Turning coal into barrels of oil 1

By Alauddin Masood

Coal is, presently, the fastest growing fuel in the world, providing 26 per cent primary energy and 40 per cent of electricity supply worldwide. Coal has gained special importance due to the growing concerns for energy security prompted by apprehensions about fast depletion of the known resources of energy and abnormal surge in international oil prices, which are presently hovering around US$143 per barrel.

Presently, China is the world’s largest producer as well as the biggest consumer of coal, accounting for 78 per cent of its total energy requirement. Meeting 60 per cent of its energy requirements from coal, the USA is the second largest user of coal on the globe.

Though already meeting most of its energy requirement from coal, China is now vigorously pursuing efforts to turn its vast coal reserves into barrels of oil. In Erdos, on the grasslands of Inner Mongolia, 10,000 workers are putting final touches to a coal-to-liquid (CTL) plant that will be run by the Chinese state-owned Shenhua Group. The plant will be the biggest outside of S. Africa, which adopted CTL technology due to international embargoes on fuel during the apartheid years.

The Chinese CTL plant is expected to start operations later this year. This plant will have the capacity to convert 3.5 million tons of coal into one million tons of oil products, like diesel, per year, for use in automobiles. The production of the plant, in other words, would be equivalent to about 20,000 barrels per day of oil. If all goes well, China has plans to exploit half of Inner Mongolia’s coal output – around 135 million tons, for conversion into liquid fuel or chemicals by 2010. By 2020, China plans to raise its CTL capacity to 50 million tons or 286,000 barrels a day.

Reviled by environmentalists who say CTL process causes excessive greenhouse gases, yet the possibility of obtaining oil from coal and being fuel self-sufficient is enticing to coal-rich countries seeking to secure their energy supply. In view of the relatively low cost of CTL produced oil, the USA is also considering to using its coal reserves for producing oil. The USA has the world’s largest coal reserves, and the CTL process offers her prospects to reduce dependency on other countries for oil.  Developed about 100 years ago, the fuel produced through CTL technology has a shelf life of 15 years. However, it has been little used, except in Nazi Germany and the apartheid South Africa, which had difficulty in getting oil supplies. However, rapid rise in oil prices, in the international market, have revived interest of coal-rich countries in CTL technology.

Realising the importance of coal in development, many countries are now switching over to coal to meet their energy requirements. India, Indonesia, Germany, Australia and UK are among those countries that have recently embarked upon new coal based power plants.

Though found in abundance in most parts of the world, the use of coal as an alternate source of energy in the developing countries has been down played by powerful lobbies who do not wish to see coal as a substitute of oil that their principals sell. Resultantly, the share of coal in the energy mix of many developing countries remains very low. In Pakistan, the share of coal in the energy mix is about 5 per cent and in power generation even less than one per cent despite the fact that Pakistan ranks among those countries which possess vast deposits of coal.

With total coal reserves at 185 billion tons, Pakistan is the sixth largest coal rich country in the world. The aggregate energy potential of Pakistan’s coal reserves is more than the combined energy potential of the resources that Saudi Arabia and Iran possess. Pakistan’s biggest coalfield lies in Thar (Sindh) where the coal reserves are estimated to be over 175,506 million tons. Seven other coal fields in Sindh have 8,617 million tons of coal reserves. These include Lakhra, Sonda-Thatta, Jherruck, Oagar, Indus East, Meeting Jhimper and Badin with reserves of 1,328 million tons, 3,700 million tons, 1,323 million tones, 312 million tons, 1,777 million tons, 161 million tons and 16 million tons respectively.

Other major fields in the country contain reserves of over 533 million tons. These include Khost-Sharig-Harnai, Sor-Range-Degari, Mach-Abagum, Duki and Pir Ismail Ziarat in Balochistan with reserves of 76 million tons, 34 million tons, 23 million tons and 12 million tons respectively; Salt Range and Makerwal-Gullakhel in Punjab with reserves of 234 million tons and 22 million tons respectively; and Hangu in NWFP with a reserve of 81 million tons.  The current estimated value of Thar coal deposits, according to Engineering Development Board’s monthly magazine “Industrial Bulletin” is $8 trillion and if converted into energy its value comes to $25 trillion. It has the potential to generate 100,000 MW of electricity for 300 years.”

Pakistan can substantially curtail its oil import bill, turn the wheel of economy, create thousands of new jobs and can in the process also alleviate poverty to some extent if it opts for the commercial exploitation and industrial use of its vast coal reserves.

The News Business, 5/7/2008

Leave a Reply

One thought on “Turning coal into barrels of oil

  • Naveed Arif Mianoor

    I have worked a lot on coal to value adds products and I have met the technology holders of inner mongolia Shenhua plant , They have prepared first presentation on pakistan all coal sites by seeing
    its coal(lignite) composition , I stayed in london for five months only to see top CTL technologist even I have been in contact with Sasol they have been sending questionaire to me , Pakistan government needs to understand that coal to liquids give you power at a very low price , when the coal is gasified and then for ft process all the flare gas during the liquefaction is done the gas is compressed and converted into power every 10,000bpd of plant will give you 100mw after internal use .

    The dcl technology give you better yield is which chinese are using but 18 plants have been licensed gasification & ft also .

    I have been working on CTL since long keep in mind SASOL was making money when crude oil was less then $40 and now it have reached the highest of all time , Pakistan coal have high moisture when coal drying is used then almost all of it moisture is removed then btu level increase still we can get oil at $50 a barrel and reduce our dependency on import which is killing our economy , USD$ 12billion import of crude oil and refined products will destroy us only way is 25% coal based synfuels plant at urgent basis , Montana governer have guaranteed financing for the project / technology / off take products / no tax / shortest time to achieve turn key projects .