India Opts For Green Gas From Coal

Updated: Jun 28 2004, 05:34am hrs
While the convenience and price of oil saw it replacing all other energy resources globally, for some time now, issues such as supply security, cartel manipulations and price volatility have seen many large consuming countries look at other alternative fuels to reduce their dependence on oil. Moreover, with environmentalist blaming, mainly, the use of oil and coal for global warming, the move to find more environment-friendly fuels has seen countries turn to natural gas.

China and India have been projected as two of the largest consumers of natural gas over the next few decades. Ironically, while both countries have huge coal reserves, they are deficient in gas. But with technology now available to convert coal into gas, it was only a matter of time before both turned to technology to convert their coal reserves into gas. And the Chinese have done just that. In fact, as many as eight such plants are under implementation in China for production of fertilisers and chemicals. The project involves an air separation unit (ASU), coal milling and drying (CMD), gassification Island, gas treatment, sulphur recovery and waste water treatment units. A plant, the size of 2,000 tpd, can produce around 3.5 mmscmd of Syngas and improvement in economies can come up with higher capacities. Benchmarking of the costs have been done against a similar ongoing project in China.

Now, following in Chinas footsteps, India too will be doing the same. Royal Dutch Shell has agreed to give GAIL India Limited the technology for setting up a Rs 800 crore, 2,000 tonnes per day coal gasification project in eastern India. More importantly, studies by GAIL and Shell have indicated that this gas can be made available at a cost of $3 per mmbtu. However, for inferior quality of coal, there would be incremental costs on the capital expenditure (capex) front to deal with the problem of high ash content.

While GAIL is yet finalise a location in eastern India for this project, the sites under consideration includes Dhanbad, Jharia, Raniganj and Asansol, where good quality coal is found in abundance. GAIL is also exploring the possibility of using imported coal for which the location will be close to a coastal area like Haldia.

While the target industries for the coalgas/Syngas are the fertiliser and chemical plants, which are currently using high cost liquid fuels like naphtha, Syngas can also be used a town gas, as a reducing agent in iron and steel manufacturing and in combined cycle power plants at efficiencies that are higher than those achieved in conventional coal-fired plants.

According to the chairman and managing director of GAIL, Proshanto Banerjee, This is a cleaner technology which help in reducing costs for manufacturing industries besides replacing existing, older and environmentally unfriendly facilities. Industries in the eastern India, which run on liquid fuel as their feedstock/fuel will save huge costs when they use synthetic gas as the initial studies indicate the availability of gas at less than $3 per mmbtu. Syngas can also be used as a feedstock for manufacture of ammonia, urea and for commercial production of hydrogen for various applications.

GAIL officials said discussions have taken place between GAIL and Shell for exploring further opportunities to set up more such coal gasification plants in India, although Shell will not pick up any equity in these projects; its role will be of a technology provider and as technical service adviser.

On the issue of capex, the GAIL study says that at present, there is no comparable gasification project in India. As a result, GAIL has taken a project in China (based on 2000 tpd coal feedstock) as a benchmark. Based on this, the GAIL study shows that the assumed capital expenditure is $165 million, which includes an ASU, CMD, gasification island, gas and waste water treatment, as well as the owners cost. For inferior coal grades such as C, D and E grades, there would be an incremental capital expenditure to deal with higher ash content.

The Chinese benchmark project has a capacity of 2,000 tpd of coal intake and 142,000 normal cubic meter (ncm) per hour of Syngas (CO plus H2) output with cold gas efficiency of 7.97% latent heating value (LHV). Syngas goes to downstream industry for ammonia and urea production. The grades of Indian coal given will produce different syngas yield but they assumed to be ballpark equivalent for the purpose of the screening study, says the GAILs study.

Studies by GAIL show that Syngas from various grades of coal sourced from Central Coalfields Ltd, Mahanadi Coalfield Ltd and Eastern Coalfields Ltd can be made available to surrounding industries at $3 per mmbtu. This compares extremely well with the delivered cost of gas from the Krishna Godavari basin (offshore) to certain locations in western India.