China’s coal-to-gas output to disappoint next year

Sep 22, 2014 12:00 AM

China’s output of synthetic natural gas (SNG) from coal is set to fall far short of government hopes next year, as existing projects wrestle with cost overruns and technical problems.

China will produce 4-6 billion cubic metres of coal-based SNG in 2015 – less than half of the 15-18 bcm proposed by the National Development and Reform Commission (NDRC) in 2012, said Li Guang, a researcher from PetroChina’s Planning and Engineering Institute.

However, Li forecast output would reach 40-60 bcm by 2020 as a result of large investments, strict environmental requirements and water consumption worries.

The SNG industry has been plagued by problems, Li said at the China Coal to SNG Market & Technology Summit in Beijing.

Chinese companies have proposed dozens of coal-to-gas (CTG) projects with a total capacity of 225 bcm/y, but the rush prompted the National Energy Administration in July to warn against “blind development”.

Only four have been approved for construction by the NDRC, and just two of those have been completed, said Li – a 1.4 bcm/y plant in Inner Mongolia by China Datang Group and a 1.38 bcm/y facility in Xinjiang by China Kingho Energy Group. Both are running at around 50% of capacity.

Less than a year after launching its plant, Datang is now leaving the SNG industry after a series of problems at the project. The company announced in July it would offload its CTG and coal-chemical businesses to a unit of the State-owned Assets Supervision and Administration Commission tasked with restructuring uncompetitive state assets.

The plant is undergoing maintenance and may restart in October, Ge Wei, senior engineer with Datang Energy Chemical, told Interfax. China Shenhua Group is in talks to take over Datang’s CTG project, Interfax reported last month.

Operations at the plant have been intermittent since it launched last December. Datang shut it down a month after startup when a hydrogen sulphide leak corroded the gasification furnace.

Kingho’s plant has also suffered difficulties. It started producing gas in August 2013, but had to be retooled after output did not meet national quality standards.

The other two approved projects are behind schedule. Datang’s 4 bcm/y facility in Fuxin city, Liaoning, is complete but has not started operations yet because of technical and infrastructure problems, Li told Interfax.

Meanwhile, the first phase of a plant by Inner Mongolia Huineng Group will launch at the end of this month – four years after it was approved.

New CTG capacity will not be launched until 2017 because of the long construction periods, Li said.

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