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Synthesis Energy Systems Enters JV with YIMA for Coal Gasification in China; Financing Key, as SES Halts Synthetic Gasoline Project in US

Synthesis Energy Systems, Inc. (SES), a gasification company, entered into a primary joint venture agreement with YIMA Coal Croup, a China integrated coal company, for the development of a coal gasification plant which will provide syngas feedstock for the downstream production of transportation fuels and chemicals intermediates in Henan Province, China. The joint venture agreement includes a provision whereby YIMA will guarantee the debt financing for the Plant. SES expects this guarantee will allow debt financing to be obtained from domestic Chinese banking sources.

SES also announced that it and its partner CONSOL Energy stopped funding the front-end engineering design package for the Benwood, West Virginia synthetic gasoline project announced earlier this year (earlier post) “due to the difficult financial environment.” With the lack of advancement of the project, the joint development agreement between SES and CONSOL expired according to its terms.

In China, SES and YIMA will work on the development of the project, but will not be required to make capital contributions to the joint venture, pending final government approvals. The preliminary estimate of the total required capital of the joint venture is approximately $350 million. In exchange for their capital contributions, SES will own a 49% interest in the joint venture and YIMA will own a 51% interest.

Additionally, SES announced that coal testing for this project, utilizing coal from YIMA’s Yaojin mine, is scheduled to commence at SES’s Hai Hua facility in Zaozhuang City, China. Data from the testing will be used to verify process simulation calculations and ensure proper design of the Plant.

The execution of the joint venture agreement with YIMA underscores our current focus on projects in China where traditional bank financing remains accessible. We are fortunate to have a partner like YIMA that has the ability to provide a guarantee for the financing which we believe will allow SES and YIMA to advance this project despite these turbulent financial times. From an operational perspective, the ability to conduct coal testing in our Hai Hua commercial facility as opposed to a pilot plant will be invaluable to the design process.

—Tim Vail, president and CEO of Synthesis Energy Systems

YIMA is very pleased to have signed the joint venture contract with SES. Despite the downturn in the international financial markets, Chinese banks have recently decreased interest rates and the central government has reduced reserve ratios for banks, enhancing the ability of Chinese banks to lend to projects. We are committed to ensuring the financing for this project as this is an encouraged industry in China with excellent government support. We believe this is an opportunistic time to be building new capacity and we expect this project to be just the first step in a series of projects with SES.

—Wu Luyu, Chairman, YIMA Coal Group

The gasification plant will utilize SES’ licensed U-GAS technology to convert low- quality, high-ash sub-bituminous coal into syngas and downstream products for transportation fuels and chemical intermediates. The Plant will be constructed in a phased approach that takes advantage of the U-GAS technology’s ability to economically scale the build-out of capacity. Phase one of the Plant is designed to process 2,000 tonnes per day of sub-bituminous coal into syngas for downstream chemical and fuel products while phase two, if constructed, is expected to double the design output.

The primary advantage of U-GAS relative to other gasification technologies is its overall low cost, enabled by fuel flexibility, low operational cost, and the technology’s ability to economically scale projects to meet the needs of industrial customers. SES licenses the U-GAS technology from the Gas Technology Institute.


Henry Gibson

Coal gasification is one of the essential steps to reduce oil imports from outside North America. It is necessary to have such units in place and operable, and funding for such must be part of the BIG BAILOUT. There is no reason why the US government should not own such units, at least as many as are required to operate the military; the US owns much of the property that oil comes from.

Nuclear power plants can be used to generate electricity right at the coal mine and even supply some of the heat for gasification and refining. The coal is not then burned to produce electricity but made into hydrogen and carbon monoxide gas. Bio-mass can also be treated. The initial product should be methanol. The methanol can be converted into gasoline or diesel. Careful gasification can extract some fuels and some fertilizer directly from the coal before it is gasified. There are also other chemicals that may be extracted first.

A reminder for those who do not understand nuclear power: There are twenty-five(25) nano-fission-bombs, potassium atoms, exploding each second in every pound of your body, and the same happens in each pound of your dog, and the same happend in each pound of your great-great-great-grandmother and still is if her body is preserved in a vault. No cell can function without potassium, and all life has adapted to recover completely from these explosions, and it can and does survive well at much higher levels. Any live organism has always had these explosions. There are other natural sources of radio-activity in humans and other organisms and in the earth and space; none of which noticeably decrease human lifespan and are thousands of times more intense than living next to a nuclear reactor.

The US government should have a monopoly on one half of the power in the US and must supply it with nuclear reactors with its ability to get low cost money. After several years, the sale of power will yield an excess to help run the government, but before that it will fund the construction to reduce the need to borrow money.

The government can sell bonds with kilowatt denominations that guarantee to the holder, not dollars, but the ownership of one kilowatt of nuclear generating capacity. This would not be an ownership of any specific plant but part of all Federal plants. There will be limits on the sale and resale of such bonds.

WIPP is a project for permanently storing highest and lowest levels of goverment nuclear waste including used fuel rods. It is in operation and has met all requirements of law and science to operate. It is far too expensive and protective considering other dangers to life, but it is operating, and there is no reason not to use a similar facility for actual power plant nuclear wastes. Used fuel rods have %95 of their possible energy left in them, but may be so destroyed if that is what law or economics requires.

Eventually, and possibly soon, nuclear reactors will extract hydrogen from water and CO2 from the air, just like plants do, to make carbon neutral fuels for vehicles that are not connected to the electric grid. If electrolysis is only %50 efficient, hydrogen sufficient to replace the heat energy of a gallon of gasoline would cost less than 2 dollars of electricity to produce in France or Canada with nuclear power. But that amount of electricity would drive a TESLA over 200 miles.

Replacing coal fired generators with uranium ones and using the coal to make gasoline is far more efficient than water electrolysis, but the thermochemical production of hydrogen or carbon monoxide with uranium can become very much cheaper than electrolysis.

There are very good reasons why some people are promoting sodium and sodium compounds for vehicle fuel instead of hydrogen. ..HG..

Jude C

Coal to gas is a vital strategy for energy independence. There is a major homeland security component to Coals to liquieds (CTL). One of the biggest backers of this concept is the Air Force. Coal's flexibility as a fuel and because we have so much of it, will remain a critical to our national security in the coming decades.

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