Syngas/Methanol to

Olefins

R. J. Chang, Global Managing Director

IHS Chemical Process Economics Program

March 27 & 28, 2014

Houston, TX USA

Petrochemical Technology Renaissance

The Rise of Syngas

Coal

Natural Gas

Crude Oil

Syngas Capacity

0

5

10

15

20

25

0

2

4

6

8

10

12

14

16

1955 1965 1975 1985 1995 2005 2015

Syngas Capacity

(billion scfd)

Price ($/MMBtu)

Coal Natural Gas Crude Oil Syngas Capacity

Prices Capacity

- the divergence between crude oil vs. natural gas and coal

prices has spurt global syngas production

Source: DOE and IHS Chemical 2

Syngas is mainly produced by natural gas

reforming and coal gasification

• Natural Gas Reforming

• Coal Gasification

STEAM

BFWGASIFIER

BFW

FLY ASH

SLAG

SYNGAS

QUENCH GAS

STEAM

DRY COAL

3

Syngas is a versatile intermediate for many

chemicals , synthetic fuels, and Power

Clean Syngas H2, CO, CO2

IGCC Clean Electricity

Hydrogen

Max H2

Methanol

(H2 - CO2) /

(CO + CO2)

=2.05

Fischer-Tropsch

Liquid Fuels

H2 / CO = 2.0

Substitute

Natural Gas

H2 / CO = 3

4

Syngas Gasification Reforming

- competition in C2 & C3 Value Chains

- the story of global chemical industry in the next 5-10 years

CH4

Ethylene

/ PE

Methanol

US Shale China

Coal

Propylene

/ PP

MTO

MTP

NGL Ethane

PDH Propane

CTO CTP

Naphtha

FCC

U.S. Shale vs. China Coal

MEG

5

China’s rapidly growing coal based capacity vs. US’

expanding shale based projects

Ethylene Capacity Build-up

0

5

10

15

20

25

30

35

40

2013Demand

2013Capacity

CTO MTO Others 2023Capacity

2023Demand

KTA

China Ethylene and PEs

0

10

20

30

40

50

2013 Demand 2013 Capacity 2023 Capacity 2023 Demand

KTA

NA Ethylene and PEs

6

-

China’s rapidly growing coal based capacity vs. US’

expanding shale based projects

Propylene Capacity Build-up

05

1015202530354045

KTA

China Propylene and PP

0

5

10

15

20

25

30

2013Demand

2013Capacity

PDH Others 2023Capacity

2023Demand

KTA NA Propylene and PP

7

Major Technology Advances Enabling

CTO/CTP Processes

• High capacity 3th generation entrained flow gasifiers

• Mega methanol technologies

• MTO Technologies (producing about ½ C2 and ½ C3)

– UOP MTO /Total OCP (Olefin Cracking Process)

– DICP (Dalian Institute of Chemical Physics) DMTO,

DMTO-II

– Sinopec SMTO

• MTP Technologies (producing mostly C3)

– Lurgi MTP

– Tsinghua FMTP

– Sinopec S-MTP

8

Leading Gasifiers used in China’s CTO

and CTP projects

Shell

GE-Texaco

Siemens

9

Leading Chinese Operating Plants

and their Technology Selections

Project Coal Gasifier MTO/MTP

Shenhua Baotou Bituminous GE (Texaco)

5 x (2,000TPD)

DMTO

Shenhua Ningxia Bituminous Siemens GSP

5 x (2,000TPD)

Lurgi MTP

Datang Duolun Lignite Shell

3 x (4,000TPD)

Lurgi MTP

Wison Bituminous GE or Shell UOP MTO

Sinopec Zhongyuan

Puyang

-- -- SMTO

Ningbo Heyuan -- -- DMTO

10

Critical Factors in China’s Coal-Based

Projects

• Driving forces

– Coal producers

seeking higher return

– Strategic decision for

petrochemical

companies to divert

chemical feedstock

from petroleum

– Close supply gap by

eliminating imports

• Deciding factors

– Government policy

– Product quality

– Environmental Impact

• CO2 Emission

• Water demand

– Production

economics

• Cash costs

• ROI

11

Questions to Answer

• In China

– Process economics of CTO/CTP vs. MTO/MTP: to integrate or

not to integrate from coal?

– Are coal based processes competitive with naphtha and PDH

processes?

– What are environmental impacts?

• In North America

– How does NA ethane based ethylene compete with CTO?

– How does NA PDH based propylene compete with CTP?

– Is MTO or MTP viable in the US?

12

Syngas production economics from coal vs.

natural gas is the Key

13

Coal Gasification: selection of gasifiers / coal grades and

petcoke

Natural Gas: choice of reforming technologies / licensors

14

iPEP Syngas Process Economics

UNIT COSTS

CONSUMPTION

PER MSCF ¢/MSCF

SUBBITUMINOUS COAL 0.7 ¢/LB 50.388 LB 35.27

AGR SOLVENT 1,000 ¢/LB 0.00075 LB 0.75

SHIFT CATALYST 1,800 ¢/LB 0.001 LB 1.80

OTHER CHEMICALS 3.78

GROSS RAW MATERIALS 41.60

SLAG DISPOSAL -0.5 ¢/LB -2.3814 LB 1.19

SULFUR 7.75 ¢/LB -0.11102 LB -0.86

TOTAL BY-PRODUCTS 0.33

COOLING WATER 15.49 ¢/MGAL 358 GAL 5.54

PROCESS WATER 132 ¢/MGAL 1.6043 GAL 0.21

ELECTRICITY 5.93 ¢/KWH 5.7371 KWH 34.02

NATURAL GAS 412 ¢/MMBTU 1,072 BTU 0.44

STEAM LP 570 ¢/MLB 1.1315 LB 0.64

STEAM MP 760 ¢/MLB 5.1214 LB 3.89

STEAM HP 810 ¢/MLB -- LB 0.00

STEAM LP 570 ¢/MLB -0.17865 LB -0.10

STEAM MP 760 ¢/MLB -14.114 LB -10.73

STEAM HP 810 ¢/MLB -76.523 LB -61.98

TOTAL UTILITIES -28.07

SYNTHESIS GAS FROM SUBBITUMINOUS COAL VIA SHELL(SCGP) GASIFIER (580 PSIA)

15

iPEP Syngas Process Economics

CAPACITY(MILLION MSCF/YR)* 66.20 132.40 264.80

INVESTMENT($ MILLIONS)

BATTERY LIMITS (BLI) 910.50 1,449 2,305

OFFSITES 163.50 320.00 609.00

TOTAL FIXED CAPITAL (TFC) 1,074 1,769 2,914

PRODUCTION COSTS(¢/MSCF)

RAW MATERIALS 41.60 41.60 41.60

BY-PRODUCTS 0.33 0.33 0.33

UTILITIES -28.07 -28.07 -28.07

VARIABLE COSTS 13.86 13.86 13.86

OPERATING LABOR, $46.23/HR 12.23 6.12 3.06

MAINTENANCE LABOR, 1.6%/YR OF BLI 22.01 17.51 13.93

CONTROL LAB LABOR, 20% of OPER LABOR 2.45 1.22 0.61

LABOR COSTS 36.69 24.85 17.60

MAINTENANCE MATERIALS, 2.4%/YR OF BLI 33.01 26.27 20.89

OPERATING SUPPLIES, 10% of OPER LABOR 1.22 0.61 0.31

TOTAL DIRECT COSTS 84.78 65.59 52.66

PLANT OVERHEAD, 80% TOTAL LABOR 29.35 19.88 14.08

TAXES AND INSURANCE, 2%/YR OF TFC 32.45 26.72 22.01

PLANT CASH COSTS 146.58 112.19 88.75

DEPRECIATION, 10%/YR OF TFC 162.24 133.61 110.05

PLANT GATE COST 308.82 245.80 198.80

G&A, SALES, RESEARCH 29.06 23.49 19.15

NET PRODUCTION COST 337.88 269.29 217.95

ROI BEFORE TAXES, 15%/YR OF TFC 243.35 200.42 165.07

PRODUCT VALUE 581.23 469.71 383.02

SYNTHESIS GAS FROM SUBBITUMINOUS COAL VIA SHELL(SCGP) GASIFIER (580 PSIA)

16

Comparison of Capex and Opex of Syngas

Production in USGC and China

0

250

500

750

1,000

1,250

1,500

USGC CombinedReforming USGC

China SCGPSubbituminous Coal

BATTERY LIMITS (BLI) OFFSITES

US $ Million

0

50

100

150

200

250

300

350

400

USGC CombinedReforming USGC

China SCGPSubbituminous Coal

¢/MSCF

PRETAX 15% ROI G&A, SALES, RES.

DEPRECIATION OVERHEAD, TAXES

OPER & MAINT. VARIABLE COST

17

Comparison of Environmental Impacts

0.0 0.5 1.0 1.5 2.0 2.5 3.0

JM/Davy

HT

Lurgi

Toyo

Siemens

E-Gas

Shell

GE quench

CO2/Syngas for MeOH (t/t)

0 2 4 6 8 10 12

JM/Davy

HT

Lurgi

Toyo

Siemens

E-Gas

Shell

GE quench

H2O/Syngas for MeOH (t/t)

18

Capex Structure of CTO/CTP and MTO /MTP

0

500

1,000

1,500

2,000

CTO CTP

US$ MM

Gasification Methanol Plant Olefins Plant

PEPCOST INDEX=1164

CHINA LOCATION FACTOR=0.75

MID 2013

19

CTO/ MTO Opex Comparison in China

ETHYLENE PRICE $/t

1,280

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

3,000

3,500

CTO MTO Naphtha

Production Costs ($/t)

VARIABLE COST OPER & MAINT. OVERHEAD, TAXES

DEPRECIATION G&A, SALES, RES. PRETAX 15% ROI

ETHYLENE PRICE $/t

PEPCOST INDEX=1164

CHINA LOCATION

FACTOR=0.75

MID 2013

20

Olefins Production Costs in North America

ETHYLENE PRICE $/t

1,221

PROPYLENE PRICE $/t

1,473

0

500

1,000

1,500

2,000

Ethane MTO Naphtha PDH MTP

Production Costs ($/t)

VARIABLE COST OPER & MAINT.OVERHEAD, TAXES DEPRECIATIONG&A, SALES, RES. PRETAX 15% ROIETHYLENE PRICE $/t PROPYLENE PRICE $/t

PEPCOST INDEX=1164

USGC

MID 2013

21

Summary • Syngas production is a high growth industry, sustained

by the divergence of oil vs. coal and natural gas prices

• Rapid growth of CTO/CTP capacities in China will

compete with US shale based projects in next 5-10 years

• Syngas production economics (opex and capex) and

environmental considerations will be the deciding factors

• An iPEP interactive data module allows a quick

comparison syngas production economics and the

environmental impacts from coal gasification and natural

gas reforming on the same basis

• Applying the iPEP module to analyze CTO/CTP

processes leads to the following conclusions:

22

Conclusions

• Coal based projects are very capital intensive and has

high carbon and water footprint

• Compared with naphtha cracking in China, MTO is

very competitive in full production costs and has

highest ROI. CTO has the lowest cash costs, but will

take a long period to recover high capex

• MTO/MTP it’s a viable option with higher ROI in China

• In North America, MTO and MTP are not competitive

• NA ethane cracking has lower cash and full production

costs than CTO and MTO processes in China

23

Syngas/Methanol to

Olefins

THANK YOU!