coal gasification opportunities and challenges for...
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1© 2016 Deloitte Touche Tohmatsu India LLP
Coal Gasification
Opportunities and Challenges for
India
Kalpana JainGasification India: 2016
− Need for clean coal
− Why gasification?
− Importance for India
− China story
− Opportunity areas
− Key challenges
− Economics
− Way forward
Contents
2© 2016 Deloitte Touche Tohmatsu India LLP
Need for clean coal
© 2016 Deloitte Touche Tohmatsu India LLP 3
• Coal – prime fossil fuel in India
‒ Abundant reserves
‒ Vital for Energy Security
• Mostly available in low quality, high ash
• Environmental issues
Coal Conversion
• Coal Gasification
• Coal to Liquid
Beneficiation (pre combustion)
• Practical challenges in achieving desired
levels
• Disposal issues
Clean Coal Technologies
Why gasification?
4
Source: Vision 2030” Natural Gas Infrastructure in India, Report by
Industry Group For Petroleum & Natural Gas Regulatory Board
In order to overcome uncertain natural gas
supply, unlocking domestic coal gas potential a
need
• Increasing demand for natural gas in India;
driven by growing economy – resurging
industrial production & infrastructure
development
• Current natural gas shortage estimated at 14.1
million tons; increasing dependence on imports;
price volatility
• Urea shortage estimated at around 7-8 million
tons
39%48%
61%52%
0%
20%
40%
60%
80%
100%
2013-14 2029-30
Imported LNG Domestic sources
Globally, share of unconventional
gas expected to increase
© 2016 Deloitte Touche Tohmatsu India LLP
242.66
378.06
516.97
654.55
746.03
0
100
200
300
400
500
600
700
800
2012-13 2016-17 2021-22 2026-27 2029-30
MM
SC
MD
Natrural Gas Demand in India
Power FertilizerCity Gas IndustrialPetrochem/Refineries Sponge Iron/Steel
Importance for India
5© 2016 Deloitte Touche Tohmatsu India LLP
Government Benefits
• Savings in foreign exchange
• Revenue generation – taxes, duties, royalty, etc.
• Employment generation
Syn Gas
(use as
feed/ fuel)
• Urea
• Steel
• Chemical
• Refinery
• Petrochemical
Coal
Gasification
Potential areas for utilization Recent examples
Company End Use Status
JSPL DRI Operating
GAIL, RCF,
CIL, FCIL
Urea JV formed, initial
studies underway
Adani Urea, Methanol,
SNG
MoU signed with
State Governments
Importance for India
6© 2016 Deloitte Touche Tohmatsu India LLP
Optimization of coal reserve
Reserves (as on 1 April 2014) Proved Indicated Inferred Total
0-300 m 96.3 69.5 10.5 176.3
300-600 m 13.6 58.7 16.5 88.8
0-600 m* 13.8 0.4 0.0 14.2
600 – 1200 m 2.2 13.9 6.1 22.2
Total 125.9 142.5 33.1 301.5
All quantities in billion tons
• Abundant reserves
• Ranked 3rd in non coking coal and lignite
ore deposits
• Potential to generate ~ 2500 m3 of syn gas
per ton of coal
Technical Advantages
• Low emissions
• Low ash disposal
• Low water consumption
• Improved efficiency
• No land degradation, landscape changes
• No R&R issues
• Increased safety
• Saleable by-products
* Jharia coal field
Importance for India
7© 2016 Deloitte Touche Tohmatsu India LLP
Captive energy resources – select economies
• Largest energy consuming economies - China, USA and India
• Both China and India have limited oil & gas reserves and large coal reserves for exploitation
• While China has invested significantly in coal gasification with more than 100 operating plants,
India is under exploratory phase – only one operating plant of JSPL
USA
Canada
BrazilGermany
Russia
China
India
Australia
(5,000)
5,000
15,000
25,000
35,000
45,000
55,000
- 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000
Oil
& G
as
Re
se
rve
s (
in M
T o
il
eq
uiv
ale
nt)
Coal Reserves (in MT oil equivalent)Size of the bubble represents total energy
consumption of the country
China story
8© 2016 Deloitte Touche Tohmatsu India LLP
• Volume of coal gasified: ~ 250,000 tons per day
• More than 107 plants operating and about 40 plants to be commissioned between 2015-19 (coal
consumption of 600,000 tons per day)
Product 2015 2020
Methanol 96.3 66
LPG 13.6 5
DME 13.8 20
Olefin 2.2 15
Ethylene Glycol 1.7 NA
Oil products 2.4 30
Urea 60 NA
Coal gas based production
(million tons)
Product wise distribution of coal
based plants (no. of plants)
3% 2%
11%
32%
50%
2%
Hydrogen
SNH
Chemicals
Ammonia
Methanol
FT-Liquid
Opportunity areas
9© 2016 Deloitte Touche Tohmatsu India LLP
Global pioneers for technology
collaborations
• Technology Suppliers
• Equipment Providers
• Project Management Consultants
Project Developers/ Investors
• Collaboration/partnership for bidding
jointly/ in consortium for coal blocks
• Independent bidding for coal blocks
Limited technical capabilities
present domestically
Key challenges
10© 2016 Deloitte Touche Tohmatsu India LLP
Risk Areas Challenges Possible Mitigation
Technology • Indian coal quality – high ash
• Lack of proven expertise
• Plant configuration challenge
• By products
• CO2 emissions
• Larger requirement of water & land
• Investment in R&D
• Use of CO2 - Manufacture
products which can consume CO2
e.g. Urea. Possibility of use for
EOR of nearby O&G fields
• Sale of by products
Financing • Relatively higher capital costs as
compared to natural gas based projects
• Long gestation period and development
concerns
• Economic viability concerns
• Government support
• Ownership of block with plant
located at proximity
• Economies of scale
Regulatory • Resistance to coal use
• Coal blocks bidding not allowed for coal
gasification
• Close participation of Government
and Private sector required
• Need for a separate regulatory
framework
Though need of self reliance on energy supply is critical, price competitiveness will play a major role
11© 2016 Deloitte Touche Tohmatsu India LLP
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US
D /
mm
btu
Indicative price gap (natural gas – coal)* (USD/ mmbtu)
US
Asia**
* Coal prices in USD/ MT converted into equivalent prices in USD/ mmbtu.
Doesn’t include conversion cost of coal gasification
Prices are illustrative
• Price gap between gas and coal is higher in Asia as compared to US
• For India, which is dependent on imported LNG, the gap may be able to cover conversion cost of
gasification
Economics – key driver for coal gas developments
** Japan reference price
In China a Coal To Gas plant
costing $630-950 million for
every BCM of gas capacity
estimated to breakeven at a
gas price of $6.5-8 per mmbtu
Economics – key driver for coal gas developments
12© 2016 Deloitte Touche Tohmatsu India LLP
US
D /
mm
btu
4
8
12
16
20
US gas price
India – current
domestic gas price
India – current
imported LNG
Note: Price estimates are indicative in nature and subject to change based on contract terms,
market and regulatory changes.
India – pooled
gas price for Urea
Economics – An illustration: Production of Urea
13© 2016 Deloitte Touche Tohmatsu India LLP
• Preliminary studies suggest cost of syn gas production from coal could be cheaper by upto 30%
compared to natural gas
• Indicative cost of production (fixed plus variable) of Urea:
Cost through coal gasification*
* Delivered washed coal cost @ ~ INR 2,000 / MT
-
50.00
100.00
150.00
200.00
250.00
300.00
350.00
6 6.5 7 7.5 8 8.5 9 9.5 10 10.5
US
D /
MT
GAS PRICE - USD/ MMBTU
UREA - COST OF PRODUCTION Indicative Capital Cost (1.3
MMTPA) Urea Plant
• Natural gas based:
USD 0.9 – 1 billion
• Coal gas based:
USD 1.2 – 1.4 billion
Way forward…
14© 2016 Deloitte Touche Tohmatsu India LLP
Given the infrastructure development needs and significant coal reserves, investment in
coal gasification needs to grow in coming years ….
Collaborative
development & R&D
Government commitment
and support – strong
governance & regulatory
framework
Technological
advancements
“In countries like India, there are vast opportunities for those wishing to invest in clean coal technology,
since our dependence will not reduce very soon.” – Narendra Modi, Hon’ble Prime Minister of India
Opportunity Potential
&
Economics
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©2016 Deloitte Touche Tohmatsu India LLP. Member of Deloitte Touche Tohmatsu Limited
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