On the prospects of coal-to-natural gas

Domestic natural gas production must be quite high, with numerous projects for transporting gas from the west to the east as well as for developing offshore oil and gas fields. In such a situation, it would be better to use coal for coking rather than to produce natural gas from it, so that the by-product, coke oven gas, can be utilized in production.

Datang Power Invests Heavily in Coal-to-Natural Gas Project; Completion Expected by 2012, with Annual Production of 4 Billion Cubic Meters of Natural Gas Author: Zhu Yu Publication Date: 00:00, April 14, 2008 Source: China Securities Journal·Zhongzheng Net Datang Power (601991) announced that it signed a Project Cooperation Agreement for the coal-to-natural gas project in Keshiketeng Banner, Inner Mongolia, on April 11, together with Beijing Gas Group Co., Ltd., its major shareholder China Datang Corporation, and Xintianyu Capital Advisory Co., Ltd. The aim is to establish Keshiketeng Coal-to-Natural Gas Co., Ltd. to prepare for, build, and operate the facility that will produce 4 billion cubic meters of natural gas per year in Keshiketeng Banner, Inner Mongolia. The total investment for this project is approximately 18.78 billion yuan. 　　To this end, Datang Power Generation must invest 2.87334 billion yuan in Keqi Coal-to-Gas Company, holding a 51% stake in it. Among the other shareholders of the joint venture, Datang Group is the largest shareholder of Datang Power Generation, holding 33.74% of the shares ； Beijing Gas Group was established in 1999; its actual controller is the state-owned Beijing Holding Group Co., Ltd. The registered capital of Beijing Gas Group is 1.98 billion yuan, and its business scope includes operating urban natural gas pipelines ； New Sky Capital is a fund management company established in May 2007 in **. Its investors consist of more than 20 internationally renowned institutions, and the size of the fund is 500 million dollars. New Sky Capital represents the second phase of funds managed by this team; its investment areas include industries such as manufacturing, new energy, consumer goods, biopharmaceuticals, and auto parts. 　　According to the investment agreement, the total investment for the Keqi coal-to-gas project is approximately 18.78 billion yuan. The final registered capital of the joint venture is approximately 30% of the total investment in the project, which is about 5.634 billion yuan. All shareholders contribute capital in cash; Datang Power holds a 51% stake, while Beijing Gas Group, Datang Group, and Xintianyu Capital hold stakes of 33%, 6%, and 10%, respectively. 　　The announcement states that the Keqi coal-to-gas project is located in Kesikten Banner, Chifeng City, Inner Mongolia. It uses lignite from the Shengli coal field, situated 5 kilometers northwest of Xilinhot in Inner Mongolia, as raw material and fuel. By employing mature and reliable gasification technologies, the project will produce 4 billion cubic meters of synthetic natural gas per year, along with other by-products. The main product of the joint venture, natural gas, is transported via long-distance pipelines, which run from the project site (Keshiketeng Banner station) to the terminal station in Miyun, Beijing, with a total length of 440 kilometers. The Keqi coal-to-gas project is planned to be constructed in three phases, with the entire project expected to be completed by 2012. Once operational, it will be able to produce 4 billion cubic meters of natural gas per year. 　　The announcement states that the company has set a goal of diversifying its industrial structure, and by investing in and taking control of the coal-to-gas project in Keqi, the company can advance in the field of clean energy production. The location of the Keqi coal-to-gas project boasts abundant coal resources, which can ensure a sufficient supply of raw materials and fuel for the project. Additionally, the area has an ample water supply and good transportation facilities, all of which help to reduce the operating costs of the Keqi coal-to-gas project. Upon completion of this project, the main supply targets will be Beijing and the cities along the gas pipeline. As China’s **political, cultural, and economic center, Beijing has high requirements for air quality, which leads to a large demand for clean energy in the form of natural gas. The company believes that once the coal-to-gas project in Keqi is completed, it will benefit from the growing demand for clean energy in Beijing and along the gas pipeline routes, thereby increasing the company’s overall profitability.

I believe that producing natural gas from coal is unreasonable, and it is also uneconomical according to the principles of energy

I’m quite concerned; please provide more information so I can learn more

I think coal-to-natural gas is not a problem from a technical standpoint. The issue is its cost-effectiveness. For low-calorific-value coals such as peat and lignite, as well as in areas with poor transportation access but abundant coal resources, coal-to-natural gas can be considered. Other options: it’s best not to take this route.

In my opinion, the coal-to-natural gas technology is mature and reliable； Environmental protection: Poor; pollution is difficult to control ； Economics: It offers economic advantages in terms of raw materials and output at present ； Sustainable: Poor sustainability.

It lacks its own new technological approach; the so-called \"Chinese characteristics\" are merely following others