Houston-based Synthesis Energy Systems ran into a big problem when the shale boom hit the U.S.
It’s “cleaner” coal gasification technologies couldn’t compete economically with the cheap and abundant supplies of natural gas.
So SES focused on selling and licensing its technology in China and other parts of the developing world where natural gas is more expensive. After struggling to find its financial footing, SES promoted DeLome Fair to chief executive in February. Former CEO Robert Rigdon remains vice chairman. The company also is focusing more on developing its own projects in China, rather than just selling the technology.
SES recently teamed up with new partners — like state-owned China Environment State Investment Company — to plan multiple projects in new industrial parks, such as Dongying, a refining region along the eastern coast between Beijing and Shanghai. SES’ technology converts cheap, low-grade coal to hydrogen, which is used in refineries to reduce the sulfur contents of fuels like diesel and to help gasoline burn more cleanly.
SES says its technology, licensed from Gas Technology Institute, an Illinois-based, nonprofit, significantly reduces carbon emissions by treating the coal before it’s converted to hydrogen and synthetic natural gas, called syngas.
China has increasingly moved coal operations to rural areas to reduce urban pollution. But environmentalists contend that does nothing to reduce carbon emissions overall, and may only exacerbate the climate change problems.
“They’re trying to de-emphasize coal because of the air pollution problems they’re having. We provide an alternative,” Fair said. “Our emissions are similar to natural gas, but we’re much less expensive in China.”
Many Asian nations import liquefied natural gas if they want natural gas. Australia and the U.S. have become LNG exporters, but there are costs to liquefy, transport and regasify the resource, Fair said, and China lacks a lot of the infrastructure. Even with current low LNG prices, she said, China’s ample and abundant coal is still cheaper. While it’s more expensive to burn cleaner coal, it’s still more less expensive than LNG in most cases, Fair said.
“We do think there’s a floor for this LNG. There’s only so low it can go,” Fair said,” while access to coal is not a problem.”
China historically has relied on methanol, which also is derived from coal in Asia, for its hydrogen production, she said. SES’ technology skips the methanol process, reducing emissions, she said.
SES expects to start construction next year on its projects in Dongying. The first phases will cost almost $100 million each. SES also is eyeing power plant projects that use syngas to operate like existing natural gas-fired plants.