Coal to Olefin Plans     

China's economy has expanded year after year, driving the consumption of energy and resources up substantially. The Chinese are well aware of their dependence on imported petroleum. Both olefins and oil products are important to China's economy, and they always compete with each other in refineries. Finding other feedstock for ethylene or propylene is necessary for China when facing the increasing supply deficit of oil. Many companies focus on coal to oil; simultaneously, coal to olefins is a focus.
   Sinopec Corp. has developed the technology of methanol to olefin (MTO) in its Beijing Yanshan Petrochemical branch and started to construct a 600 000 t/a MTO commercial unit in another branch Zhongyuan Petrochemical Corp., Ltd. (page 26 this issue) China's coal giant, Shenhua Group Corporation has constructed a 600 000 t/a MTO unit in Inner Mongolia and will bring it on stream this year.
   Considering the impact of coal chemicals on the environment, Chinese government banned new coal chemical projects in May 2009. The approved five categories of demonstration projects are coal to oil, coal to olefin, coal to dimethyl ether, coal to methane and coal to ethylene glycol. An evaluation of the operation of demonstration projects will decide which kind of coal to chemical will be encouraged in the country.
   Chinese researchers have made efforts in developing coal to olefin technologies, however, most technologies of China's three coal to olefin demonstrative projects come from foreign companies, such as GE, Davy, Shell, Dow Chemical, Univation, Lurgi and ABB Lummus. The construction cost will undoubtedly be higher. These three projects all have an estimated expenditure of around RMB19 billion, with their olefin capacity being 500 000 t/a or 600 000 t/a.
   Moreover, domestic experts urge the government to pay attention to the impacts brought by the imminent coal to olefin projects on environment, investment risk, competition with cheaper olefin from the Middle East, etc. To sum up the suggestions, the most important words are: moderation, caution and rational management.
    China's demand for ethylene and other major chemicals will grow more slowly due to global economic conditions, said Shu Zhaoxia, Sinopec's expert, in her projection report. (page 21-26) In her analysis, the impact of coal to olefin projects has not been covered in the 2010 estimates.  


Zhong Weike
April 28th, 2010