CTL Development in China

Qingyun Sun Ph.D. Associate Director US-China Energy Center, WVUPhone: (304)293-4832 Ext. 4465Email: qsun@wvu.edu

Based on Shenhua CTL Projects

Congressional Noontime BriefingRayburn House Office BuildingWashington, D.C.April 24, 2008

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Outline

CTL Development in ChinaShenhua DCL Plants

o Commercial DCL plant in Inner Mongolia o Shenhua DCL pilot plant in Shanghai

CO2 sequestration associated with Shenhua DCL plantUS-China Energy Protocol for Fossil Energy and Shenhua-WVU Collaboration

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Coal to Liquid Development in China

Seven CTL demonstration plants are being developed in western China.

One DCL and two ICL plants by Shenhua Yitai ICL projectYankuang ICL plantLuan ICL projectJincheng MTG plant

More CTL plants will be approved by the Chinese central governmentMultiple coal to chemicals, methanol, DME, and GreenGen projects are under development

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Coal To Liquids Development in ChinaTotal budget of 7 Chinese CTL plants: 12 billion USD

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Why CTL in China

National strategy for energy securityEnvironmental requirement for clean coal useTechnology progressBusiness development strategies of China’s energy companies

Abundant coal reservesBottlenecks in shipping coalHighly profitableEconomic development in mining area

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Fast Growth of Oil Consumption in China

Oil Pruduction and Consumption in China

-50.0

0.0

50.0

100.0

150.0

200.0

250.0

300.0

1990

1991

199219

93

1994

1995

1996

1997

199819

99

2000

2001

2002

200320

04

2005

2006

Year

Mt

Production Consumption Imports

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Shenhua CTL Development Supported by the Chinese Government

January 1998, the National Council gave Shenhua the “Coal Replacing Oil Fund” of $1.3 billion USD (¥11 billion RMB) for CTL development (oil price: $12/b)The feasibility study of Shenhua DCL was completed by 2002 (oil price: $22.8/b)The construction of Shenhua DCL plant started in 2004 (oil price: $37/b)Shenhua DCL plant will start up in 2008

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Shenhua Group Corp.Shenhua is the World’s Largest Coal Producer (240 MMt in 2007)

Coal Reserves: 35.4 Billion TonnesCovered area: 3481 km2

BeijingBaotou

Taiyuan

Xian

Shanghai

Shenhua DCL Plant (24,000 BPD)

Sasol-Shenhua ICL plant in Shaanxi (65,000 BPD)

Sasol-Shenhua/NingmeiICL Plant (65,000 BPD)

Shenhua Leads CTL Development in China

Shenhua DCL Pilot Plant

Shenhua ICL Plant (7,000 BPD)

Dow/Shenhua Coal to Chemical

Shenhua Coal to Polyethylene Plant

Total investment of 4 CTL and 2 chemical plants: $10 billion USD

Business Plan: 4 MMt/y by 2010 and 31.5 MMt/y by 2020

Shenhua HD

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Shenhua Commercial Direct Coal Liquefaction Plant In Inner Mongolia

o World’s 1st DCL commercial planto Production Capacity: 24,000 BPD (mainly diesel) o Plant Cost: $1.5 billion USDo 4 years of construction (2004-2008)

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Shenhua Direct Liquefaction Process

Coal Prep.

Gasification

Purification

Liquefaction

Separation

Upgrading

Slurry Prep.

ASU

Fractionation

Residue

Jet fuel

Diesel Oil

Gasoline

Gas

Coal

Air

Recycle solventCatalyst

H2

N2

O2

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Construction of Shenhua DCL Commercial Plant

20022003

20062008

2004

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Critical Equipment Lifting & ErectionCoal Liquefaction Reactor

The world’s largest single reactor （2250mt）

Liquefaction Reactor Manufactured On-Site

DOE visitors

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Shenhua DCL Demonstration Project

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Shenhua DCL Pilot Plant in Shanghai

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Oil Products from Shenhua DCL Pilot Plant

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Characteristics of Shenhua DCL Technology

Integrated technologies from USDOE, Germany, and Japan with Shenhua innovations High efficiency with mild reaction conditions:

o Lower temperature and pressure o Inexpensive and high effective catalysto High reaction rate: conversion rate over 90% and oil yields as high

as 57% of dry and ash free coalApplicable for high sulfur and high reactivity coalEconomically viable

o Low plant cost: $62,500 per daily barrelo Break even cost: $35~40 per barrel selling price

Reducing environmental impactso Zero water dischargeo Solid waste recyclingo CO2 sequestration

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CO2 Sequestration Related to Shenhua DCL PlantThe plant produces about 3.6 million tonnes of CO2 per year

o About 3.1 million tonnes of high purity capture ready CO2 is from hydrogen making process and the rest comes from heating, flares,and power generation

o 0.88 ton of CO2 per ton of coalo CO2 / Oil Ratio = 0.48 metric tonnes per barrel

Pre-feasibility study of carbon storage possibilities now being conducted Will be the largest CO2 sequestration demonstration project in the worldSequestration options:

o Enhanced oil recovery (200 km)o Deep unminable coal seams o Deep saline water (+1,500 m)

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WVU-Shenhua Joint ActivitiesChina National Development and Reform Commission (NDRC) and US DOE Fossil Energy signed joint protocol for energy research and provide funding for study of Shenhua plant under Annex IIJoint research

Environmental and economic analysis of Shenhua DCL plantCO2 sequestration related to Shenhua DCL plantIntegrated DCL and ICL processesFT synthesis studyCTL process modeling Liquefaction fuel testing

Technical workshops sponsored jointly by US DOE and China NDRC and hosted by WVU and ShenhuaTraining and educational programs