Official contract signed for the air separation unit of Inner Mongolia HuiNeng Coal Chemical Co., Ltd.’s coal-to-natural gas project
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On October 17, Inner Mongolia HuiNeng Coal Chemical Co., Ltd. and Linde Engineering (Hangzhou) Co., Ltd. officially signed a contract in Ordos for a 2×100,500 Nm3/h (O2) air separation unit to support the second phase of a coal-to-natural gas project with an annual capacity of 1.5 billion cubic meters. Liu Jianqiang, General Manager of Inner Mongolia HuiNeng Coal Chemical Co., Ltd., Jan Nopper, President of Linde Engineering (Hangzhou) Co., Ltd., and Cha Wenjie, General Manager, jointly attended the signing ceremony. Recently, HuiNeng Coal Chemicals awarded the contract for the downstream LNG liquefaction facility to Linde Engineering Hangzhou, thereby further strengthening their partnership built on the successful cooperation during the first phase of HuiNeng Coal Chemicals’ coal-to-natural gas project. It is reported that Linde Engineering Hangzhou has implemented 9 air separation units of 100,000 class or above. Once the HuiNeng project is put into operation, it will become Linde Engineering’s 10th and 11th 100,000-ton-class air separation units in Hangzhou. The coal-to-natural gas project of Inner Mongolia HuiNeng Coal and Electricity Group Company is located in the Shengyuan Coal Chemical Industry Base in Yijinhuoluo Banner, Ordos City. This project uses coal as raw material to produce synthetic natural gas and liquefied natural gas, and it is the first demonstration project of coal-to-natural gas in China to be invested and built by a private enterprise. The construction of this project is carried out in two phases: Phase 1 required an investment of around 7 billion yuan; it began operations in October 2014, with all 400 million cubic meters of natural gas being liquefied ； The second-phase natural gas liquefaction project (LNG) is a load-driven natural gas liquefaction plant. The planned investment for this project is 12 billion yuan; the construction will include natural gas purification, liquefaction, storage of liquefied natural gas, transportation, as well as related supporting facilities. It will enable an additional production capacity of 1.6 billion cubic meters of coal-based natural gas, all of which will be liquefied, with a processing capacity of 2.7 million Nm3 of natural gas per day. Operation is expected to begin in 2021. On the morning of May 22, 2018, a kick-off meeting was held in Yijinhuoluo Banner, Ordos, for the second phase of the coal-to-natural gas project of Inner Mongolia HuiNeng Coal and Electricity Group Company ； On April 28, the project contract signing ceremony and project kick-off meeting were held at Hualu Engineering Technology Co., Ltd.
It seems that LNG still offers good benefits
Everyone sees the business opportunities in the natural gas sector
I wonder if it’s possible to make a profit from coal-to-gas production at current prices In particular, how is the transportation problem solved?
The total cost of producing natural gas from coal is around 1.3 to 1.5 yuan; considering market prices, this cost allows for considerable profits. But why are so many coal-to-natural gas projects suffering heavy losses? There is that step of pipes in the middle. The gas pipelines are all in the hands of a few oligarchs (everyone knows which companies those are). The oligarchs force prices down to 1.5 yuan to buy and then resell, otherwise they prevent natural gas from entering the pipeline network. Using the same tactics as the power grid, corporate profits are thus drained away by the oligarchs. If coal-to-gas enterprises are managed well and costs are kept below 1.5 yuan, there is still a slight profit; they can survive by producing large volumes. However, if management is poor, losses will occur.
The total cost of producing natural gas from coal is approximately between 1.3 and 1.5 yuan. It’s not clear how this figure was determined; with an investment of tens of billions, the amortization cost amounts to nearly 0.7 yuan
I heard that in Xinjiang it’s 1.4 yuan; is it because they use fixed-bed gasification, which requires less investment?