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China venture offers expertise
Yuzhuo Zhang
Rick Stouffer can be reached via e-mail or at 412-320-7853.
Yuzhuo Zhang, vice executive (equivalent to senior vice president) of Shenhua Group, said his organization has purchased the expertise for its $1.3 billion plant from no fewer than 10 foreign firms, including Shell Oil. The plant, about 94 percent complete, is in Inner Mongolia, about 375 miles west of Beijing.
"We would be very happy to share our experience with anyone in the United States," Zhang said, following a presentation at West Virginia University's National Center for Coal and Energy.
Zhang and his delegation are in the United States this week to meet with Department of Energy experts in Washington, tour a coal gasification project in North Dakota, update West Virginia University officials on the Mongolia project and to visit Columbus, Ohio, today to meet with representatives of utility giant American Electric Power.
Zhang and Shenhua are completing the energy project that U.S. experts and proponents are only dreaming about. The process of applying heat and pressure, along with a catalyst, and converting coal into gasoline, diesel fuel and naphtha is under discussion in this country, with small laboratory projects operating around the United States. But China is light years past talking.
China Shenhua Coal Liquefaction Co. Ltd. and some 10,000 workers are in the final stages of construction of the coal-to-liquid plant. The facility will convert 3.9 tons of coal into some 4.9 barrels of crude oil-like liquid, of which about 70 percent will be ultrapure diesel fuel. Shenhua states that as long as crude oil remains above the $35- to $40-a-barrel price, it trades in the $70 range, the plant will be profitable.
"It's quite a leap in scale and you're always running into operating issues with processes like that," said Geoff Wilson, who oversees coal-to-liquid technology research for independent testing company Intertek Inc. The work is being conducted at the former research-and-development complex of Gulf Oil Corp., now the University of Pittsburgh Applied Research center on Gulf Lab Road in Harmar.
Wilson said that should the Chinese plant be successful, it could open the door for large-scale plant construction in this country. Jerald Fletcher, director of the Natural Resource Analysis Center at WVU and the newly formed U.S.-China Energy Center, agrees with Wilson.
"I think this project, when it's up and running, will stir something in this country," Fletcher said, following Zwang's presentation. "In this country, it probably would cost twice the price due to our higher environmental and labor costs, but we can't afford to walk away from a project like this."
Since December 2003, Shenhua Coal Liquefaction and West Virginia University have operated under a memorandum of understanding to partner in researching the consequences of large-scale implementation of the coal-to-liquid process.
China is the world's second-largest energy consumer, behind the United States, and uses coal to produce almost 80 percent of its electricity. Government-owned Shenhua Group is China's largest power producer.
The state-run company began the coal-to-liquid project in 2004 as a matter of national security. While it sits on billions of tons of coal, China is woefully wanting for natural gas and crude oil. It's been a net crude oil importer since 1993 and realized that if it was to continue feeding its growing economy, steps had to be taken to substitute for oil. By 2020, China estimates its oil imports could reach 60 percent to 62 percent of its needs, percentages nearly identical to this country's current crude oil import number.
Once the giant pilot project is completed, Zwang said Shenhua has plans for no fewer than four additional, larger coal-to-liquid plants.
While coal-to-liquid plants have been used by South Africa's Sasol in that country since the 1950s, the Shenhua facility uses a less expensive, more environmentally friendly system, developed by the company's experts over a 15-year period, Zhang told his audience.
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