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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.

coal and sng in china

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.

Photo Credit: Coal to Synthetic Natural Gas in China/shutterstock

Geoffrey Styles's picture

Thank Geoffrey for the Post!

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Ed Dodge's picture
Ed Dodge on January 22, 2014

Geoffrey,

Nice piece, coal-to-SNG is an underappreciated topic. As you point out there are serious advantages and disadvantages to this model.

The biggest pro is that coal is the largest and cheapest energy resource in many parts of the world and its net consumption is only poised to grow in coming decades.  As long as coal is being used it might as well be used in the cleanest and most efficient manner possible, ideally by converting it into higher value fuels such as methane or jet fuel.  Gasification technologies are long proven and provide the ability to separate all of the problematic components and convert them into assets.  For example sulfur oxides which are dangerous pollution when burned are converted into sulfur commodities for sale and slagging gasifiers convert fly ash into slag suitable for construction.   Very little waste is left over at the end. 

The big downside is the dramatic rise in CO2 emissions, but as you pointed out gasifiers enable the capture of high purity CO2.  The problem is that we don’t have a market for the quantities being produced, and sequestration is unproven for a variety of reasons.  There are also probelms with water use which must be addressed in the context of local water stress issues.

The major market for captured CO2 presently is Enhanced Oil Recovery (EOR) in the oil fields, but it is not clear how large that market is relative to the millions of tons of CO2 produced every year at every facility, nor the feasibility of locating pipelines.

Fortunately there are other emerging options in biotech and chemical industries for utilizing CO2.  Joule is using photosynthesis in gentically modified bacteria to convert CO2 directly into diesel and ethanol.  Novomer is a small chemisty firm converting CO2 to plastics.  Other companies are piloting CO2 mineralization.  Options abound and neccessity is the mother of invention.

Coal gasification enables solutions for carbon utlization to be plugged into the system.  We should not object to coal gasification simply on the basis of increased CO2 emissions in the short run when there is good probability of a technical solution emerging in the near term that will allow for profitable carbon capture.  As pointed out in the article, these plants are already capturing the CO2 as part of the process, we simply we need to find something useful to do with it.  The same technology applies to waste gasification as well.  The world is going to use coal whether we like it or not, lets at least upgrade it.

 

Bill Woods's picture
Bill Woods on January 22, 2014

“Synthetic natural gas” is a bit of an oxymoron.  Burnable gas taken out of the ground was called ‘natural’ in the first place to distinguish it from gas made from coal (“town gas”, “coal gas”, etc.).

Geoffrey Styles's picture
Geoffrey Styles on January 22, 2014

Bill,

I agree it’s an awkward label, though “synthetic methane” wouldn’t be much better, while “coal gas” might be confused with coal-bed methane and “town gas” sounds like an anachronism. How about coal-to-methane, analogous to coal-to-liquids?

Geoffrey Styles's picture
Geoffrey Styles on January 22, 2014

Ed,

You make good arguments for giving the process the benefit of the doubt on current emissions increases. The key point is probably “proftiable carbon capture.” Among the evidence that it’s not profitable today in most circumstances, most US EOR being done with CO2 from naturally occurring CO2 fields, plus some recovery from natural gas: http://pbog.zacpubs.com/the-future-of-co2/ 

There’s a lot of speculation about CO2-to-fuel processes, and the CO2-to-chemicals that I wrote about in December. Whether any of this can be done at a net cost lower than petroleum products or GTL is an open question.

Ed Dodge's picture
Ed Dodge on January 22, 2014

Geoffrey,

I agree that none of the processes I mentioned for converting carbon have proven themselves in the market, yet.  But these are emerging fields of science where the work is pretty new, mostly done in the last decade.  We are only now seeing the urgency of finding a solution for excessive carbon emissions, and there are a lot of good people working on it.  I am prone to optimism, the world has a habit of not ending.

I have debated coal to natural gas processes in other forums before.  In light of the immediate health problems we all face from toxic coal pollution I think upgrading coal to ultra pure liquid fuels or SNG is a path well worth pursuing even if does come at a price of increased CO2 emissions.  I will accept the trade-off of increased global warming in exchange for improved air quality, but I may be in the minority there.

I believe the key to finding a solution for CO2 emissions is a combination of a carbon tax that raises the prices on emissions (the stick) along with finding markets for CO2 so that it can treated as an asset rather than a liability (the carrot).  In addition, land management techniques that sequester carbon by building up healthy soil will be important.  Pounds of carbon add up fast when converted into soil. 

Nathan Wilson's picture
Nathan Wilson on January 22, 2014

Ed, the problem with all uses of CO2 (except EOR) is that the end product is a fuel (plastics burn, the carbon bio-char which is the proposed soil additive also burns).  That means that an addition energy source is required, and the amount of energy that must be added is about the same as what was released to make the CO2.

So the most economical solution is very likely to always be to use the alternate energy source to replace the CO2-producing energy source, rather than cleaning-up after it.

To me the most compelling use of CC&S is for non-electricity applications: concrete making and production of carbon-free transportation fuels (H2 and ammonia).

Roger Arnold's picture
Roger Arnold on January 23, 2014

Nice article.  I have a few questions, however.  I realize that coal gasification has been around, in various forms, for a long time.  But if it’s easy to do, why have the prototype ICGG plants been such high maintenance disasters?  Are the problems that have plagued them entirely related to the attempt to separate the H2 from the synthesis gas and shift the CO to CO2 plus more H2? 

I also understand that the Great Plains coal-to-methane was a financial failure initially.  I believe it went bankrupt, and it was only after the capital costs of its construction had been written off that its continued operation became profitable.  Could new plants be built today at a low enough cost to be profitable without the aid of a bankruptcy court?

I believe the old gasworks plants that made town gas all used partial combustion to gasify the coal.  The energy for producing H2 and CO came from burning almost half of the coal.  The yield of methane per tonne of coal could be nearly doubled if the gasification were done using only steam superheated with a plasma torch.  The plant would convert nearly all of the carbon in the coal to methane, and would have very low CO2 emissions at the plant itself.  CO2 would of course be produced when the methane was burned, but upgrading coal to methane seems like it would be an efficient way to capture intermittent wind and solar energy for later dispatch.

Geoffrey Styles's picture
Geoffrey Styles on January 23, 2014

Roger,

My understanding is that the Great Plains facility was built on the basis of rising gas prices and went into bankruptcy during the subsequent US “gas bubble”, or glut. Developers today should be looking very carefully at how long today’s high LNG prices will persist, and how quickly domestic prices in China and elsewhere might fall as shale resources are developed. However, it also seem apparent that more than market forces are behind China’s pursuit of this technology.  Meanwhile, it’s at least a modest endorsement that Great Plains emerged from bankrtuptcy and is still running to this day, when so many other alternate energy projects from that era were eventually scrapped. 

As for IGCC, proven doesn’t imply simple. These are complex facilities, and there aren’t many in operation yet. I’d look to the solids handling, rather than the syngas loop, for the challenges.

Ed Dodge's picture
Ed Dodge on January 23, 2014

Nathan,

Clearly energy inputs are required to convert CO2 into anything, the efficacy depends on the economics of the solution at hand.  Joule is a company taking a biotech/solar pathway.  They modified bacteria to produce ethanol or hydrocarbons directly from the cells using photosynthesis and CO2 piped in.  I wrote about it here.  This is just one concept though, other folks are working on other ideas.

http://breakingenergy.com/2014/01/22/co2-to-fuels-via-photosynthesis/ 

In nature CO2 is converted into calcium carbonate and folks are trying to mimic that, and other pathways towards carbon mineralization are being tried.

Coal is simply not going away as far as I can tell.  Every projection I have seen from every agency depicts coal use only going up through midcentury.  Nukes could displace a lot of it and I think that is worth pursuing.  But I find treating CO2 as a waste to be disposed of undergropund at someone else’s expense to be a dubious proposition.  Safety concerns abound and no one can demonstrate conclusively that it would even work on a technical level.  But finding useful solutions for CO2 that allow a market to develop offers many opportunities for creativity and invention.

Part of the reason why sulfur emissions were able to be slashed from coal power plants is that the sulfur, once captured, is converted into marketable commodities and it offsets the capital expense of the additional equipment.  We need a similar solution for carbon.  Sequestration underground is just replicating the landfill model for waste, a loser environmentally and financially.

 

Rick Engebretson's picture
Rick Engebretson on January 23, 2014

Very interesting post and comments, Geoff (as usual).

Perhaps it is also interesting that most major technology nations (China, Japan, Germany, US, etc.) have resumed trying to improve the carbon-hydrogen cycle. This is sometimes called the food/water/energy nexus, or similar.

On the other hand, carbon-oil nations have resumed wars.

Carbon is us. Carbon is our home. Carbon is our economy. Carbon isn’t going away. Certainly we can’t be carbon slobs.

How we improve our environmental impact is open to wide speculation. And I completely enjoy learning from well intended, competent speculators.

Personally, I think we are stumbling in the right direction. We put ever higher value on ever lower entropy (higher value) carbon systems, like petroleum fuels and plastics. All BTUs (enthalpy) are not alike. And we are discovering technology to improve food and water systems. And I like how passive solar and biofuels increasingly offer high entropy (heat) options. All of these trends seem to be emerging in spite of political pressure.

Moderate realists must be appreciated. This isn’t football.

 

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