First coal liquefaction centre set up in Shanghai
By Mai Tian (China Daily)
Updated: 2004-03-12 08:46

China has set up its first coal liquefaction research centre in Shanghai, a strategic move to safeguard the nation's increasing oil supply shortage.

Three energy and industrial companies, Shenhua Group, Shanghai Huayuan Group and Shanghai Electric Group, jointly invested more than 100 million yuan (US$12 million) in the centre, according to an engineer with the China Coal Research Institute.

Shenhua, one of the nation's largest coal companies, has taken an 80 per cent stake in the research centre. Local industrial companies Shanghai Huayuan Group and Shanghai Electric Group have taken 10 per cent each.

The centre mainly explores and develops direct and indirect coal liquefaction technologies, said the engineer. With this technology, coal is broken down into small molecules with hydrogen to form oil molecules that are then refined into diesel, gasoline and other petroleum products.

The centre will also become a research headquarters providing technology support and engineer training for China's first coal liquefaction project in North China's Inner Mongolia Autonomous Region. Shenhua Group is the investor in the US$3.3 billion coal liquefaction project.

Due to its much higher productions cost as compared with normal oil products, commercial coal liquefaction projects have almost buckled elsewhere.

Still, the Chinese Government hopes to incease research as it faces an increasing oil supply shortage. The government hopes the technology could be used to help it increase the oil supply in the short term if oil imports slow down or oil prices surge.

China is now the second-largest oil consumer in the world after the United States. It is widely expected it will import half of its oil consumption by 2010.

Sources said the research centre was originally to be built in Tianjin in North China. But it finally chose Shanghai where the necessary industrial gases are available.

Shenhua has almost completed the construction of the Inner Mongolia coal liquefaction project's infrastructure.

Operations of its first production line are expected to commence by 2005 to produce 1 million tons of gasoline and diesel fuel a year.

It is expected to process 15 million tons of coal to produce 5 million tons of oil products with four more production lines becoming operational by 2008.

Shenhua is planning the second phase of the project with a total investment of 60 billion yuan (US$7.3 billion).

Shenhua's project is the only coal liquefaction project that the government has approved for the trial operation.

Plans for two similar coal-to-oil projects in Southwest China's Yunnan Province and Northeast China's Heilongjiang Province have been shelved as the government needs to evaluate the performance of the Shenhua project.

China has set up its first coal liquefaction research centre in Shanghai, a strategic move to safeguard the nation's increasing oil supply shortage.

Three energy and industrial companies, Shenhua Group, Shanghai Huayuan Group and Shanghai Electric Group, jointly invested more than 100 million yuan (US$12 million) in the centre, according to an engineer with the China Coal Research Institute.

Shenhua, one of the nation's largest coal companies, has taken an 80 per cent stake in the research centre. Local industrial companies Shanghai Huayuan Group and Shanghai Electric Group have taken 10 per cent each.

The centre mainly explores and develops direct and indirect coal liquefaction technologies, said the engineer. With this technology, coal is broken down into small molecules with hydrogen to form oil molecules that are then refined into diesel, gasoline and other petroleum products.

The centre will also become a research headquarters providing technology support and engineer training for China's first coal liquefaction project in North China's Inner Mongolia Autonomous Region. Shenhua Group is the investor in the US$3.3 billion coal liquefaction project.

Due to its much higher productions cost as compared with normal oil products, commercial coal liquefaction projects have almost buckled elsewhere.

Still, the Chinese Government hopes to incease research as it faces an increasing oil supply shortage. The government hopes the technology could be used to help it increase the oil supply in the short term if oil imports slow down or oil prices surge.

China is now the second-largest oil consumer in the world after the United States. It is widely expected it will import half of its oil consumption by 2010.

Sources said the research centre was originally to be built in Tianjin in North China. But it finally chose Shanghai where the necessary industrial gases are available.

Shenhua has almost completed the construction of the Inner Mongolia coal liquefaction project's infrastructure.

Operations of its first production line are expected to commence by 2005 to produce 1 million tons of gasoline and diesel fuel a year.

It is expected to process 15 million tons of coal to produce 5 million tons of oil products with four more production lines becoming operational by 2008.

Shenhua is planning the second phase of the project with a total investment of 60 billion yuan (US$7.3 billion).

Shenhua's project is the only coal liquefaction project that the government has approved for the trial operation.

Plans for two similar coal-to-oil projects in Southwest China's Yunnan Province and Northeast China's Heilongjiang Province have been shelved as the government needs to evaluate the performance of the Shenhua project.

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