Wanxiang and GreatPoint Energy close $1.25B deal for 1 Tcf/year coal-to-natural-gas plant in Xinjiang; Sinopec to purchase output, building pipeline to east
21 May 2012
|Overview of the Bluegas catalytic coal methanation process. Click to enlarge.|
GreatPoint Energy and China Wanxiang Holdings have officially closed their investment and partnership agreement which was highlighted during an official signing ceremony between senior US and Chinese government officials in 2012.
As part of the transaction, GreatPoint Energy has raised equity investment and secured project funding of $1.25 billion from Wanxiang to finance and construct the first phase of a coal-to-natural gas facility that ultimately will have an annual production capacity of one trillion cubic feet (1 Tcf) (30 billion cubic meters) per year. The complex will be located near Turpan, Xinjiang Uyghur Autonomous Region in the Peoples Republic of China and will utilize GreatPoint Energy’s proprietary Bluegas technology (earlier post).
Wanxiang and GreatPoint Energy have entered into a joint venture and have begun engineering the Bluegas complex. The first phase is expected to commence operation in 2015 with an initial annual natural gas production capacity of 30 billion cubic feet (0.85 billion cubic meters), which will expand to 116 billion cubic feet (3.4 billion cubic meters) of annual natural gas output within two years.
China Petroleum and Chemical Corp. (Sinopec), China’s largest company by revenue, has agreed to purchase the natural gas produced from the facility and has already announced plans to construct a pipeline to deliver the gas to the eastern region. of China, including Guangdong and Zhejiang provinces and Shanghai,
The Bluegas catalytic hydromethanation technology, developed and owned by GreatPoint Energy, directly converts coal into pipeline quality natural gas (99.5% pure methane). By comparison, syngas resulting from conventional gasification cannot be converted to pipeline quality natural gas without further processing.
By adding a catalyst to the coal gasification system, GreatPoint Energy is able to reduce the operating temperature in the gasifier, while directly promoting the reactions that yield methane (CH4). Under these mild catalytic conditions, less expensive reactor components are required, pipeline grade methane is produced, and very low cost carbon sources (such as lignites, sub-bituminous coals, tar sands, petroleum coke and petroleum resid) can be used as feedstocks.
Compared to more conventional approaches to gasification and SNG production, the bluegas process eliminates the need for an external water gas shift reactor, a methanation reactor, and air separation plant. GreatPoint says that its system produces natural gas at the lowest cost in the industry and that its water consumption is half of that of competing gasification systems.
Inherent in the technology is the ability to capture nearly all emissions, including carbon dioxide, which can be sequestered and used for oil production through Enhanced Oil Recovery. The technology is especially well suited for arid regions and where low-quality, concentrated coal resources are available, such as in Xinjiang.
Together, Wanxiang and GreatPoint Energy also plan to develop large-scale Bluegas projects at other locations in Xinjiang and in other regions of China using the Bluegas technology.
Following development of the Bluegas plant in Xinjiang, GreatPoint Energy intends to expand to other significant natural gas markets in and outside of China, including Japan, South Korea, India, and Europe, becoming a major global supplier of natural gas that will compete with traded Liquefied Natural Gas (LNG) and long-distance pipeline supplies in these markets.
As part of the transaction, Wanxiang is becoming a large shareholder of GreatPoint and will join the Board of Directors of the Company. Other Board members include Ray Lane, Partner at Kleiner Perkins Caufield & Byers and Executive Chairman of Hewlett Packard; Paul Hanrahan, former CEO of AES Corp.; Bill Wiberg, Partner at Advanced Technology Ventures; Andrew Perlman, Chairman and CEO; and Daniel Goldman, President and CFO.
We are extremely pleased to welcome Wanxiang as one of our strategic investors and establish a joint venture with them in China. This agreement provides a tremendous pathway for commercialization of the Bluegas technology and enables us to develop and finance multi-billion dollar projects and provide large quantities of natural gas that will compete with supplies from neighboring countries.—Daniel Goldman
Wanxiang was founded in 1969 by its Chairman Lu Guanqiu and is now one of the largest private companies in China. Wanxiang is a diversified manufacturing enterprise with interests in equipment and automotive parts manufacturing, where it has become one of the largest global suppliers, clean energy, financial services, agricultural products, natural resources, real estate and investments. The company operates facilities in 23 provinces in China and more than 40 countries around the world. In the United States, Wanxiang owns or controls 29 companies and has nearly 6,000 employees.
Wanxiang is embarking upon a major development in Xinjiang Uyghur Autonomous Region where it anticipates investing 160 billion RMB (US$25 billion) through 2020, including the development of projects utilizing the Bluegas technology to convert coal to natural gas.
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