China Dirties Up - Coal Liquefaction Underway

It's possible to extract a form of ersatz oil out of coal. It's an old technique but one that's fallen out of favour due to the large amounts of greenhouse gases created in the production process.

China's willingness to trash the global environment is a question of deeds, not words. The Chinese talk a good game but they're launching a major CTL, or coal-to-liquid, plant in Inner Mongolia.

The first plant will only produce about 20,000 barrels of oil a day, a drop in the bucket compared to China's 7.2 million barrel a day consumption. To reach this level of production, China will process 3.5 million tonnes of coal per year into 1 million tonnes of oil products such as diesel for cars.

But wait, there's more.

China is targeting on transforming half of Mongolia's coal production into oil by 2010. That would involve processing 135-million tonnes of coal per year.

And China may soon be joined by the United States which is believed to have the largest reserves of coal in the world. From ENN:

"DRKW Advanced Fuels plans to start construction on a plant in Wyoming next year in partnership with Arch Coal Inc and with technologies licensed by General Electric and Exxon Mobil. The defense department is experimenting with CTL in an effort to cut reliance on fuel from countries unfriendly to the United States.

But CTL is highly controversial. Experts say the whole lifecycle releases about twice as much carbon dioxide, the most common greenhouse gas,

as fossil fuel. Liquefying coal also requires large amounts of energy and drains water supplies.
The fuel produced through this method has a shelf life of up to 15 years, unlike other motor fuels which is attractive to the military and to governments keen to ensure fuel security.

Though CTL technology was developed about 100 years ago, it has been little used, except in Nazi Germany and apartheid South Africa, which had difficulty accessing then-inexpensive oil.
Oil prices, which have more than quadrupled this decade to above $130 a barrel, have reignited interest in CTL.

The Oil and Gas Journal in April suggested it costs $67 to $82 a barrel to produce CTL fuel, based on the experiences of South Africa's Sansol. Exact prices would depend on a range of factors including coal and water prices and of course it is very expensive to build CTL plants.
Shenhua will be the first to use direct CTL technology on a large scale. It is different from indirect CTL, proven in Nazi Germany and by South Africa's Sasol, and converts coal directly into liquid fuel, skipping gasifying coal into syngas.

"CTL happened only twice in world history, and both times it's been in nations facing some kind of state of emergency with respect to energy. It should sound an alarm bell," said Gary Kendall, from the WWF conservation group."

Think the supposedly green yet lobbyist plagued John McCain will shut this down? Think again.