New breakthrough in coal to oil technology

Feb. 28, 2007

Reporting from Johannesburg, Ma Hailiang reports: South African Witwatersrand University recently announced that in cooperation between Shaanxi Jinchao Investment Company and Witwatersrand University's Material and Process Synthesis Center, new breakthroughs have been made in a coal to oil project, especially developed for China.
Prof. Glasser [sic], lead researcher, explains during the interview that the best features of this new technology are its low investment requirements, low operating costs, low carbon dioxide emissions, and highly efficient use of materials. The new technology's innovative concept is to use chemical methods to increase energy efficiency. New chemical methods mix traditional raw materials, coal and natural gas (or coal mine gas emissions), making it possible to adjust the carbon and hydrogen ratio. The new technology omits the circuit step in the synthesis process. Prof. Glasser says the traditional method for this process are: coal + water + oxygen → producing syngas → producing hydrocarbons + carbon dioxide. Through this production method, carbon dioxide is emitted as a waste gas, not only reducing the yield of hydrocarbon from the coal, but also polluting the air. At the same time, increased emissions of carbon dioxide cause more coal to be needed to produce one ton of hydrocarbons, increasing operating costs. The new method simplifies the production method, reducing technical risk and operating costs. Currently, coal to oil pioneers focus technical changes on the reactor in the synthesis process. The reactor requires less than 10% of total investment and this new breakthrough for the production method can reduce investment 15%-30%.
Prof. Glasser says, if this experiment between South Africa and China succeeds, by 2008, plants that are able to produce 100,000 tons of oil will be built in China to obtain oil from coal liquefaction. Once the 100,000 ton project is completed, construction of the first commercial plant to derive oil from coal liquefaction, with an annual production capacity of 3m tons, will begin. It is estimated that it will take three years to build commercial production plants and will cost RMB24b. Concerning the future of the project and benefits derived, Prof. Glasser believes current proven coal reserves can sustain mining for about 200 years. At present, each barrel of oil costs over $50, but the cost of each barrel of oil derived from coal is only $25. Therefore, in terms of the industry life cycle, development costs and market profits, the future of coal to oil is very promising. Also, the project was originally part of a focus to reduce carbon dioxide emissions, very significant for South Africa in terms of raising the financial efficiency of its coal industry, and in terms of dealing with future international restrictions and taxes on carbon dioxide emissions.

by reporter Ma Hailiang