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Page added on November 6, 2013
China cuts gas supply to industry as shortages hit
China’s top natural gas producers have begun to cut supplies to industrial consumers in a bid to make sure that homes and users of transport are not left short as demand surges over the winter.
Chemical fertilizer makers and other industrial users are likely to bear the brunt of Beijing’s latest efforts to ration scarce gas supplies, but they are also victims of a long-term strategy to discourage the use of gas as a feedstock.
China’s second-biggest oil and gas producer, the China Petroleum and Chemical Corp (Sinopec) (0386.HK), said it would free up gas supplies over winter partly by cutting deliveries to its vinylon plant in the southwestern province of Sichuan by 1 million cubic meters per day and those to its Qilu refinery in eastern Shandong province by a daily 300,000 cubic meters.
The firm also said on Wednesday it would raise commercial natural gas supplies by 10.5 percent to 7.583 billion cubic meters (bcm) in coming months to address the shortages, noting it had already boosted annual production capacity by 4 billion cubic meters (bcm) this year.
Sinopec and rival PetroChina (601857.SS) have raised both production capacity and import volumes this year but still cannot meet demand after cities across China switched to natural gas in order to cut coal use and tackle air pollution.
In response to the supply crisis, China’s state planning agency, the National Development and Reform Commission (NDRC), said it would maximize natural gas supplies to residential and transport users by strictly controlling demand.
It said demand in the first three quarters of the year rose 13.5 percent to 120.8 bcm, while domestic production was increased by 9.2 percent to 86.3 bcm.
REVERSING COURSE
Industries had been under pressure to switch from coal to natural gas but, since last year, growing shortages have forced Beijing to reverse course as it tries to maximize supplies available for priority areas like urban heating.
In guidelines issued late last year, the NDRC banned the construction of gas-fired power plants in coal-rich regions such as Shanxi and Inner Mongolia, and also put restrictions on the use of gas as feedstock for chemical products such as synthetic ammonia.
In a pollution action plan in September the government went further, saying it would “limit the development of natural gas chemical projects” and “in principle would not allow any more natural gas-fired power plants to be built”.
“The government have always been unhappy about the amount of gas going to the chemical sector and the many small, inefficient plants chucking out cheap chemicals, and it is easier to ration supply (to industries) than it is to the domestic residential market,” said Tony Regan, an analyst with Singapore-based consultancy Tri-Zen.
China has also sought to use gas supply restrictions — together with price rises imposed on industry earlier this year — to help curb overcapacity in sectors such as glassmaking, fertilizers and porcelain.
An official at a porcelain producer in Hebei province told Reuters that limits on supplies had forced it to buy cylinders of compressed natural gas (CNG) from the market at twice the normal price. Other porcelain makers have switched to more expensive liquefied petroleum gas (LPG).
An official at a fertilizer producer in the southwest city of Chongqing said the firm would close for two or three months over winter, with gas supplies expected to be cut to a minimum.
He said his plant, which uses around 200,000-300,000 cubic meters of natural gas per month, was suffering big losses as a result of higher gas prices and that other feedstocks such as coal or LPG were even more expensive.
“There’s no question that these industrial users will face the biggest problems,” said Regan of Tri-Zen. “They haven’t got contracts for full gas supply and they know they are at risk of being turned off.”
4 Comments on "China cuts gas supply to industry as shortages hit"
bobinget on Wed, 6th Nov 2013 2:14 pm
http://www.adb.org/publications/energy-outlook-asia-and-pacific-2013
Key findings and energy policy implications
Key findings focus the implications arising from the analysis focusing on energy security enhancement, the environment, energy efficiency, and financing energy projects. Some of the key findings include:
Demand for coal in Asia and the Pacific will increase by 52.8% from 2010 to 2035, reaching 3,516.3 million tons of oil equivalent (Mtoe) by 2035;
Oil demand in Asia and the Pacific is projected to increase by 1.9% yearly over the outlook period and reach 1,973.0 Mtoe by 2035, 59.3% higher than the 1,238.2 Mtoe in 2010;
Demand for natural gas is projected to increase at 3.9% per year, reaching 1,463.2 Mtoe in 2035, 2.6 times the 2010 level of 566.7 Mtoe;
Driven by economic and industrial development and higher living standards, electricity demand in Asia and the Pacific is projected to more than double between 2010 and 2035, reaching 16,169.2 terawatt-hours in 2035;
CO2 emissions in Asia and the Pacific as a whole will increase from 13,404.0 million tons of CO2 in 2010 to 22,112.6 million tons of CO2 in 2035 at a growth rate of 2.0% per year, slightly slower than the projected growth in energy demand of 2.1% per year; and
To meet energy demand in the BAU case, Asia and the Pacific as a whole will need a cumulative investment of about $11.7 trillion in the energy sector (2010–2035), from upstream energy extraction and production to midstream energy transformation and transportation to downstream energy distribution.
foxv on Wed, 6th Nov 2013 4:06 pm
I know. They need Fracking to solve their problems. Good thing fracking has no environmental issues associated with it. Certainly not when implemented in such a safety and environmentally conscious country as China
I wonder when the environmental refugees from China will start arriving?
Kenz300 on Wed, 6th Nov 2013 5:33 pm
It is time to move from fossil fuels to more sustainable alternative energy sources…..
Wind, solar, wave energy, geothermal and second generation biofuels made form algae, cellulose and waste are safer, cleaner and cheaper…..
China has a huge trash and pollution problem. They can increase their available energy and decrease pollution at the same time by converting the trash or waste to biofuels, energy and recycled raw materials for new products.
Their landfills and unregulated garbage dumps can be converted to produce clean energy. By increasing the value of the trash they can increase the amount that is recycled and reduce the amount that is polluting the land.
bobinget on Wed, 6th Nov 2013 7:11 pm
Speaking of sewage…I know Kenz said ‘garbage’
check this out:
Sasol, GE Develop New Water Technology, Boosting Gas-to-Liquids (GTL) Value Proposition
PR Newswire
SASOLBURG, South Africa, November 6, 2013
SASOLBURG, South Africa, November 6, 2013 /PRNewswire/ —
Sasol and General Electric (NYSE: GE)’s GE Power & Water have together developed new water technology that will clean waste water, while also providing biogas as a by-product for power generation. This new technology, known as Anaerobic Membrane Bioreactor Technology (AnMBR), will be further developed at a new demonstration plant at Sasol’s R&D Campus at its Sasol One Site in Sasolburg.
“This is another exciting technological innovation that will further entrench our position as a world-leader in gas-to-liquids (GTL) technology and synthetic fuels production. While sophisticated water treatment technologies are already employed at Sasol’s major operations, this particular development will enhance our efficiency even further,” said Ernst Obersholster, Sasol Group Executive for International Energy, New Business Development and Technology.
“GE is excited to be partnering with Sasol on this initiative that further outlines our commitment to supporting the sustainable development of South Africa with advanced infrastructure technologies, services and solutions. This partnership demonstrates what the private sector can achieve by working together for the benefit of growing the economy and making the economy competitive,” said Tim Schweikert President and CEO for GE South Africa.
AnMBR involves anaerobic micro-organisms that are able to live in environments devoid of oxygen, such as sediment layers on floors of lakes, dams and the ocean. These organisms are almost ubiquitous – found in the human digestive system, under the earth surface, deserts and mountain peaks, to name a few.
Sasol currently uses aerobic microbes to treat GTL and coal-to-liquids (CTL) effluents in ORYX GTL, Qatar and Synfuels, Secunda facilities.
One of the by-products from the Fischer-Tropsch (FT) process is an effluent stream rich in organic acids and alcohols. Traditional (aerobic) treatment technologies treat this effluent by converting the organics to carbon dioxide. The benefit of the AnMBR is that the micro-organisms convert these organics into a methane rich bio-gas which can then be used for power generation. This then results in an overall efficiency improvement in the GTL process. By converting the effluents to a valuable product (power) there is a resulting improvement in the GTL value proposition. Another benefit of the AnMBR is that it produces almost 80% less waste biosolids than the previous generation process.
The treatment of GTL derived effluents is complex and challenging. Sasol pioneered the treatment of effluents from the GTL process in Ras Laffan, Qatar, where effluents are treated and recycled for use as irrigation water in the city of Ras Laffan.
Sasol’s second generation offering, which is currently being designed for the US GTL facility, is the aerobic Membrane Bioreactor (MBR). The AnMBR helps maintain Sasol’s leadership position in this field by converting wastes into value-adding products.
Micro-organisms break down complex organics, such as proteins and carbohydrates through a process called hydrolysis, to simpler building blocks, such as sugars that provide food to the micro-organisms. The waste produced is bio-gas, which can be used as feedstock to generate power.
“The organics in waste water generated from our operations have proven to be the ideal food, or substrate, for Anaerobic micro-organisms,” said Thulani Dlamini, Executive Manager Research and Development at Sasol Technology. “We will now continue to explore and develop this technology further with the potential for commercial application to our future GTL facilities.”
Sasol has been developing the technology for a number of years with promising results. The partnership with GE is aimed at leveraging GE’s ecomagination qualified ZeeWeed 500 membrane and decades of membrane bioreactor experience and Sasol’s expertise in biological treatment of FT derived effluents.
“The new AnMBR is one of the many solutions that can be developed in the Petrochemical and Refining environment to benefit all other industries,” says Daniele Scenarelli, GE Account Executive for Sasol. “This strategic partnership, which was signed in 2010, symbolizes a new way of doing business between Customers and Suppliers. It is a collaborative approach and a mutual commitment to technology development and innovation aimed to accelerate the commercialization of this new technology.”
Bench scale test work has been on-going for the past year with promising results and with the construction of a pilot plant at Sasol’s R&D facilities this improves the potential for commercialization of this technology.
It is anticipated that the technology will be commercially ready early in 2015. Sasol will have exclusive rights to apply this technology to FT based plants whilst GE will have the right to market the technology for other industrial uses.