With global oil prices now lingering near historical highs, it
is likely that China's first coal-to-liquid (CTL) project will
begin operation before the previously projected date of 2016,
according to South Africa's Sasol, the world pioneer in commercial
CTL technology. It is planning two giant projects in China.
"Once we have completed our studies, we will consider shortening
the period (before operations begin)," says Lean Strauss, Sasol
Group general manager. "We will bring the date forward."
He didn't give a new timetable, but the company's Beijing office
said earlier the two projects might come online in 2013.
The company and its Chinese partner China Shenhua Group are now
in the second phase of feasibility studies for the two projects,
one in Northwest China's Shaanxi Province and the other in the
Ningxia Hui Autonomous Region.
Sasol began planning with Shenhua Group Co Ltd and Shenhua
Ningxia Coal Ltd for the projects in 2004 and preliminary studies
were finished at the end of 2005. According to earlier reports, the
studies now underway will determine details of capital and
feedstock costs, water supplies and market conditions, and will
outline most of the major commercial and funding issues.
"China has the right conditions to become the second country in
the world to develop CTL," Strauss says. Sasol commercialized CTL
projects in its home country after building its first plant in 1955
and two more from the 1970s to the mid-1980s. Twenty-five percent
of South African fuel is now derived from coal to power cars and
airlines in the country.
"South Africa flies and drives on coal," Strauss says
proudly.
Experts say that as world oil prices approach $100 a barrel,
Sasol's projects look increasingly appealing to China, where coal
is abundant and about half of oil consumed is imported from
overseas.
The Chinese government has felt the pinch of soaring oil prices
that climbed to more than $90 a barrel in November. Due to a price
gap between the domestic and world oil markets, some major cities
experienced gasoline shortages last month. The National Development
and Reform Commission resorted to administrative measures to force
China's two oil giants to meet the demand for gasoline.
Amid calls for China to build more strategic oil reserves to
ensure energy security, Strauss believes China's coal reserves
provide a significant strategic opportunity to improve both its
energy security and self-sufficiency. The nation has about 1
trillion tons of explored coal reserves, ranking it third in the
world.
But since they were first proposed, Sasol's projects in China
have been controversial due to doubts about their energy efficiency
and economic viability.
According to Strauss, the efficiency of coal to oil is around 40
percent with the remainder used to make other coal chemical
products. The company is now researching how to improve
efficiency.
Generally speaking, he says, at an oil price of $50 a barrel,
the CTL process is commercially viable.
If oil is cheap, the CTL does not make economic sense, he says.
But a growing thirst for oil and global competition for resources
means CTL "is a strategic decision for a country to make".
Sasol's studies say that 15 CTL plants could replace almost 15
percent of China's fuel imports by 2020.
Its two projects are designed to produce 80,000 barrels of
liquid fuel a day. Each plant is expected to cost $5 billion to $6
billion. Depending on coal quality, one CTL plant converts 13 to 19
million tons of coal annually.
(China Daily December 17, 2007)
