China New Coal Chemical Industry Report, 2011
China is poor in oil and gas but relatively rich in coal. At the end of 2010, China’s coal reserves were 114.5 billion tons, accounting for 93.3% of its total energy reserves. Therefore, while oil prices hover high, the development of coal chemical industry to reduce dependence on crude oil imports is becoming a strategic choice of China.
During the ”Twelfth Five-Year” period (2011-2015), China will launch major demonstration projects in seven areas, namely, coal liquefaction, coal-to-gas, coal-to-olefins, coal-to-ammonia/urea, coal-to-glycol, low-rank coal upgrading, and coal-to-aromatics. Stimulated by national policies and favorable market conditions, there have been many projects under construction or planning in the new coal chemical industry represented by coal-to-oil, coal-to-olefins, coal-to-glycol, and coal-to-gas in recent years, presenting overheated development at present or perhaps the risk of overcapacity in the future.
The application of coal gasification technology and syngas-to-methanol technology has been mature at present, and the methanol-to-olefins technology has been improved in both theory and experimental equipment after years of development. Shenhua Group has started the commercial operation of its Baotou Coal-to-olefins Project and Shenning Coal-based Olefin Project. As of August 2011, there are 29 coal-to-olefins projects under construction or planning in China, with total olefin capacity of over 20 million tons per year and total investment of over RMB 630 billion.
The coal-to-gas technology is quite mature and promising in China. At present, the cost of coal-made natural gas is about RMB1.0-1.5 per m3 in Inner Mongolia and Xinjiang, and plus the filling and transmission cost, the price is about RMB2.0-2.5, while the average price in the second-tier cities covered by the West-East natural gas transmission project is RMB3.28. During 2011-2015, China’s coal-to-gas projects will be mainly located in Shanxi, Shaanxi, western Inner Mongolia, Xinjiang, eastern Inner Mongolia, Yunnan and Guizhou. The coal-to-gas projects under construction or planning have a total capacity of above 150 billion m3, including the Ordos 2 billion m3 coal-to-gas project of Shenhua Group and the 4+4 billion m3 coal-to-gas project of Datang International Power Generation Co., Ltd.
Coal-to-glycol hasn’t achieved complete industrialization in China. Danhua Chemical Technology Co., Ltd. is the first Chinese enterprise engaged in coal-to-glycol, but fails to solve the catalyst absorption problem, and only maintains an operating rate of about 30%. However, due to high prices of glycol, the profitability of coal-to-glycol will still be good after the technical difficulties are solved. The coal-to-glycol projects under planning have a capacity of over 3 million tons and total investment of over RMB50 billion, including the 5×200,000 tons coal-to-glycol project of Henan Coal Chemical Industry Group and the 800,000 tons coal-to-glycol project of Shaanxi Yanchang Petroleum Group.
Coal-to-oil is booming in China. Pre-construction studies, planning, fundraising and construction of large coal-to-oil projects have been carried out in provinces with coal resources. Shenhua Group has leading advantages in direct coal liquefaction, and the first phase of its Inner Mongolia coal-to-oil project has an annual capacity of 1 million tons and an actual operating rate of 80%. At present, there is expected to be nine coal-to-oil projects in China, with annual capacity of 38.2 million tons and total investment of around RMB380 billion.
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