At what price per barrel of oil does coal-to-oil become profitable?

Coal-to-oil conversion currently lacks industrial economic viability; on the one hand, the initial investment is too high, as a large volume of products is required, meaning that operations must be on a large scale, at least on par with large oil refineries； On the other hand, there are oil prices. Coal-to-oil conversion can be profitable only when oil prices are around 150% of the current level.

Based on calculations of the coal hydrocarbon coefficient and energy consumption per product, marginal benefits are achieved when the price per ton of equivalent standard coal is equal to the price per barrel of crude oil. Taking into account refining costs, as well as investment and scale benefits, the critical point is when the price per ton of equivalent standard coal is between 1/2 and 2/3 of the price per barrel of crude oil. At current exchange rates and levels of oil refining technology, when the price per barrel of crude oil is below 40 dollars, it is not possible to make a profit even if the price of coal is zero. It is worth incurring high costs for technological development; at the initial stage, the priority is not to make profits but to improve technical processes. In fact, coal-to-oil conversion has already yielded significant social benefits and overall advantages for enterprises, so there is no need to take this too seriously

Unless technology improves, there will be no significant improvement in efficiency; an increase in oil prices will inevitably lead to a rise in coal prices!

According to information from Shenhua, Yankuang Coal-to-Oil, and other foreign sources, it can be seen that: (1) 4.5 to 5 tons of coal are required to produce one ton of oil, and the cost of raw materials for coal-to-oil production accounts for around 50 to 60% of the total cost. Therefore, in order to be profitable, the price of crude oil must exceed $60 per barrel. (2) The technology for coal-to-oil conversion is relatively advanced, but the stability of system operation is lower compared to that in oil refining; therefore, due to this factor, the price of crude oil must be increased by $10 per barrel. Taking all of the above into account, the price of crude oil must be above $70 per barrel to be profitable.

The coal-to-oil project does not look promising; the 4-5T figure is merely a theoretical value under ideal conditions. Moreover, both water and electricity usage are adjusted according to market conditions. It seems that this current process will not yield significant profits; only in the event of an oil crisis or when there is an abundance of coal resources might it be worthwhile to develop new, viable processes

For the project documents of our factory, we use coal from our own mines; there is a profit margin only when the price of crude oil is at least 50 dollars per barrel. But the problem now is that even if we manage to produce the products, we can’t sell them

Although coal-to-oil is technically feasible, its economic viability will remain problematic for a long time. Unless one wants oil prices to soar like in 2008, it will be difficult to cover the costs.

The key point is that, as a strategic resource, oil is something that countries strive to bring into their own possession, which inevitably leads to rising oil prices. Currently, developing coal-to-oil technology allows for the improvement of process techniques and the training of skilled personnel, so that we won’t be at the mercy of others in the future!

I believe that it is necessary to consider not only economic indicators but also social factors. Our country has little oil and gas, but abundant coal**, so it is natural to develop projects for converting coal into oil.