A new study by industry analysts and consultants Nexant, San Francisco, raises the possibility of a chemical industry based not on oil and gas but on coal. The study “Coal-to-Chemicals: Is it Coal’s Time Again?” looks at the technologies and economics of using coal as a feedstock to produce major petrochemicals via gasification and what it calls other “on-purpose” processes. From a technological standpoint, this hardly is groundbreaking. After all, well over half a century ago both Germany and South Africa relied on coal-conversion technologies, although admittedly relatively inefficient ones. So why should the chemical industry be looking to turn the clock back now?
According to Nexant, four key trends point in the direction of coal. The first three are essentially economic in nature: the global increases in crude oil prices; the huge boosts in natural gas costs in North America and Western Europe; and the burgeoning energy demand in the developing economies of Asia. There also is a technological driver, the advances now being made in coal utilization processes such as gasification. Taken together, the study suggests that the chemical industry is at a strategic turning point.
There is no doubt that today’s gasification processes — and the gas-to-liquids Fischer-Tropsch plants now mushrooming in the Middle East — use technology far more advanced than that in earlier German and South African units, which were driven more by economic necessities than anything else. But, as Nexant stresses, it is still the economics of production that will govern the growth of coal-based chemicals.
In the U.S., for example, notes the report, the production of, say, linear low-density polyethylene (LLDPE) from a coal-based gasifier process (taking the route of coal to synthesis gas to methanol to olefins) would not be able to compete with conventional ethylene-cracker processes “in the foreseeable future.” In China, however, production of a staple such as vinyl chloride monomer either from gasification-sourced ethylene or from an “on purpose” route to acetylene (coal to coke to calcium carbide to acetylene) is said to be highly competitive. Moreover, the report goes on to describe how LLDPE produced from coal in China or Central Europe can compete in Western Europe at current market prices.
Coal clearly plays a pivotal role in the economy of China. Production there, in fact, has recently overtaken that of the U.S., which still has the world’s biggest reserves of coal. In both countries, and in all other coal-producing nations for that matter, nearly all coal mined goes into power generation, of course. Projects like the recently approved FutureGen initiative in the U.S. — a $1-billion government/industry effort to build a prototype fossil-fueled power plant of the future, complete with hydrogen generation, carbon sequestration and zero emissions — will, if successful, no doubt ensure a steady demand for coal for decades to come, irrespective of what the chemical industry does.
Should the chemical industry move more towards coal-based technologies, however, we should never forget that coal mining in general remains one of the most hazardous occupations around the world. We know about China’s appalling record in this area, with some 3,000 miners reported killed in 2005 — over 200 alone in an underground explosion in Liaoning province last February — but this January’s tragic events at mines in West Virginia remind us of the dangers that miners working deep below ground face. The country’s safety record has improved steadily over the years, but still on average about 30 miners die each year in the U.S., a modest but still unacceptable number. So, everyone in the chemical industry — where safety considerations are paramount — should be able to appreciate that, occasionally, there are more overriding concerns in play than pure economics.
Mike Spear, editor at large