• 24 hours PDVSA Booted From Caribbean Terminal Over Unpaid Bills
  • 1 day Russia Warns Ukraine Against Recovering Oil Off The Coast Of Crimea
  • 1 day Syrian Rebels Relinquish Control Of Major Gas Field
  • 1 day Schlumberger Warns Of Moderating Investment In North America
  • 1 day Oil Prices Set For Weekly Loss As Profit Taking Trumps Mideast Tensions
  • 1 day Energy Regulators Look To Guard Grid From Cyberattacks
  • 1 day Mexico Says OPEC Has Not Approached It For Deal Extension
  • 1 day New Video Game Targets Oil Infrastructure
  • 1 day Shell Restarts Bonny Light Exports
  • 2 days Russia’s Rosneft To Take Majority In Kurdish Oil Pipeline
  • 2 days Iraq Struggles To Replace Damaged Kirkuk Equipment As Output Falls
  • 2 days British Utility Companies Brace For Major Reforms
  • 2 days Montenegro A ‘Sweet Spot’ Of Untapped Oil, Gas In The Adriatic
  • 2 days Rosneft CEO: Rising U.S. Shale A Downside Risk To Oil Prices
  • 2 days Brazil Could Invite More Bids For Unsold Pre-Salt Oil Blocks
  • 2 days OPEC/Non-OPEC Seek Consensus On Deal Before Nov Summit
  • 2 days London Stock Exchange Boss Defends Push To Win Aramco IPO
  • 2 days Rosneft Signs $400M Deal With Kurdistan
  • 3 days Kinder Morgan Warns About Trans Mountain Delays
  • 3 days India, China, U.S., Complain Of Venezuelan Crude Oil Quality Issues
  • 3 days Kurdish Kirkuk-Ceyhan Crude Oil Flows Plunge To 225,000 Bpd
  • 3 days Russia, Saudis Team Up To Boost Fracking Tech
  • 3 days Conflicting News Spurs Doubt On Aramco IPO
  • 3 days Exxon Starts Production At New Refinery In Texas
  • 4 days Iraq Asks BP To Redevelop Kirkuk Oil Fields
  • 4 days Oil Prices Rise After U.S. API Reports Strong Crude Inventory Draw
  • 4 days Oil Gains Spur Growth In Canada’s Oil Cities
  • 4 days China To Take 5% Of Rosneft’s Output In New Deal
  • 4 days UAE Oil Giant Seeks Partnership For Possible IPO
  • 4 days Planting Trees Could Cut Emissions As Much As Quitting Oil
  • 4 days VW Fails To Secure Critical Commodity For EVs
  • 4 days Enbridge Pipeline Expansion Finally Approved
  • 4 days Iraqi Forces Seize Control Of North Oil Co Fields In Kirkuk
  • 4 days OPEC Oil Deal Compliance Falls To 86%
  • 5 days U.S. Oil Production To Increase in November As Rig Count Falls
  • 5 days Gazprom Neft Unhappy With OPEC-Russia Production Cut Deal
  • 5 days Disputed Venezuelan Vote Could Lead To More Sanctions, Clashes
  • 5 days EU Urges U.S. Congress To Protect Iran Nuclear Deal
  • 5 days Oil Rig Explosion In Louisiana Leaves 7 Injured, 1 Still Missing
  • 5 days Aramco Says No Plans To Shelve IPO
John Daly

John Daly

Dr. John C.K. Daly is the chief analyst for Oilprice.com, Dr. Daly received his Ph.D. in 1986 from the School of Slavonic and East European…

More Info

China to Invest in Coal Gasification - with GEs help

China to Invest in Coal Gasification - with GEs help

First, the bad news for China’s economic miracle.

According to a quarterly report issued last month by China’s China Electricity Council (CEC), some parts of China will experience severe blackouts this summer as the result of an electricity shortage of 30-40 million kilowatt hours. The CEC warned, "The shortage will hit about 30 million kilowatt hours during summer peak days and may expand to 40 million kilowatt hours if heat waves persist," with China's more developed eastern and southern regions bearing the brunt of the shortages.

Aside from soaring demand is an unwillingness on the part of China to abandon its hundreds of coal-fired plants, which currently generate 389 billion kilowatt-hours, 70-80 percent of its domestic electricity. Of this 45 percent goes to the industrial sector, with the remainder used to generate electricity to produce more energy amid rising costs and decreased prices.

The shortfall has spurred Beijing’s efforts to locate any and all additional sources of power, especially those that might make use of the country’s vast coal reserves.

Accordingly, the good news is that on 10 May Shenhua Group Corp., China's largest coal producer, and General Electric Co. announced the opening of their joint venture coal gasification to advance "cleaner coal" technology solutions in the world’s largest country.

The 50-50 Shanghai-based joint venture was developed under a U.S.-China November 2009 framework agreement between the two companies as part of a broad agenda of Sino-U.S. clean energy cooperation. Under terms of the agreement Shenhua and GE will improve performance of commercial scale gasification and integrated gasification combined cycle (IGCC) solutions, which turn coal into a gas, removing impurities from the coal gas before it is ignited to generate power.

While fiscal arrangements of the joint venture were not disclosed, Paul Browning, chief of GE Energy's thermal products division, said GE put all of its $100 million gasification business in China into the new project. The joint venture will sell industrial gasification technology licenses in China, conduct research and development to improve cost and performance of commercial-scale gasification and IGCC operations and work to advance the distribution of commercial-scale IGCC.

With more than 50 licensed facilities in China, GE’s gasification technology is one of the most widely deployed in the industry, while Shenhua is one of the world’s largest coal and energy companies, with integrated coal production, power generation, railway, port and shipping infrastructure.

Shenhua Group deputy general manager Wang Xiaolin said, “Both GE and Shenhua have worked together for years in China on important projects, including the Shenhua Baotou coal-to-olefins facility, which uses GE’s gasification technology. The collaboration will create a leading gasification technology business in China with significant local presence, focus, resources and expertise,” while GE Energy China CEO Jack Wen added, “This is not a market access in exchange for technology deal. Instead, this will be a two-way technology win, with both GE and Shenhua benefiting from each other’s expertise.”

Putting the final seal of approval on the project GE Energy Thermal Products president and CEO Paul Browning concluded, “Coal plays an important role in the economies of both the U.S. and China, and gasification technology allows us to use this abundant and low-cost resource in a much cleaner way.
This joint venture is an evolution of the strong gasification business GE has in China today. Each business will contribute technology, operational and service expertise to create a comprehensive gasification and cleaner coal technology and service provider in China.”

The emphasis shift in coal power generation from thermal plants to utilizing IGCC technology is a key element in the Chinese leadership’s efforts to maintain its economic momentum by providing its vast industrial base uninterrupted power supplies.

China's National Institute for Clean-and-Low-Carbon Energy (NICE) President and CEO Mike Davis encapsulated Beijing’s thinking when he observed, "The path ahead for success is clear - China and the world must together invent new ways to extract, process and convert fossil fuels for use in energy production and utilization - in a way that is clean, safe, reliable and affordable."

What is singularly lacking in the GE, Shenhua Group and NICE pronouncements is any discussion of how Western technology and investment to improve China’s industrial base benefits Beijing’s trading partnerships, most of whom run massive trade deficits with China – most notably the U.S. In March Washington’s trade deficit with China rose to $21.7 billion, up from a February shortfall of $19.4 billion, with the government predicting that the trade discrepancy with China this year is on pace to exceed last year’s gap of $295.5 billion, which was an all-time high for any country.

So, aside from benefiting GE’s ‘bottom line,” where exactly is the benefit of this technology transfer to the United States? After all, China remains ostensibly a Communist country and as Vladimir Lenin once famously observed, “If you want to hang a capitalist, he’ll sell you the rope to do it.”

Questions about America’s ocean of red ink in its trade with China might make for fruitful political discussions in this presidential election year, but it seems unlikely to make the agenda.

By. John C.K. Daly of Oilprice.com

For the latest oil prices visit our homepage.

Back to homepage

Leave a comment

Leave a comment

Oilprice - The No. 1 Source for Oil & Energy News