Shenhua Coal-To-Fuels Output May Quadruple by 2015

Shenhua Group Corp., China’s sole producer of fuels from coal, may more than quadruple output to 3 million metric tons annually by 2015 compared with this year to help meet demand from the world’s fastest-growing major economy.

Coal-to-fuel production may increase to 11 million tons a year by 2020, Gu Dazhao, head of Shenhua Group’s science and technology development department, said at a conference in Beijing today. Output may reach 649,000 tons this year, data on the company’s website show.

China, the world’s biggest producer of coal, started its first coal-to-fuels plant in 2008 to help meet surging energy consumption. Shenhua Group, operator of the 1 million-ton-a-year facility in Inner Mongolia province, is the only company making fuels from coal after the government limited such projects in 2008 to conserve coal resources.

The proposal for a coal-to-fuels plant in the northwestern Chinese province of Ningxia, a planned venture with South Africa’s Sasol Ltd., is awaiting approval from the National Development and Reform Commission, Gu said.

The project had reached an “advanced stage,” South Africa’s Trade Minister Rob Davies said in August. A panel of industry executives appointed by the Chinese government was due to complete a review of the development in August, the Johannesburg-based company said at the time.

The parent of Hong Kong-listed China Shenhua Energy Co. may also be able to produce 5 million tons of chemicals and 1.2 billion cubic meters of natural gas from coal annually by 2015, Gu said. Output may rise to 10 million tons and 18.3 billion cubic meters by 2020, respectively, according to Gu.

Carbon Capture

A pilot carbon capture and storage facility at the group’s Inner Mongolia coal-to-fuels plant will start operations in January, Gu said.

Carbon dioxide capture and storage is a process whereby CO2 is captured from gases produced by fossil fuel combustion, compressed, transported and injected into deep geologic formations for permanent storage, according to the International Energy Agency.

China, the world’s biggest polluter, may increase its oil product use by 32 percent to 286 million tons in 2015 compared with this year, the official China Daily reported today, citing Cai Xiyou, vice president of China Petroleum & Chemical Corp., the country’s largest refiner known as Sinopec.

--Chua Baizhen. Editors: Ryan Woo, Tan Hwee Ann.

To contact the reporter on this story: Baizhen Chua in Beijing at bchua14@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net.

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