Gas & Power

Natural Gas Marketing in China

LNG

Coal gasification

Gas-to-liquids

Coal-to-liquids

China's Changing Energy Profile

Natural gas is an important clean energy source for China. Shell's Gas and Power business covers the transmission, marketing and use of gas following its production. 

Shell aims to work with national oil companies to jointly develop the market for natural gas in identified areas of potential long-term demand and growth.

Shell signed a Joint Venture Contract signed a joint venture contract on 11 May 2005 to construct, operate and manage a high pressure natural gas pipeline system in Hangzhou.

The new joint venture, which will involve an investment of RMB 750 million, is building a 117-kilometre pipeline and two natural gas city gate stations.

The Hangzhou Gas (Group) Company Limited will take a 51 per cent shareholding in the new company, while the Shell companies will hold 39 per cent. Hong Kong and China Gas (Hangzhou) Limited (HKCG) will take 10 per cent.

Work on the project started last year with 18 kilometres of pipeline completed and one city gate station operational. Currently, the system supplies 200,000 cubic metres of gas per day to 150,000 families and some commercial users in Hangzhou.

The project is expected to be completed in 2008 and it will operating at its capacity of 800 million cubic metres of gas per day two years later, supplying gas to an estimated 2.1 million residential customers.

As the worldwide leader in LNG, Shell has been actively promoting the use of LNG in China since the early 1990s. Shell was a member of the North West Shelf Joint Venture that won the bid in 2002 to supply 3.3 million tonnes per annum of LNG over 25 years to China's first LNG import project in Guangdong, starting in 2006.

Coal provides more than 70 per cent of the country's energy needs. Even with the development of cleaner energy resources, the rapidly growing economy in China will mean coal will remain the country's dominant energy resource for the medium term. The challenge will be using this resource more efficiently and cleanly, reducing environmental impact. 

Shell has been researching coal gasification for more than 25 years and its third generation coal gasification technology allows the clean use of coal, with an environmental footprint similar to natural gas. 

Shell (50 per cent) and Sinopec (50 per cent) formed a joint venture in 2001 to construct and operate the 2,000 ton/day coal gasification plant at Dongting fertiliser plant, Yueyang, Hunan Province, about 900 kilometres south-west of Shanghai. The gas will replace naphtha as the feedstock for the fertiliser plant. The coal gasification plant is expected to start operations in 2006.

Shell has so far licensed its coal gasification technology to 12 companies in China

Shell is testing GTL fuel in taxis and heavy-duty engines in Shanghai. It is a clean alternative fuel made from natural gas that can be used in current diesel engines without modification.  It delivers a superior environmental performance with significantly lower local emissions than ultra low sulphur diesel.  It is a cost-effective alternative fuel that can use the existing diesel distribution and refuelling infrastructure. 

Shell has run GTL Fuel trials in Berlin, Tokyo, Los Angeles and London and has introduced a commercial blend of Shell GTL and normal diesel in Thailand, Greece (in conjunction with the Olympics) and Germany. 

Shell (China) limited has signed a Memorandum of Understanding (MOU) with Shenhua Ningxia Coal Ltd. (Ningmei) and the Ningxia Hui Autonomous Region People’s Government today for a coal-to-liquids project in Ningdong. 

Under the MOU, the three partners will undertake a joint study using Shell’s indirect coal to liquids technology.

The Chinese Government is pursuing CTL conversion programmes as part of its national energy policy and both Shenhua and Ningmei are members of the Combined Chinese Working Team for Negotiation on Indirect CTL Projects (CCWT), tasked by the National Development and Reform Commission to conduct research, provide guidance and negotiate with foreign parties on matters relating to the Indirect CTL Programme in China.

Shell's CTL technologies are based on its proven coal gasification technology, which is now being applied in China and converts coal to synthetic gas, and its Gas to Liquids (GTL) technology, where it is a global leader.  Shell's GTL Fuels are being used in a number of cities around the world and currently in trial in Shanghai.  Shell is building a world scale GTL plant in Qatar.

Shell's CTL technologies use coal in a clean way that produces little waste. Shell CTL Fuel is clean, colourless and cost-effective with excellent combustion characteristics and virtually free of sulphur delivering significant emissions benefits

Natural gas is cleaner than alternatives such as oil and coal, but today only supplies two per cent of China's energy needs, which are dominated by coal (66 per cent) and oil. The government is committed to increasing the use of gas from 2 per cent of China's energy mix today to 8 per cent by 2010. This will come from China's own reserves offshore and in the west, and from imported liquefied natural gas. With China having one third of the world's coal reserves, coal will clearly be a major part of the country's energy equation for a long time to come. The challenge for China is to find new ways of harnessing the energy from coal with minimal environmental impact. That makes clean coal technologies, such as Shell's coal gasification process and CTL, so important to the future.