Breaking the profitability dilemma: Coal-to-natural gas projects in two regions launch peak-shaving initiatives

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Breaking the Profitability Dilemma: Peak-Shaving Projects Launched for Coal-to-Natural Gas Projects in Two Regions. Author/Source: Huahua Network – Coal Chemical Industry. Date: 2017-12-28. Clicks: 7. On December 26, a meeting was held at the Fuxin Coal-to-Natural Gas Company to review the feasibility of the peak-shaving projects for the coal-to-natural gas projects in Keqi and Fuxin, undertaken by Zhongxin Energy Chemical Technology Co., Ltd. More than 60 people attended the meeting, including officials from Sino-New Energy Chemical Co., Sinopec Ningbo Engineering Company, Wuhuan Engineering Company, Keqi Coal-to-Natural Gas Company, Fuxin Coal-to-Natural Gas Company, as well as heads of various departments and management staff. In response to the seasonal fluctuations in the natural gas demand market, Sino-Singapore Energy Chemicals has optimized its product portfolio in order to enhance the overall economic efficiency and risk resistance of its coal chemical operations, and has actively carried out work related to peak-shaving for the projects in Keqi and Fuxin. In the future, by building on natural gas-based products, the added value of these products will be increased, leading to a diversified development pattern. It is reported that the feasibility study reports for the peak-shaving plans for Keqi’s second series of products and Fuxin’s first-phase products have been completed, and they have been filed with the respective **departments; all preliminary work is being carried out in an orderly and intensive manner. Once completed, the peak-shaving project will produce mainly natural gas-based products, as well as high-value chemicals such as methanol and ethylene glycol, depending on market conditions; simultaneously, it will generate chemical products like tar, mixed benzene, sulfur, and ammonium sulfate, thereby enabling the projects in Keqi and Fuxin to offer a diversified range of products. The feasibility study review and kick-off coordination meeting for the peak-shaving projects in Keqi and Fuxin lasted for 4 days. At the meeting, Fuxin and Keqi Coal-to-Natural Gas Companies provided detailed introductions to the progress of their respective projects. As the lead agencies, Ningbo Engineering Company and Wuhuan Engineering Company presented detailed reports on the feasibility studies for the projects in Keqi and Fuxin Coal-to-Natural Gas Company. After the meeting, all participants were divided into four groups to carry out the feasibility study reviews separately. The Datang Keqi coal-to-natural gas project is the first large-scale coal-to-natural gas demonstration project approved by the **National Development and Reform Commission. The construction scale is 4 billion cubic meters per year, with construction carried out in three phases on a rolling basis, at 1.33 billion cubic meters per phase. The construction of a series of units began in August 2009, was completed in July 2012, and they were successfully put into operation on December 18, 2013. On December 4, the peak-shaving renovation project for the second production unit of Datang International Kesiketeng Coal-to-Natural Gas Co., Ltd. was successfully approved by the Economic and Information Technology Commission of Chifeng City in Inner Mongolia Autonomous Region. The project has already completed the preparation of the feasibility study report as well as the registration process for social stability risk assessment, and has now entered the substantive implementation phase. The total investment in the project is 3.383 billion yuan. The construction scope includes a gas separation unit, a methanol plant, an ethylene glycol plant, a storage and transportation system, utility systems and auxiliary facilities, as well as related external system projects. Upon reaching full production capacity, 800,000 tons of methanol and 400,000 tons of ethylene glycol can be produced annually. According to estimates, taking a coal-to-natural gas project with a capacity of 4 billion cubic meters per year as an example, the construction cost is approximately 20.09 billion yuan. With a coal price of 200 yuan per ton, a catalyst cost of 55 yuan per thousand cubic meters, electricity costing 0.6 yuan per kilowatt-hour, water consumption of 6.3 tons per thousand cubic meters, and water costs of 5 yuan per ton, the final calculated production cost is 1.54 yuan per cubic meter. When coal-based natural gas is transported via pipelines, certain transportation costs as well as business tax and value-added tax must be deducted. In terms of selling prices, at present, the sales prices for gas transported through pipelines and liquefied natural gas produced via liquefaction, as well as gas produced from coal, are all higher than the local natural gas gate station prices, resulting in weaker competitiveness. At present, the production costs in the coal-to-natural gas industry remain high, resulting in significant profit pressures.