Crossroad for Methanol Fuel in Chinese Market    

"The use of methanol gasoline may hurt human health, so Sinopec does not want to introduce the low blend rate M15 methanol gasoline to the market. However, the use of high rate M85 fuel requires modification for car engines, we also do not think it can be widely used at the moment," Wang Tianpu, president of Sinopec Corp, said at a conference to announce the company's interim results.
   M15 methanol gasoline is named so because it contains 15% methanol content and a certain amount of additives in gasoline. Other types include M30 gasoline and M85 gasoline.
   Mr. Wang said there is already a national standard in place for M15 methanol gasoline on trial basis. There is no timetable when the formal standard will come into force.
   The problem for methanol gasoline is the blend can erode engines and other auto parts, a petrochemical industry insider said. As the blend of methanol and gasoline is easy to be separated with water, the use of the methanol fuel has relatively higher requirement on the sealing of vehicle fuel tank and pipeline. As methanol is also toxic, careless use could cause harm to human body.
   However, an executive at the national ethanol/ether fuel and ethanol/ether clean energy car committee said that all the problems can be solved. The government should not keep methanol gasoline out of the market because there are some shortages.
   Earlier, an industry insider who advocates the use of methanol fuel said that at present, it is not difficult to use methanol fuel to replace traditional gasoline. But if so, the industry chain for oil companies will be affected badly. At present, the gasoline production/sales situation is in balance, he said. So if methanol fuel enters the Chinese market, the storage, sales and production chain for traditional gasoline will get affected.
   Though methanol gasoline can not interest state-owned oil giants, the alternative fuel is favored by regions and companies which own rich coal resources. Shanxi province took the lead by starting a trial program to promote the use methanol gasoline, followed by Tangshan, Hebei province. Now, Hebei province has chosen Tangshan as the trial base for methanol fuel, while Tangshan has chosen Kailuan Group as a demonstration company for the M15 car-use methanol gasoline.
   Shandong Jinmei Mingshui Chemical Group Co., Ltd. and Shanxi Jiaxin Energy & Chemical Industry Co., Ltd on June 27th signed agreement to jointly build a methanol fuel blending center in Shandong province, banking on Jiaxin's mature technology in the field.
   In addition, the Guohong Chemistry Company of Yanzhou Coal Group, which has a methanol production capacity of 500 000 t/a has successfully developed modified clean M15 methanol fuel, along with the Shanghai Internal Combustion Engine Research Institute, Jimmy Technology (Shenzhen) Ltd., and the national engineering research center for coal-water slurry pressurized gasification at Lunan Chemical.
   "Firms can not make money from the methanol business now," said a representative of a coal-to-chemicals company. As the policy for methanol gasoline has not yet be published, the current trial programs for methanol fuel use can not consume all the methanol capacity.
   China's methanol capacity has exceeded 30 million t/a, according to the head of the China Petroleum and Chemical Industry Federation (CPCIF). But the nation's methanol-to-olefins projects are still in trial phases, and the national standards for low blend rate M15 methanol fuel has not been rolled out. The overall run rate of the domestic methanol industry is less than 50%, while the average run rate for dimethyl ether (DME) projects is only about 20%, putting high pressure on company operations.
    "Methanol/DME companies need policy guidance in the future," an methanol/ether sector industry player said. China's methanol/DME market can be very huge should the policy to allow methanol/DME fuel to replace petroleum is confirmed.
   A deputy secretary general at the national methanol/DME fuel and clean energy car committee said that methanol/DME fuel is the most feasible and most realistic option in the transition period from traditional energy to clean fuels in the first half of this century. Methanol/DME fuel should play its role as an alternative fuel in a transition period, and be developed following the industry chain of "methanol - DME - hydrogen". The market outlook for methanol/DME fuel is good with higher level of technology and extended industry life span.
   Related lab work has been completed for China to draw up its national standards for M15 methanol fuel, according to a deputy secretary general of the CPCIF. The standard, now under review and revision, is expected to be rolled out in the first half of next year.
   China in 2009 officially published the national standard for the M85 methanol gasoline. In addition to product standards, the standards for pumping systems, carrying and distribution facilities should also be prepared timely as the promotion of methanol/DME fuel is a systematic program.