The Hubei Provincial Development and Reform Commission submitted a report to the **Development and Reform Commission on the summary of projects related to the restructuring of the fertilizer industry

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**Development and Reform Commission: In accordance with the requirements set out in your commission’s “Notice on Summarizing Projects for the Restructuring of the Fertilizer Industry,” we hereby submit a summary of the construction and operational status of the Shell Powder Gas Project carried out by Hubei Shuanghuan Group in our province, for your review. Attachment: Summary of the Operation of Shell Powder Coal Gasification Unit at Hubei Shuanghuan Company, January 8, 2008. Summary of the Operation of Shell Powder Coal Gasification Unit at Hubei Shuanghuan Company. I. Overview Hubei Shuanghuan Technology Co., Ltd. (hereinafter referred to as Shuanghuan Company) is a large-scale joint-stock chemical enterprise controlled by Hubei Yihua Group Company; it is one of the 1,000 energy-saving enterprises identified in China’s 11th Five-Year Plan. Previously, Shuanghuan Company used the partial oxidation of heavy oil to produce 200,000 tons of synthetic ammonia per year, as well as the combined alkali production method to manufacture 600,000 tons of soda ash. However, with the deregulation of oil prices and a shortage of heavy oil, its price soared, which led to a sharp increase in the cost of synthetic ammonia. This severely affected the company’s economic performance and put it under great pressure in market competition. At the same time, during the production process of synthetic ammonia feed gas from heavy oil, 2–3% of the heavy oil is converted into carbon black, causing severe environmental pollution. In June 2001, with the approval of the former **Economic and Trade Commission, the Shell powder gasification technology was adopted to replace heavy oil gasification for the production of synthetic ammonia, thereby achieving a shift from oil to coal as the raw material for synthetic ammonia production. Suncycle’s \"oil-to-coal\" project consists of three parts; the first is the Shell powder coal gasification unit ； Second is the gas purification unit that comes with Shell gasification, and which utilizes sulfur-resistant shift reaction as well as low-temperature methanol washing for desulfurization and decarbonization ； Third is an air separation and oxygen-nitrogen compression unit with an oxygen production capacity of 10,000 Nm3/h. “The total investment for the \"oil-to-coal\" project is 829 million yuan, of which 172 million yuan comes from bank loans, 12.6 million yuan from central government budget funds, and 644.4 million yuan from funds raised by the enterprises themselves. The air separation unit was put into operation in June 2004, started up successfully on the first attempt, and reached its designed capacity ； The gas purification unit was put into operation in June 2005 using heavy oil cracking gas, integrating into the production system and replacing the two existing older purification units ； The gasification unit began trial operation in October 2005, and started full-scale production on May 17, 2006, producing qualified syngas in one go for delivery to the gas purification unit, thus bringing a successful conclusion to Shuanghuan Company’s \"oil-to-coal\" conversion project. II. Technical Characteristics of the Shell Powder Coal Gasification Process: The Shell powder coal gasification technology is a clean and environmentally friendly method for producing synthetic ammonia from coal, developed by the Dutch company Shell. This technology was first applied in the Demkolec 250,000 KW integrated coal gasification combined cycle power plant in the Netherlands, where it began operation in 1993, with the duration of continuous operation gradually increasing over time. The Shell powder gasification technology has the following features: 1. It uses dry powder feeding and a fluidized bed gasification process, which enables broad adaptability to different types of coal, allowing any type of coal to be completely converted. However, from the perspective of economic operation, and by analyzing the amount of flux added and the oxygen consumption, the type of coal should be selected appropriately. 2. High carbon conversion rate and low energy consumption. It features high thermal efficiency, with an overall thermal efficiency of over 98%; heat loss is only 1–2%, and the concentration of useful gases (CO+H2) is as high as 90%. 3. Long operating cycle, with high production capacity per furnace. The inner wall of its membrane-type water cooler is coated with a layer of refractory material; it has no refractory brick lining, requiring less maintenance work and no need for a backup furnace ； The burner has a long service life, usually around one year. 4. Low operating and maintenance costs. Due to the use of a single series in continuous operation, the workload for inspection and maintenance is **reduced**. 5. Good environmental benefits. Due to the high gasification temperature, liquid slag discharge is used, and the slag has a low carbon content, so it does not pollute the environment. In addition to the aforementioned features, the Shell powder gasification technology’s energy-saving and clean characteristics make it an effective approach for reducing emissions and energy consumption as well as promoting circular economy practices in chemical production. Since the gasification reaction takes place at high temperatures and the particle size of the raw materials is very small, the reaction proceeds extremely thoroughly, resulting in few by-products that affect the environment; zero emissions can be achieved, making it a \"clean coal\" process. The slag and fly ash produced by gasification are both inert and do not pose a threat to the environment; they can also be sold as raw materials for construction, ceramics, or cement. The pulverized coal gasification unit at Shuanghuan Company operates normally, with a slag production rate of 13 tons per hour; selling this slag can generate an annual revenue of 2.08 million yuan ； The ash production rate is 3.25 tons per hour, generating annual revenue of 1.144 million yuan through sales. At the same time, the inner wall of the membrane-type water cooler replaces the refractory brick structure; the steam system is capable of producing 52 tons of saturated steam at 5.4 Mpa per hour. At a cost of 105 yuan per ton of saturated steam at 5.4 Mpa, this can generate annual earnings of 43.68 million yuan. Thanks to the use of dry dust removal, the amount of wastewater generated is very low, making it easy to treat and recycle, thus meeting European environmental standards. When coal is burned in combination with biomass, CO2 emissions can also be reduced. III. Technical Characteristics of the Syngas Purification Process: The syngas purification process employed by Shuanghuan Company utilizes a sulfur-tolerant shift reaction at wide temperature ranges, combined with low-temperature methanol washing and methanation processes. This process has the following features: 1. By adopting a wide-temperature sulfur-resistant shift process, the shift operation is greatly simplified, heat utilization becomes more efficient, and consumption is significantly reduced. 2. The low-temperature methanol washing technology utilizes the fact that methanol has an extremely strong ability to absorb acidic gases such as CO2, H2S, and COS under low temperature and high pressure. It requires a small amount of solution circulation, resulting in low power consumption; moreover, the solvent does not oxidize or degrade, possessing excellent chemical and thermal stability ； Methanol is inexpensive and readily available, has a low consumption rate, and results in lower operating costs ； Methanol has low solubility for H2, CO, and CH4, which ensures good absorption efficiency while minimizing the loss of the valuable gas H2 ； Methanol has a much higher absorption rate and capacity for H2S compared to CO2. Taking advantage of this property, H2S and CO2 can be absorbed in the same equipment, separated during regeneration, thereby ensuring a high-purity CO2 supply for use in the double-base process ； It has good desulfurization and decarburization effects, with low levels of CO2 and H2S in the exhaust gas. 3. Methanation technology is a mature technology in China, and the purity of the syngas produced is high. IV. Progress in the construction of gasification and gas purification projects. The most complex component in the \"oil-to-coal\" conversion project is the gasification unit. To reduce costs, the internal components of the main equipment, such as the gasifier and the syngas cooler, are manufactured by foreign manufacturers, while the exteriors are produced domestically; the internal components and the exteriors are then assembled together at domestic factories. Equipment with high investment costs, such as coal mills and quench air compressors, are all domestic-made. The gasification unit features a high degree of automation; its control system utilizes DCS and ESD configuration technologies. Shuanghuan Company relied on its own capabilities to carry out all the instrument calibration and configuration tasks, and it corrected all the issues present in the original design, earning praise from renowned foreign experts. The gasification unit began trial operation in October 2005. Without any prior experience to draw on, Shuanghuan Company relied on its own efforts to achieve the first successful trial operation of the gasification unit in May 2006. The syngas purification unit at Shuanghuan Company was the world’s first system designed to process syngas produced by Shell’s gasification process for use in ammonia synthesis. It utilized a four-stage sulfur-resistant shift reaction to reduce the CO concentration from 65% to 0.35% in a single step, while also ensuring efficient utilization of thermal energy. The unit was completed and put into operation within the production system in June 2005. V. Operation status of the Shell gasification unit and gas purification unit: Since its commissioning on May 17, 2006, the Shell gasification unit has undergone nearly one and a half years of operation and improvement; it is now operating in a relatively stable manner with its load reaching the designed capacity. According to cost-benefit analyses, it can save 1.09 million yuan in production costs per day compared to using heavy oil for gas production. Its main consumption and product parameters are as follows: Coal consumption per ton of ammonia produced: 1.45 tons (heat value of coal: 22.49 MJ/kg) ； Ammonia consumption per ton: 830 Nm3. Steam generated per ton of ammonia (at 5.4 Mpa): 2.645 tons. The syngas contains 20% H2, 63% CO, 2% CO2, 11% N2, and 1000 mg/Nm3 of H2S. The carbon content in the ash is 3%, while it is 1–2% in the slag. The accompanying gas purification systems are operating properly; in particular, the sulfur-tolerant shift process was successful in reducing the CO concentration from 65% to 0.35%. The purified gas, after desulfurization, decarburization using low-temperature methanol washing, and methanation, is then sent to ammonia synthesis. All process parameters for low-temperature methanol washing meet the specified requirements, fully satisfying the design specifications. Compared to the original two sets of four-catalyst purification systems, annual operating costs are saved by 40 million yuan, thereby achieving a qualitative leap in the company’s ammonia synthesis technology. VI. Problems and suggestions in the production and operation of the Shell gasification unit. During the period of over a year since the Shell gasification unit was successfully commissioned and put into operation, Shuanghuan Company worked to master this technology, which was also a process of independent innovation. Due to some issues in the original design of Shell gasification, and the fact that only one company in the world has adopted this technology for power generation, resulting in limited operational experience available for reference, the gasification unit at Shuanghuan Company has stopped operating 32 times since it was put into use on May 17, 2006. These shutdowns have affected production for a total of 3,067 hours – either through complete shutdowns of the entire company or by reducing production capacity significantly – causing economic losses amounting to 200 million yuan. The gasification unit of Shuanghuan Company encountered many problems during operation, mainly the following: 1. Burner shields were burned through and leaked ； 2. The thermal load on the gas transfer pipeline of the gasifier is too high; when the load on the gasifier exceeds 7.2 kg/s, the vapor density is likely to be below 150 kg/m3. 3. The properties of the coal have a significant impact on the operation of the gasifier ； 4. The ventilation devices in the coal conveying system are prone to damage ； 5. The internal components of the high-temperature and high-pressure filter are damaged ； 6. In the design, the gap pressure of the gasification furnace should be slightly higher than the pressure inside the furnace, whereas in operation, Dual Ring Company maintains a gap pressure that is slightly lower than the pressure inside the furnace ； 7. The annular space of the gasification furnace is under negative pressure during operation, making it easy for high-temperature gases to enter ； 8. Quench compressors are prone to failures that can cause the system to stop operating. Due to the continuous occurrence of these problems, chemical production is burdened, and in some cases the entire system has to be shut down; it becomes impossible to achieve long-term, full-load, stable operation, which puts the company’s production and operations in a very difficult situation. In response to these issues, the company formed a task force that achieved a series of technical innovations, such as modifying the burner cover: extending the entire burner cover 25 mm into the gasification furnace, and changing the diameter of the water-cooling tube nozzles on the burner cover from φ5 mm to φ6 mm ； Install a flow meter on the burner cover, establish standards for flow control of the burner cover (≥52 NM3/h) and define responsibility assignments ； Establish management systems for the water vapor system, etc. Through these modifications and the establishment of a sound management system, the problem of burner covers burning through has been effectively resolved, resulting in a significant extension of their service life. Failures occurring during the operation of the quench compressor are also a major cause of system shutdowns; in fact, two out of the four system shutdowns since 2007 were caused by failures in the quench compressor. To address this issue, the company conducted extensive research and numerous discussions with compressor manufacturers, developed an online reverse operation scheme for the quenching compressor, and carried out simulation tests to ensure its feasibility. On August 10, 2007, when the quench compressor failed again and the system was at risk of shutting down, the company’s management made a decisive decision to implement an online reverse operation. Through careful planning and preparation, the quench compressor was successfully reversed online once. This success completely eliminated the risk of shutdowns of the gasification unit due to failures in the quench compressors. It also marked a milestone for Shuanghuan Company in the field of Shell powder gasification technology, filling a gap in this area worldwide. Through continuous technical upgrades, the process equipment of the plant has been successively improved. At present, the Shell gasification unit at Shuanghuan Company is operating in a relatively stable condition, having reached a new record of 73 days of continuous operation. The commercial application of the Shell powder gasification technology at Shuanghuan Company signifies that we now possess the world’s most advanced gasification technology, which greatly boosts the confidence of domestic peers. At present, the gasification unit of Shuanghuan Company is the one with the longest operating cycle and the most stable performance among all the units that are in operation in China. Next, we will ensure the gasification unit operates for extended periods at full capacity through scientific management. The five coal gasification units currently in operation in China all have technical problems of varying degrees that have not yet been resolved, which indicates that Shell’s powder coal gasification technology is not yet fully mature for use in the chemical industry. In particular, as China’s first company to utilize Shell’s powder coal gasification technology, Shuanghuan has, to a large extent, served as Shell’s testing ground in China; from this perspective, Shell should provide Shuanghuan with high-quality technical support free of charge. On the one hand, it can safeguard Shell’s good reputation both domestically and internationally; on the other hand, it can also strengthen the confidence and determination of potential customers (especially private enterprises and smaller companies). Therefore, it is recommended that Shell adopt a lenient policy regarding after-sales service when dealing with Chinese customers, by providing free technical support for a certain period of time to help them get the devices up and running properly. Hubei Shuanghuan Technology Co., Ltd. January 8, 2008