China's Coal to Chemicals: Guest Post by Rembrandt

Note: The article below is reprinted from the peak oil site "The Oil Drum" to illustrate that even peak oil sites occasionally publish informative and factual material. Most of this information has already been published here at Al Fin Energy over the past few years. But it is always good to encourage the publishing of important, positive information by websites which typically focus on the negative.

The following article by Rembrandt was originally posted at The Oil Drum

In this post, I give an overview of developments in China to create a coal to chemicals industry, primarily using methanol as an intermediary feedstock. In doing this research, to my surprise, I found that the Chinese chemical economy is advancing rapidly in its use of coal as a chemical feedstock, as opposed to crude oil in other countries. In many cases, coal already represents 20% or more of chemical feedstocks, and in special cases such as PVC, the country already sources virtually all of its input from coal. Since China produces 20% of the world's PVC, such transitions have a substantial impact on the global energy system.

The primary raw chemical input produced from coal is methanol, which is produced through coal gasification and subsequently, methanol synthesis and refining (see picture below for overview of process steps).

Figure 1 - Block flow diagram of coal to methanol synthesis. Source: Inouye et al. 2008

Today, methanol is used to produce a wide variety of chemicals including formaldehyde, MTBE, acetic acid, DME, esters, olefins, and other products. These are used for fuels, pesticides, medicines, plastics, fibres, resins, etc. China currently produces approximately 25% of the world’s output of methanol.

Figure 2 - Products produced in the coal to chemical's industry of today. Source: Yang and Jackson 2012

The current status of China’s coal to chemical industry.

Since 2000, China has been investing an increasing amount into the production of coal-based petrochemicals, substituting these for traditional crude oil based processes. The plausible reasons are the cheap price of coal and the strategic desire to be self-sufficient in resource inputs. The industrial base originally focused on five areas of petrochemical replacement. More recently, the industry is gearing up to produce other petrochemicals by Chinese R&D, and through establishing technology partnerships with non-Chinese players such as TOTAL Oil Company.

The five base chemical products currently made from coal in China are:

• Light oil (containing benzene, toluene and xylene) as a by-product of coke oven steel industry operations. The COLO (coke oven light oil) is utilized in the production of aromatics. It has been estimated that approximately 27% of benzene production in China is coming from this source. Benzene is a precursor for tens of thousands of chemical products including cosmetics, drugs, pesticides, lubricants, dyes, explosives, detergents, nylon, polymers, and plastics. Source: Jeffrey Plotkin 2012

• Acetylene used for production of vinyl chloride monomer (VCM) and 1,4 Butanedoil (BDO). VCM is used to produce polyvinyl chloride (PVC) plastics. BDO is used for a variety of plastics, elastic fibres, and polyurethanes. It is estimated that approximately 85% of VCM produced in China is through coal based routes. Source: Jeffrey Plotkin 2012

• Urea and Ammonia used mainly for the production of fertilizers. Roughly 70% of nitrogen fertilizers in China are produced from coal feedstocks, and all expansion in the future will likely be coal, given the lack of natural gas supplies in China. Source: China Fertilizer Consultants 2010

• Coal to Olefins (CTO), also referred to more commonly as alkenes. These are used to process into a large number of other building block chemicals including ketones, carboxylic acids, ethylene, and alcohols. The first commercial plant was started in 2010.

• Monoethylene Glycol (MEG) production, utilizing a new process route based on gasification of coal with several further reactions to obtain methyl nitrate into dimethyl oxalate into MEG. The first commercial plant began operating in 2009 at a rate of 200,000 tons per year.

Future ventures

The country's industry is expanding its current operations rapidly, as well as implementing new process routes. For example, the company Celanese is looking at commercializing technologies to produce ethanol from coal. A few of the upcoming developments include:

• Dow Chemicals together with Shenhua will launch a large multi million tonnes coal to many chemicals plant in 2016, called the Yulin Integrated Chemicals project, for the production of methanol, methanol to olefins, monoethylene glycol, ethanolamines/ethylendiamines, polyether polyols, acrylic acids, acrylic esters, chlorinated methanes, ethylene dichloride, vinyl chloride monomers, and PVC’s. Source: Business Wire 2010.

• A substantial number of companies are planning to expand methanol to olefins production at commercial scales. Currently there are three methanol to olefins plants with a capacity of 1.56 million tonnes, using coal based methanol inputs. Another nine such plants have been approved and are under construction, and thirty such plants are in the planning stage with a combined capacity of 20 million tonnes. It is estimated that half of these projects would be sufficient for China to become self-sufficient in ethylene supply (primarily from Coal).Source: Ken Yin 2012

• PetroChina is planning to build two coal to paraxylene facilities, one of the main building blocks of PTA for the production of polyester. The facilities are planned at a capacity of 1.6 million tonnesSource: Ken Yin 2012

While ambitions exist, the Chinese government has announced that it aims to cap methanol production capacity at 50 million tonnes by 2015. Current capacity is around 40 million tonnes, of which only 50% is utilized. I.E. half of the plants stand idle due to over-expansion of the industry. Beyond the obvious too fast expansion, there appears to be other strategic reasons such as potential competition over coal use for electricity, and restrictions on water availability to produce coal. Some other key challenges lie in the distance of the coal seams to major consumer markets, and competition over other fossil fuel feedstocks from the Middle-East.

Original article by Rembrandt at The Oil Drum

More on Primus Green Energy's Use of Natural Gas as a Bridge Feedstock

Primus Green Energy Multi-Feedstock Synthetic Fuels
Here is another look at Primus Green Energy and its compromise use of cheap natural gas as feedstock -- in place of the original plan to use biomass feedstock. Just like Sundrop Fuels, Primus Green Energy is behaving in a pragmatic and flexible fashion, to establish proof of technology first, and to develop the essential cash flow which will allow them to proceed with their longer range plans.

The Hillsborough, New Jersey-based company has developed a process for converting biomass into gasoline, jet fuel, and other chemicals. But because its biomass technology isn't quite ready for prime time and its process works with natural gas, its first demonstration plant will use natural gas as a feedstock.

"We're using natural gas as either a bridge to biomass or a bridge to natural gas," says CEO Bob Johnsen, a biofuels veteran who joined the company in March. "We can develop our processes for biomass while concurrently producing product at larger scale."

The company broke ground on the demonstration plant last week and is seeking to raise $60 million to $70 million for a commercial-scale operation which it hopes to begin building later this year or next year. To date, it raised $40 million from conglomerate Israel Corp. in 2007.

Johnsen, a co-founder of Mascoma and the company which became Verenium, was attracted to Primus Green Energy because the flexibility of its technology and because it's at stage where it can be scaled up, he says.

The company has modified a 1970s-era process called Methanol to Gasoline (MTG) originally developed by Mobil. Its plants have multiple steps but the core technology is converting synthesis gas, or syngas, into gasoline or jet fuel. That syngas can be made either from biomass, such as wood pellets or miscanthus, or from natural gas using a steam reformer. Because it's biomass-to-syngas gasifier didn't achieve the performance needed, the company will move ahead with natural gas first.

Once the syngas is produced, the gas is treated with catalysts to produce methanol and then fed into a reactor to synthesize the gas into liquid high-octane gasoline or jet fuel. The company has modernized the MTG process and engineered a more efficient system using a combination of its own inventions and off-the-shelf products, executives say. _TechnologyReview

There is nothing wrong with biomass to liquids in principle. But BTL cannot compete with either GTL or CTL in today's marketplace. And if the price of crude oil keeps dropping, even GTL will be unable to compete with oil.

It is fine to be idealistic. But if you are in business, you will need to temper your idealism with a healthy dose of realism, based upon current and near-term future market conditions.

Sundrop's Methanol to Gasoline Plant to Use Exxon Mobil MTG

The methanol-to-gasoline (MTG) process developed by Exxon Mobil doesn't care where the methanol comes from originally. MTG turns methanol into gasoline regardless of the original source -- natural gas, coal, biomass, etc.

Exxon Mobil Methanol to Gasoline Process

Economics will dictate whether the overall process can be profitable in the current marketplace -- and business startups had best pay attention to a thorough economic analysis before the first shovelfull of dirt is dug.

Sundrop Fuels Inc. intends to fight the current economic conditions of cheap natural gas and cheap coal, in order to prove a point. Sundrop wants to prove that it can fight the markets and survive, while producing "green gasoline."

Sundrop Fuels will use a multi-phase process to convert sustainable forest waste into a bio-based drop-in gasoline for use in today’s combustion engines. A gasification process converts the forest waste combined with hydrogen from natural gas into a synthesis gas, which will then be converted into methanol and then into gasoline in a fixed bed reactor system via the MTG process.

The MTG process first dehydrates methanol to dimethylether (DME); an equilibrium mixture of methanol, DME and water is then converted to light olefins (C2-C4). A final step synthesizes higher olefins, n/iso-paraffins, aromatics and naphthenes. The shape-selective catalyst limits the synthesis reactions to 10 carbons.

MTG reactor product is separated into gas, raw gasoline and water. Raw gasoline is separated into LPG, light gasoline and heavy gasoline; heavy gasoline is hydro-treated to reduce durene content, then heavy and light gasoline are re-combined into finished MTG gasoline. The result is sulfur-free gasoline with a typical 92 Research Octane.

The gasoline yield represents 38% of the feed, and 87% of the hydrocarbon product. Water (H2O) represents 56% of the feed.

The company’s first facility will also provide an operational platform for Sundrop Fuels to begin field integration of its proprietary RP Reactor radiant particle heat transfer gasification technology. The super-efficient, ultra high-temperature process will drive Sundrop Fuels’ future massive-scale biofuels plants, planned to produce more than 300 million gallons of renewable, drop-in biofuels annually.

Plans are for Sundrop Fuels to achieve a combined production capacity of more than one billion gallons by 2020—a significant percentage of the cellulosic advanced biofuels goal set by the nation’s Renewable Fuels Standard (RFS).

Significant backing for Sundrop Fuels comes from Chesapeake Energy Corporation, the largest producer of natural gas in northern Louisiana’s Haynesville Shale Field and second-largest producer in the nation. Chesapeake invested $155 million in Sundrop Fuels in mid-2011. The company’s investors also include two of the world’s premier venture capital firms, Oak Investment Partners and Kleiner Perkins Caulfield & Byers. _GCC

As we mentioned in an earlier posting, Sundrop will prove much of its technology using natural gas as a feedstock Sundrop will use natural gas to power its gasifiers and as a hydrogen donour -- thus explaining their success at raising capital from Chesapeake Energy Corp. Chesapeake needs to prove that GTL can be profitable -- either using MTG or using Fischer Tropsch to make diesel -- and it needs to help boost as many other uses for natural gas as possible. Chesapeake doesn't care how the gas is used so long as it is profitable.

Sundrop's pragmatic move to the initial use of natural gas for its MTG plant instead of using solar powered gasifiers, demonstrates a certain flexibility that is extremely important, if a "green business" is to stay in business.

First establish a cash flow while proving and perfecting your processes. Then you can branch out.