Coal-to-MEG: Focus on Technology Improvement

By Yu Chunmei and Zhou Hong, the Jilin Design Institute of PetroChina Northeast
  China Refining & Chemical Engineering Co Ltd


China’s Coal-to-MEG projects being constructed

In 2011, China had 22 coal-to-MEG (mono ethylene glycol) projects that were being constructed or planned for construction with a total capacity of 5.25 million t/a, of which there were ten large-scale units being constructed with a combined capacity of 1.60 million t/a.

Cost analysis of MEG produced using different raw material routes

At present there are three major sources of raw materials for MEG production: coal, petroleum and the Middle East’s ethane.
The following can be seen through the cost contrast of MEG from the three different raw material routes:
1. The cost of coal-to-MEG is around RMB3 800 per ton, whereas the cost of the domestic traditional petroleum-based MEG is around RMB6 300 per ton. Once it is matured, the coal-to-MEG process will have a certain cost advantage. However, compared with MEG produced using raw materials like the Middle East’s ethane, the coal-to-MEG process has no cost advantage.
The total cost of coal-to-MEG in China is 40% lower than that of the domestic traditional petroleum-based MEG. China’s coal-to-MEG process therefore has the absolute cost and competitive advantages. But before the demonstration unit being put into commercial operation, this data is only a theoretical speculation. In fact, in the commercial operation, if the load of the unit can not reach the design capacity, the catalyst selectivity and yield of MEG can not achieve the expected results or the unit frequent starts and stops for various reasons, its cost will rise substantially.
2. At present, based on the calculation of RMB130 per ton of the coal price, the production cost of MEG is apparently lower. It is expected the price of lignite will climb to more than RMB250 per ton in China in the next 1-2 years.

Risks

1. Technology risk
China’s coal-to-MEG technology has widened the raw material sources for existing MEG production, however, the technology is overall in the early stage of the commercial production, has not yet been fully mature and is still required for further testing of the commercial operation.
   At present, there are four major problems in the coal-to-MEG technology. First, the hydrogenation catalyst has not undergone the long period operation test. Second, catalyst contains chromium and its stability is not good. Third, there are problems in the product quality and that MEG can achieve the polymerization product requirements are still to be tested. Fourth, from the pilot unit to the large-scale industrial unit, the engineering enlargement including the carbon monoxide dehydrogenation reactor, the catalytic coupling carbonylation reactor, the nitrite regeneration reactor and the hydrogenation reactor is still difficult and exists risk problems.


Table 1 Progress of Coal-to-MEG Projects in China

Location    Company    Capacity (thousand t/a)    Status
Tongliao, Inner Mongolia    Tongliao GEM Chemical Co Ltd    200 (phase I)    Operation
Xilingol, Inner Mongolia    Berun Holdings Group's Xilingol Sunite
       Soda Industry Company    100 (phase I)    Under construction
Xilingol, Inner Mongolia    Berun Holdings Group's Xilingol Sunite
       Soda Industry Company    100 (phase II)    Planned
Erdos, Inner Mongolia    Inner Mongolia ECO Coal Chemical
       Technology Co Ltd    200    Under construction
Puyang, Henan province    Henan Coal Chemical Group Co Ltd and
       Tongliao GEM Chemical Co Ltd    200    Under construction
Mengjin county, Luoyang, Henan province    Henan Coal Chemical Group Co Ltd and
       Tongliao GEM Chemical Co Ltd    200    Under construction
Yongcheng, Shangqiu, Henan province    Henan Coal Chemical Group Co Ltd and
       Tongliao GEM Chemical Co Ltd    200    Under construction
Xinxiang, Henan province    Henan Coal Chemical Group Co Ltd and
       Tongliao GEM Chemical Co Ltd    200    Under construction
Anyang, Henan province    Henan Coal Chemical Group Co Ltd and
       Tongliao GEM Chemical Co Ltd     200    Under construction
Qitaihe, Xinjiang    Baotailong Coal Chemical Co Ltd    200    Under construction
Hebi, Henan province    Hebi Baoma Group    50    Under construction
Dezhou, Shandong province    Shandong Hualu Hengsheng Chemical Co Ltd    50    Under construction
Tongliao, Inner Mongolia    Tongliao GEM Chemical Co Ltd    400 (the second phase)    Preliminary work
Erdos, Inner Mongolia    Wison Group’s Hengyuan Chemical Co Ltd    300    Preliminary work
Erdos, Inner Mongolia    Inner Mongolia Kailuan Chemical Co Ltd    200    Preliminary work
Erdos, Inner Mongolia    Huawei Energy Co Ltd    200    Preliminary work
Erdos, Inner Mongolia    Elion Resources Group    300    Preliminary work
Erdos, Inner Mongolia    Donghai New Energy Co Ltd    200×3    Preliminary work
Weinan, Shaanxi province    Shaanxi Coal and Chemical Industry Group Co Ltd    200    Preliminary work
Hulunbeier, Inner Mongolia     China Huadian Hulunbeier Energy Co Ltd    400    Preliminary work
Shanxi province    Shanxi Xiangkuang Hongtong Coal Chemical Co Ltd    300    Preliminary work
Guizhou province    Qianxi Coal Chemical Co Ltd    300    Preliminary work
Hebi, Henan province    Hebi Baoma Group    250    Preliminary work
Total         5 250    


2. Transportation and logistics
East China and South China are major MEG terminal product markets. The production regions are far away from the needed regions and the production enterprises face the transport, freight and security issues. Especially, the freight is around RMB400-500 per ton of MEG in Northwest China. There exists a certain risk in logistics cost and transportation conditions.

3. Macro economic policy
A few days ago, the prices of the basic raw materials like iron and steel, and cement in China increased. China’s control on the macro economic development and the future trend of energy price rise raised the risks of project construction- the extension of equipment ordering cycle and the increase of the equipment and material fees.

4. Energy and product prices
China's energy prices will be further in line with those in the international market. The price of coal will further increase, whereas, the price of MEG will be likely to decline due to the release of mass production capacity and the end of the peak of the sector. The comprehensive factors will increase the risk of project investment.

Improvement of the competitiveness

1. Technology improvement is the key
The investment of a 200 thousand t/a coal-to-MEG project is ranging RMB2.0 billion-2.5 billion. Compared with coal-to-oil and coal-to-olefin projects with tens of billions investment, the coal-to-MEG project has many advantages such as much smaller investment, shorter industrial chain, definite market demand and low entry threshold, and is easier to be promoted. At present, a number of domestic scientific research institutes are actively promoting their technology levels and the government has issued the national industrial support policy. These are the main reasons for the investment boom of the coal-to-MEG projects in China. If there is no intervention of national industry policy, the investment enthusiasm will continue. It can be seen that China’s coal-to-MEG technology has widened the raw material sources for existing MEG production, however, the technology is in the early stage of the commercial production. To eagerly promote the technology has greater risk and may result in the waste of resources. The relevant departments should attach great importance to the investment boom of MEG projects, and the project cooperators should firstly focus on the technology innovations.

2. Big market gap in China
Reportedly, domestic petroleum-based MEG projects that might be completed before 2012 include 300 thousand t/a MEG project of Sinopec Wuhan Petrochemical Co Ltd and  380 thousand t/a MEG project of PetroChina Sichuan Petrochemical Co Ltd. The total capacity of the coal-to-MEG projects being constructed or planned for construction will exceed 5.0 million t/a, and if 1/2 of the capacity is put into operation in the next three years, the capacity of MEG in China will be added by 1.6 million t/a. Considering the existing capacity, it is expected that China’s capacity of MEG will reach 5.5 million t/a by 2015. The demand for MEG in China will reach around 11.0 million tons in 2015 and the market gap will still be around 5.5 million tons at that time.
Companies from the Middle East have cost, scale, technology and other comprehensive advantages for MEG operations. The capacity of MEG in China and the Middle East was 3.56 million t/a and 7.3 million t/a, respectively in 2010.

Table 2 Product Cost of MEG from Different Raw Material Routes in China

Raw material route    Coal-to-MEG    Petroleum-based MEG    Ethane-based MEG     50% Ethane and 50% propane-based MEG    Condensate oil-based MEG
Product cost (RMB/t)    3 824    6 355    1 479    2 269    2 844



3. Extending the industrial chain and improving the competitiveness
The construction of coal-to-MEG and polyester integrated project in the coal producing regions will be the development direction in China in the future. The MEG projects are built in the coal chemical integrated bases of the coal producing regions. MEG is made by gas in production process and air separation units as well as chemical raw materials produced in the coal chemical bases. At the same time, p-xylene is produced using methanol to aromatics process technology and then used to synthesize PTA (purified terephthalic acid) that can react with MEG to manufacture solid polyester. The rational and extended industrial chain can cut transportation cost. As a result the competitiveness is improved.