Shell and Chinese coal giant to develop clean coal technology

Royal Dutch Shell has partnered with a unit of China’s largest coal producer to jointly develop clean coal technology.

The Netherlands-based oil group this week signed a deal with Shenhua Coal to Liquid and Chemical to work on advanced techniques to covert coal into gas, then to liquid – also known as coal liquefaction. The process results in a synthetic oil.

The companies will also consider the possible application of carbon capture and storage to their technology, said Shell China.

“We will work together to provide China with the cutting-edge clean coal technology in order to help meet the country's growing demand for energy and chemicals in a more sustainable way,” said Shell China executive chairman Lim Haw-Kuang.

Shenhua Coal to Liquid and Chemical is part of the Shenhua Group, which in July launched operations for the nation’s first coal liquefaction project in Inner Mongolia.

Shenhua Group invested US$3.2bn for the coal-to-oil project’s first phase. A second phase is slated for completion in 2010, when it is expected to produce six million tons of oil products annually.

Shell and Shenhua Group had previously planned a joint coal-to-liquid project, but it was been shelved due to fluctuations in global crude oil prices, Shi Xiaoli, director of Shell China’s clean coal business, told state-run Xinhua news agency.

Shell also this week signed an agreement with China’s Dongfang Boiler Group, Wuxi Huaguang Boiler and Suzhou Hailu Heavy Industry to produce equipment for the oil giant’s coal gasification technology.

The deal is aimed at having 95 per cent of key equipment for Shell’s existing coal gasification technologies manufactured locally, said Shi.

He believed that the domestic production of the machinery would help boost the number of coal gasification plants in China. Shell has signed 26 contracts worldwide for the authorized use of its coal gasification technology to date, with two-thirds of the deals in China.

The equipment deal follows recent criticism of Shell’s existing coal gasification technology by a Chinese petroleum industry body.

In July, the China Petroleum and Chemical Industry Association asked the federal government to limit purchases of Shell’s coal gasification technology, with one stated contention being that it relies on a large number of imported of components which could be costly to repair.