CTL Development in China

Based on Shenhua CTL Projects

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

Congressional Noontime Briefing Rayburn House Office Building Washington, D.C. April 24, 2008

Outline
CTL Development in China Shenhua DCL Plants
o Commercial DCL plant in Inner Mongolia o Shenhua DCL pilot plant in Shanghai

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

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 project Yankuang ICL plant Luan ICL project Jincheng MTG plant

More CTL plants will be approved by the Chinese central government Multiple coal to chemicals, methanol, DME, and GreenGen projects are under development
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Coal To Liquids Development in China

Total budget of 7 Chinese CTL plants: 12 billion USD

Why CTL in China

National strategy for energy security Environmental requirement for clean coal use Technology progress Business development strategies of Chinas energy companies
Abundant coal reserves Bottlenecks in shipping coal Highly profitable Economic development in mining area
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Fast Growth of Oil Consumption in China

300.0 250.0 200.0 Mt 150.0 100.0 50.0 0.0 -50.0
19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06
Production Consumption Imports

Year
Oil Pruduction and Consumption in China

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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Coal Reserves: 35.4 Billion Tonnes Covered area: 3481 km2

Shenhua Group Corp.

Shenhua is the Worlds Largest Coal Producer (240 MMt in 2007)

Shenhua Leads CTL Development in China

Shenhua Coal to Polyethylene Plant Shenhua DCL Plant (24,000 BPD)

Shenhua ICL Plant (7,000 BPD)

Baotou Beijing

Shenhua HD

Sasol-Shenhua/Ningmei ICL Plant (65,000 BPD)

Xian

Taiyuan

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

Shanghai

Shenhua DCL Pilot Plant

Dow/Shenhua Coal to Chemical

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 Commercial Direct Coal Liquefaction Plant In Inner Mongolia

o o o o Worlds 1st DCL commercial plant Production Capacity: 24,000 BPD (mainly diesel) Plant Cost: $1.5 billion USD 4 years of construction (2004-2008)

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Shenhua Direct Liquefaction Process

Catalyst Recycle solvent Gas

Gasoline Fractionation Coal Coal Prep. Slurry Prep. Upgrading Separation Liquefaction Diesel Oil Jet fuel

N2 H2 Purification Gasification Air ASU O2

Residue

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Construction of Shenhua DCL Commercial Plant

2002 2003 2004

2008

2006

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Critical Equipment Lifting & Erection

DOE visitors

Coal Liquefaction Reactor The worlds largest single reactor 2250mt

Liquefaction Reactor Manufactured On-Site

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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 catalyst o High reaction rate: conversion rate over 90% and oil yields as high as 57% of dry and ash free coal

Applicable for high sulfur and high reactivity coal Economically viable
o Low plant cost: $62,500 per daily barrel o Break even cost: $35~40 per barrel selling price

Reducing environmental impacts

o Zero water discharge o Solid waste recycling o CO2 sequestration

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CO2 Sequestration Related to Shenhua DCL Plant

The 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 coal o 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 world Sequestration 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 Activities

China 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 II Joint research Environmental and economic analysis of Shenhua DCL plant CO2 sequestration related to Shenhua DCL plant Integrated DCL and ICL processes FT synthesis study CTL process modeling Liquefaction fuel testing Technical workshops sponsored jointly by US DOE and China NDRC and hosted by WVU and Shenhua Training and educational programs
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