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Chinese Coal-to-Liquids and Gas Program Could Completely Change the World Energy
Markets
·
Renewable Energy Briefs
·
Headlines for the June 27, 2014 – Utility E-Alert
·
“Hot Topic Hour Webinar” on July
10 is “Direct
Sorbent Injection”
·
McIlvaine Hot Topic Hour Registration
Chinese Coal-to-Liquids and Gas Program Could Completely Change the
World Energy Markets
China will increase LNG imports. Some predict imports of 110 billion cubic
meters per year (BCM) by 2020. However, the cost of LNG is presently
$16/MMBtu. This is an expensive fuel source when China has domestic options
including coal-to-gas, underground coal gasification, and coal bed methane.
China is therefore changing focus and is pursuing these alternatives. The
biggest program includes building plants in the western and northern coal fields
which will convert coal to gas. This gas will be piped across country and
provide clean burning fuel for major eastern cities. It is the avowed
solution to the smog problem.
The reason for a huge coal-to-gas program is the low cost of the product from a
reliable domestic source. Here are the cost components:
Cost of Gas Derived From Coal
Cost Segment |
$/MMBtu |
Coal |
2.00 |
Capital |
1.30 |
Operation and Maintenance |
1.20 |
Total |
4.50 |
The costs for coal bed methane are likely to be in the same range. Underground
gasification could be even less expensive depending on the depth of the seam.
If China produces 200 BCM from coal and coal bed methane and buys only 40 BCM of
LNG, then the implications on the world LNG market will be very substantial.
There would be a negative effect on gas prices. The program would benefit
a gas turbine operator or gas-to-chemicals manufacturer in any country which
would be a potential exporter of LNG. Here are the Chinese gas sources
under a plan to make maximum use of coal gas.
Gas Use In China |
||
Source |
2013 BCM |
2025 BCM |
Conventional |
100 |
100 |
Shale |
20 |
50 |
Pipeline imports |
20 |
50 |
LNG |
20 |
40 |
Coal to gas including CBM and
UBC |
50 |
200 |
Total |
210 |
440 |
The Chinese have 15 coal-to-gas projects underway which will produce 80 BCM of
gas per year. Another 25 projects are under discussion which, if all were
constructed, would raise gas from coal production to 200 BCM. This compares to
the U.S. present shale gas production of 260 BCM.
China has the world’s third largest ready reserves of coal bed methane (CBM),
estimated at 36.8 trillion cubic meters (TCM), of which 10 TCM can be exploited.
China plans to complete construction of two
major coal bed methane production bases in the central and western regions by
2015 and increase the number to three to five in another ten years.
China is also the leader in underground gasification. It has thirty projects
under discussion and one in construction.
Carbon Energy's first commercial UCG project is
located at Haoqin Coal Field in Xiwuqi in Inner Mongolia, China.
Underground coal gasification is estimated to increase reserves by 300 to 400
percent. When coupled with coal bed methane, total recoverable reserves
are sufficient to supply the world for hundreds of years.
Here is the Chinese coal production for last year compared to a very approximate
estimate of coal production in 2025:
Chinese Coal Consumption |
||
Coal Use |
Million Tons 2013 |
Million Tons 2025 |
Large electric power |
2,500 |
3,000 |
Residential |
50 |
0 |
Industry |
300 |
50 |
Heating |
100 |
50 |
Steel and other ( coke) |
400 |
700 |
Coal to gas including CBM and
UGG |
50 |
700 |
Coal-to-chemicals and fuel |
120 |
800 |
Total |
3,520 |
5,300 |
The Chinese vision entails cleaning up the air in the big cities by piping in
coal gas from the west and north of the country. The elimination of 300 million
tons of coal burned by industry and residences will go a long way toward
reducing the smog in Beijing and elsewhere. The Chinese leaders have been
quoted as saying that the health of these citizens in the short term is a higher
priority than global warming.
In China, 16 olefin and polypropylene from coal projects are due for start up by
the end of next year with a combined capacity of 10 million tons per year. This
new capacity will exceed the additional petrochemical capacity planned for the
U.S. So the Chinese are saying that shale gas is only one route to an
inexpensive raw material for chemical manufacture. With another 650
million tons of coal slated for coal-to-chemicals, China will be a major
petrochemical manufacturer.
The conventional coal-to-fuels route uses indirect gasification. For
decades there has been research on direct liquefaction. This is potentially a
much less expensive way to make high quality liquid fuels. China now has a
successful commercial direct liquefaction plant in operation and two more under
construction.
China has coal reserves in excess of 110 billion tons. Another 300 billion tons
could be recoverable with underground coal gasification. Coal bed methane
is a reserve of equivalent size. China imported 276 million tons of coal in
2013. The environmental efforts to reduce coal burning in many countries have
unintended consequences. Reduced world demand for coal lowers prices.
China will be the beneficiary.
World coal production is now 8 billion tons per year. China is the major
consumer, but it is also the major supplier of cement and other energy intensive
products, so its coal consumption is proportional.
China is leading the coal-to-gas and chemicals initiative, but India and other
countries are likely to follow. The lower the per capita GDP, the lower
the relative concern about global warming and the greater the concern about the
necessities of life. To the Chinese apartment owner faced with $16/MMBtu
LNG or $4.50/MMBtu coal gas, the global warming arguments are not likely to be
persuasive.
China can also make a case for the total environmental benefits of the program.
If the result is smogless cities, the benefits will be very substantial.
The tradeoff between CO2 and pollutants such as NOx and
particulate has been reduced to a common metric by McIlvaine in the
Sustainability Universal Rating System.
McIlvaine continually analyzes these developments in two publications
N049 Oil, Gas, Shale and Refining Markets and Projects
and
N043 Fossil and Nuclear Power Generation: World Analysis and Forecast.
The costs and potential for alternatives are analyzed in
N042 Renewable Energy World Markets.
The company was founded to further environmental knowledge in 1974. In
response to the oil crisis, McIlvaine initiated the Coal Gasification and
Liquefaction Knowledge System in 1979. The first issue covered DOE activities to
develop direct coal liquefaction. This technology was eventually acquired
by a U.S. company Headwaters. It is this technology 35 years later which
is finally being commercially deployed in China.
How different would the situation in the Middle East be today if the U.S. had
continued to support the synfuels programs? One can only speculate. The
future of Middle East supply is equally uncertain. The perspective of China
faced with assured coal gas or uncertain quantities from an unreliable Russia
and a region in revolution has to be weighted toward reliable supply. In other
words, China will make the decision the U.S. could have made decades earlier.
Renewable Energy Briefs
Canadian Solar Closes Canada’s Largest EPC Agreement for the Construction of a
140 MW DC Solar Energy Farm in Ontario
Canadian Solar Inc. announced that its wholly-owned subsidiary, Canadian Solar
Solutions Inc., has entered into an Engineering, Procurement, and Construction
(EPC) agreement with Kingston Solar LP, a solar energy project developed by
Samsung Renewable Energy Inc. for the construction of a 140 MW DC (100 MW AC)
utility-scale solar energy farm. The EPC agreement is expected to generate
revenue of over C$300 million for Canadian Solar. The construction of the
utility-scale solar energy farm will begin in the third quarter of 2014, and is
expected to be fully operational in the third quarter of 2015. This is Canadian
Solar's second EPC agreement in connection with a solar project developed by
Samsung and represents Phase II of Samsung's Green Energy Investment Agreement
(GEIA) solar project development in Ontario, which totals 300 MW AC. This
follows the Phase I agreement announced on June 10, 2013, for Canadian Solar to
build the 130 MW DC Grand Renewable Energy Park in Haldimand County.
Clinton
Global Initiative Funds Solar Powered Carports with Electric Vehicle Charging
Stations through World’s First “Feed-Out” Funding Program
The
Clinton Global Initiative America (CGI America) and Demeter Power Group are
launching the world's first market-based, fixed-price funding program for solar
and renewable technologies. The CGI Commitment to Action will help
modernize the nation's power grid with more distributed energy through the
Feed-Out® Program.
"The
Feed-Out® Program will bring together independent power producers and financiers
to enable the lowest-cost, fixed-price offering for renewable energy, "said
Michael Wallander, Demeter Power Group Founder and President. "But unlike
other similar 'feed-in-tariff' programs, the energy will be used on the
customer-side of the meter."
"What
retail tenant or business owner would not want to save money on their energy
bills while offering customers and employees the ability to shade their cars and
power up with solar energy?" said Yann Brandt, Demeter Co-Founder and EVP of
Development. "We enable funding for solar-powered carports with electric
vehicle charging stations at a net-negative cost to the customer."
The
program will initially make financing available to commercial properties located
in Northern California communities participating in the California FIRST
property assessed clean energy (PACE) Program offered through the California
Statewide Community Development Authority.
OPIC
Board Approves Financing for Solar Plant in Chile
The
Board of Directors of the Overseas Private Investment Corporation, the U.S.
Government’s development finance institution, has approved an investment
guaranty of up to $230 million to First Solar, Inc. to support construction and
operation of the Luz del Norte power project, a solar photovoltaic park in
Chile’s Atacama desert. This will be the largest photovoltaic project in Latin
America once complete, producing 141 megawatts of renewable energy.
Chile’s
National Energy Strategy outlines an ongoing effort to expand that country’s
renewable energy capacity to 20 percent of total generated power by 2025. The
grid-connected Luz del Norte project will contribute significantly to this goal.
Chile’s
Atacama Desert receives some of the planet’s steadiest concentrations of direct
sunlight, presenting ideal conditions for solar power generation. Widespread
utilization of this tremendous resource is relatively new, and First Solar’s
OPIC-supported Luz del Norte project represents an important advancement for
development of solar energy in the region.
Voith
Ships Stators and Distributors to the Smithland Hydroelectric Project in
Kentucky
Voith
Hydro has continued its manufacturing role in American Municipal Power's Ohio
River projects through its recent shipment of three stators and three
distributors from its Hannibal, OH plant to the Smithland Hydroelectric Project
in Kentucky. Voith has previously shipped stators and distributors – which are
major components of the generators that will be used to provide power – to the
Cannelton and Meldahl projects in Kentucky and Willow Island in West Virginia.
Smithland is the last of the four Ohio River plants to receive this shipment.
Taken together, AMP's Ohio River projects represent the largest new U.S. hydro
development undertaken in recent years.
The
stators and distributors were manufactured by Voith Hydro at the facility it
opened in Hannibal, OH (the distributors were manufactured at Voith Hydro's
facility in York, PA with final assembly in Hannibal). The stator is a key
component of the generator and typically one of the larger components of the
power unit of a hydroelectric project. The stators for Smithland are 9.18 meters
in diameter and weigh 165 metric tons.
AMP's
hydroelectric projects – which are taking place on existing locks and dams on
the Ohio River - will add more than 300 MW of new, renewable generation. The
Smithland project will provide 72 MW of power to AMP's participating members
once operational.
Bluesphere Pursues Acquisition Strategy & Puts Company on Accelerated Path to
Growth in $6 Billion Waste to Energy Market
Bluesphere Corp., a clean energy company that develops, manages and owns
waste-to-energy projects, announced it is pursuing a strategy to acquire fully
operational, revenue generating waste-to-energy facilities in select global
markets. The company is augmenting its current build-own-operate model with an
acquirer-own-operate strategy in order to create immediate revenue and cash flow
generation, putting the company on a short term path to profitability in the $6
billion global waste-to-energy market.
Bluesphere is currently conducting due diligence on an acquisition opportunity
in Italy for 16 anaerobic digestion waste-to-energy 1 MW facilities that have
each been fully operational for at least a year. These facilities have long term
agreements with local utilities that are purchasing electricity from the plants.
Based on due diligence conducted to date, collectively the plants are producing
very high EBITDA, are expected to have an internal rate of return (IRR) of
greater than 25 percent, and if acquired, would generate strong immediate cash
for Bluesphere.
Bluesphere is currently developing two facilities in the U.S. under its
build-own-operate model. The first is a 5.2 MW facility in Charlotte, NC slated
to become fully operational in 2015. Approximately $23 million in project
financing has been secured from a Fortune 50 company and a leading environmental
finance fund. One of the largest power holding companies in the U.S. has signed
a long-term contract with Bluesphere to purchase electricity generated at the
Charlotte plant.
For more information on Renewable Energy Projects and Update
please visit
Headlines for June 27, 2014 – Utility E-Alert
UTILITY E-ALERT
#1181 – June 27, 2014
Because of the Fourth of July Holiday the Next E-Alert will be July 11
Table of Contents
COAL – US
COAL - WORLD
GAS/OIL – US
GAS/OIL – WORLD
·
BHI Co. awarded
Contract by Samsung C&T for design and supply of HRSGs for Rabigh II Combined
Cycle Power Plant in Saudi Arabia
NUCLEAR
·
Westinghouse
developing Seismic Option for AP1000 Nuclear Reactor
·
Korean
Consortium to upgrade Research Reactor in the Netherlands
BUSINESS
·
$9 Billion Fabric Filter System Market will
expand from 4 Percent to 8 Percent a Year
·
Dominican Republic,
AES Corp. strike US $260 Million Energy Deal
·
FirstRand
Limited Investment Banking Unit will finance $120 Million of Ghana’s $820
Million Kpone Power Plant
HOT TOPIC HOUR
·
The Hot Topic for June 26 was “CCR $ Billions Needed”
·
Gas Turbine
Emission Control Webinar on July 17 will focux on NOx, CO and Toxics
·
Webinar on July 10 on
Direct Sorbent Injection
·
Wet Calcium FGD “Hot Topic Hour” on July 24
·
Upcoming Hot Topic Hours
For more information on the Utility Tracking System, click on:
http://home.mcilvainecompany.com/index.php/databases/2-uncategorised/89-42ei
“Hot Topic Hour” Webinar on July
10 is “Direct
Sorbent Injection”
This panel discussion will build on the webinar on “Dry Scrubbers” held in March
of this year.
To view the Continuing Analysis of Dry Scrubbers go to:
http://www.mcilvainecompany.com/DryScrubAnalysis/Subscriber/Default.htm.
However, the focus of the DSI Update panel will be more on the cost and
efficiency of various sorbents and delivery systems relative to reducing
emissions of SO2, Hg and HCl. We would like to discuss the affect of
sorbent type and material preparation, handling and delivery on the efficiency,
and proven methods for increasing the performance while reducing the cost. There
is also a tradeoff between capital cost of the sorbent preparation and delivery
equipment and the continuing cost of sorbent required to achieve emission
limits.
Panelists will include:
James Dickerman,
Director of Flue Gas Treatment Applications, Lhoist North America/Chemical Lime
Company
Tony Licata,
Principal, Licata Energy & Environmental Consultants, Inc.
Marc Sylvester,
Vice-president, Sales, Midwest Energy Emissions Corp (ME2C)
Robert Brogli,
Senior Manager for Business Development, NAES Engineering & Construction Group
Paul Farber,
Principal, P. Farber & Associates, LLC
Michael (Mike) Atwell,
Market Development Manager, Solvay Chemicals Inc
During the webinar we will arrange for personal discussions at MEGA in August.
Paul will be a speaker and McIlvaine will have a stand with several people on
hand.
To register for the “Hot Topic Hour”, click on:
http://home.mcilvainecompany.com/index.php/component/content/article?id=675.
McIlvaine Hot Topic Hour Registration
On Thursday at 10 a.m. Central time, McIlvaine hosts
a 90 minute web meeting on important energy and pollution control subjects. Power
webinars are free for subscribers to either Power Plant Air Quality
Decisions or Utility Tracking System. The cost is
$300.00 for
non-subscribers.
See below for information on upcoming Hot Topic Hours. We welcome your input
relative to suggested additions.
DATE |
SUBJECT |
|
|
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|
July |
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|
10 |
Direct Sorbent Injection |
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|
17 |
Gas Turbine Emission Control |
|||
|
24 |
Wet Calcium FGD |
|||
|
31 |
Mercury Sorbent Options |
|||
|
August |
||||
|
7 |
MATS Timing and Technology
Options |
|||
|
14 |
Industrial Boiler and Cement
MACT Timing and
Compliance Options |
|||
|
21 |
MEGA Symposium |
|||
|
28 |
Demineralization and
Degasification |
|||
|
September |
||||
|
4 |
Hot Gas Filtration |
|||
|
11 |
Power Plant Pumps |
|||
|
18 |
Power Water Monitoring |
|||
|
25 |
Power Plant Water Treatment
Chemicals |
|||
Click here for the
Subscriber and Power Plant
Owner/Operator Registration Form
Click here for the
Non-Subscribers Registration Form
Click here for the Free
Hot Topic Hour Registration Form
----------
You can register for our free McIlvaine Newsletters at:
http://home.mcilvainecompany.com/index.php?option=com_rsform&formId=5
Bob McIlvaine
President
847 784 0012 ext 112
rmcilvaine@mcilvainecompany.com
191 Waukegan Road Suite 208 | Northfield | IL 60093
Ph: 847-784-0012 | Fax; 847-784-0061