Approaching Ningxia’s coal-to-oil project, which has the largest production scale in the world, with an annual target of producing 3.27 million tons of oil-based products!

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Approaching Ningxia’s coal-to-oil project, which has the largest production scale in the world, with an annual target of producing 3.27 million tons of oil-based products! Author/Source: Yahuah Coal Chemical Industry. Date: 2019-07-19. Clicks: 10. The world’s largest coal-to-oil project by production capacity stands majestically in eastern Ningxia. It is undeniable that China’s coal chemical industry, with its rapid growth and increasingly sophisticated and diverse industrial structure, holds a prominent position in the global energy and chemical industry landscape. It can be regarded as a \"unicorn\" in the context of the global energy revolution, paving a new path and offering bright prospects for the innovative utilization of traditional energy sources. China’s modern coal chemical industry took only 20 years to develop from its inception to a mature sector. It not only reshaped China’s chemical industry landscape, which had previously been dominated by oil, but also created a dual structure with oil-based industries in the east and coal-based industries in the west. In the energy and chemical industry hub known as the \"Golden Triangle\" (Ningdong in Ningxia, Yulin in Shaanxi, and Ordos in Inner Mongolia), world-class energy and chemical industry bases as well as modern coal chemical industry clusters have gradually emerged, and this rapid development trend continues to hold. As a **-level energy and chemical industry base as well as a circular economy demonstration zone, the Ningdong Energy and Chemical Industry Base in Ningxia boasts abundant coal resources, water resources, and vast land areas, giving it unique geographical advantages for the development of modern coal chemical industries. On July 19, 2016, ****, while inspecting the construction of a 4 million tons per year coal indirect liquefaction plant at the Ningdong facility, issued the great call that \"socialism is achieved through hard work\", urging the project team to \"strictly control technical standards, quality, safety, and environmental protection aspects, so as to complete the construction of the coal-to-oil plant on time and with high quality.\" On July 10, 2019, reporters from the China Mining News joined a large media delegation on a mission to explore New Ningxia and witness its new developments, and went to the Ningdong Energy and Chemical Industry Base to experience firsthand the rise of this region. 16 years ago, this area was nothing but an endless expanse of Gobi desert. Today, Ningdong has transformed from a barren wasteland into a spectacular world-class energy and chemical industry hub, emerging as a key part of the **energy and chemical industry’s ‘Golden Triangle’ as well as a vital center for the development of the western region. Shouldering a mission, after a light rain, Ningdong is pristine under the blue sky and white clouds. You could never imagine that you are in the environment of a super-large energy and chemical industry complex. The Ningdong Energy and Chemical Industry Base is located in the central-eastern part of Ningxia, 40 kilometers away from Yinchuan. Together with Yulin in Shaanxi and Ordos in Inner Mongolia, it forms China’s \"golden triangle\" for the energy and chemical industry. Shenhua Ningxia Coal Industry Group (hereinafter referred to as “Shenhua Ningmei”)’s 4 million tons per year coal-to-oil project is a demonstration project for the deep processing of coal under the 12th Five-Year Plan; Shenhua Ningmei is the most representative enterprise in the Ningdong Energy and Chemical Industry Base. It is understood that this area used to be a barren Gobi desert, with undulating terrain and irregular surfaces, not as flat as it is today. With the rapid development of energy base construction, this wasteland has now turned into a valuable asset. In fact, the construction of the Ningdong Energy and Chemical Industry Base has carried the historical mission of ensuring **energy security from the very beginning. Focusing on the on-site conversion and further processing of coal, the Ningxia Hui Autonomous Region launched the construction of Ningxia’s \"Project No. 1\" as early as 2003, marking the beginning of the development of the Ningdong Energy and Chemical Industry Base. However, bringing a coal-to-oil project of such scale online is no easy task; it requires a long and tortuous journey. Since coal-to-oil projects in China were still in the exploratory stage at that time and faced technical constraints, Shenhua Ningmei conducted multiple rounds of negotiations with a South African company regarding technology acquisition over the following nearly decade, yet with little success. Without the ability for independent innovation, China’s coal-to-oil technology is completely held back by others. For a great nation that relies on coal as its primary energy source, it is truly embarrassing to still have to depend on others in terms of this technology. At that time, due to the geopolitical tensions in the Middle East, international oil prices soared at an astonishing rate. Therefore, for China, coal-to-oil projects are not merely about the clean utilization of coal; they represent a strategic issue related to energy security necessary to ensure **economic development. China is a country with abundant coal but limited oil resources. Such an energy structure forces China to find more ways and devise additional strategies for utilizing coal. The urgency of coal-to-oil projects for China is self-evident. The change in this difficult situation began during the 12th Five-Year Plan period. In 2011, Chinese scientists and engineers successfully broke through the foreign restrictions on coal-to-oil technology; China developed its own coal-to-oil technology with independent intellectual property rights, thereby ending the situation of being dependent on others. Motivated by this, in September 2013, the **National Development and Reform Commission officially approved the construction of the Shenhua Ningxia Coal-to-Oil project with a capacity of 4 million tons per year. This project was put on fast track. On July 19, 2016, during his inspection in Ningxia, **** made a special trip to inspect the 4 million tons per year coal indirect liquefaction project under construction at the Ningdong facility. ****The great call gave all builders tremendous spiritual motivation. The builders worked overtime, day and night, racing against time and overcoming numerous difficulties; on December 21 of that year, the project was completed and qualified oil was produced. As soon as the news came out, the people of the country were very excited. The 4 million-ton coal-to-oil project at Shenhua Ningmei has successfully produced qualified oil products, which holds great symbolic significance for addressing China’s shortage of oil and gas resources, balancing the energy structure, advancing medium- to long-term energy development strategies, reducing dependence on foreign sources, ensuring energy security, and supporting national economic development. On December 28, 2016, **** issued important directives regarding the completion and operation of the project, urging efforts to \"persevere and strive for excellence, ensure the safe, stable, and clean operation of the project, continuously enhance China’s technical and industrial advantages in coal processing and conversion, accelerate the revolution in energy production and consumption, and make new and greater contributions to achieving the ‘Two Centenary Goals’ as well as the Chinese Dream of the great rejuvenation of the Chinese nation.\" Breaking through bottlenecks: The coal, oil, and other fossil fuel reserves in the energy and chemical industry’s \"golden triangle\" account for about 50% of the country’s total reserves. At the same time, this region is rich in solar and wind energy resources, providing unique resource advantages for the development of the energy and chemical industry in this area. The total planned area of the Ningdong Energy and Chemical Industry Base is 3,500 square kilometers, with the core area covering 885 square kilometers. It is a **key development zone** approved by the State Council, an important large-scale coal production base, a thermal power generation base for the project of transporting electricity from the west to the east, a coal chemical industry base, and a demonstration area for circular economy. It also serves as the core area where resources such as coal, water, and electricity in Ningxia are concentrated. A responsible official from the Shenhua Ningmei coal chemical project told a reporter from China Mining News that after the project began producing oil products, there were many shortcomings in terms of safe, stable, and clean operation, as key technologies and large-scale equipment were being used for industrial purposes for the first time, and such a complex integration of technologies had never been attempted before. Under these circumstances, Shenhua Ningmei overcame numerous difficulties, made full use of collective wisdom, and launched a campaign to address existing issues. It carried out repairs and upgrades, as well as system optimization and technical improvements to the gasification units, low-temperature methanol washing systems, oil product Fischer-Tropsch reactors, cycle heat exchange separators, and stripping towers. This approach gradually resolved the \"bottleneck\" problems that hindered the stable operation of the facility. On July 17, 2017, the first oil product production line began operating at full capacity, and by December 17, the entire project was operating at full capacity, with individual Fischer-Tropsch reactors reaching a load level of up to 115%. In 2018, Shenhua Ningmei Coal Chemical Company carried forward the great call that \"socialism is achieved through hard work.\" It adhered to quality and efficiency as its core priorities, value creation as its guiding principle, and \"stable, continuous, full-capacity, and high-quality\" operation as its goal. By focusing on technological innovation and refined management, the company overcame various key environmental challenges; it achieved near-zero emissions from its water systems and ultra-low emissions from its flue gas ； The operating conditions of the facility have been steadily improving; the average annual load was 85%, with 3.04 million tons of oil-based products and 910,000 tons of purified methanol produced throughout the year. This resulted in revenue of 16.8 billion yuan. Meanwhile, the company actively implemented 43 cost-reduction and efficiency-improvement measures, saving over 1 billion yuan ； In October 2018, the capital was reallocated; during the trial operation phase, the costs associated with joint testing were 2.5 billion yuan less than the approved budget ； After the capital transfer, overall profits in the fourth quarter amounted to 400 million yuan ； All types of consumption meet or exceed the design values; the plant consumes 4.47 tons of raw coal per ton of oil processed, which is close to the design value (4.38 tons) ； The water consumption per ton of oil products is 5.33 tons, which is better than the design value of 6.11 tons; this represents a reduction of nearly 30% compared to the previous year ； The comprehensive energy efficiency reaches 43.2%, greatly enhancing the competitiveness of the coal-to-oil market. At the same time, Shenhua Ningmei attaches great importance to technological innovation; it organized 29 well-known domestic research institutions and manufacturers to work together on technical research, and completed the task of localizing **37 key technologies, as well as major equipment and materials** required for the project ； An independent development was made of a single-nozzle dry coal powder pressurized gasification technology with a daily processing capacity of 2,000 to 3,000 tons (the “Shenning Furnace”), among which the 3,000-ton capacity version filled a gap in the international landscape. This technology has won the **Invention Patent Gold Award**, and it has been designated by the **Energy Bureau** as a key technology to be promoted for the safe and green development of coal, as well as its clean and efficient utilization. “Where is the ‘divinity’ in the Shenning Furnace? In simple terms, the Siemens gasification technology used in the past could only process refined coal, while the \"Shenning furnace\" can process various types of coal and can also clean and utilize low-quality coal. On this basis, Shenhua Ningmei developed a complete set of technologies for high-temperature slurry-bed medium-temperature Fischer-Tropsch synthesis and oil processing at a capacity of 4 million tons per year, overcoming the technical challenges related to the design, manufacturing, and engineering of large-scale high-temperature slurry-bed reactors ； We have broken through the bottlenecks in the design and manufacturing of large-scale compressor units, enabling the “Made in China” production of 100,000-ton-class air separation compressor units” ； Special pump valves, sheets, and pipes such as high-temperature and high-pressure ceramic ball valves, double-disc valves, and minimum flow control valves that are resistant to wear and corrosion have been developed, breaking multiple foreign monopolies; the degree of localization for these products has reached 98.5%. Reporters learned that the achievements related to coal-to-oil production by Shenhua Ningxia Coal Industry have been applied in multiple fields both at home and abroad. These achievements have helped improve a number of domestic equipment manufacturing enterprises, enabling China to export complete sets of large-scale coal-to-oil chemical technologies and equipment to other countries. The reporter saw at Shenhua Ningmei Coal Chemical Branch that the bottles of oil were extremely clear, just like bottled mineral water – transparent and pure – and it was impossible to associate them with the dark-colored coal. From coal mining and selling coal to the development of the coal chemical industry, and then to continuous technological innovation and improvement, the \"Ningdong Speed\" has emerged rapidly in this desert area. The \"Ningdong Spirit\", which broke foreign technological monopolies and facilitated the domestic production of 37 key technologies, equipment, and materials, carried the hope for breakthroughs, enabling Ningxia to transform from a region that sold charcoal to one that sells oil. Challenging the high-end: The coal chemical industry is a hallmark of the Ningdong Energy and Chemical Industry Base. Shenhua Ningmei’s 4 million-ton coal-to-oil project is the largest coal-to-oil facility in the world in terms of production capacity. Its completion and operation have established China’s dominant position in the global coal chemical industry. Reporters learned that the second phase of the coal-to-oil project by Shenhua Ningxia Coal Industry has also been included in the **13th Five-Year Plan for Energy**, which will pave the way for a new pathway in producing coal-based fuels, primarily gasoline. To address the economic challenges associated with coal-to-oil projects, Shenhua Ningmei has adopted a market-oriented approach to accelerate the development of high-end and differentiated chemical products derived from coal. Building on the product range originally designed for coal-to-oil projects, it has improved the quality of project operations by optimizing the production processes and adding seven new product types, including crude paraffin oil, light paraffin oil, liquid paraffin, FTO heavy wax, and FTO synthetic waxes #1 and #2. At the same time, taking into account the unique technological characteristics of coal-to-oil production, Shenhua Ningmei has developed new technologies such as single-carbon separation, precise isolation, and accurate synthesis through independent research or collaboration. These technologies are used to produce high-end chemical materials, fine chemical products, and aerospace fuels, thereby extending the industrial chain toward higher-value segments and further enhancing the profitability of the project. At present, Shenhua Ningmei has completed the planning for the fine chemicals industrial park as well as the product development plan. The feasibility studies for projects such as lubricant base oils, PAO, high-carbon alcohols, and olefin separation, which were planned initially, have been finished ； Ground tests of coal-based liquid oxygen fuel rocket engines were completed in collaboration with Aerospace Science and Technology, and the first test was successful. It has been confirmed that the kerosene produced by Shenhua Ningxia can be used as a raw material for aerospace kerosene; work related to the construction of production facilities and quality testing is being accelerated. In addition, Shenhua Ningmei is also working on the research and development of aviation jet fuel in collaboration with the Civil Aviation Administration; a research project has been submitted, and work is currently underway on the establishment of **standards. 2019 marked the 70th anniversary of the founding of the People’s Republic of China. It was also the year when Shenhua Ningmei’s coal-to-oil subsidiary fully embarked on operations aimed at generating profits, and began to develop its own manufacturing facilities. The company will have a scientific understanding of the current situation, accurately assess future trends, strengthen party building, prevent risks, ensure safety, stabilize production, improve quality, reduce costs, and increase efficiency, thereby enhancing the overall quality and effectiveness of its development ； Strive to maintain a load factor of over 90% for the oil product line, and over 105% for the methanol line ； It is planned to produce 3.27 million tons of oil-based products, with chemicals accounting for 42% of this amount; 1.05 million tons of methanol will also be produced, and the project as a whole is expected to achieve good profits. From January to May this year, due to the maintenance of heat exchangers in three series of Rectisolve units and the sequential shutdowns of Fischer-Tropsch reactors for technical upgrades, the Shenhua Ningxia Coal Industry project operated at only about 80% of its full capacity. To date, the company has produced a total of 1.217 million tons of diesel and chemical products, of which 309,000 tons were diesel, 304,000 tons were chemical products, 501,000 tons were naphtha, and 103,000 tons were liquefied petroleum gas ； 387,000 tons of high-purity methanol were produced. In the first quarter, due to technical upgrades, the production of oil and chemical products reached only 89% of the planned level ； The total cost is 5,446.62 yuan per ton, while the controllable cost is 3,463.99 yuan per ton; these figures represent increases of 20% and 26% respectively on a quarter-on-quarter basis (compared to the fourth quarter of 2018). Although the load was low and the market conditions were poor, thanks to the effective cost-reduction and efficiency-improvement measures implemented earlier, the project managed to stay break-even and maintain its minimum financial threshold. Based on calculations, as long as the coal-to-oil production capacity remains above 80%, the Brent crude oil price at the break-even point can be kept below $60 per barrel. The reporter learned that over the next 3 to 5 years, Shenhua Ningmei plans to carry out thorough technical upgrades in order to develop a series of coal-to-oil projects that are suited to the group’s development needs and complement those of the production bases. The goal is to transform all the fuel oils produced from coal into high-value, high-end chemical products, resulting in a product portfolio of more than 30 different types, each produced in quantities of tens of thousands of tons. Additionally, the company aims to develop more than 5 high-profit flagship products that set it apart from other coal-to-oil manufacturers and enjoy a high level of recognition in the industry.