The 1-million-ton coal-to-oil (CTO) project of Yankuang Group, China's leading coal producer and parent company of Yanzhou Coal Mining Co., Ltd, has passed approval by the Ministry of Environmental Protection.
The first indirect coal liquefaction demo project, located in in Yulin, China’s northwest province of Shaanxi, is estimated to invest 13.45 billion yuan. Environmental protection investments will amount to 650 million yuan, or 4.81 percent of the total.
The CTO project is expected to achieve an annual indirect coal liquefaction production capacity of 1 million tons, including 780,800 tons of diesel, 258,400 of naphtha, 56,480 of LPG, and other secondary products such as sulfur, nitrate, liquid argon and gypsum.
So far, the CTO project has got approval from all relevant administrative departments and expects to lay its foundations in Shaanxi province very soon.
The CTO project will be a significant step in developing alternative energies for petroleum and achieving a sustainable supply of oil and gas for China.
The Yankuang Group project has gone through tough procedures. Since the profitability of CTO projects is closely tied to the price of oil, and they will be profitable when oil price is above 40 US dollars per barrel, the National Development and Reform Commission earlier suspended a number of CTO projects.
Nevertheless, Shenhua, Lu'an, Yankuang and Yitai Groups never stopped advancing CTO projects.
In mid-November 2008, the national key lab Coal Liquefaction and Coal Chemical of Yankuang Group, with total investment of 240 million yuan, was founded in Pudong, Shanghai.
The Shenhua's 1-million-ton direct coal liquefaction demonstration project was successfully put into trial run in January 2009.
Experts hold that China's CTO industry will make significant progress this year.