Coal to MEG – Changing the Rules of the Game
The production of MEG from Coal (Coal-to-MEG) is one of the major break-through processes to impact the chemical industry in recent years. A migration from conventional ethylene-based MEG production to coal-based production could potentially lead to a big shake-up of the global MEG market. And it is China which is spear-heading the way.
Nexant has produced a comprehensive study analysing the strategic impact of coal-based MEG and the underlying technology development. Our technology analysis reveals that coal is not the only feedstock that can be used; the key intermediate synthesis gas can also be readily sourced from other feedstock such as biomass and natural gas. This new route to MEG has therefore opened up an even wider feedstock slate than the headline coal being commercialised in China.
MEG is used predominantly in the manufacture of PET fibre, more commonly known as polyester. Polyester fibre is the most popular and versatile synthetic fibre whose growth rate continues to outpace all other fibres. Polyester has wide-ranging use as filament yarns in clothing, furnishings, and technical textiles; and as staple fibres in bed sheets, bedspreads, curtains and draperies. Other uses for MEG include PET for bottles (e.g. water), PET film, and use in antifreeze and other industrial uses.
Given China’s dominance in the global textiles/clothing market, polyester plays a significant role in the Chinese economy. Chinese MEG requirements are substantial, representing 43 percent of 18 million tons per year of global demand. However, in comparison, China’s current MEG production accounts for just 12 percent of global supply - a position China’s Coal-to-MEG program is set to overturn.
Global MEG Consumption (2009, 18 million tons)
Traditionally, MEG has been produced from ethylene via the steam cracking of crude oil-derived products (usually naphtha or natural gas liquids). However, limited oil and gas reserves mean that China needs to develop industries based on its vast coal deposits to fuel growth and new technologies are being developed to exploit this coal base. Coal-to-MEG is a key example of a new process route developed to take advantage of Chinese resources and that cost effectively converts coal, (or potentially biomass and natural gas) to MEG via an intermediate of Dimethyl Oxalate (DMO).
Selected Potential Routes for Monoethylene Glycol
Coal is already used extensively for methanol, ammonia and vinyl chloride (VCM) production in China as well as for olefins production. T he recent and exciting development in MEG production technology adds a further derivative to the slate of petrochemical products commercially available from coal feedstock.
While there is currently only one commercialised Coal-to-MEG plant in China which came on-stream in 2010 with 200 000 tons per year capacity, the Chinese government’s support of novel technologies using coal is speeding up the pace of commercial development.
Four projects, each of 200 000 tons per year are already under construction with planned start-up at the end of 2011. Plans have already been announced for around 1.8 million tons per year of new capacity by the end of 2015, with the potential of over 12 million tons per year by 2025.
The impact on the global market could be substantial if China successfully implements this technology on a wide-scale. China is the largest global importer of MEG with imports of almost six million tons in 2009 (of which Saudi Arabia supplied over 2 million tons).
To assess the impact of this new technology, the strategic implications derived from the analysis of feedstocks, market dynamics, pricing, technology, and delivered cost competitiveness are summarised and reviewed:
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Market : The report analyses three market scenarios based on the potential uptake of the Coal-to-MEG technology and the impact of additional MEG production routes through syngas. This analysis shows that global trade patterns cannot fail to be impacted by this new route to MEG.
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Pricing: Analysis of cost curves under the three market scenarios reveals that the new technology will make an impact on prices as China reduces its demand for MEG imports and high cost producers are forced to close.
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Technology : The technology analysis reveals that Coal-to-MEG and more widely syngas to MEG has immense potential, although there remain barriers to widespread adoption of the technology, such as the commercial availability of licence packages for all process steps, and the lack of a track record of reliable and safe commercial operation.
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Cost Competitiveness: This remains largely dependent on feedstock costs. However, based on anticipated coal, natural gas, biomass, and naphtha pricing scenarios, it is clear that the new technology based on coal, biomass or natural gas has a significant cost advantage over naphtha-based producers via ethylene.
In summary, Nexant’s study describes the potential opportunities for the new technology as Coal-to-MEG is set to transform the global MEG industry – quite literally, changing the rules of the game.
Nexant's Coal-to-MEG – Changing the Rules of the Game, 2011 is available in two volumes. The reports can be bought separately or together in a single subscription.
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Volume 1: Strategic Impact Analysis
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Volume 2: Technology Evaluation
Click here to download the Table of Contents or to order your copy of Volume 1: Strategic Impact Analysis.
Click here to download the Table of Contents or to order your copy of Volume 2: Technology Evaluation.
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