With its continued drive to secure supplies of oil and natural gas, China is moving ahead with determination on several different coal-to-liquids (CTL) projects.
In the most recent development, Royal Dutch Shell PLC and China’s top coal producer Shenhua Group last week moved a step closer to a major CTL project involving an investment of up to $5-6 billion.
The firms announced their agreement to pursue a 3-year study of a plant in the remote western Ningxia region, after which they would make a final investment decision.
If the project goes ahead, the plant is expected to produce about 3 million tonnes/year, or about 70,000 b/d, of liquid fuel, when it starts up around 2012. That is equivalent to about 1% of China’s overall oil demand.
A single step
That may not seem like much more than a drop in the bucket of growing Chinese demand for hydrocarbons. But don’t forget, this also is the land that originated the saying, “A journey of 1,000 miles begins with a single step.”
Just a week before that deal, Shenhua announced a similar agreement to set up two CTL plants-each valued at $5 billion-in Northwest China with Sasol of South Africa.
The firms signed one agreement for the feasibility study of an 80,000 b/d CTL project in Shaanxi Province, while the other agreement was for an 80,000 b/d plant in the Ningxia Hui Autonomous Region. Both are expected to start up in 2012.
Chinese state media reported that the initial prefeasibility studies of the projects have confirmed that all key drivers are in place for establishing a viable CTL business in China using Sasol’s Fischer-Tropsch technology.
China is a main driver of stepped up demand for coal, but it is hardly the only country seeking more of it. Indeed, according to the US Energy Information Administration, coal is set to become the king again of the energy industry.
New profit center
EIA last month reported that growth in global demand for coal will now outpace that for both oil and gas. Its 2006 outlook predicts coal demand will rise 2.5%/year between 2003 and 2030 compared with 2.4%/year for gas and 1.4%/year for oil.
It remains to be seen just how much of that coal will go to CTL. But producers are not standing idle.
Altona Resources PLC is conducting new studies based on providing coal feedstock to an on-site CTL plant with an integrated power generation facility at its Arckaringa basin coal deposit in South Australia.
Studies on the development are being expanded, and the results of these will likely become the design criteria for a subsequent new bankable feasibility study.
Bankable feasibility study? Some people clearly believe that they can count on Old King Coal when it comes to what many observers see as the coming energy crunch.