What is CTO process? Are there any studies in China?

This post was last edited by ddtj401 on 2015-8-18 at 12:41. CTO should refer to coal-based olefins, right? It includes coal-to-methanol and methanol-to-olefins (MTO). Meanwhile, the technology for producing methanol from coal is already quite mature. The technology for producing olefins from methanol has been industrialized. Major research institutions involved include the Dalian Institute of Chemical Physics and Sinopec. For more details, please refer to the “Coal Chemistry/Oil Production, Olefins” section of this forum.

CTO refers to coal-based olefins, which include MTO; there is yet no industrially viable one-step process that involves direct gasification of coal to produce olefins. 　The 600,000-ton/year methanol-to-olefins project by Zhongyuan Petrochemical in Puyang, Henan, is Sinopec’s first coal chemical demonstration project. Its completion and commissioning mark a major breakthrough for Sinopec in the field of coal chemistry. The figure shows its operating device. (Photo provided by CFP) At the end of March, the highly anticipated world’s largest single coal chemical project – the Shenhua Yulin Circular Economy Coal Comprehensive Utilization Project – began construction. With a total investment of 121.6 billion yuan, this project will use coal as raw material and, through processes such as methanol synthesis, methanol to olefins, and olefin derivatives, produce 2.1865 million tons of chemical products per year. According to statistics from the Science, Technology and Equipment Department of the China Petroleum and Chemical Industry Federation, there are over 50 planned coal-to-olefins (CTO) and methanol-to-olefins (MTO) projects in China. These projects have a combined capacity of nearly 33.66 million tons per year, with a total investment of 900 billion yuan. With international oil prices remaining low, should these planned CTO/MTO projects be carried out? Will their operation lead to overcapacity? After conducting research, a reporter from China Chemical Industry News found that there are different opinions in the industry on this matter. 　　Voice 1: Planned production capacity exceeds demand. A reporter from China Chemical Industry News learned from the Dalian Institute of Chemical Physics, Chinese Academy of Sciences, that throughout 2014, 5 industrial units using the methanol-to-olefins (DMTO) technology were put into operation, namely those in Yanchang Jingbian, China National Coal Group Yulin, Ningxia Baofeng, Shandong Shenda, as well as Pucheng Energy Chemicals (second-generation technology). This added an additional olefin production capacity of 2.8 million tons per year. Together with the already operational Shenhua Baotou plant and the Ningbo Fude project being built by Ningbo Heyuan in the coastal city of Ningbo, the total olefin production capacity of the seven DMTO units has reached 4 million tons per year. 　　Recently, a survey conducted by Yahuaxun Consulting showed that among the CTO/MTO projects in China that are currently in operation, testing, construction, or at the preliminary planning stage, 45 of them have a probability of being completed and put into operation of over 50%. These projects will result in an annual production capacity of 28.21 million tons of olefins derived from coal (methanol) by 2019. 　　In response to this, Wang Xiujiang, deputy director of the Science, Technology and Equipment Department of the China Petroleum and Chemical Industry Federation, told a reporter from China Chemical Industry News: \"Among all the CTO/MTO projects currently planned, it depends on whether they can be put into operation and generate effective production capacity. If all the planned projects are launched, there will likely be a problem of overcapacity.\" ” 　　According to Tang Hongqing, an advisor at Beijing Zhongke Synthetic Oil Engineering Co., Ltd., by 2020 the total shortage of olefins in China is expected to be around 30 million tons. Olefins produced through petroleum-based methods can cover 20 million tons of this gap, leaving a shortfall of 10 million tons that needs to be met by coal-based olefins. Of this amount, 7–8 million tons can be produced domestically, while another 2–3 million tons can be imported from coastal areas to achieve supply-demand balance. Therefore, the total capacity planned at present has **exceeded demand. 　　“Currently, domestic companies face a problem: they rush to engage in whatever seems promising. A market economy does not mean acting arbitrarily; even the market economies in the West are planned. So, in my opinion, some people in China have a one-sided understanding of the market economy; it seems as though there should be no oversight of it at all. A socialist market economy should manage the market economy in accordance with socialist principles, and proper planning is essential. ” Tang Hongqing told the reporter. 　　The image shows the site of the groundbreaking ceremony for Shanxi Coking Coal Group Feihong Chemical Co., Ltd.’s 600,000 tons per year olefins production project. At present, the project is under construction. (Photographed by Wang Zhenbo) Voice 2: No risk of overcapacity in the short term. Another view within the industry is that there is no risk of overcapacity in the production of olefins from methanol at present. 　　Liu Zhongmin, deputy director of the Dalian Institute of Chemical Physics under the Chinese Academy of Sciences, told reporters: “Some media reports claim that the CTO/MTO project has a capacity of 28 million tons per year; I don’t know where this figure comes from.” First of all, launching this project requires **approval and clear criteria. In principle, CTO/MTO projects are subject to constraints imposed by water resources and environmental carrying capacity; they are already guided by **industrial policies. The apparent manifestation of this overcapacity is that everyone seems to be getting involved. However, only projects that have undergone strict approval processes can actually proceed. In particular, given the current extremely stringent environmental regulations, there is no need to worry about an overabundance of such projects. ” 　　Li Zhijian, assistant to the director of the Petroleum and Chemical Planning Institute, said, “I believe that the methanol-to-olefins projects planned to be launched will not lead to a surplus.” Since there were many plans for methanol-to-olefins projects in the past, but with oil prices so low, everyone is slowing down their construction efforts; progress is not fast enough, and effective production capacity will not be established any time soon. ” 　　According to Liu Zhongmin, by the end of 2014, the DMTO technology developed by the Institute of Catalysis, Chinese Academy of Sciences, had been licensed for use in 20 large-scale industrial plants (including those using the second-generation technology), resulting in a total olefin production capacity of 11.26 million tons per year. Several other companies signed contracts in two phases. However, some enterprises, such as Ningxia Baofeng’s second-phase project, have not been launched; therefore, around 15 to 16 projects will be put into operation in the next 3 to 5 years. Furthermore, the market share of DMTO technology developed by the Institute of Catalysis, Chinese Academy of Sciences, has reached 70%–80%. From this perspective, the final effective production capacity that can be achieved is less than 10 million tons per year. 　　“In addition, many companies that engage in planning do not really intend to carry out the projects; instead, they want to acquire local coal mines and land. As a result, it’s already quite good if half of these projects can actually be completed. For example, a project recently approved by Shenhua Group actually involves 4.5 million tons per year of methanol and 1.5 million tons per year of olefins; Sinopec will also install one or two production units, which will enable it to produce at most 2 to 3 million tons per year of olefins. ”Liu Zhongmin told reporters. 　　Why do so many people try to cross a single-plank bridge? With numerous methanol-to-olefins projects already in progress or planned, whether these projects will lead to a surplus or not, the phenomenon of so many people striving to cross this limited resource still requires careful analysis. The consequences of launching too many such projects without proper planning also need to be taken seriously by all parties involved. 　　Liu Zhongmin believes that, on the one hand, the reason why many companies are planning methanol-to-olefins projects at present is the lack of alternative new coal chemical technologies; on the other hand, if a large number of such projects are launched, it will not only be difficult to deal with the excess methanol available in the upstream sector, but it will also create further pressure on the excess production capacity for methanol. 　　In the early stages of its development, the domestic coal chemical industry was driven by high oil and coal prices, leading to a boom at that time. Taking coal-to-methanol as an example, despite restrictions set forth in documents issued by the National Development and Reform Commission, the low technical barriers and high profits led to a wave of capacity expansion in China’s methanol industry. Between 2007 and 2010, the average annual growth rate of methanol was around 30%. By 2014, the total production capacity had reached 64 million tons, yet the actual output was only 37.41 million tons, resulting in severe overcapacity and forcing some companies to close down. 　　The success of methanol-to-olefins technology has led to a new wave of investment in the short term, despite **planning and policy restrictions**. The fundamental reason for this phenomenon is that the development of China’s coal chemical industry is constrained by technological progress (the same is true worldwide). Companies are highly enthusiastic about investing, but there is a shortage of technical sources; as a result, once a breakthrough in a particular technology occurs, investment concentrates on that area, leading to overheating. If there are not many technologies available for enterprises to choose from and into which they can invest across various areas in the short term, it is possible that a situation similar to that in the methanol industry will arise, leading to a lack of diversity in technologies and products, as well as local overproduction and wasted investment. This is something worth being vigilant about. In response to this, Liu Zhongmin suggested that it is necessary to provide active guidance in order to protect companies’ enthusiasm for investment. More importantly, it is essential to support technological innovation, so that more technologies similar to DMTO can be rapidly moved from the laboratory stage to practical application. This will give companies more choices and also help to develop a balanced industrial structure. 　　On the surface, methanol-to-olefins can consume methanol and alleviate the overcapacity issue of methanol production in the western region, but this is not the case in reality. Currently, all new coal-based olefin projects, including those for propylene production from methanol, start with coal by constructing large-scale methanol production facilities, thus creating a complete chain from coal to the final products. The common feature of these facilities is the large scale of their methanol production units; a single unit can achieve a production capacity of over one million tons. The methanol synthesis plant in Shenhua Baotou has an annual production capacity of 1.8 million tons, and its economies of scale are beyond comparison with those of many smaller methanol plants. The methanol produced by these CTO/MTO units is primarily used for the production of olefins downstream, but it can also be produced as high-purity methanol for sale when necessary. This phenomenon results in the newly installed CTO/MTO units not only failing to alleviate the overcapacity in methanol production but also potentially giving rise to new competition and conflicts. 　　The 1.8 million tons per year methanol and 700,000 tons per year polyolefins project of Pucheng Clean Energy Chemical Co., Ltd. utilizes the world’s first second-generation DMTO technology, and was successfully put into operation at the end of last year. The image shows staff conducting test operations in the control room. (Photo provided by Li Jun) Comprehensive consideration in regional planning On February 27 this year, the Ministry of Industry and Information Technology released a report on the performance of China’s petrochemical and chemical industries in 2014. In 2014, China’s crude oil production was 210 million tons, an increase of 0.6% compared to the previous year; the processing volume of crude oil was 503 million tons, representing a growth of 5.3%. Ethylene production amounted to 17.044 million tons, with a growth rate of 7.6%, while methanol production reached 37.407 million tons, showing a growth of 26.2%. Among them, the production capacity for coal-based olefins was 4.53 million tons (including 1.07 million tons from methanol produced externally), representing a growth of 78.3%; the output was 2.366 million tons, with a growth rate of 31.4%. In 2014, the external dependence on crude oil was 59.4%, while the external dependence on ethylene (on an equivalent basis) was 51%. 　　As can be seen from these figures, despite efforts made, our country’s oil supply remains dependent on external sources, with the degree of reliance on imported crude oil approaching the warning level. Despite the high annual growth rate in the production capacity for olefins from coal (methanol), the external dependence on ethylene, the basic raw material for the petrochemical industry, remains high. Since the reform and opening up, although China’s petrochemical industry has achieved significant development, its structural flaws have gradually become apparent. On the one hand, there is an overproduction of refined oil products, while there is a shortage of naphtha, the raw material needed for the production of high-quality olefins. On the other hand, the raw materials used in olefin production are relatively heavy, and high-quality olefin raw materials (naphtha) rely mainly on imports. 　　As can be seen from the above analysis, methanol-to-olefins is a valuable complement to olefins produced by petroleum-based methods; there is no doubt that such projects should be carried out. The key lies in figuring out how to implement them effectively. Wang Xiujiang told reporters, “In the future, methanol-to-olefins projects can only be launched in areas that have the necessary conditions.” First, methanol must be secured, with a source available. A 600,000 tons per year methanol-to-olefins project requires 1.8 million tons of methanol annually. Therefore, whether methanol is purchased from abroad or domestically, the quantity must be properly determined. Secondly, whether the project will be profitable depends on the price specified in the methanol contracts, as methanol prices can fluctuate significantly; when they reach 3,000 yuan per ton, it will affect the profitability of this project. ” 　　Wang Xiujiang emphasized: “What’s more important is to see whether the produced olefins can be absorbed by downstream industries.” If the product is produced but no one wants it, this project cannot be sustained either. Therefore, it is not possible to simply encourage the launch of a large number of projects, or to pursue them in large quantities just because they seem promising. There are conditions for successfully carrying out this project. First, the source of raw materials must be secure; second, there must be a market for the products. This involves the issue of the rational layout of projects. One must consider the size of the local regional market; it’s not advisable to establish a very large production capacity in one location if there’s no way to absorb that output. Once a company experiences large-scale movements of materials in and out, its competitiveness diminishes, which in turn affects its ability to survive. Therefore, we emphasize that when a company decides to undertake a project, it should not do so without limit just because the technology and processes are good; instead, it must consider the company’s profitability. It is necessary to study both domestic and international markets, taking into account the impact of imported olefins and polyolefins, before deciding whether to pursue such a project. In short, methanol-to-olefins projects can be developed, but various factors must be taken into consideration, and the old path of low-level repetitive construction of other chemical products should be avoided. ” 　　Tang Hongqing also said, “The methanol-to-olefins project needs to develop, but it should be done in a measured manner; it is necessary to consider the overall situation across the country. **Policy guidance, as well as planning and coordination, are extremely important.” In my analysis, some projects were temporarily halted due to falling oil prices, but this year oil prices might stop falling, stabilize, and rebound, which could prompt those projects to become active again; therefore, restrictions should be imposed from a ** perspective. But with ordinary methods, such as not issuing permits, things become uncontrollable; some companies simply proceed as long as they have the funds. I think there is a way to control it, which is by controlling coal, that is, by implementing a coal rationing system. In other words, a limit is set on the amount of coal that can be used nationwide in a year, and each province is given its own quota – for example, a certain number of tons of coal that Shandong Province is allowed to use per year – with permits issued to allow them to use that amount of coal. It is up to each province to decide whether to use the coal quotas they receive for steel production or for coal-based chemical manufacturing. ” Relevant comments: Planning, demand, and differentiation—none can be overlooked. Wang Xiujiang, Deputy Director of the Science, Technology and Equipment Department at the China Petroleum and Chemical Industry Federation, said: “As far as I know, many enterprises now have the intention to undertake coal (methanol)-to-olefins projects, and these projects are being planned in areas rich in coal resources or along the coast. However, due to the decline in international oil prices, some enterprises have slowed down their construction efforts. Nevertheless, there are still numerous projects planned for development.” Oil prices remain low at present, so it is urged that everyone conduct thorough analysis and respond calmly when planning projects. Given the current situation, there is an oversupply of many of our bulk chemical products; therefore, it is hoped that the subsequent product chains for coal (methanol)-based olefin production projects will be designed in a differentiated manner, so as to avoid the pitfalls of repetitive construction leading to product homogenization. Currently, there is still a significant gap in the demand for olefin equivalents in the domestic market. Moreover, the use of methanol to produce olefins represents a move toward diversifying raw materials; such projects can be undertaken, but they should not be launched indiscriminately. A comprehensive analysis of both domestic and international sources as well as the market conditions is essential. The company must be aware that it is merely an important supplement to the petroleum-based olefin route, not a substitute, let alone the main option. 　　Tang Hongqing, consultant at Beijing Zhongke Synthetic Oil Engineering Co., Ltd.: At present, there are several major issues with domestic coal (methanol)-based olefin production projects. 　　First, there are too many planned projects, with initiatives underway everywhere. Currently, there are over 50 coal (methanol)-based olefin production projects in China that have been approved or are under approval, with a planned total capacity of 28 to 30 million tons per year – which is clearly too much. There are currently over a dozen projects that have an approval pathway, but only 4 of them have been approved; there are also many projects that lack such an approval pathway. Second, the projects are unevenly distributed, and there is a lack of thorough consideration for downstream demand. At present, people do not really understand what applications the produced polyolefins should be used for, and there should be a map showing the distribution of demand across the country. Yet I have never seen anyone investigate the nationwide usage patterns of polyolefins; projects are simply launched in a blind manner. 　　Liu Zhongmin, deputy director of the Dalian Institute of Chemical Physics, Chinese Academy of Sciences: Given the insufficient total production capacity for olefins and the high degree of dependence on imports for ethylene (in equivalent terms), although local market or product conflicts cannot be ruled out, demand is strong, and there is no direct competition between olefins produced from methanol and those produced through petroleum-based methods. In particular, with proper planning, olefins produced from methanol can actually compensate for the shortcomings of petroleum-based olefins and reduce the pressure associated with oil imports. 　　The oil quality in China’s major oil fields is relatively heavy, with a general shortage of light oil, which limits the production of olefins and aromatics in the petrochemical industry. It would be a great opportunity to take advantage of the development of coal-based olefins and coal chemical industries to comprehensively consider and adjust the structure of the petrochemical industry, thereby addressing its shortcomings. However, if the layout is not proper, introducing new coal-to-olefins projects near oil and olefin plants could also have an impact on the petrochemical olefin industry. How much for CTO/MTO projects? How to carry them out? – Sinochem New Network – A leading portal website in the chemical industry, sponsored by China Chemical News Agency. http://www.ccin.com.cn/ccin/news/2015/04/21/316143.shtml

CTO refers to coal-based olefin production, while MTO stands for methanol-based olefin production. The CTO process is not very viable at present; from economic and environmental perspectives, it is inferior to MTO； Looking at coal-to-oil as well, the direct conversion of coal into oil is nominally industrialized, but in the future it will still be the world of indirect coal-to-oil conversion ；