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NEWS RELEASE                                                                                                    JUNE 2014

Coal Gasification Could Completely Change Asian Energy Outlook

China has launched a massive program to convert coal to gas and pipe gas to cities thousands of miles away. India is likely to follow that example. Editors of Fossil and Nuclear Power Generation: World Analysis and Forecast have concluded that this program will have a major effect on energy prices and the world economy.

The U.S. economic outlook has changed due to the supply of low cost shale gas. China believes coal gasification is going to provide similar benefits. Here are the anticipated costs:

Cost Segment

$/MMBtu

Coal

2.00

Capital

1.30

Operation and Maintenance

1.20

Total

4.50

This cost of $4.50 MMBtu compares to present spot prices of LNG delivered to Asia at above $16/MMBtu. The impact of large quantities of low priced fuel would greatly boost the Asian economies.

The projects in the planning stage will deliver over 100 Bcm per year, but others which are envisioned would bring the total to over 200 Bcm.   This would make coal gas the largest source in China.

Gas   Supply in China in 2025  Bcm/yr

Conventional Extraction

150

Shale and Other

130

Pipeline Imports

50

LNG Imports

                                       50

Coal Gas (Syn. Gas)

200

Total

580

Asia is the largest regional coal producer. It has far less natural gas than other regions. Four of the top five coal producing countries are in Asia.

Top Ten Coal Producers

PR China

3549Mt

Russia

359Mt

USA

935Mt

South Africa

259Mt

India

595Mt

Germany

197Mt

Indonesia

443Mt

Poland

144Mt

Australia

421Mt

Kazakhstan

126Mt

More than 50 percent of the world’s coal production of 7.8 billion tons/yr comes from just China and India. Reserves are not a problem since there is more than 1 trillion tons which can be extracted. This is a one hundred year supply.

Coal gasification for the production of pipeline gas and synthetic fuels has been commercial for many decades. Hundreds of installations are operating around the world. In the U.S., Dakota gasification has been supplying synfuels for use in Canada. Recently, it cited the connection to the Antelope valley power station to replace the less clean diesel which was used as a start-up fuel for the coal-fired boiler.

U.S. companies such as GE are suppliers of gasification technology. Some Chinese companies are now also active. In addition to technology using above ground processes, there is the potential for underground gasification. China has about 30 projects in different phases of preparation that use underground coal gasification. India plans to use underground gasification as well. This technology is less proven but, if successful, could lower the production costs considerably.

The environmental impact of this program is already coming under fire from environmentalists. But the perspective of the Asians is that there will be a considerable environmental improvement. Gas will replace coal for home and office heating and for use in industrial boilers. The result will be substantial reductions in particulate, SO2, NOx and other pollutants. These are pollutants that are affecting the health of Asians today.

Impacts of CO2 emissions are viewed as long term while the pollution and economic impacts of gasification are very positive in the short term. Water has been also cited as an issue, but zero liquid discharge technology is available from GE, Aquatech and many other providers.

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