Wednesday, April 14, 2010

Sasol to Produce Coal-to-Liquids in China

A feasibility study of the joint coal-to-liquids project between China's top coal producer Shenhua Group and South Africa's Sasol has been completed, the top executive of Shenhua said on Wednesday.

Zhang Yuzhuo, president and chief executive officer of the group, told a news conference the scale of the project would be 93 000 barrels per day.

The project was earlier estimated at equivalent to 80 000 barrels of oil output per day.

Zhang said the project would need government approval and declined to comment on the time frame of the project.

Shenhua's other coal-to-liquids project in Inner Mongolia has already launched trial production.

The group, which has invested 80 billion yuan (R85.32 billion) in coal conversion, is also developing various coal-to-chemical plants in provinces in northern China.

"If oil prices are like today -- $84 to $85 a barrel, coal conversion projects can be very feasible," Zhang said.

Shenhua Group plans to produce over 30 million tonnes of coal-derived liquids and chemicals in the next 5 years, in addition to 800 million tonnes of coal, Zhang added.

Coal-to-liquids projects have long been controversial due to concerns over their high water consumption. But Zhang argued such projects would not necessarily be water-guzzling monsters.

"Water consumption is very, very low compared to the average industry water consumption in China," he said, arguing that compared to the average water consumption on every 10 000 yuan of added industrial value of 127 cubic metres, coal-to-liquids only consume less than 12 cubic metres of water.

More about: Coals-to-Liquids and Future Coal Fuels