Shell says has key to cleaner coal

LONDON (Reuters) - Royal Dutch Shell's technology to turn coal into gas to fuel power plants could allow developing countries to meet surging energy demand without a matching rise in emissions, Shell executives said on Tuesday.

Power plants fuelled by gas made from coal using Shell's proven technology could have 9 percent lower costs than conventional coal-fired boilers if both types of generation involve carbon capture and storage, the executives said.

There are various projects to fight climate change by developing commercial-scale capture of carbon dioxide (CO2) and storage underground but none has yet been proved to work in practice.

Shell is licensing clean coal technology it developed over 40 years to produce synthetic gas (syngas) from any type of coal including bituminous, sub-bituminous, lignite and anthracite.

"Integrated Gasification Combined Cycle (IGCC) plants run on syngas are around 10 per cent more costly than conventional coal plants," said Peter de Wit, Executive Vice President Clean Coal Energy.

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"But this is reversed if you assume carbon capture and storage," said Ian Poll, General Manager Synthesis and Gasification, Shell Global Solutions International.

Shell's process adds oxygen to coal at a high temperature, partially oxidizing it. It creates slag containing ash and trace metals that can be easily removed and disposed of, Shell said.

EASIER AND CHEAPER

It is far easier and cheaper to extract CO2 from highly-pressurized syngas, before it is burnt in a generator, than to extract the greenhouse gas from coal plant flue gases, Shell said.

"Coal gasification and CCS will be extremely relevant in years to come if energy demand is to be met," de Wit said.

"While accepting there are lots of carbon-related issues and that coal has been a dirty energy resource, coal is central to meeting the world's energy challenge," he said.

"Global energy demand is not just rising, it's accelerating, even faster than the rate of population growth, he said.

Shell is developing oil shales, sands, offshore and deeper oil and gas production, which are more energy-intensive than "easy oil," but are necessary for diversification, he said.

Licensing its syngas production technology and participating in research to develop coal-fuelled generation with a zero carbon footprint are part of that diversification, he said.

Shell has sold 18 licenses for use of its syngas production technology to date. Of these, 15 have been sold to China for syngas production plants that are now coming on stream.

China is bringing two large conventional coal-fired power plants into operation each week, coal industry sources said.

Shell has around 40 license opportunities which are being evaluated, executives said, including six to take an equity stake in a project.

Interest in syngas technology has come from many countries including India, Africa, Indonesia and Russia, they said.

One attraction of syngas and IGCC generation for developing countries is that low quality coal can be used.

India, Indonesia and Turkey are among countries with surging energy demand but which have mostly low quality domestic coal.

Shell is licensing the use of its technology but is not building plant, they said. However, Shell would consider taking equity stakes in syngas production ventures with partners.

It has signed alliances with coal producers Anglo American and China's Shenhua Energy but has no plans to re-enter coal mining, de Wit said. Shell sold its coal mining interests to Anglo in the 1990s.