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中国化工信息中心

China National Chemical Information Center
CNCIC Consulting
Copyright ©CNCIC Consulting
Development and Trends of Modern Coal-to-
chemicals in China
Orchid Yang
Deputy Director of Research Institute of
Industry Economics
CNCIC
yangwl@cncic.gov.cn
CPIC
Singapore, 19
th
July, 2012
中国化工信息中心
China National Chemical Information Center
CNCIC Consulting
CPIC2012
 Drivers for development of coal to chemicals
 Current status and future projects
 Problems, risks & industry policies
 Summary
CONTENTS
No.2
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Proven fossil energy resources
Coal
653.7
57%
Oil
259.6
22%
NG
245.4
21%
Coal
145.7
95%
Oil
4.0
2%
NG
4.2
3%
ENERGY RESOURCE
DISTRIBUTION, btce
Coal:22.3%
Oil:1.5%
Gas:1.7%
The world’s proven reserve of fossil
energy is 1.16 t rillion tce and can be
used for 50-100 years
China is rich in coal and lack of oil
and nat ural gas: Coal accounts for
around 95% of t he total, oil & gas
accounts for 5%

20
40
60
80
100
120
140
Coal Oil Natural gas
134
46
63
69
15
38
World China
Year
BP Stat ist ical Review of World Energy, June 2011; Minist ry of Land and Resources of China.
World
China
RESERVE TO PRODUCTON RATIO FOR
FOSSIL ENERGY IN WORLD AND CHINA
Drivers for development of coal to chemicals
No.3
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0
1000
2000
3000
4000
5000
6000
7000
1
9
9
0
1
9
9
1
1
9
9
2
1
9
9
3
1
9
9
4
1
9
9
5
1
9
9
6
1
9
9
7
1
9
9
8
1
9
9
9
2
0
0
0
2
0
0
1
2
0
0
2
2
0
0
3
2
0
0
4
2
0
0
5
2
0
0
6
2
0
0
7
2
0
0
8
2
0
0
9
2
0
1
0
2
0
2
0
2
0
3
0
2
0
4
0
2
0
5
0
Coal
Oil
NG
Mtce
Coal-dominated energy consumption
Nat ional Bureau of Stat ist ics; Research of Medium and Long-term (2030, 2050)
Energy Development St rategies in China,CAE
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
Other fuels
coal
natural gas
oil
Other
fuels
Consumption in 2011:34800
CHINA’S PRIMARY ENERGY CONSUMPTION
Drivers for development of coal to chemicals
No.4
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0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
0
100
200
300
400
500
600
700
800
2005 2006 2007 2008 2009 2010 2011 2015E 2020E 2025E
Mt Output Consumption Foreign dependency
SUPPLY/DEMAND OF CRUDE OIL IN CHINA
• China has become net oil
importer since 1993
• Import increased year by
year, account ing for 56%
of total consumpt ion in
2011
• Import of crude oil will be
more t han 400Mt /a by
2020-2030
Oil and chemicals: highly dependent on imports
0
1000
2000
3000
4000
5000
6000
7000
8000
2005 2006 2007 2008 2009 2010 2011
PE PP PX SM MEG
kt
TYPICAL CHEMICALS HIGHLY DEPENDENT ON IMPORTS
Drivers for development of coal to chemicals
No.5
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Technology improvement of coal to chemicals
Technology Technical maturity in China
Coal coking Mature
Coal gasification Mature
Coal-to-methanol Mature
Coal-to-ammonia Mature
Two-step process for DME Mature
Coal-to-olefins Successful commercial demonstration
Coal direct liquefaction Successful commercial demonstration
Coal indirect liquefaction Successful commercial demonstration
Coal-to-MEG Successful commercial demonstration
Coal-to-natural gas Commercial demonstration
Drivers for development of coal to chemicals
No.6
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Drivers for development of coal to chemicals
 Abundant coal reserves in China
 Technology breakthrough in coal based
alternative fuels and chemicals
 Both the central and local governments
continue to promote coal-to-chemicals for
domestic resource use, energy security,
economic development and diversification
 Coal prices relatively low in major producing
regions, making it possible for coal-to-chemical
projects economically feasible
 Low resource reserve of oil and gas in
China
 High import dependency on oil and
chemicals(PE, PP, PX, MEG, SM)
 High international oil prices
Coal
platform
Oil
platform
Drivers for development of coal to chemicals
No.7
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 Drivers for development of coal to chemicals
 Current status and future projects
 Problems, risks & industry policies
 Summary
CONTENTS
No.8
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Syngas

Coke

Crude benzene

Coke oven gas
Gasification
Methanol

Ammonia

SNG

H
2


DME
Coal

MEG
H
2


H
2


Coking
Direct liquefaction
CO
Mixed alcohols

MTO
MTP
MTG
MTA
DME
Formaldehyd
e
Acetic acid
Methanol
gasoline
MTBE
F-T Synthesis
Diesel
Naphtha
LPG
Coal tar

Traditional
Modern
CaC
2

C
2
H
2

VCM BDO
VAM

Pathways for coal to chemicals
Current status and future projects
No.9
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Traditional Modern
 Coal to liquids(CTL)
 Coal to olefins(CTO)
 Coal to synthetic
natural gas(CTG)
 Coal to glycol(Coal
to MEG)
 Coal to dimethyl
ether(Coal to DME)

 Ammonia/urea
 Acetic acid
 Formaldehyde
 Acetylene
derivatives(VCM,
VAM, BDO)
Modern coal-to-chemicals in China
In 2009, t he State Council issued The Restructuring and Revitalization Plan
of the Petrochemical Industry, which listed f ive modern coal to chemicals as
demonst rat ion projects, namely CTL, CTO, CTG, coal to MEG and coal to
DME.
Current status and future projects
No.10
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Source : CNCIC
Modern coal-to-chemicals projects in China
Tongliao GEM
Coal-to-MEG 150kt /a
Datang Duolun,
MTP 460kt /a
Zhongyuan PC
SMTO 200Kt /a
Shenhua Baotou,
DMTO 600kt /a
Shenhua Ningxia Coal
Indust ry, MTP
500kt /a
Shenhua Ordos ,
CTL 1.08Mt /a,
180kt /a
Yitai Ordos ,
CTL 160kt /a
Sanxi Lu’ an Group,
CTL 160kt /a
Coal to MEG(2,350kt/a)
CTL(4,1580kt/a)
CTO(4, 1765kt/a)
Xinxiang Yongjin Chemical
Coal-to-MEG 200kt /a
Current status and future projects
No.11
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Coal to olefins
Coal
Coal
gasification
Syngas
Purification
Syngas to
Methanol
MTO
Olefin
separation
MTP
Olefin
derivative
preparation
Commercial
demonstration
Commercial
technologies
Commercial
technologies
DMTO
SMTO
MTO/OCP
Converting coal to olefins involves the following major steps:
Current status and future projects
MTO
•1
st
generation:
DMTO(DICP/SYN/LPEC), SMTO (Sinopec)
•New generation:
DMTO-II, MTO/OCP(UOP/Hydro-Total/UOP)
 MTP
• Major licensor(s): Lurgi
No.12
methanol to olefins
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 Shenhua Baotou 600kt/a DMTO project
GE Davy
Dow
Univation
Lummus
Olefins
600kt/a
Syngas
Methanol
1800kt/a
PE
300k/a
PP
300k/a
Ethylene
Propylene
Coal
DMTO
DICP/SYN/LPEC
• Approved by NDRC in Dec., 2006; const ruct ion completed in May, 2010
• Made successf ul t rial run in Aug., 2010 and entered into commercial operat ion stage
in Jan., 2011
• Out put of polyolef ins was 500kt, prof it reached RMB 970 million in 2011
Coal to olefins
Current status and future projects
No.13
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Potential CTO projects
Coal to olefins
 At least 10 addit ional CTO (MTO) plants are projected to come on
st ream in China by 2015 and will provide 6Mt /a olef ins.
Part of t he potent ial projects:
• Zhejiang Nibo Heyuan, 600kt /a, DMTO, 2012, met hanol purchased
• Shaanxi Pucheng Clean Energy Chemical, 670 kt /a, DMTO-II, 2014
• Shaanxi Yanchang/ChinaCoal Yulin Energy Chemical, 600kt /a,DMTO
• Wison (Nanjing) Clean Energy Co., Ltd. OXO plant, 295 kt /a MTO/OCP
• Shenhua Ningxia Coal Indust ry Group, 500kt /a, MTP, 2014
• Total/ China Power Invest ment Group, 800kt /a, MTO/OCP
• Sinopec(4)
Zhong’ an united coal indust ry, 600kt /a, SMTO
 There are more t han 30 CTO(MTO) projects under const ruct ion or
planned in China today, wit h total olef in capacit y of over 20 million
tons annually.
Current status and future projects
No.14
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Coal to MEG
 The coal-to-MEG technology in China is still at the stage of further
development and improvement. It will still take some time to achieve
commercial operation.
 Projects under construction
• Tongliao GEM and Henan Coal Chemical Indust ry joint ly set up Henan
Yongjin Chemical Ltd to const ruct coal-to-MEG projects.
• Yongjin started const ruct ion of 5 projects each wit h a capacit y of 200kt /a
in Anyang, Puyang, Xinxiang, Yongxin and Luoyang in 2010.
• The project in Xinxiang, Henan was started up in March 2012.
 About the demonstration project
• The f irst commercial demonst rat ion plant, wit h a
capacit y of 200kt /a(8 ×25), was started up by Tongliao
GEM in 2009.
• In light of problems exposed in t he t rial run of t he
project, t he company opt imized t he product line to 150kt
/a et hylene glycol and 100kt /a oxalic acid.
• Through cont inuous improvement, its daily out put has
been gradually enhanced to around 75% of its design
capacit y now.
• Net prof it in 2011 was RMB -139.36 million.
Current status and future projects
No.15
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Coal to MEG
• As huge gap bet ween supply
and demand and cost
advantages exist , it ’s expected
t hat once t he demonst rat ion
projects are proven successf ul,
large capacit y of coal to MEG
will come on st ream in China.
• There are many planned coal-to-
MEG projects and t he total
capacit y is more t han 3Mt /a.

Syngas Dimethyl
Oxalate
Coal Reduction
Ethylene
glycol
Hydrogen
Coal
gasification
Syngas
Conversion
TECHNOLOGICAL ROUTE OF COAL TO MEG
10.12
12.56
17.88 19.5 20.35
22.71
28
40
40.61
48.02
52.16
58.28
66.44
72.7
0
20
40
60
80
100
120
2005 2006 2007 2008 2009 2010 2011
Import Output
Mt
Source : CNCIC
SUPPLY/DEMAND OF MEG IN CHINA
Current status and future projects
No.16
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Coal to MEG
 R&D on technologies of coal to MEG is active in China, some technologies have
been adopted in pilot or commercial facilities.
Techs
Technologies
at
commercial
stage
Tongliao GEM, Danhua Chemical Tech, FJIRSM of CAS

Technologies
at lab or
pilot plant
stage


Shanghai Wuzheng Engineering Tech
Tianjin University
Wuhuan , Hubei Research Institute of Chemistry
East China University of Technology, Pujing Chemical Industry (Shanghai)
Japan's Ube Kosan, Japan’s High Chemistry, East China Energy and Tech
Shanghai Huayi Group, Shanghai Coking
Sinopec Shanghai Research Institute of Petrochemical Technology
Current status and future projects
No.17
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Coal to Liquids
 Both the direct and indirect demonstration units of CTL have proven
successful in China(realized steady & long term operation)
Direct
liquefaction
Shenhua
Ordos,
1.08Mt/a
Indirect
liquefaction
Shenhua
Ordos,
180kt/a
Yitai, Ordos,
160kt/a
Lu’an,
Changzhi,
160kt/a
MTG
Jinmei,
Jincheng,
100kt/a
Hydrogenation
of coal tar
Shanxi Coal
Industry,
500kt/a+
120kt/a
Chinacoal
Heimeilonghu
a, 50kt /a
Yunnan
Jiehua, 10kt/a
Started up: Mar., 27,2008
Data in 2011:
Capacit y:160-180kt /a
Run t ime:328days
Oil out put :151.8kt
Net prof it in Q3 & Q4:
RMB27.5M
Started up:
Dec., 30,2008
Data in 2011:
Run t ime:280days
Oil out put :750kt
Prof it : RMB400M
Products: diesel, naphtha, LPG Products: Gasoline
Products: diesel, naphtha, LPG
Current status and future projects
No.18
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Coal to Liquids
Company Location
Capacity/
(Mt/a)
Products
Investment/
USD billion
Shenhua Ningmei
Group
Ningdong,
Ningxia
4
Diesel, naphtha,
LPG
8.7
Yankuang Shaanxi
Futrue Energy
Chemical Co., Ltd.
Yulin, Shanxi 1
Diesel, naphtha,
LPG
2.4
Lu’an Group Changzhi, Shanxi 0.5
Diesel, naphtha,
LPG
Comprehensive
utilization project
Yi’tai Group
Ganquanpu or
Yili, Xinjiang
5.4
Diesel, naphtha,
LPG
10.3
Total 10.9
CTL PROJECTS LIKELY TO START CONSTRUCTION DURING 12
th
FYP PERIOD
Capacity threshold for a new project in China: > 1Mt/a.
Current status and future projects
No.19
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 CTG projects are still in the commercial demonstration stage in China.
Coal to SNG
Source : CNCIC
Datang fuxin,
CTG 4 bnNm
3
/Phase Ⅰ 1.34bn
Nm
3

China Kingho Energy Yili,
CTG 5.5 bnNm
3
/Phase Ⅰ
1.375bn Nm
3

Huineng Ordors,
CTG 1.6 bnNm
3

Huaneng Hulun Buir ,
CTG 4 bnNm
3

Datang Chifeng,
CTG 4 bn Nm
3
/Phase Ⅰ
1.34bnNm
3

• Approved projects by NDRC(5)
19.1BnNm
3
/a
• Planned projects in
Xinjiang(20):76.7BnNm
3
/a
• Planned projects in China(40):
>160BnNm
3
/a
• Capacity expected to reach 25-
30BnNm
3
/a by 2015 in China
CTG PROJECTS APPROVED BY NDRC
Current status and future projects
No.20
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Coal to SNG
0
1000
2000
3000
4000
5000
6000
2006 2007 2008 2009 2010 2011 2015E2020E2030E
output Consumption
10
8
Nm
3
• China’s nat ural gas market growt h
pat tern has changed f rom supply
driven to demand driven.

• Wit h t he development of SNG and
unconvent ional NG and t he
complet ion of increasing receipt
stat ions and NG pipelines, t he NG
consumpt ion will grow rapidly.
NG
34%
SNG
29%
unconventio
nal NG
37%
PRODUCT STRUCTURE OF NG
IN 2020
NG
67%
SNG
18%
unconventi
onal NG
15%
PRODUCT STRUCTURE OF NG
IN 2015
Source : Pet roChina, China Nat ional Energy Bureau, CNCIC
• SNG and unconvent ional
NG will play an
important role in China’s
NG out put
SUPPLY/DEMAND BALANCE OF NG IN CHINA
Current status and future projects
No.21
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 Drivers for development of coal to chemicals
 Current status and future projects
 Problems, risks & industry policies
 Summary
CONTENTS
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Huge capital
investment
• 600kt/a CTO:
RMB 18 Bn
• 4Mt/a CTL: RMB
55 Bn
• 4BnNm
3
CTG:
>RMB 20 Bn

• 200kt/a EG :
>RMB 2 Bn
High water
consumption
• CTO: 33t/t
• CTL: 13t/t
• CTG: 6.58t/kNm
3
• EG:14t/t
High coal
consumption
• CTO: 6.68t/t
• CTL: 4.39t/t
• CTG: 2.83t/kNm
3
• EG:2.55t/t
High
CO
2
emission
• CTO: 5.5t/t
• CTL: 5t/t
• CTG: 2.5t/kNm
3
• EG:2t/t
Problems existing in the development of modern coal to chemicals
 Features of modern coal to chemicals : heavy capital investment, high
consumption of resources and large amount of pollutant

emission.
Problems, risks & industrial policies
No.23
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 Reverse distribution between coal resources and the level of economic
development as well as water resources.
Problems existing in the development of modern coal to chemicals
Problems, risks & industrial policies
No.24
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• On water resource consumption, nat ional policies prohibit using
resident ial and agricult ural water for coal-to-chemicals , rest rict CTG and
CTL projects in regions wit h water scarcit y, and prohibit coal -to-
chemicals in regions where water consumpt ion has reached quota limit.
 Water scarcity in coal-heavy regions and other policies restrict the
development of coal-to-chemicals
• On environmental protection, policies
prohibit coal-to-chemicals in regions
where indust rial impact exceeds
environmental tolerance, and require
t he reject ion of projects t hat fail to
meet environmental standards on
emissions and wastewater t reat ment.
• On location selection, policies limit
coal-to-chemicals in regions t hat
import coal while promot ing projects in
regions wit h suf f icient water and coal
resources.
Source :CICC
DISTRIBUTION OF COAL RESERVE AND
WATER RESOURCES IN CHINA
Problems existing in the development of modern coal to chemicals
Problems, risks & industrial policies
No.25
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Risks
Technology risks—still at the stage of gaining experience
• CTL: Technical support system has not fully developed, capacity enlarging risks
• CTG: no commercial operating experience yet
• EG: catalyst activity, yield of EG, stability of equipments
Market risks
• Availability of cheap coal always?
• Competition of low-cost products from Middle East and oil-based products: EG, polyolefins
• Overcapacity: Ex. Methanol
• Transportation: EG, SNG
Policy risks
• Carbon tax(CCS implemented, cost 15% higher in the case of CTL), environment tax, water
resource fee, ecological compensation tax for resource development in western areas
• Local governments aggressively launching commercial projects, which will increasingly
conflict with national policies on emissions and water, leading to potential project
cancellations
Problems, risks & industrial policies
No.26
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National policies on coal-to-chemicals are becoming increasingly cautionary
Since 2006, the government has issued a number of restrictive policies
on coal-to-chemicals .


• In 2006, the Notice on Strengthening the Management of coal-to-
chemicals Industry and Facilitating its Healthy Development, which
prohibited approval of projects wit h annual product ion of less t han 3
million tons for CTL, 1 million tons for CTM and coal -to-DME, and
less t han 0.6 million tons for CTO.
• In August 2008, the Notice on Strengthening the Management of
CTL Projects stopped all CTL projects ot her t han t he Shenhua Direct
Liquefact ion.
• In 2011, the Notice on Regulating coal-to-chemicals Industry for
Orderly Development prohibits approval of coal-to-glycol projects
under 0.2 million tons of annual capacit y and CTG projects under 2
billion cubic meters annual product ion.
• Development Plan for Demonstration Projects of coal-to-chemicals
issued by NEA in May, 2012, which points out main tasks in 12
t h

FYP period will be Upgrades, Demonstration & Volume Cap
Problems, risks & industrial policies
No.27
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Development Plan for Demonstration Projects of coal-to-chemicals
• 15 signif icant demonst rat ion projects will be approved in 7 sectors including
CTL, CTG, CTO, CTMEG, coal to ammonia(1Mt /a ammonia for one single unit ) ,
low rank coal upgrading and CTA in 12
t h
FYP period.
• These projects will be located in 9 provinces, including Xinjiang(4), Inner
Mongolia(3), Shaanxi(2), Shanxi, Ningxia, Anhui, Yunnan, Guizhou and Henan.
• Among t hese projects, 7 are CTG projects, 4 are CTO, 2 are CTL(indirect ).
• Projects in Xinjiang and Inner Mongolia will be submit ted for approval in
packages ‘ in t he mode of parks or bases’ ot her t han t he previous ‘ one by one
mode’ .
CTL indirect CTG CTO Ammonia CTMEG
Low Rank
Coal
Upgrading
Min. energy
conversion efficiency
42% 52% 35% 42% 25% 75%
Max. coal
consumption(tce)
4t/t 2.3t/KNm
3
5.7t/t 1.5t/t 2.4t/t
Max. fresh water
consumption
11t/t 6.9t/KNm
3
22t/t 6t/t 9.6t/t 0.15t/tce
TECHNICAL STANDARD ON DEMONSTRATION PROJECTS OF COAL TO CHEMICAL
Problems, risks & industrial policies
No.28
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 Drivers for development of coal to chemicals
 Current status and future projects
 Problems, risks & industry policies
 Summary
CONTENTS
No.29
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 Nat ional policies on coal-to-chemicals have become increasingly
caut ionary, t he indust ry will be at t he stage of Upgrade, Demonstration
& Volume Cap in t he next few years.

Summary
 China is t he world’s leading count ry in several new coal to chemical
sectors.
 The indust ry has feat ures of heavy capital invest ment, high
consumpt ion of coal and water, high emission of pollutants. Many
technologies have been adopted for t he f irst t ime in China, t here is
almost no ready-made experience to draw on.
 Rising price of coal, logist ics cost to major consumer markets, levy
of carbon tax etc., will all lead to higher cost of t he products, t he
release of massive capacit ies and t he low cost cargos f rom middle
east, will have an impact on t he economics of t he projects.
No.30
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