Coal for fuels and chemicals:worldwide challenges andworldwide challenges and

opportunities

Dr Andrew Minchener OBEGeneral Manager

IEA Clean Coal Centre

Membership status of the IEA CleanCoal Centre at June 2015Coal Centre at June 2015

Italy Japan

S AfricaGermany

CEC

Poland

UK

USA

Austria

CEC

The foremost centre of excellencefor all aspects of clean coal

Anglo AmericanThermal Coal

USA

Beijing Research

Australiafor all aspects of clean coal

knowledge transfer

j gInstitute of Coal Chemistry

SuekElectric Power Planning &Engineering Institute of China

BHELBanpu

Scope of the presentation

Rationale for coal to chemicals gaseous and• Rationale for coal to chemicals, gaseous andliquid fuels deployment

• Global overview of prospects and activities• Global overview of prospects and activities• Status of the key conversion routes• Issues arising• Issues arising

• Economic considerations• Environmental issuesEnvironmental issues• Early opportunities for CCS deployment

• Conclusions

New coal chemical industry supply chainis extensive but comes with challengesg

• Concerns re high capital costsand uncertainty of forward oiland uncertainty of forward oilprices, which has beenemphasised recently

• Concerns re water availability(such as in northern parts of( pChina where majority of suitablecoal is located)

• Increasing recognition thatthese are high CO2 intensitycoal conversion processes

Prerequisites for assessingpotential coal conversion projectspotential coal conversion projects

(IEA 2008)

• Large reserves of low cost gasifiable coalrequired;

• Stranded coal, due to either its low-quality orlocation, can be attractive;

• Government ability and will to provide enablingsupport for the very large capital investments.

Further considerations (IEACCC 2011)Further considerations (IEACCC 2011)

• Coal availability compared to either indigenoussupplies or imports of oil and natural gas;supplies or imports of oil and natural gas;

• Technical and economic issues must be• Technical and economic issues must beattractive;

• Gasification products selection in terms of usagewithin the country itself and as exports;y p ;

• Infrastructure needs both for the supply ofpp yfeedstocks and for transporting the end products;

• Institutional capacity requirements.

More promising developing countriesfor coal conversion developmentfor coal conversion development

Africa Asia Eurasia Europe SouthAmericaAmerica

South Africa China

Mozambique Mongolia Ukraine TurkeyVietnam

IndiaIndonesia

Uzbekistan

Botswana Russia BrazilZimbabwe Pakistan KazakhstanZimbabwe Pakistan Kazakhstan

Commercial scale operationsi S th Af iin South Africa

• Coal-based economy withi ifi t d ti dsignificant domestic use and

exports• Sasol operates the world’s• Sasol operates the world s

only gasification-basedcommercial CTL facility atSecunda with an outputcapacity of 160,000 bbl/d of oilequivalentequivalent.

• Major petrochemicalsproduction plant at Sasolburg,production plant at Sasolburg,but in 2004 Sasol switched thisfrom coal to natural gasfeedstock

Challenges and opportunities for Mongoliag pp g

• Very strong energy security• Very strong energy securitydriver to establish CTL andcoal to chemicals

• Abundant, easily mineablelignite reserves and plenty ofwater in most of these regionsg

• Positive government support• Cooperation underway

b t l l i d • Limited technical andbetween local companies andCTL technology suppliers

• Initial studies suggest an

Limited technical andeconomic capacity

• Very limited infrastructureggattractive price differentialbetween CTL and imported oilproducts

• Small national GDP and needfor external financing

• Mongolia seen as a riskyproducts Mongolia seen as a riskyinvestment in the mining sector

Activities in Vietnam

• Significant coal resources, inth f th tnorth of the country

• Joint ventures for exploitationproposedproposed

• Interest in power andconversion projectsp j

• One coal-to-chemicals projectestablished at the Ninh BinhNitrogenous Fertiliser Plant

• China Huadian EnergyDe elopment Compan

• Shell gasificationtechnology usedDevelopment Company

fulfilled EPC roletechnology used

• Full operation will produce560,000 tonnes urea560,000 tonnes urea

Slow start in India

• Major user of coal and a rapidlygrowing economygrowing economy

• Very large reserves of hard coal(60Gt) and lignite (38Gt)

• Hard coal far from industrialdemand regionsM j l lit i• Major coal quality issues

• Government driven initiativeshave been ineffective but somepositive activities underway

• Jindal Steel and Power Ltddeveloping coal to chemicals

• Rashtriya Chemicals andFertilisers Ltd Coal India Ltddeveloping coal to chemicals

project to produce a substitutereducing gas for the production

Fertilisers Ltd, Coal India Ltdand the Fertiliser Corporation ofIndia Ltd refurbishing several

of Direct Reduction Iron in ashaft furnace

fertiliser production units

Comparison with China’s coal to chemicalsdevelopment and deployment programmedevelopment and deployment programme

• Aim is to establish a modern coal chemical industry, toinclude the upgrade of those demonstration projects thatoffer the higher energy conversion efficiency, a suitableoffer the higher energy conversion efficiency, a suitablegeographical location, with both adequate suitable coalsupplies and sufficient water availability, as well as offeringprospects for extending the industrial chain to promote localprospects for extending the industrial chain to promote localeconomic and social development.

• This will include a focus on the construction of projects forfclean production, utilisation, processing and conversion of

low-calorific-value coal

Indicative economic assessmentf l t il d tfor coal to oil products

Indicative economic assessmentInput coalprice

Crude oil productioncosts (US$/barrel)price

(US$/tonne)costs (US$/barrel)ICL DCL

15 35-45 25-30

125 80-90 49-59

155 110-120 65-75

Environmental considerations

Chineseapplications

Standardcoalconsumption

Waterconsumption

CO2emissions

consumptiontonnes/tonnes

ICL 4.39 13 5.0Coal toolefins

6.68 33 5.5

Coal toethylene

2.55 14 2.0ethyleneglycol

tonnes/1000 Nm3Coal to SNG 2 83 6 58 2 5Coal to SNG 2.83 6.58 2.5

Near term low cost carbon intensityreduction opportunities in China

(IEACCC 2012)

CO2 EOR offers best near termprospect in China to compensate forCO2 transport and injection costs

USA (NETL) work suggests that Coalto Chemicals with CCS can achieve asmaller (5 12% less) carbon footprintsmaller (5-12% less) carbon footprintcompared petroleum-derived diesel

Inclusion of CCS on CTL would addInclusion of CCS on CTL would add¢7 per gallon to the required sellingprice of the diesel product

Initiatives to establish major CCS projectsbased on coal to chemicals projects by

ltil t l d l t b kmultilateral development banks

Conclusions

• Coal gasification for chemicals, gaseous and liquid fuelsproduction can fulfil an important need particularly inproduction can fulfil an important need, particularly invarious developing and industrialising countries where coalis the primary fuel source and oil and gas energy security is

ian issue.• However, the establishment of projects in such countries

can be problematical for a number of technical andpeconomic reasons, although it is encouraging that someprojects appear to be moving forward.

• China offers a template for large scale coal to chemicals• China offers a template for large scale coal to chemicals,gaseous and liquid fuels deployment, for all stages of theindustrial development cycle. It can also financially underpin

h j t i l di th i t d i f t t dsuch projects, including the associated infrastructure needs.• Water availability and the need to limit CO2 emissions will

need to be taken into account, if the global sector is togcontinue to grow.