Is the coal chemical industry facing a downturn? Three options to break the deadlock

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Author/Source: China Nitrogen Fertilizer and Methanol Technology Network. The winter season for the coal chemical industry has arrived, with investments and profitability dropping significantly. It has become industry consensus to pursue refined development, extend the industrial chain, and increase the added value of products as a way to break the deadlock. So, what are the pathways to refinement? Can they become a lifeline to help the coal chemical industry overcome its difficulties? What other constraints and bottlenecks exist? At the 2016 China Coal Chemicals Precision Development Forum held recently, industry experts and scholars analyzed the situation and provided their insights. Reporters from the magazine \"China Coal Chemical Industry\" also conducted investigations and interviews. Option 1: Extend the industrial chain. “Coal will remain a major primary energy source in China for a long time to come.” Currently, oil prices are low and coal prices are also cheap, so there are still significant opportunities for the development of coal-based chemicals; the key is to choose the right products and processes. ”Jin Yong, an academician of the Chinese Academy of Engineering and a professor at Tsinghua University, said that modern coal chemical industry is still in the stage of upgrading and demonstration, rather than industrialization. For example, coal-to-oil production involves certain risks; it has a low energy efficiency (50% for the direct method and 40% for the indirect method), requires large investments and amounts of water, results in high carbon dioxide emissions, and imposes significant pressure due to carbon taxes. Jin Yong believes that the way forward and hope for the coal chemical industry lie in developing chemical products, particularly by moving towards higher-end products, rather than producing liquid or gaseous fuels. Even though modern coal chemical industries can produce ‘triphenyltrienes’, this does not necessarily yield good economic benefits; it is necessary to move toward differentiation, personalization, and higher-end products, thereby increasing the added value of these products through further processing. Such as the development of specialty waxes, α-olefins, lubricants, refined phenols, etc ； Ethylene extended bimodal polyethylene, metallocene-catalyzed ethylene, ultra-high molecular weight polyethylene, nylon 66, brominated butyl rubber, etc ； 95% of aromatic hydrocarbons are produced in oil refineries. The domestic market deficit for PX is expected to reach 12 million tons by 2020. Benzene is used to produce nylon-6, while xylene is processed into polyester products such as PTA (purified terephthalic acid) and PET (polyethylene terephthalate) ； Methanol is further processed to produce DMM3-5 (polymethoxydimethyl ether), which is used as an additive in gasoline and diesel. Experts such as Yang Yuanyi, Vice President and Secretary-General of the Chinese Chemical Society; Zhang Jiming, Vice President of China Shenhua Energy Co., Ltd.; He Jiuchang, Chairman of Shaanxi Yanchang Petroleum Group; and Cai Rui, Assistant to the Director and Head of the Science and Technology Department at the Dalian Institute of Chemical Physics, Chinese Academy of Sciences, also believe that in order for the coal chemical industry to maintain its advantages in the face of changes in oil price markets, refinement, high-end development, and differentiation are the inevitable trends in its growth. Throughout the coal chemical industry chain, the more refined products that are further down the chain are less affected by market fluctuations. Zhang Jiming said, “The characteristics of modern coal chemical products are superior to those produced via petrochemical routes. For instance, the impurity content in ethylene and propylene monomers generated from coal-based olefin production is lower than that in products derived from petroleum cracking. Direct coal liquefaction is better suited for producing fine chemical products such as high-grade resins, specialty oils, premium lubricants, high-quality paraffin, and advanced carbon materials.” ” It is reported that Shenhua Group is working on the development and application of high-value products, adjusting the structure of its coal direct liquefaction products, and developing special oils, mid-to-high-end lubricants, advanced carbon materials, and high-grade wax products. The group is also planning to establish bases for the production of high-end coal-based polyolefin products in order to increase the economic value of these products. Hu Qianlin, deputy secretary-general of the China Petroleum and Chemical Industry Federation, believes that most of the modern coal chemical projects that have been built or are under construction currently focus on products such as methanol produced from coal, olefins produced from coal, and ethylene glycol produced from coal. Taking coal-to-olefins as an example, there is a severe homogenization among post-processing projects for ethylene and propylene. Most polyethylene and polypropylene products are concentrated under a few general-purpose brands, while there are very few projects involving high-end or specialty-grade brands. If the issue of product homogenization is not addressed through higher quality and differentiation, a situation of overcapacity and fierce competition will soon arise. In terms of extending the industrial chain, Hu Qianlin suggested developing more new grades of polyolefin resins through the use of coal and methanol to produce olefins, such as polyethylene copolymerized with alpha-olefins, ULDPE (ultra-low density polyethylene), propylene-butylene copolymerized polypropylene, melt-polypropylene, and high-crystallinity polypropylene ； While producing diesel through high-temperature Fischer-Tropsch synthesis, high-value fine chemical products and specialty chemicals that are difficult to obtain in the petrochemical industry, such as high-carbon alpha-olefins, ultra-hard waxes, high-carbon alcohols, rubber fillers, PAO (polyalpha-olefins), and lubricant base oils, are being developed ； While producing ethylene glycol from coal, technical routes for converting coal into polyglycolic acid and polycarbonates via dimethyl oxalate and dimethyl carbonate are being developed ； The deep processing of coal tar involves the development of methylphenol and downstream fine chemical products, as well as fine chemical intermediates such as o-phenol, m-**phenol, p-**phenol, 2,6-di**phenol, 2,3,5-tri**phenol, 2,4,6-tri**phenol, and 2,3,6-tri**phenol. Option 2: Collaborative diversification. Is the refinement of the coal chemical industry merely about extending the industrial chain and developing downstream products? The experts' answer is **no**. “Refined development is a broad concept; it involves not only the refinement of products but also the advanced processing of downstream products such as fine chemical products, high-end chemicals, and new chemical materials. It is necessary to consider the entire life cycle of the coal chemical industry, and to achieve refinement and sophistication in areas such as industrial layout, process optimization, technological innovation, and process control. ”Yang Yuanyi told reporters that advanced coal chemical processing can not only address the issues of similarity among traditional coal chemical products, poor competitiveness, and overcapacity, but also improve the efficiency of energy conversion as well as the level of comprehensive resource utilization. “During the 13th Five-Year Plan period, China’s coal chemical industry will focus on transitioning from traditional coal chemical processes to modern and sophisticated ones. “Our country has relatively abundant coal resources, and coal-to-oil conversion is of strategic importance; but how much coal-to-oil production does there actually exist at present? ”Xie Kechang, an academician of the Chinese Academy of Engineering, said that refined development includes two aspects: the continued conversion of coal into energy and high-quality chemicals. China’s energy structure should be clean, low-carbon, safe, and efficient. To reduce overall energy consumption, it is essential to gradually improve energy utilization efficiency. While developing new and renewable energy sources, it is necessary to make significant efforts in the development of coal chemistry, with moderate expansion of modern coal chemical industries. Coal chemical integrated production is an excellent approach; in addition to being converted into fuel, chemicals can also be produced. We must continue to improve energy efficiency and ensure complementary resource utilization ； Reduce emissions at the source and seal them at the end point ； Energy savings in processes, process innovation ； Understand coal scientifically and make comprehensive use of it. Zhang Chuanjiang, chairman of China Shenhua Coal-to-Oil Chemicals Co., Ltd., believes that the refined development of coal chemicals differs from the development of fine chemical products; it also involves aspects such as regional planning and layout, technical route design, product development and sales, as well as safety and environmental protection. It represents a shift in development methods, as well as an improvement in management concepts and standards. Zhang Chuanjiang said that Shenhua Group emphasizes its \"coal-based strengths.\" While developing high-value-added downstream products such as coal-to-oil and coal-to-olefins, it also focuses on meticulous regional planning, careful design of technical approaches, and precise product sales. The refined regional layout enables coordination among various business segments and coal chemical projects, fostering the formation of an industrial cluster where raw materials are shared and products complement one another ； The design of the technical approach focuses on the integrated and complementary interaction among various technologies and industries, aiming to achieve development that is differentiated, high-end, clean, and intelligent. This approach seeks to establish a modern coal-to-oil chemical industry system that features significant efficiency, technological leadership, advanced management practices, intrinsic safety, and compliance with environmental standards. Zhang Chuanjiang further explained that the project planning of Shenhua Group adheres to integrated design, differentiated layout, centralized construction, and clean development; by relying on the core development area in the Golden Triangle region, it coordinates the process plans among various projects and bases ； Product development adheres to the principle that \"structure determines properties, and unique features create value,\" gradually establishing a Shenhua coal-based petrochemical product portfolio. Efforts are focused on developing special coal-based oils, high-value-added olefin derivatives, and downstream polyolefin products ； Technology development focuses on the present while planning for the future; through the improvement of demonstration technologies, the pilot implementation of advanced technologies, and the research and development of fundamental technologies, the coal-to-oil chemical industry is to be transformed into a new type of industry that is low-carbon, efficient, environmentally friendly, and safe. Taking advantage of its unique strengths in possessing various resources such as coal, oil, and gas, as well as the foundation for integrated development across multiple industries, Yanchang Petroleum Group adheres to the comprehensive utilization of these resources. It optimizes the allocation of chemical elements from different resources, ensures that industrial facilities complement each other, and promotes integrated innovation in processing technologies. This approach helps to significantly reduce investment costs, minimize pollutant emissions, lower production expenses, and improve economic efficiency, thereby striving to create a chemical industry chain characterized by diversified raw materials, integrated technologies, and high-quality products. “Our coal-to-olefins plant maintenance has just been completed, further eliminating production bottlenecks. The unit operated continuously for over 600 days before maintenance. ”said Li Wei, general manager of Shaanxi Yanchang China Coal Yulin Energy Chemical Co., Ltd. The company’s coal-based olefins project makes comprehensive use of coal, oil, and gas as raw materials, determines the optimal ratio of these materials, and innovatively achieves a complementary balance between hydrocarbons. By integrating coal chemistry, petrochemicals, and natural gas chemistry, it achieves an effect where \"1+1+1>3\". The direct contribution is an annual increase in methanol production by 300,000 tons, with the full cost of methanol being less than 1,300 yuan. Furthermore, the energy conversion efficiency increased by 16.88 percentage points, the utilization rate of carbon resources rose by 17.71 percentage points, the comprehensive energy consumption per unit of product decreased by 15.5%, and at least 10.8 million tons of water were saved annually, along with a reduction of 2.82 million tons of carbon dioxide emissions. Similarly, the comprehensive utilization project for coal, oil, and gas resources by Yanchang Energy & Chemical Co., Ltd. is also under intense construction. In addition to polyolefin products, the project has also added EPDM rubber, butanol, 2-PH (2-propylheptanol), etc. In addition, the 100,000 tons per year coal-to-ethanol via methanol demonstration project of Yanchang Petroleum is about to be completed and put into operation for testing ； At the same time, plans are in place for projects such as coal-based ethylene glycol, PX, polyesters, and the development of high-end chemicals through advanced processing of tar. Since its commissioning in July 2014, the 1.8 million tons/year methanol and 600,000 tons/year polyolefins facilities operated by China Coal Shaanxi Yulin Energy & Chemical Co., Ltd. have been running stably for 26 consecutive months. To date, they have generated a total profit of 1.244 billion yuan, setting the best operational record among similar coal chemical projects in China. “We are advancing the transformation and upgrading of the fine coal chemical industry, with the current focus on maximizing the comprehensive and efficient utilization of C4 compounds produced as a by-product of methanol-to-olefins production. ”Zhou Yongtao, assistant general manager of China Coal Shaanxi Yulin Energy Chemical Co., Ltd., explained that since the final product is polyolefin, it is difficult to obtain the monomer butene-1 required for production in the areas surrounding Yulin, and its price is high. Therefore, the company adopted a technical solution based on the MTBE (methyl tert-butyl ether)/butene-1 + olefins conversion (OCU) process; this approach allows for the production of MTBE, butene-1, and polymeric-grade propylene using mixed C4 hydrocarbons. This results in an annual increase in propylene production of 70,000 tons, reduces the consumption of olefins, and also solves the issue of obtaining the comonomer butene-1, generating economic benefits worth 150 million yuan. Hu Qianlin believes that the refined development of coal chemical industry implies that coal chemical enterprises need to become more deeply involved in the chemical industry. It is recommended that coal chemical enterprises should actively pursue a path of high-end development, differentiation, and specialization in the design and application of their downstream products, in order to avoid homogeneous competition. At the same time, they should pay close attention to the impact of new policies regarding resources, safety, and environmental protection on the industry, systematically adopt new environmental protection technologies, address the technical challenges related to water use and wastewater discharge in coal chemical production, accelerate the demonstration and upgrading of this industry, and promote its healthy development. Option three: Further technological breakthroughs. “Our independently developed integrated technology for extracting coal tar from coal and producing syngas (CCSI) has achieved significant breakthroughs. The ten-thousand-ton-scale industrial pilot plant has just completed 144 hours of continuous and stable operation; the yield of coal tar reached 16.23%.” ”Li Dapeng, the leading expert in coal chemical engineering at Shaanxi Yanchang Petroleum Group Company and director of the Hydrocarbon Center, told reporters that while CCSI technology is used to extract tar, the crude syngas produced can also be utilized for power generation. By integrating this technology with green power generation methods, a new type of integrated production model for coal, electricity, oil, and chemicals can be created, one that features clean and efficient conversion of coal, advanced processing of coal tar, and green power generation. In mid-September, the industrial trial project for the low-grade coal powder gas-solid heat carrier dual-circulation rapid pyrolysis technology (SM-SP), developed in collaboration between Shaanxi Coal and Chemical Group Shanghai Shengbang Chemical Technology Co., Ltd. and Shanxi North Qianyuan Energy and Chemical Co., Ltd., passed the evaluation for scientific and technological achievements. After more than a year of testing, the industrial trial unit capable of processing 20,000 tons per year using this technology was calibrated on-site by the China Petroleum and Chemical Industry Federation; the results showed an energy conversion efficiency of 80.97% and a tar yield of 17.11%. In early August, the syngas production process technology using a four-channel nozzle for the co-gasification of kerosene, developed by the Northwest Research Institute of Chemical Engineering, was successfully tested in a one-time feed operation at Yulin Energy and Chemical Co., Ltd. under China National Coal Group. As a result, the concentration of the effective components in the syngas increased by 5 percentage points, oxygen consumption decreased by 7%, and the energy efficiency improved by more than 6%. Although China’s coal chemical technologies have continuously achieved major breakthroughs, with significant progress in areas such as coal gasification, coal liquefaction, methanol-to-olefins, methanol-to-aromatics, syngas-to-ethylene glycol, and syngas-to-ethanol, most of today’s modern coal chemical technologies are still in the demonstration and upgrading phases. There is still room for improvement and optimization in the main processes, and there is a disconnect between technological research and industrialization. The development of coal chemical products focuses mainly on the conversion of primary energy sources; however, the development of downstream products still lags far behind that of the petrochemical industry. A large number of fine chemical products and new chemical materials continue to be imported, which is the main reason why the coal chemical industry fails to achieve strong economic performance and is vulnerable to fluctuations in oil prices. For example, looking at the self-sufficiency rates of China’s key shortage products in 2015, the self-sufficiency rate for PX was 52%, for polyamide engineering plastics it was 41%, for high-end polyolefins it was 38%, and for ethylene glycol it was 33.1%. The self-sufficiency rates for polycarbonate and carbon fiber were only 27% and 29%, respectively. There is a lack of core production technologies for certain high-end polymers (including polymer monomers), high-end polyesters, high-performance fibers, and specialty chemicals that are based on coal. “The refinement of coal chemical industry is an inevitable trend of development; however, enterprises still face certain practical difficulties in truly getting involved. The coal chemical industry is constrained by water resources and faces significant pressure regarding environmental emissions ； Technical equipment also represents a bottleneck; the industry standard system is not yet well-established, and these are all challenges to the development of refined coal chemical industries. ”Hu Qianlin admitted that most domestic coal chemical enterprises lack technical expertise in the chemical industry and are in urgent need of support in terms of relevant production technologies. At the same time, the range of coal-based chemicals that have emerged as a result of the more refined development of coal chemical industry represents a relatively unfamiliar market for enterprises. In addition, most coal-based chemicals lack corresponding product standards; these are issues that need to be addressed for the refined development of the coal chemical industry. With the advent of the era of carbon taxes and carbon emission trading, reducing carbon emissions has become an urgent task. “There is yet no ideal technical approach for the chemical storage and utilization of carbon dioxide in the world, and the route of converting carbon dioxide into methanol is also unreasonable. ”Zhu Weiqun, a professor at Shandong University, told reporters. Low-carbon technologies can be divided into three categories: “carbon-free technologies” for source control, “carbon-reduction technologies” for process control, and “carbon-removal technologies” for end-stage control. The coal chemical industry emits large amounts of carbon dioxide during its production processes; it is often not cost-effective to capture, store, or utilize this CO2. Therefore, it is desirable to seal carbon dioxide in the products as much as possible during production, so that no carbon dioxide is emitted during the manufacturing process. In fact, this is the best way to capture and utilize carbon dioxide. Zhu Weiqun suggested reacting a portion of the hydrogen with the accompanying nitrogen to produce ammonia; under certain processing conditions, ammonia and carbon dioxide combine to yield triazinol, a stable solid product with the highest carbon dioxide content, while the remaining hydrogen can be used for power generation. Producing 1 ton of triazinol product requires the consumption of 1 ton of carbon dioxide. Triazinol can be further synthesized into triazinamine, triazinol resins, triazinol crosslinking agents, triazinol chlorinated products, and so on. For example, a plant with an annual production capacity of 300,000 tons of synthetic ammonia and 520,000 tons of urea can be equipped with a triazine alcohol production facility capable of producing 660,000 tons per year, while also consuming 160,000 tons of carbon dioxide each year. “The refined development of the coal chemical industry has posed challenges to coal gasification technology. ”Chen Xueli, a professor at East China University of Science and Technology, said that the scaling up of coal gasification is a trend and direction; enhancing feedstock adaptability is an inherent requirement and guarantee; and achieving near-zero emissions is a goal that must be continuously pursued and an inevitable requirement. Larger scale can significantly reduce investment through efficient energy savings and consumption reduction. However, there are also technical challenges such as how to achieve process intensification under extreme conditions and the separation of complex reactants, all of which require continuous efforts to overcome and improve. “Coal can be regarded as a natural polymer material with a 3D structure. In addition to gasification and further processing in the coal chemical industry, developing high-value functional carbon materials based on coal tar and coal pitch is also a good approach; through ‘molecular tailoring’ techniques, different materials can be synthesized by utilizing the various precipitation states of carbon atoms. However, the composition of coal is very complex, and it is not easy to turn it into carbon materials. ”Qiu Jieshan, deputy director of the Energy Research Institute at Dalian University of Technology, told reporters that relying on the coal tar-based carbon fiber technology it has developed independently, the institute is working with a certain company to set up an industrial test facility in Zhangjiagang with a processing capacity of 300 tons per year for coal tar, aiming to produce 30 tons of asphalt-based carbon fiber; the facility is expected to be operational by the end of the year. “Our country has achieved remarkable results in coal chemical industry-related fields, with some technologies at the world’s forefront, but there is still much room for further development. The coal chemical industry needs technological innovation more than ever to drive green and sustainable development. ”Cai Rui said that the Dalian Institute of Chemical Physics is working on technological advancements related to the next generation of coal-based chemicals. It is focusing on the development of efficient catalysts for such chemicals, as well as on their scale-up and industrial production. The institute is making efforts to advance technologies such as the third-generation methanol-to-olefins process (DMTO-III), methanol-to-propylene (DMTP), the conversion of methanol into ethanol via dimethyl ether carbonylation, the co-production of olefins from methanol and toluene, the production of olefins through the coupling of methanol with naphtha, and the synthesis of high-carbon primary alcohols from syngas. Additionally, it is exploring methods for producing olefins directly from syngas and ethanol.