Shenhua Group, the country's biggest coal producer, said on Jan 5 that its first direct coal-to-liquids (CTL) project, the first of its kind in China, had already started operation.

The project, launched on Dec 30, has started to produce fuels and chemical products, all up to standard, according to a statement posted on the company's website, adding the launch was right on schedule.

Ning Chenghao, a researcher with Shenhua CTL institute told China Daily in December that the launch of this project might be postponed to early 2009 "for several reasons", which he did not specify.

According to Ning, the cost for generating each barrel of oil was estimated at about US$45 in 2007, but "the figure has changed as the prices of coal and oil have been fluctuating this year (2008)".

The cost of running a CTL project in winter is quite high because "it requires the use of more techniques to ensure the water, which is critical for CTL projects, will not be frozen in the pipes", said Jiao Hongqiao, a senior engineer with Shenhua Group.

Located in Inner Mongolia autonomous region, the 10-billion-yuan (US$1.46 billion) CTL facility is reported to be capable of producing one million tons of fuels annually. The project is also the world's first major liquefaction plant that employs direct coal liquefaction technology.

(China Daily January 6, 2009)