Jan 1 2008 6:24PM | Permalink | Email this | Comments (0) |
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The future stability of materials costs will be a key issue facing design engineers in the next two to three years. No one is expecting an end to the roller coaster turbulence in pricing of plastics or metals. A key factor for plastics will be feedstock costs. Renewable resources have little opportunity in the short-term to stabilize costs—they remain much more expensive than hydrocarbons.

China has been moving quickly in a different direction: they’re building plants that convert cheap and abundant coal to a gas feedstock that can make plastics such as polypropylene and polyethylene. According to the Gasification Technologies Council, China has built 20 of these plants in the past two years. Now Dow Chemical is partnering with Shenhua Group to develop coal-to-gas-to-plastics plants. Celanese is also interested.  The idea isn’t new. The Germans used “syngas” to make fuel for planes during World War II. It was a hot button idea in Pennsylvania in the early 1970s, but work collapsed as the Mideast oil powers reined in the price of hydrocarbons.

The idea probably won’t take off in the USA soon because coal gasification generates carbon dioxide. However, a new plant is being built in North Dakota to convert lignite to pipeline-quality natural gas.  Carbon dioxide will be captured and stored in depleted oil fields. According to James Childress, executive director of the GTC, there is a growing consensus that carbon dioxide controls are on the horizon. Carbon dioxide concerns, however, are not slowing the Chinese, who have 29 gasification plants in the pipeline through 2010.

The economics of the process make sense for the Chinese because environmental requirements are limited. In the United States, the high capital costs of the process are still tough to justify, particularly considering that Mideastern countries may drop oil prices as soon as they see real alternatives develop.

For the short-term, at least, the move to coal gasification will give Chinese chemicals and plastics producers a cost advantage. What else is new?

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