Wanxiang and GreatPoint Energy close $1.25B deal for 1 Tcf/year coal-to-natural-gas plant in Xinjiang; Sinopec to purchase output, building pipeline to east
21 May 2012
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| Overview of the Bluegas catalytic coal methanation process. Click to enlarge. |
GreatPoint Energy and China Wanxiang Holdings have officially closed their investment and partnership agreement which was highlighted during an official signing ceremony between senior US and Chinese government officials in 2012.
As part of the transaction, GreatPoint Energy has raised equity investment and secured project funding of $1.25 billion from Wanxiang to finance and construct the first phase of a coal-to-natural gas facility that ultimately will have an annual production capacity of one trillion cubic feet (1 Tcf) (30 billion cubic meters) per year. The complex will be located near Turpan, Xinjiang Uyghur Autonomous Region in the Peoples Republic of China and will utilize GreatPoint Energy’s proprietary Bluegas technology (earlier post).
Wanxiang and GreatPoint Energy have entered into a joint venture and have begun engineering the Bluegas complex. The first phase is expected to commence operation in 2015 with an initial annual natural gas production capacity of 30 billion cubic feet (0.85 billion cubic meters), which will expand to 116 billion cubic feet (3.4 billion cubic meters) of annual natural gas output within two years.
China Petroleum and Chemical Corp. (Sinopec), China’s largest company by revenue, has agreed to purchase the natural gas produced from the facility and has already announced plans to construct a pipeline to deliver the gas to the eastern region. of China, including Guangdong and Zhejiang provinces and Shanghai,
The Bluegas catalytic hydromethanation technology, developed and owned by GreatPoint Energy, directly converts coal into pipeline quality natural gas (99.5% pure methane). By comparison, syngas resulting from conventional gasification cannot be converted to pipeline quality natural gas without further processing.
By adding a catalyst to the coal gasification system, GreatPoint Energy is able to reduce the operating temperature in the gasifier, while directly promoting the reactions that yield methane (CH4). Under these mild catalytic conditions, less expensive reactor components are required, pipeline grade methane is produced, and very low cost carbon sources (such as lignites, sub-bituminous coals, tar sands, petroleum coke and petroleum resid) can be used as feedstocks.
Compared to more conventional approaches to gasification and SNG production, the bluegas process eliminates the need for an external water gas shift reactor, a methanation reactor, and air separation plant. GreatPoint says that its system produces natural gas at the lowest cost in the industry and that its water consumption is half of that of competing gasification systems.
Inherent in the technology is the ability to capture nearly all emissions, including carbon dioxide, which can be sequestered and used for oil production through Enhanced Oil Recovery. The technology is especially well suited for arid regions and where low-quality, concentrated coal resources are available, such as in Xinjiang.
Together, Wanxiang and GreatPoint Energy also plan to develop large-scale Bluegas projects at other locations in Xinjiang and in other regions of China using the Bluegas technology.
Following development of the Bluegas plant in Xinjiang, GreatPoint Energy intends to expand to other significant natural gas markets in and outside of China, including Japan, South Korea, India, and Europe, becoming a major global supplier of natural gas that will compete with traded Liquefied Natural Gas (LNG) and long-distance pipeline supplies in these markets.
As part of the transaction, Wanxiang is becoming a large shareholder of GreatPoint and will join the Board of Directors of the Company. Other Board members include Ray Lane, Partner at Kleiner Perkins Caufield & Byers and Executive Chairman of Hewlett Packard; Paul Hanrahan, former CEO of AES Corp.; Bill Wiberg, Partner at Advanced Technology Ventures; Andrew Perlman, Chairman and CEO; and Daniel Goldman, President and CFO.
We are extremely pleased to welcome Wanxiang as one of our strategic investors and establish a joint venture with them in China. This agreement provides a tremendous pathway for commercialization of the Bluegas technology and enables us to develop and finance multi-billion dollar projects and provide large quantities of natural gas that will compete with supplies from neighboring countries.
—Daniel Goldman
Wanxiang was founded in 1969 by its Chairman Lu Guanqiu and is now one of the largest private companies in China. Wanxiang is a diversified manufacturing enterprise with interests in equipment and automotive parts manufacturing, where it has become one of the largest global suppliers, clean energy, financial services, agricultural products, natural resources, real estate and investments. The company operates facilities in 23 provinces in China and more than 40 countries around the world. In the United States, Wanxiang owns or controls 29 companies and has nearly 6,000 employees.
Wanxiang is embarking upon a major development in Xinjiang Uyghur Autonomous Region where it anticipates investing 160 billion RMB (US$25 billion) through 2020, including the development of projects utilizing the Bluegas technology to convert coal to natural gas.
CO2 sequestration in this coal-to-NG (methane) conversion process is better than CO2 release into the atmosphere.
However, the combination of H2 (produced from renewable energy like solar and wind) with coal gasification to double the amount of methane yield for a given amount of coal, would be even better.
However, it is best ultimately to bypass NG altogether and just pump the H2 via pipeline instead.
Posted by: Roger Pham | 21 May 2012 at 03:58 PM
This is a massive resource. The whole of the UK only uses about 3.5 Tcf pa, so just this one facility will be turning out around 30% of that.
It makes sense to me to pipe it out at NG, as the problem of leaks and embrittlement from hydrogen is avoided.
Reformation might perhaps be better carried out where the hydrogen is to be used.
Until fuel cells become more common that will only be a very small percent of the NG anyway, as you can burn it in a turbine or an ICE as is.
Posted by: Davemart | 22 May 2012 at 12:35 AM
Is the conversion and pumping of SNG more efficient than trains carrying coal, or could this just be a way to remove the dirty parts of the process to remote areas and clean up the air in the cities?
Posted by: Engineer-Poet | 22 May 2012 at 05:13 AM
EP:
This is a win at all levels.
Not only does it remove pollution, the huge plant there will be able to afford the very best pollution control equipment, and so will have a fraction of the emissions of the average Chinese coal plant.
On the efficiency side, it is vastly more efficient to send stuff through pipelines than load it into railway tracks, rattle them over the tracks, unload them and return the empty trucks.
You are also not lugging around all the other bits of the coal that get burnt off in producing natural gas/electricity, all the slag.
I'd guess that in energy efficiency terms for transport it might be 20-50 times better.
Posted by: Davemart | 22 May 2012 at 05:25 AM
EP,
You are right. There is no point adding intermediate process in energy transformation for energy efficiency. But for certain applications NG simply you could not replace. Natural gas price on Asian and Europe markets is ridiculously high. It is approximately sixfold higher than on US market. Price formula is linked to oil price escalation. Therefore such means of natural gas generation makes sense. Still for China market 3 bln. cubic meters yearly is very tiny amount. Even 30 bn. would not make major impact on China power demand.
Posted by: Darius | 22 May 2012 at 06:59 AM
Darius:
It's 1 trn cu ft, around 29 bn cu metres.
Not bad for one installation.
'China's natural gas consumption rose from 24.5 billion cubic meters in 2000 to 88.7 billion cubic meters in 2009. This year it will possibly surpass 100 billion cubic meters'
http://www.cnpc.com.cn/en/press/speeches/China_s_Natural_Gas_Demand_and_CNPC_s_Natural_Gas_Business_Strategy_.htm
Around 30% of China's NG use sounds like a good start.
Posted by: Davemart | 22 May 2012 at 07:10 AM
What is to stop China from building 10 such plants?
Posted by: HarveyD | 22 May 2012 at 07:52 AM
NG supplies around 3% of Chinese energy, so this plant would cover about 1%.
If it all works as advertised I would be surprised if they do not go for a couple of dozen plants, bearing in mind that energy use is still going up.
Posted by: Davemart | 22 May 2012 at 08:27 AM
Davemart,
Don't guess, show me numbers. At 400 ton-miles per gallon, a train is a very efficient way to move energy in the form of coal. If you're producing syngas, making methane gives you a ding in efficiency up front but close to a 3:1 pumping energy advantage over piping the syngas itself. At short distances, it makes more sense to send the syngas (once known as "town gas").
If you're making electricity, HVDC travels better than any of them. What you want to do depends on the end use.
Posted by: Engineer-Poet | 22 May 2012 at 02:15 PM
EP:
If I had had figures to hand I would obvioulsy have supplied them.
Since I don't I await the referenced results of your researches with interest.
Posted by: Davemart | 22 May 2012 at 02:54 PM
This is horrible!
Who really believes that they will sequester the CO2? There is no business case for sequestering the CO2, and EOR seems far fetched deep inside China.
So in reality, this is an increase of CO2 emission from coal use.
Posted by: Thomas Pedersen | 23 May 2012 at 01:19 AM
2C + 2H2O ----> CO2 + CH4
30 bcm CH4 and 30 bcm CO2 together or 60 million tons of CO2 per year for a small "bluegas" chinese unit.
Posted by: Raymond Bonnaterre | 23 May 2012 at 04:02 AM
I'm not doing your homework for you, Davemart. You made the assertion, I want to see what supports it.
Posted by: Engineer-Poet | 23 May 2012 at 07:06 AM
@Thomas and Raymond,
This is indeed horrible WRT CO2 release.
A better case for this fantastic and highly-efficient single-step catalytic hydromethanation would be the use of waste biomass instead of coal.
If the catalysts are supporting, the addition of H2 from renewable energy to the gasification vessel to double the methane yield per unit of biomass would be doubly-green. I would call this the catalytic hydrogen-methanation of biomass.
@Davemart,
Here's a little help for your "homework." Xinjiang is China's New Frontier akin to Alaska being USA's Last Frontier, located very far from heavily-populated Eastern regions. As such, most of the coal mined in Xinjiang must be transported thousands of miles to the East. I'm sure that the Wanxiang company must have done their "homework" in calculating the costs of various transportation options including railway coal transportation vs. methane pipeline. In the same way, Alaskan oil is being transported to mainland USA via pipeline instead of by rail following the same calculation, even though oil is much more viscous than methane and must flow at much lower speeds. Coal must be transported to final destination via inefficient trucks. There were many mile-long lines of coal-carrying trucks got stuck in a horrendous weeks-long traffic jam in Beijing one or two summers ago.
Efficiency-wise, their new method of catalytic hydromethanation is more efficient than the two-step old method of producing methane from gasification of coal, using lower temperatures. The heat generated from the gasification process can be used to generate electricity to improve the overall efficiency. NG to electricity using CCGT is 50-60% efficient with hardly any pollution vs. coal-fired plants at 35-45% efficiency with much higher level of pollutants. NG can be used for home heating at over 90% efficiency while coal can't be used for modern home heating due to the pollution. This may spell the end of coal-fired power plants.
Posted by: Roger Pham | 23 May 2012 at 05:22 PM
Cheers, Roger.
Since the fact that whenever possible products are transported by pipleline rather than rail did not influence EP, I couldn't be bothered to counter his prejudices, especially since he chose to express them in a needlessly disobliging manner.
Since rail is so cheap, it is strange that, for instance, water is invariably transported by pipeline rather than in containers by rai.
Unless, of course, the idea that rail is competitive with pipeline transport for bulk goods is completely daft and without foundation.
I suppose his handle gives an indication of the high opinion he has of himself, and certainly he becomes upset at any opinion contrary to his.
I note that he did not have the courtesy to reference the figures he stated of 400 ton miles per gallon for coal transport, so his unreferenced assertions are worthless.
It is strange to demand sources from others without himself supplying any.
Anyway, life is too short to bother with people like that, and transport systems throughout the world will have to struggle on with transporting goods by pipleine whenever possible, instead of bowing to his genius and using rail.
I'd suggest he switches off his water and gas, and has them delivered.
Posted by: Davemart | 24 May 2012 at 01:12 AM
Posted by: Engineer-Poet | 24 May 2012 at 06:16 AM
Ideally, coal should be converted to methane underground and NEVER be mined.
Yes, there is no doubt that it is much easier (and more efficient) to (pipeline) transport methane gas from coal mines remote areas to populated areas and that using methane gas to produce electricity is cleaner than using coal.
E-P should conceded without intended studies with millions of often meaningless numbers.
Posted by: HarveyD | 24 May 2012 at 06:42 AM