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Japanese Company Investing in New Coal Liquefaction Project in China

26 December 2006

Interfax. Universe Gas and Oil Co. (UGO), a Japanese energy development company, plans to invest RMB 400 million ($51.28 million) in a coal-to-liquids project in northeastern China’s Jilin Province.

Zhang Shuang, an official with the company, said the plant will have an annual capacity of 500,000 tonnes (about 3.7 million barrels—10,000 barrels per day) of fuel oil production capacity after three phases of construction.

Zhang said the technology applied in the project was different from coal-to-liquids projects under construction at the moment, but declined to offer more information. Zhang could not say when construction would start.

Project contracts are already signed for development of the plant in the city of Liaoyuan—a center of coal mining—and the project is approved by the State government. Feedstock coal will come from the local coal mines.

UGO is involved in projects developing natural gas in Indonesia, and is affiliated with a number of larger Japanese energy organizations such as Japan Energy Corporation and Osaka Gas.

December 26, 2006 in China, Coal-to-Liquids (CTL) | Permalink | Comments (17) | TrackBack (0)

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$50m does not seem like a lot for a plant that can produce 100m gallons per year. Considering the U.S. uses 150B gallons per year, we might need to get started on more projects like this ourselves real soon now...

This is what the Oil industry told about Ethanol when few small plants came online.

Today there are lots of such plants and also the larger ones with 100 million gallons / year capacity are coming online.

And Ethanol has captured 40 % of Brazilian auto-fuels market and 4 % in US.

Same way, in 10 years, Coal based liquids could capture a lot of market from Oil in China, US and elsewhere.

That's assuming we can get the coal and can accept the consequences, Max.  It also assumes that we can get the water that CTL plants require.  Neither China nor the major coal producing parts of the US are going very well, water-wise.

It also assumes that we can get the water that CTL plants require.

Or that the plants use dry cooling. The water used by the chemical reactions themselves is rather modest. In some cases, the coal bed water is sufficient. Disposal of this water is a problem in parts of the US west, due to dissolved salts.

_This has the potential for ~$510 million/100k bbl/day. Exchange rate is favorable, as are lower construction/labor costs, but this is much lower than the $4 billion/100k bbl/day quote for US CTL plans.
_The questions are:
a) The quality and consistency of the fuel.
b) The claim this is not similar to other CTL projects currently underway, thus non F-T process. This leads to the possibility of a modernised Kerrick process-ie LTC (low temperature carbonization)-other processes, or some combination of systems.
c) Could this feasibly/economically be replicated in OEDC/developing world, and preferably with biomass sources instead of coal.

_If it can be replicated, at similar costs, in the developed world, a complete switch over to biomass fuels would be much cheaper than recently thought. the ~$600 billion (FY2005) it would take to cut oil consumption by 10 million bbl/day may be ~$80 billion instead. Though I doubt this is the case, it would have huge implications even if was twice that figure. A one-time investment of $500-$600 (average) per American citizen might suffice to put this country on a path to energy independence.
_Of course, I am simplifying it a bit, and there are other issues to tackle-i.e. where and how to source the biomass beyond waste material. NIMBY may crop up, as are the possible issues of profit sharing, and to make ever more fuel or to cut energy expenditure through efficiency/productivity growth.

Poet-engineer:

Industrial processes actually use minuscule amount of water (aside from cooling, which is merely temporary use of water without it contamination and with close to 100% recycling – think heat sink ponds at nuclear plants).

Same is true with drinking water. It is agriculture which uses huge amounts of water, and high per cent of it is evaporated and not recycled to surface water streams. Yet most of evaporated water is precipitated locally soon after evaporation.

Think about glass of orange juice we enjoy at breakfast – it require 1000 glasses of water to grow and produce. Yet such “water rich” places as Morocco, Spain, California, and Israel are major suppliers of oranges and orange juice to world markets.

I read that CBM (coal bed methane) can produce lots of toxic water for the amount of methane you get. They have to drill lots of wells and get perhaps 20,000 gallons of this water per day per well. I read that the administration has authorized over 70,000 such wells. If you do the math you see that we are going to greater lengths to get lesser amounts of fossil fuel. Maybe this is the time to shift thinking to conservation and renewables.

(aside from cooling, which is merely temporary use of water without it contamination and with close to 100% recycling – think heat sink ponds at nuclear plants).

Temporary, but the heat eventually vaporizes water (either in a cooling tower or downstream in the heated river or lake), so the water is lost in the sense of no longer being available there in liquid form. It eventually precipitates, but mostly far away.

Paul:

You presented in past a lot of viable back-of-the-envelope calculations for different processes on this web site. Please do it again with amount of water necessary to evaporate in order to cool major industrial plant, and compare it with amount of solar energy daily evaporating water from lawn in front of office building of this plant, or from lawns of workers working at this plant, or from adjacent agricultural field growing fresh vegetables for same workers. You will forget forever to post about “high water consumption” of industrial processes.

Andrey: a 1 GW(e) nuclear plant, for example, dissipates 2 GW(th) of waste heat. This is about the same as the time-averaged sunlight striking an area of about 8 km^2.

I doubt most nuclear plants have 8 km^2 lawns, especially if that plant is in a region with restricted supplies of fresh water.

Agriculture of course uses more water. But, again, you'd worry about this in regions where water is already scarce and presumably there isn't much irrigation or that irrigation already has claims on the available water.

I wouldn't be too sure that CTL is a 'bridge' to BTL. They said that about corn vs cellulose ethanol and we're still waiting. It seems like China will increase its 6,000 coal mining related deaths each year plus respiratory illness in the general population. It takes most of Australia's 200 megaton coal exports which arguably comes back as drought. We can't complain as they are only catching up with the West.

China is screaming for new coal technologies. I just do not understand why U.S. companies have been so slow in answering.

Lack of IP protections for their technology?

_Even if IP protection was stringently enforced, many business deals involving mainland chinese companies demand technology transfers. Some companies are now wary of giving away their IP for quick, short term gains due to medium, and long term ramifications to their business competitiveness.
_Another reason is US and Western Europe are starting to smell bubble in PRC, esp. in the large eastern cities. Hence, they are cutting back on investments. East Asia is filling in - not wanting to miss the China boom - thus we do not see a dip in the overall foreign investment picture.

They said that about corn vs cellulose ethanol and we're still waiting.

These things don't happen overnight. Real world engineering can be a hard and prolonged challenge, especially in highly competitive cost-conscious industries.

Cellulose had to get the cost of enzymes down, not an easy thing to do, but they did it. Now they have to tailor the enzymes to the particular biomass, can be done, but it will take some time. They have made good progress, because there is so much money to be made.

There are more than just enzyme problems for cellulosic ethanol.  Another is that the fermentation product is only about 4% ethanol and requires more energy to distill than it yields as fuel.  Corn starches yield 15% or so.

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