The operation of the Shell gasification unit is improving steadily

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I. The Shell gasification unit operates stably, with no technical bottlenecks remaining. The Sinopec Dongnian gasification unit: The problems related to the production process have been resolved, and there are no issues with the burner covers or the slag discharge system. The furnace temperature of the gasifier still cannot be monitored in real time; instead, it is indirectly monitored by analyzing the carbon dioxide content in the gas exiting the gasifier and the amount of steam produced by the waste heat boiler. Due to the time lag associated with this indirect monitoring, it is necessary to maintain stability in the composition of the raw coal. The problems with the low-temperature methanol washing system in the downstream ammonia synthesis plant have also been resolved. 　　There are no longer any technical issues regarding the long-term operation of the device; its stable production load rate has reached 80%, and it has been in operation continuously for over 50 days. Due to mechanical issues with the compressor unit, the facility is currently shut down for maintenance; however, this is an occasional problem. 　　Under the current coal price conditions, if the gasification unit, ammonia synthesis unit, and urea production unit all operate on a long-term basis, the monthly profit can reach 3 to 4 million RMB ； If the device does not operate properly, losses are inevitable. 　　Sinopec Anqing Gasification Unit: The performance of the Sinopec Anqing Gasification Unit is better than that of the Dongnit unit; it has been operating continuously for 64 days at an operational load of 80%. The coal in Anqing mainly comes from the Huainan coal mines. 　　According to the company, in order to ensure the stability of the components of the raw coal supplied to the plant, Anqing Petrochemical requires that the coal supplied by Huainan coal mines to Anqing’s gasification unit must come from the same coal seam within those same coal mines. The situation at Sinopec’s gasification plant in Hubei is more or less the same. 　　Liuhua Co., Ltd. and Shuanghuan Technology: Among these two listed companies, Liuhua Co., Ltd. has raw coal conditions similar to those of Sinopec’s facilities, while Shuanghuan Technology faces relatively poorer conditions regarding its raw coal; the composition of the raw coal it receives is quite unstable. Moreover, due to the relatively smaller scale of the Liuhe and Shuanghuan gasifiers, temperature control is relatively easier compared to Sinopec’s facilities. 　　Both Liuhua and Shuanghuan are currently operating in relatively good condition; there are no issues with long-term operation at full capacity. In particular, Liuhua’s gasification unit is able to maintain an operating load of around 95% for extended periods of time. 　　II. Analysis of the reasons for the low operating load of Sinopec’s gasification units The reason why the operating load of Sinopec’s Dongnitrogen and Anqing gasification units is only 80% is due to a mismatch at the downstream stage. According to the technical supervisors of the Anqing and Dongtan gasification plants, there are no technical issues even when the gasification capacity is operated at 100%. The reason why the plants do not operate at full capacity is that the downstream facilities have not kept up. 　　During the design of the Anqing gasification unit, it was planned that 80% of the raw gas would be supplied to the fertilizer production plant, while the remaining 20% would be used by the hydrocracking and hydrotreating systems in the oil refining plant. Since the expansion and renovation of the oil refining plant have not yet been completed, the fertilizer production plant can only utilize around 80% of the capacity generated by the gasification unit; therefore, the load on the gasification unit is also kept at around 80%. 　　During the design of Sinopec’s Dongnitrogen gasification unit, it was planned that 80% of the crude feed gas would be supplied to the fertilizer plant, while the remaining 20% would be used as a hydrogen source for the caprolactam plant. Currently, the caprolactam plants are equipped with hydrogen production units of their own; these units use a hydrocracking process based on naphtha to produce hydrogen, and their cost is about 40% higher than that of hydrogen production via coal gasification. Since the operational stability of the gasification unit had not yet been tested in practice, and to ensure the stable and long-term operation of the caprolactam unit, the crude raw gas from the gasification unit was not used as a hydrogen source; instead, the hydrogen source from the naphtha cracking unit was continued to be utilized. Once the stable and long-term operation of the gasification unit has been thoroughly verified, the caprolactam plant will inevitably switch to using the hydrogen produced by that gasification unit; at that point, it will be natural for the gasification unit to operate at 100% capacity. 　　III. Comparison of Economic Benefits from the Operation of Gasification Units At present, although there are no technical issues with the several gasification units within Sinopec’s system, their economic performance since operation has not been satisfactory. The main reasons for this are as follows: The units operated unstably in the initial stages, with frequent start-ups and shut-downs, and they could not operate at full capacity. Preliminary estimates suggest that a single start-up and shutdown of the gasification unit results in losses of over 2 million yuan; if both the gasification unit and the subsequent fertilizer production unit are shut down and started up as part of a complete system, the losses can reach as much as 10 million yuan. 　　The scale of investment is large, resulting in high depreciation costs. The three coal gasification conversion units in Sinopec’s system previously used naphtha as a raw material to produce fertilizers; now they use coal instead. The investment required includes not only the modifications to the coal gasification units but also substantial costs for upgrading the downstream ammonia synthesis units. In these downstream units, only the refrigeration and compression systems as well as the synthesis system remain intact, while the other conversion systems have been modified to use sulfur-resistant conversion processes. The decarboxylation system has been changed from a phenol-based decarboxylation method to a low-temperature methanol washing process. 　　**A price cap is imposed on urea, preventing the cost increases resulting from rising coal prices from being passed on to downstream users. 　　The gasification units of Liuhua are different from those in Sinopec’s system. Industry analysts believe that the economic efficiency of these gasification units is relatively high, and the reasons for this are as follows: the scale of investment is smaller, resulting in lower depreciation costs. The coal processing capacity of Liuhua’s gasification units is only 1,500 tons per day, while that of Sinopec’s gasification units is 2,000 tons per day; the scale of these gasification units is smaller, resulting in lower investment costs ； The gasification renovation of Liuhua’s fertilizer plant involves only the gasification system; the shift system and decarboxylation system require little modification, and the investment needed for upgrading the downstream supporting systems is minimal. 　　The coal used by Liuhua is mainly sourced locally, resulting in low transportation costs for the raw materials. 　　The crude raw gas produced by the Liuhua gasification unit is primarily used for the production of synthetic ammonia. In addition to being used in the manufacture of fertilizers, a significant portion of this synthetic ammonia is also used to produce **, and the production ratio between these two products can be adjusted according to the market prices of fertilizers and **. Therefore, despite the **price cap on urea, thanks to Liuhe’s flexibility in production, the cost increases resulting from rising coal prices can be largely passed on. 　　IV. Latest Progress in Shenhua’s Coal-to-Oil Technology The Shenhua coal-to-oil process mainly consists of two parts: the coal gasification system and the liquefaction system. Its gasification system also employs Shell’s gasification technology; there are successful experiences from other gasification units in China. Additionally, thanks to the stability of the coal it produces, there are few issues likely to arise with the proper operation of the gasification system. However, there is still some uncertainty as to whether the coal liquefaction system will be able to operate smoothly. 　　The main task of the 2008 project was to streamline the entire process; in other words, oil production was the primary goal, and there was no requirement for the plant to operate for long periods at high loads. After the process was connected in October 2008, the focus was on process parameters and equipment tuning, as well as scheduling maintenance. 　　The goal for 2009 is to achieve long-term operation of the facility, with the benefits of the entire project expected to become apparent at least in the second half of 2009. 　　The company plans to start construction on the second and third units only after the first coal-to-oil unit is operating stably, with the project starting as early as 2010.