted concerns

Three CTO projects - Datang Duolun, Shenhua Baotou and Shenhua Ningxia Coal, were under full swing construction in the first half of 2009. Other powerful Chinese enterprises and foreign firms are also seeking opportunities to develop CTO projects.
   Based on ASIACHEM's data, China would have 1.7 million t/a CTO capacity by the end of 2010. (CCR2009 No. 20)

5. Coal-based SNG: highlight

To fill the shortage of gas supply in China, in addition to increase of imports, coal-based SNG (synthetic natural gas) production has induced passion of investment and will become a principal source of gas supply in China. During the first half of 2009, SNG projects became a highlight in the coal chemical industry.
   In February, Shendong Tianlong Group's 1.3 billion Nm3/a SNG project at eastern Zhunger was registered by the Xinjiang Autonomous Region, and construction on the attached 20 million t/a open-cut coal mine project was started at the end of June.
   In April, Shenhua Group broke ground for its 2 billion Nm3/a SNG project in Erdos.
   In early May, Datang Group's 4 billion Nm3/a SNG project in Fuxin of Liaoning province passed environment impact assessment organized by the Ministry of Environment Protection.
   On June 22nd, CNOOC and Datong Coal Group jointly launched a 4 billion Nm3/a SNG project.
   On June 30th, Xinwen Mining Group started construction of a 2 billion Nm3/a SNG (phase I capacity) in Yili, Xinjiang.
   In addition, Datang will start construction of another 4 billion Nm3/a SNG project in Chifeng, Inner Mongolia in near future. Qinghua Group has commenced construction on a 1.35 billion Nm3/a SNG project in Yining, Xinjiang, and an industrial park to accommodate the project is now under construction.
   There is a strong expectancy for the up-going gas price in Chinese market, which is in favor to the competition power of coal-based SNG projects.

6. Technical breakthrough

In the first half of 2009, China achieved a series of new progresses in self-developed coal chemical industry processes. China has evolved from a major coal chemical industry process licensee to a potential licensor.
   On March 22nd, the State Intellectual Property Office of China granted patent right for "one-step process to produce olefins from methanol", jointly developed by Shanxi Institute of Coal Chemistry of Chinese Academy of Sciences (CAS), Sedin Engineering and Yunnan Coal Chemical Group. A 3 500 t/a methanol-to-gasoline unit in Yunnan Jiehua Company started up in December 2007.
   At the end of March, Xi'an Thermal Power Research Institute of Huaneng Group and Future Fuels Technology LLC of USA signed an agreement on the license of the "double stage pulverized coal HP gasification process", to build a 150 MW IGCC power station in Schuylkill, Pennsylvania.
   On May 7th, CAS announced the success of "the world's first 10 000 t/a coal-based MEG commercial demonstration unit". A 200 000 t/a plant using this process is now under construction by Tongliao Jinmei Company in Inner Mongolia, and is scheduled to start up in September 2009.

7. Clean coal conversion: put on eyes

On March 3rd, an officer of Shenhua Group said that Shenhua will carry out a carbon capture & store (CCS) demonstrative project in two years. The project will be designed to capture and concentrate carbon dioxide from the effluent of CTL plants.
   In May, the first IGCC demonstrative project in the Chinese power industry, Huaneng GreenGen project obtained approval by the National Development & Reform Commission. Construction on the project was commenced in Tianjin on July 6th.
   As known to ASIACHEM, China has built two IGCC/multi-co-production projects in the coal chemical industry and petrochemical industry respectively. Yankuang Group realized commercial demonstration of IGCC/multi-co-production process in a project supported by MOST (Ministry of Science & Technology) 863 Program, located in Tengzhou, Shandong province as early as in 2005. Fujian United Petrochemical Co., Ltd. constructed an IGCC/multi-co-production project as the kernel unit of the company's utility island, which was mechanically completed and handed over to the owner in March 2009. The IGCC unit uses asphalt from refinery plant as raw material, generating 280 MW of power in addition to 80 000 Nm3/h of hydrogen as well as by-produced nitrogen and oxygen.
   Generally speaking, China made further clarification on the nation's coal chemical industry policy and planning in the first half. Following the rebound of oil price, investors showed more interests in coal chemical projects. However as influenced by the market conditions, project brought on-stream in this period were much less than the number of planned projects. It is predicted that coal chemical industry still needs to withstand the weak downstream demand and the impact of imports in the second half, and the profit margin and operating load will depend mainly on general economic situations.
   ASIACHEM think the coal chemical industry works not only as energy supply including liquid fuels and electric power etc, but also delivers basic raw materials to chemical production, therefore it is closely related with economic development and will resurrect along with the national economy for certain.
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