Accelerated Development of Coal-to-Gas in China

By Sang Jianxin, China National Chemical Information Center

Natural gas output in China reached 121.0 billion cubic meters (bcm) in 2013, an increase of 13.3% over the previous year. Of the total, the output of conventional gas was 117.8 bcm and among the unconventional gases, the output of shale gas was 0.2 bcm and the output of coal-bed methane was 3.0 bcm. Owing to factors such as environmental protection policies and pipeline construction, the demand for natural gas in China has increased rapidly for some time. China consumed 171.2 bcm of natural gas in 2013, an increase of 17.1% over the previous year. The supply/demand gap widened further, to more than 50.0 bcm.
Natural gas is increasingly favored as clean energy. Driven by factors such as urbanization, environmental protection policies and pipeline construction, the supply/demand gap of natural gas in China will become even wider in the next few years. Two coal-to-gas demonstration projects in China were completed in 2013 and have entered the stage of trial production: a project of Datang International in Hexigten Banner and the first phase of a project of Xinjiang Kingho in Yili. Conditions for large-scale coal-to-gas commercialization are ripening. Moreover, with the issuance and implementation of major policies such as the Action Plan for the Prevention and Control of Atmospheric Pollution and the Twelfth Five-Year (2011-2015) Program for the Development of Natural Gas, the pace of government review and approval of coal-to-gas projects has been speeded up remarkably since 2013. Coal-to-gas in China will hopefully enter a period of rapid development in the near future.

Completed projects

At of the end of 2013, there were still no coal-to-gas units in commercial operation in China. Construction of two coal-to-gas plants had been completed: the 4.0 bcm/a plant of Datang International in Hexigten Banner and the 1.35 bcm/a first-phase plant of Xinjiang Kingho in Yili (the total planned capacity there being 5.5 bcm/a). They had both started functioning.

(1) 4.0 bcm/a project of Datang International in Hexigten Banner

Inner Mongolia Datang International Hexigten Coal-to-Gas Co., Ltd. was registered on December 23, 2010. It is subordinate to Datang Energy Chemical Co., Ltd. The 4.0 bcm/a coal-to-gas and matching gas pipeline project undertaken by the company got approval from the National Development and Reform Commission (NDRC) on August 20, 2009. It was the first large coal-to-gas demonstration project approved by the NDRC. The project uses rich lignite resources in Inner Mongolia. The plant site is at Darihanwula Sumu, located northwest of Hexigten Banner, Chifeng of Inner Mongolia. The gas pipeline passes Chifeng and Xilingol League of Inner Mongolia, Chengde of Hebei and Miyun of Beijing. The total length of the pipeline is 359 km, the design pressure is 7.8 MPa and the pipe diameter is 914 mm. The designed gas capacity is 4.0 bcm a year and the maximum capacity is 6.0 bcm/a.
The entire process flow was executed on July 28, 2012 and qualified natural gas was produced. A series of units were successfully put into operation on December 18, 2013 and incorporated into the pipeline. Natural gas produced from coal was transmitted to PetroChina Beijing Section gas pipeline. The plant, however, suspended production one month later because the gasifier could not be adapted to the quality of the coal being supplied. The plant is still in a trial run today, and no real commercial operation has yet started. After problems are sorted out, the highest gas supply amount could reach more than 3.0 million cubic meters a day.

(2) 5.5 bcm/a coal-to-gas project of Xinjiang Kingho in Yili

China Kingho Group was established in 1998. It has now become a large multi-industry and trans-regional comprehensive private enterprise group integrating mining, coal dressing, coking, coal chemical production, metallurgy, iron/steel and logistics. The company has set up Inner Mongolia Kingho Group, Qinghai Kingho Group, Ningxia Kingho Group and Xinjiang Kingho Energy Group. It has been ranked among the “top 100 coal enterprises in China” and “top 500 private enterprises in China” since around 2005. Its total asset value is over RMB24.0 billion.
Xinjiang Kingho Energy Group Co., Ltd. is located in Yidong Industrial Park of Yining County. The total scale of the coal-to-gas project is 5.5 bcm/a, the total investment is RMB26.438 billion; the first-phase capacity is 1.35 bcm/a, the coal consumption is 20.5292 million tons a year and the water consumption is 38.592 million cubic meters a year. The project was set for Yili in 2009. Shortly after the project got the preliminary approval from NRDC, the construction of the first phase was launched in May 2010. The equipment installation of the first-phase project was fully completed by the end of 2012. Natural gas was produced on August 20, 2013 and was first transmitted to the second West-East trunk gas pipeline on December 28, 2013. This showed that the first phase of the project had entered the stage of stable gas transmission and achieved commercial operation. A total investment of nearly RMB13.0 billion was made from the beginning of the project construction to the start of commercial gas supply. The Yining-Huoerguosi coal-to-gas pipeline was the first coal-to-gas special pipeline in Xinjiang and the first large-diameter coal-to-gas pipeline in China. It started functioning on July 10, 2013. Gas from the coal-to-gas project of Xinjiang Kingho will be transmitted to Huoerguosi through this pipeline and further, all over China, through the West-East gas pipeline.

Projects approved, under construction or planned

The NDRC issued the Circular for Matters Related to Standardizing the Development of the Coal-to-Gas Sector on June 18, 2010. It was stated in the document that coal-to-gas projects must be examined and approved by the NDRC, connect lines to natural gas pipelines must be made and transmission channels and sales markets must also be ensured. Among the first four projects approved for construction, three were already included in the Program for the Adjustment and Rehabilitation of the Petroleum and Chemical Industry and approved by the NDRC. They included the 4.0 bcm/a project of Datang International in Chifeng of Inner Mongolia, the 4.0 bcm/a project of Datang International in Fuxin of Liaoning and the 1.6 bcm/a project of Huineng Group in Ordos of Inner Mongolia. After the NDRC tightened the approval of coal-to-gas projects, the first coal-to-gas project approved was the 5.5 bcm/a project of Xinjiang Kingho in Yili. By the end of 2011, the total capacity of coal-to-gas projects approved by the NDRC was 15.1 bcm/a.
With the dual pressure of atmospheric pollution and increasing demand for natural gas, the review and approval of coal-to-gas projects, which had been sluggish, was expedited somewhat in 2013. Owing to their advantages of low unit-product investment and short technical process flow, coal-to-gas projects became favorites.
A ceremony for constructing Inner Mongolia Ordos Coal-to-Gas Industrial Park and a 12.0 bcm/a coal-to-gas plant was held on July 24, 2013. The park is located in Dalu Industry Zone, Ordos city of Inner Mongolia. The total scale includes 12.0 bcm/a coal-to-gas, 600 kt/a tar, 140 kt/a crude phenol, 180 kt/a sulfur, 210 kt/a ammonium sulfate and other byproducts. Major facilities include coal-to-gas principal chemical units and related utility and auxiliary units. CNOOC and Beijing Enterprises Group will each construct a 4.0 bcm/a coal-to-gas plant. Hebei Construction & Investment Group Co., Ltd. will construct a 4.0 bcm/a coal-to-gas plant and a 2×350MW thermal island plant. Other utility and auxiliary projects will be planned by the industrial park. The project passed NDRC’s scrutiny in September 2013.
On September 22, 2013, Xinjiang Zhundong coal-to-gas demonstration project was also preliminarily approved by the NDRC. The scale of the project is 30.0 bcm/a, which is matched to the scale of the Sinopec Xinjiang-Guangdong-Zhejiang pipeline (capacity 30.0 bcm/a). The project includes 12.0 bcm/a coal-to-gas in Wucaiwan (8.0 bcm/a for Sinopec and 4.0 bcm/a for Xinjiang Production and Construction Corps), 4.0 bcm/a in Dajing (Huaneng Xinjiang Energy Development Co., Ltd.), 6.0 bcm/a coal-to-gas in Xiheishan (4.0 bcm/a for Xinjiang Longyu Energy Zhundong Coal Chemical Co., Ltd. and 2.0 bcm/a for Zhejiang Energy Group Co., Ltd.), 4.0 bcm/a coal-to-gas in Kamisti (Xinjiang Fuyun Guanghui New Energy Co., Ltd.) and 4.0 bcm/a coal-to-gas in Hefeng (Suxin Energy Hefeng Co., Ltd.). The total investment of the project is estimated to be RMB183.0 billion. After the completion of the project, the sales revenue will be RMB55.0 billion a year, 18 000 new jobs will be created, and the consumption of coal will be 90.0 million tons a year. Zhundong is located in Changji Hui Autonomous Prefecture of Xinjiang. It has predicted coal reserves of 390.0 billion tons and proven coal reserves of 213.6 billion tons. It is a self-contained coalfield with the biggest area and the richest resources in China.
In addition, 17 coal-to-gas projects have already obtained permission to launch early-stage work. The combined capacity is 121.5 bcm/a, and the combined first-phase capacity is 65.0 bcm/a.