Monday, January 20, 2014

Converting Coal to Synthetic Natural Gas in China

  •  With so much attention focused on China's shale gas potential, its growing synthetic natural gas industry is a wild card.

  • In light of China's severe air quality problems,  trading smog for higher CO2 emissions is an understandable choice, but one with global implications.

In its latest Medium-Term Coal Market Report the International Energy Agency (IEA) forecasts a slowing of coal demand growth but no retreat in its global use. That won’t surprise energy realists, but the item I wasn’t expecting was the reference in the IEA press release to growing efforts in China to convert coal into liquid fuels and especially synthetic natural gas (SNG).  It’s not hard to imagine China’s planners viewing SNG as a promising avenue for addressing the severe local air pollution in that country’s major cities, but the resulting increase in CO2 emissions could be substantial. It could also affect the economics of natural gas projects around the Pacific Rim.

Air quality in China’s cities has fallen to levels not seen in developed countries for many decades. There’s even a smartphone app to help residents and visitors avoid the worst exposures. Much of this pollution, in the form of oxides of sulfur and nitrogen and particulate matter, is the result of coal combustion in power plants. Although China is adding wind and solar power capacity at a rapid clip, after years of exporting most of their solar panel output, the scale of the country’s coal use doesn’t lend itself to easy or quick substitution by these renewables.

Natural gas offers a lower-emitting alternative to coal on a larger scale than renewables. Existing coal-fired power plants could be converted to run on gas or replaced with modern combined-cycle gas turbine power plants. Gas-fired power plants emit up to 99% fewer local, or “criteria” pollutants than coal plants, especially those with minimal exhaust scrubbing.

Unfortunately, China doesn’t have enough domestic natural gas to go around. Despite potentially world-class shale gas resources and the rapid growth of coal-bed methane and more conventional gas sources, natural gas supplies only 4% of China’s energy needs. Imported LNG can help fill the gap, but it isn’t cheap. What China has in abundance is coal. Converting some of it to SNG could boost China’s gas supply relatively quickly–perhaps faster than the country’s shale gas infrastructure and expertise can gear up.

SNG is hardly a new idea; the Great Plains Synfuels Plant has been producing it in North Dakota since the 1980s. When that facility was built, natural gas prices were volatile and rising, and greenhouse gas emissions appeared on no one’s radar. The process for making SNG from coal is straightforward, and its primary building block, the gasification unit, is off-the-shelf technology. I worked with this technology briefly in the 1980s, and my former employer, Texaco, licensed dozens of gasification units in China before the technology was eventually purchased by GE. Other vendors offer similar processes.

Gasifying coal adds a layer of complexity, compared to gasifying liquid hydrocarbons but this, too, has been demonstrated in commercial operations. Most of the output of the facilities Texaco sold to China was used to make chemicals, but the chemistry of turning syngas (hydrogen plus carbon monoxide) into pipeline-quality methane is no more challenging.

This effort is already under way in China. Last October Scientific American reported that the first of China’s SNG facilities had started shipping gas to customers, with four more plants in various stages of construction and another five approved earlier this year. The combined capacity of China’s nine identified SNG projects comes to around 3.5 billion cubic feet per day, or a bit more than the entire Barnett Shale near Dallas, Texas produced in 2007 as US shale gas production was ramping up. It’s also just over a quarter of China’s total natural gas consumption in 2012, including imported LNG.

To put that in perspective, if that quantity of SNG were converted to electricity in efficient combined cycle plants their output would be roughly double that of China’s 75,000 MW of installed wind turbines in 2012, when wind generated around 2% of the country’s electricity.

The appeal of converting millions of tons a year of dirty coal into clean-burning natural gas, in facilities located far from China’s population centers, is clear. This strategy even has some similarities to one pursued by southern California’s utilities, which for years imported power from the big coal-fired plants at Four Corners.  For that matter, the gasification process has some key advantages over the standard coal power plant technologies in the ease with which criteria pollutants can be addressed. Generating power from coal-based SNG might actually reduce total criteria pollutants, rather than just relocating them.

However, wherever these plants are built they would add around 500 million metric tons per year of CO2, or around 5% of China’s 2012 emissions, a figure that dwarfs even the most pessimistic estimates of the emissions consequences of building the Keystone XL pipeline. That’s because the lifecycle emissions for SNG-generated power have been estimated at seven times those from natural gas, and 36-82% higher than simply burning the coal for power generation.

What could possibly lead China’s government to pursue such an option, in spite of widespread concerns about climate change and China’s own commitments to reduce the emissions intensity of its economy? Having lived in Los Angeles when it was still experiencing frequent first-stage smog alerts and occasional second-stage alerts, I have some sympathy for their problem. China’s air pollution causes even more serious health and economic impacts and has been blamed for over a million premature deaths each year. By comparison the consequences of greenhouse gas emissions are more indirect, remote and uncertain. Any rational system of governance would have to put a higher priority on air pollution at China’s current levels than on CO2 emissions.

It might even turn out to be a reasonable call on emissions, if China’s planners envision carbon capture and sequestration (CCS) becoming economical within the next decade. It’s much easier to capture high-purity, sequestration-ready CO2 from a gasifier than a pulverized coal power plant. (At one time I sold the 99% pure CO2 from the gasifier at what was then Texaco’s Los Angeles refinery to companies that produced food-grade dry ice.) It should also be much easier and cheaper to retrofit a gasifier for CCS than a power plant.

In an internal context the trade-off that China is choosing in converting coal into synthetic natural gas is understandable. However, that perspective is unlikely to be shared by other countries that won’t benefit from the resulting improvement in local air quality and view China’s rising CO2 emissions with alarm. I would be surprised if the emissions from SNG were factored into anyone’s projections, and nine SNG plants could be just the camel’s nose under the tent.

In an environment that the IEA has described as a potential Golden Age of Natural Gas, large-scale production of SNG could also constitute an unexpected wild card for energy markets. When added to China’s shale gas potential, it’s another trend for LNG developers and exporters in North America and elsewhere to monitor closely.

A different version of this posting was previously published on Energy Trends Insider.

7 comments:

Hanif said...

Can you tell us how the value of high rank coal?

jtf said...
This comment has been removed by the author.
jtf said...

Good point about capturing CO2 from (pure oxygen-using) gasifiers - I hadn't thought about it, but in retrospect it's obvious.

I'm not so sure that indirect methane production is inherently more or less viable than integrated gasification combined cycle. If China is indeed looking for a solution to its most pressing air pollution problems - as you correctly note, particulate matter, sulfur and nitrogen aerosols, and others - then IGCC appears to present most of the advantages of coal-based methane production without the intermediate water-gas shift necessary to provide the appropriate stoichiometric number in the syngas for production of methane. Refining out of inorganic components is as viable given that the mechanisms (slagging in the gasifier, various gas scrubbing techniques) and it would appear to be intuitively more energy efficient on a lifecycle basis. It also gives the option of not using an ASP for pure oxygen production if you use an air-fed gasifier, although that obviates the advantage of CO2 capture that you mentioned in your piece.

Obviously, the above only applies for power generation and a natural gas network is a clearly superior alternative to a coal-fired system for e.g. space heating, but it seems the current focus is on power generation and it seems to be easiest area to tackle.

Geoffrey Styles said...

jtf,
IGCC would probably make more sense, at least from an efficiency and thus emissions perspective, if they were starting from scratch. However, IGCC plants are expensive and complex to operate, and my sense from the research was that the target for the SNG was repowering existing coal plants w/ gas. I'd love to see some hard numbers on which path uses the least capital.

jtf said...

No idea on hard numbers, I'm afraid; neither I nor my company does work in power generation.

Tony Day said...

Gents, I lead a team of ex-British Gas engineers developing a slightly modified version of the British Gas coal to SNG technology jointly developed by the UK government and British Gas Corporation between 1955 and 1992 to provide a replacement for UKCS natural Gas supplies when these were forecast to become depleted.

I disagree with the statement that coal to SNG produces more CO2 emissions than straight coal combustion for power generation.

The British Gas scheme in its final form using high pressure Oxygen blown slagging gasification at up to 93% cold gas efficiency in the BGL slagging gasifier, and up to 82.5% efficient conversion of syngas to synthetic methane using high temperature HICOM combined shift and methanation, with waste heat recovery to provide on site power and Oxygen production, modified to include CCS, produces low car on gas at 76.75% efficiency, complete with CCS.

Assuming a 59% efficient state of the art CCGT this gives a coal to SNG to power efficiency of around 45% with CCS. No coal fired power station can compete with this overall efficiency and CO)2 emissions reduction.

I believe that much of the reason for the planned big coal to SNG plants in Xinjiang is the ability to transport bulk energy more cheaply by pipeline than by power transmission line. The planned 2 x 30 bn cub m pa West to East China gas pipelines will carry the equivalent of 75% of total UK gas demand in 2 pipes.

Best wishes,

Tony Day

h.samengo@hotmail.co.uk
M 0791 256 0740

Geoffrey Styles said...

Tony,
Thank you for sharing the performance figures for the SNG process you're working on. The lifecycle emissions estimate with which you disagree didn't include CCS, so it isn't surprising your results with capture and sequestration would come in much lower. I'd encourage you to get in touch with the team at Duke University to go through the details of their analysis.

As for the primary rationale behind China's SNG projects, it's a bit counterintuitive that investing incremental billions in converting coal to gas would result in lower delivered electricity costs by saving the rail costs for transporting coal to power plants, or by avoiding power transmission losses from mine-mouth generating plants, but perhaps the detailed analysis would show otherwise. Can you share those figures, too?