16 Jul 2009 14:47

CPCIA suggests limiting adoption of Shell's coal gasification technology

Shanghai. July 16. INTERFAX-CHINA - The China Petroleum and Chemical Industry Association (CPCIA) has suggested that the Chinese government limit the adoption of Royal Dutch Shell Plc's coal gasification technology, the association said in a newsletter on its Web site on July 16.

Chinese companies have licensed 23 coal gasification units since 2001, yet only 12 units are currently operating, and less reliably than expected, the association said.

The CPCIA also said that Shell lacks experience in engineering design, which has forced Chinese companies to learn for themselves through various trial runs on how to operate the units. Furthermore, repairing the units is expensive when their components break down.

The CPCIA advised the Chinese government that Shell's technology remains immature and it will take a long time to improve the units' operations in China.

CPCIA's official newspaper, China Chemical Industry News, reported on July 16 that a defect in Shell's coal gasification unit makes it impossible for projects to run at full load for long periods.

Hubei Shuanghuan Sci-tech Co. Ltd., which was the first company to adopt Shell's coal gasification technology, has restarted its coal gasification unit more than 40 times since its trial operation commenced in May 2006, which has led to an economic loss of RMB 200 million ($29.28 million), the report said.

The paper also reported that three units used by three China Petrochemical Corp. (Sinopec Group) subsidiaries operated at only 53 percent of capacity in 2008.

Most reliability problems occur outside a unit's gasifier island, which is the only part of the unit's operations that Shell is responsible for under the contracts that it signs with its clients, Fan Yuelong, senior media advisor of Shell (China) Ltd., told Interfax.

Fan also noted that some clients alter the unit's design to save money, which also leads to problems with its operation.

The CPCIA is also suggesting the government limit the adoption of Shell's technology because many Chinese companies have already purchased it and China needs to diversify its coal gasification technology, which includes adopting technologies developed by Chinese companies, an official with CPCIA's news department told Interfax.

Coal gasification is the key process of coal chemical projects, and Shell's coal gasification units are the most widely-used in China.