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Coal Gasification
It’s a (Syn) Gas, Gas, Gas
Contents
Coal Gasification – It’s a (Syn) Gas, Gas, Gas ......................................................................2
Conclusions...............................................................................................................................2
Investment Highlights .............................................................................................................3
Coal-based Syngas................................................................................................................3
Why Coal-based Syngas .......................................................................................................3
Fixed/Variable IGCC Plant Economics................................................................................4
Typical IGCC Plant Cost ......................................................................................................4
Coal Gas History......................................................................................................................5
How IGCC Units Work...........................................................................................................5
2005 U.S. Energy Bill Supports More U.S. IGCC Plants .....................................................6
China’s IGCC Gas for Methanol and Ammonia/Urea Plants Exploding...........................7
China’s Variable Coal Costs for IGCC Plants......................................................................9
China IGCC Conclusions ...................................................................................................10
Europe’s IGCC Gas-to-Methanol Plants.............................................................................11
Ruhr Oel IGCC Facilities ...................................................................................................11
BASF IGCC Facilities ........................................................................................................12
Shell/DEA Mineraloel IGCC..............................................................................................12
Total IGCC .........................................................................................................................12
IGCC Poly-Production Plant Economics.............................................................................13
IGCC and GTL Technology Players....................................................................................14
Existing IGCC and GTL Technology Features...................................................................15
Shell Global Solutions ........................................................................................................ 15
Lurgi AG ............................................................................................................................16
General Electric ..................................................................................................................16
IGCC Plant Builders........................................................................................................... 17
Existing North American IGCC Plant Owners...................................................................18
Eastman/Air Products – Kingsport, Tennessee...................................................................18
Dynegy and PSI Energy – West Terre Haute, Indiana .......................................................18
Tampa Electric IGCC – Polk County, Florida....................................................................18
Coffeyville Resources – Coffeyville, Kansas .....................................................................18
Future IGCC Plant Owners in North America....................................................................18
Fischer-Tropsch (FT) Technology........................................................................................20
FT Technology Owners ......................................................................................................20
FT Technology Financial Thoughts – Rentech ...................................................................21
Conclusions.............................................................................................................................22
Appendix 1 – World Gasification Plants .............................................................................23
Appendix 2 – Energy Prices..................................................................................................26
For Reg AC Certification and important disclosures see Appendix A of this report.
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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Coal Gasification –
It’s a (Syn) Gas, Gas, Gas
This report summarizes the key highlights of coal gasification technologies, which are back in
the limelight due to record oil and gas prices.
Conclusions
By some measures, overall coal consumption worldwide (up 6.9% in 2004) is growing faster
than the use of any other source of energy, including oil, gas, hydro, and nuclear. In addition,
the use of coal by China, India, and other coal-rich countries like the United States to produce
synthetic gas (syngas) related products, displacing the use of expensive oil or natural gas, is
Sam Kanes, CA, CFA about to sharply accelerate. Hurricane Katrina has also shown how vulnerable U.S. and world
(416) 863-7798 energy markets are to weather disruptions at offshore oil and gas facilities.
sam_kanes@
scotiacapital.com An acceleration of thermal coal-based syngas plants will have negative impacts on
natural gas-based U.S. and European methanol and ammonia/urea producers, whose
variable cash costs are spiralling deep into fourth quartile status on record oil and gas costs.
U.S. and European methanol and ammonia producers are the most vulnerable in the short
term, as gas costs represent the highest percentage of their variable cash costs. We therefore
continue with our 3-Sector Underperform ratings on methanol-based Methanex Corporation
and nitrogen-based Agrium Inc., preferring NOVA Chemicals Corporation and/or Potash
Corporation of Saskatchewan.
Longer term, European, U.S., and Japanese ethylene producers using either natural gas-based
liquids or naptha may also be negatively affected, as coal-based syngas to ethylene (MTO)
and/or propylene (MTP) technologies are proven in countries like China via joint ventures
like Dow Chemicals’.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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Investment Highlights
We continue to prefer ethylene-based NOVA Chemicals and potash-based Potash Corp. over
methanol-based Methanex and ammonia/urea-based Agrium. Our relative preferences are due
partly to China’s ramp-up of its coal-based gasification plants, which we believe will disrupt
world methanol and ammonia/urea markets first.
Coal-based Syngas
Thermal coal-based syngas (not to be confused with synthetic natural gas) is produced from
integrated gasification combined cycle (IGCC) plants, gas-to-liquids (GTL) plants, and other
Fischer-Tropsch (FT) technology plants. Coal-based syngas production could have negative
implications for some of Canada’s gas-based chemical and fertilizer companies. Investors
interested in the economics of coal gasification as it relates to the use of coal and the
production of methanol, ammonia/urea, power, and/or other gas-based production
applications should find some value-added information in this Scotia Capital coal gasification
research effort.
Why Coal-based Syngas
The explosion in global oil prices has led to an explosion in regional natural gas prices,
particularly in North America and Europe. Natural gas prices have also risen due to natural
gas’s clean burning properties and recent increased use for power generation. These price
increases have led oil importing countries such as China, India, and now the United States to
support more coal gasification projects, which chemically transform coal’s BTU content into
syngas via sublimation techniques. Because this can be done at a cheaper price per BTU than
the direct use of higher-cost natural gas, there has been a recent boom in the number of
gasification plants being designed and constructed, mostly in China and, more recently, the
Middle East, United States, India, and Australia. As shown in Exhibit 1, there is significant
new world gasification capacity coming on stream in the next five years (see Appendix 1 for a
complete list of projects).
Scotia Capital’s China analyst has observed that the current percentage of methanol and
nitrogen production in China is approximately 62% coal based, 26% gas based, and 12% oil
based. The coal-based percentage of methanol and nitrogen production will only rise,
based on the number of coal-based nitrogen and methanol plants coming on stream
(see pages 7-8 for details).
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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U.S. natural gas costs have more than quadrupled in the past five years from $2.30/mmBtu to
$11.00+/mmBtu at Henry Hub, increasing the U.S. cost for natural gas and electricity by
more than $150 billion per year. In Europe, industrial gas costs are typically set using
residual fuel oil #6 prices with a four- to six-month time lag. The gas costs in Europe have
more than doubled over the past five years as well, to $5.50/mmBtu currently from
$2.65/mmBtu, using Zeebrugge, Belgium, as a price point (see Appendix 2).
We attended a coal gasification conference during Q1/05 in Denver, Colorado, that attracted
about 120 people and included Canadian representation from TransCanada Corp., Manitoba
Hydro, Environment Canada, and Natural Resources Canada. Our interest was piqued by the
rapid increase of coal gasification project announcements on the world scene, particularly in
China, where a majority of its new methanol and ammonia capacity is being built using
coal gasification technologies owned by General Electric (acquired from ChevronTexaco)
and Royal Dutch Shell. This has led to our cautious stance on methanol-based Methanex and
nitrogen-based Agrium.
Fixed/Variable IGCC Plant Economics
For fixed capital costs, AEP (AEP-N) estimated on March 18, 2005, that a new IGCC unit in
the United States built by 2010 would cost $1.72 million per MW of power capacity, about
15%-20% more than for a conventional pulverized coal unit. IGCC units produce only half of
the pollution of a pulverized unit.
In the Wabash River, United States, IGCC plant project, non-fuel operating and maintenance
costs for the syngas facility, including the power block at a mature IGCC, was estimated at
5.2% of installed capital.
The variable cash cost of converted coal BTUs to coal
Exhibit 2 – On-site IGCC Economics gas can be as low as $1.05/mcf if gasification plants are
Assume: $10/tonne coal mine site located at or beside a coal mine. If the coal gasification
@ 10,000 BTU/tonne facility is surrounded by methanol, ammonia, clean
= 10 mcf (@ 1:1) diesel, and other applicable plants (i.e., power), an
= $1/mcf optimum configuration can raise full energy conversion
Coal Gas Conversion Efficiency 95% - 97% efficiency up to 60%. The $1.75/mcf full conversion gas
Coal Gas/mcf = $1.05/mcf price is what is stimulating so many new coal
gasification projects in China and, to a lesser degree,
Final Energy Conversion Efficiency up to 60%
India, Australia, and the United States to-date (see
Final Gas Cost/mcf = $1.75/mcf
(depends on how many co-products or poly-products are added Exhibit 2).
and variable sulphur extraction, water removal, air separation and
other clean-up costs)
Typical IGCC Plant Cost
Source: Scotia Capital estimates. The typical turnkey cost for a coal IGCC plant is about
$1.7 million per MW ($1.033 billion for 600 MW), split
30% for gasification, 15% for syngas cleanup, 40% for
the power island, and 15% for cryogenic air separation. The size of an IGCC plant is
comparable to that of a conventional coal-fired power boiler plant. An IGCC plant does not
require additional area for scrubber sludge treatment or ash dewatering. The cost is up to 25%
greater than conventional units when adding methanol and/or ammonia/urea production.
Industry experts estimate that 30%-50% of the fixed cost per tonne to build these plants is
solely to transform natural gas into syngas, depending on their syngas usage configuration;
therefore, ammonia and methanol plants built beside coal gasification plants only require
50%-70% of the capital cost per tonne that natural gas feedstock plants require. This offsets
the larger up-front cost for coal gasification units.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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Syngas has a heating value of only 125-350 mBTU per mcf, which is 3x-8x lower than that
of natural gas. It must be cleaned before it can be used as a gas turbine fuel. This requires
removing sulphur compounds, ammonia, metals, alkylates, ash, and particulates. To make
IGCC units more economically attractive, additional plants that can produce methanol,
ammonia, and/or other chemicals that work directly from syngas are typically pursued,
particularly in China.
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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For methanol production sourced from IGCC coal specifically, China has about 9,600,000
tonnes per year in potential capacity additions between now and 2009, or about 25% of world
capacity (see Exhibit 5). However, the economics of many of these projects are unknown to us.
Also, the location of these IGCC plants relative to the location of coal supplies will have a huge
impact on feedstock costs.
China has announced about 500 coal-fired power plants to produce 100,000 MW of coal-fired
capacity at a cost of about US$120 billion. Some of these will be coal gasification oriented
(IGCC), where multiple co-products (poly-products) will be made, including power,
methanol, ammonia, clean diesel, and/or distillates.
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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2007 China Pingzhuang Coal Group & Zekai Group, Inner Mongolia 1 600 Coal
2007 China Zhongzhu Aluminium 200 Coal
2007 China Yanzhou, Shandong Zoucheng 1 500 Coal
2007 China Henan Zhongyuan 400 Coal
2007 China Huaibei Coalmine/Anhui 1 200 Coal
2007 China Shenmu Shaanxi 2 400 Coal
2,300
Methanol-specific IGCC plants are not the only source of incremental new methanol capacity
coming on stream in China. Poly-product plants, where multiple co-products such as ethylene
(MTO) and propylene (MTP) are produced from methanol using coal-gas feedstock also
appear to have attractive economics, as well as the benefit of low-cost syngas supply (see
Exhibit 6). Most coal-producing Chinese provinces have realized that coal-based chemical
production would be a relatively easy way to use their abundance of coal and expand their
position on the value chain, especially when the current high energy price environment makes
IGCC plant economics very attractive. The actual total capacity additions from these poly-
product plants are uncertain, as the Chinese government has only approved a few pilot poly-
product projects up to this point.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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China currently produces 35% of the world’s coal (Industrial Information Resources Inc.),
consumes 28%, and has 13% of world recoverable coal supplies (U.S. EIA). In inner China’s
Shanxi Province, numerous projects are underway to turn coal, natural gas, and oil into
chemicals. In a July 25, 2005, Reuters article, Mayor Wang of Yulin, China, called the region
“the Kuwait of China” due to generous proven reserves of oil, natural gas, and coal. There are
6 major and 30 minor petrochemical projects in this area alone. In the article, Guohua was
featured as an integrated electricity plant and coal mine that will feed a 600,000 tonne per
year coal-to-methanol plant.
According to the official China Daily, Chinese domestic prices for coal have recently
declined slightly due to “moderate oversupply” in the fragmented sector and could be
expected to continue to decline through 2007 due to better rail transportation, increased
capacity, and declining demand from industries such as steel. The China Daily also cited
industry sources as stating that coal prices in production areas such as Shanxi and Shandong
have declined to RMB50/tonne from RMB80/tonne in July. Similarly, Forbes reported that
Guo Yuntao, director of the China Coal Industry Development Research Centre, stated in a
July coal conference in Beijing that China is expected to produce an additional 200 million
tons of coal in 2006 year over year, while demand will likely rise by some 150 million tons
year over year, causing some downward pressure in prices.
China’s Variable Coal Costs for IGCC Plants
Coal prices are heavily manipulated by provincial and local authorities in China. After rising
about 100% in 1H/05 versus 1H/04, China’s coal costs have been easing lately on double-
digit production increases and declining freight costs that can easily be triple that of coal
production costs. The Asian Chemical News publication has made references to new
methanol and ammonia/urea plants that will work from syngas and have typically pointed to
coal prices in the $10/tonne area at the coal mine site (RMB80/tonne) used for validating
the economics of the IGCC and related facility projects. According to Fang Dewei,
consultant for the China Chemical Industry Productivity centre (CCIPC), Yulin, Erdos in
Inner Mongolia, and Luliang in Shanxi are good locations for IGCC, methanol-to-olefins,
and methanol-to-propylene plants. Currently, the cost of coal in Yulin is estimated at
RMB60/tonne or $7.50/tonne. Production costs per tonne for methanol were estimated
between $74.17-$105.22/tonne, with coal prices ranging from RMB60-RMB170/tonne or
$7.42-$21/tonne for various locations (see Exhibit 7).
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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The longer-term direction for China’s mine site coal prices has to be upwards. On
August 31, 2005, the BBC noted that China is suspending production at 7,000 of its 24,000
coal mines, of which 1,324 have been specifically earmarked for closure. Most are private
and small coal mines that have abysmal safety records. About 3,400 Chinese miners have
been killed from January 1 to August 15, 2005, in fires, floods, and other work-related
accidents. Li Wenge from the Coal Industry Group of Shanxi province stated that coal
supplies were unlikely to be seriously affected by these shutdowns, as most of the pits to
close are relatively small.
China IGCC Conclusions
Since China is not a Kyoto signatory, its rapidly expanding use of coal for power and coal
gasification (IGCC) for chemicals and fertilizers continues unabated. Its new methanol and
ammonia urea plant economics based on IGCC syngas appear to have cash costs that would
be placed in the second quartile of the methanol cost curve. Shortly, China will be in a net
surplus position to export both methanol and urea to high-cost areas like the United States
and Europe.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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800
700 3
Hydrogen: 30 Nm /h H 2
Ammonia Tonnes/day
Flexible Production
600
500 3
Hydrogen: 50 Nm /h H 2
400
550 600 650 700 750 800
Methanol Tonnes/day
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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35,000
30,000 Planned
25,000 Operating
MWth Syngas
20,000
15,000
10,000
5,000
Other
Shell
Sasol/Lurgi
GE
ConocoPhillips
Source: U.S. National Energy Technology Laboratory (2004); Sasol (2005).
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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Shell Global Solutions’ IGCC technology process has the following features (see Exhibit 13):
1. It uses a dry coal feedstock versus a slurry coal feedstock, so less water is used, with less
wastewater treatment required.
2. Its availability is claimed to be over 90% due to a low-maintenance gasifier wall that
protects the vessel.
3. Its overall net efficiency to produce power using thermal plant conversion exceeds 43%,
while competitor technologies are about 38%.
4. It provides greater coal feedstock flexibility, as it can handle coal with high ash content.
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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Lurgi AG
The latest LP methanol synthesis process (MegaSyn) developed by Lurgi is used to produce
crude methanol (MegaMethanol) from synthesis gas (H2, CO, and CO2). Lurgi’s new
MegaSyn syngas units could be 30%-40% cheaper per tonne due to scale. This will keep
down the cost per tonne for new methanol facilities ($0.5 billion for 1.8 million tonnes/year).
In the downstream distillation, crude methanol is processed to high-purity methanol. It has led
to six orders to date for gas-based 5,000 tonne/day methanol plants with the latest from
Malaysia (two in Thailand, one in Iran, and two in Saudi Arabia). See Exhibit 14 for the
simplified process flow diagram, which shows the process variant Combined Converter
Synthesis. With this process, a water-cooled reactor is combined with a gas-cooled reactor,
yielding a higher methanol yield at a lower cost than conventional Lurgi methanol synthesis.
That makes Lurgi’s new technology suited to high-capacity methanol production
facilities that double production levels, to 5,000 tonnes/day versus 2,500 tonnes/day.
Lurgi’s technology has also doubled the average size of future ammonia plants to
4,000 tonnes/day from 2,000 tonnes/day (called MEGAMMONIA). It will also be used for
GTL, MTO, MTP, and other chemical/fertilizer applications.
Source: Lurgi.
General Electric
General Electric (GE) advertises its IGCC plant technology features versus existing
pulverized coal technologies as follows over a 25-year life span:
2 million tons less CO2.
67,000 tons less sulphur.
26,000 tons less nitrogen oxide.
If 100% of U.S. conventional coal plants operated today on GE’s IGCC technology, it would
save 320 million tons of CO2 or 25% of U.S. greenhouse gas reduction proposed for the
United States under the Kyoto Protocol. It would also save about 390 billion gallons of
water because the process uses 30% less water. Also, GE’s IGCC can reduce mercury
emissions by 50%. GE’s IGCC process is the most widely used in China.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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Sasol has 45 years of commercial experience, with 160,000 bpd derived from coal feedstock.
MossGas (also from South Africa) has 11 years of experience and 22,500 bpd of FT liquids
that are derived from natural gas, while Shell (Malaysia) has nine years and 15,000 bpd
derived from natural gas. Rentech has nine active FT and GTL proposals underway, but none
have gone to construction yet. Tulsa-based Syntroleum announced on August 16, 2005, that it
had signed an agreement with Australian-based Linc Energy to evaluate a coal-to-liquids FT
project in Queensland, Australia. Linc has an underground gasification process that has the
potential to significantly reduce the capital cost of coal-to-liquids plants. Linc Energy has
more than 4 billion tons of coal reserves and intends to develop multiple coal-to-liquids
projects using its nitrogen-diluted syngas.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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Products
Ammonia (tons/day) (Prod/Sales) 830 / 439 975 / 605
UAN (tons/day) 671 671
CO2 (tons/day) 502 502
Granular Urea (tons/day) 50 50
Urea Solutions (tons/day) 9 9
Nitric Acid (tons/day) 26 27
FT Liquids (bbls/day) 0 1,800
Sulphur (tons/day) 0 81
Power (MW/day) -14 17
Note: Assuming typical 830 tons per day ammonia facility.
Source: Rentech Inc.
The economics of using #2 Illinois coal delivered at $30/ton provide the following value-
added options for Rentech:
Revenue per coal ton
1. Electric power production $70
2. Electric power and syngas $109
3. FT fuels and electric power $124
4. Fertilizer, FT fuels, and electric power $149
The Rentech deal for Royster-Clark’s Illinois
Exhibit 18 – Proposed GTL Projects nitrogen complex failed, as Royster-Clark decided
instead to go public in Canada. Rentech has six
Bbl/day US$ Investment
other prospective coal-to-liquids projects in the
ExxonMobil 154,000 $7 billion
Shell 140,000 $5 billion
United States, one in Bolivia, one in Indonesia, and
Marathon 140,000 $5 billion joint ventures in China, Australia, and Papua New
Sasol 200,000 $6 billion Guinea.
ConocoPhillips 80,000 $2.5 billion In the past 18 months, more than $25 billion in
Note: Sasol 35,000 bbl/day by Q1/06. All others 2009. GTL investments has been announced. See Exhibit
18 for some highlighted projects.
Source: Rentech Inc.
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
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Conclusions
Soaring oil and gas costs worldwide are leading to a revival of interest in coal-to-gas or coal-
to-liquids technology development and implementation. These technologies are receiving
increasing government support, as pressures on trade imbalances due to high oil and natural
prices continue to grow.
The applications of IGCC, GTL, and FT include converting coal to power, chemical,
nitrogen fertilizer, clean diesel, and other value-added products. Within our area of interest,
China is rapidly building out excess coal-based methanol and ammonia/urea capacity that
could be used to enter or re-enter global export markets for these products while they are still
being made in North America and Europe with record high oil and gas costs.
We therefore continue to recommend 3-Sector Underperform ratings on both methanol-based
Methanex and ammonia/urea-based Agrium. Our relative Canadian chemical and fertilizer
preferences remain ethylene-based NOVA Chemicals and potash-based Potash Corp.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
Exhibit 1.1 – World Gasification Plants
Year
Plant Owner Plant Name Country Region Technology Name Started
BOC Gases Brisbane H2 Plant Australia Asia/Australia GE 2000
Ultrafertil S.A. Araucária Ammonia Plant Brazil Central & South America/Caribbean Shell 1979
Sistemas de Energia Renovavel Brazilian BIGCC Plant Brazil Central & South America/Caribbean TPS 2006
Opti Canada Canada North America Shell 2006
Beijing No. 4 Chemical Beijing Oxochemicals Plant China Asia/Australia GE 1995
China National Petrochemical Corp./Sinopec Daqing Oxochemicals Plant China Asia/Australia GE 1986
CNPC Ningxia Dayuan Refining & Chemical Ningxia Syngas Plant China Asia/Australia GE 1988
China National Petrochemical Corp./Sinopec Urumqi Ammonia Plant China Asia/Australia GE 1985
Dalian Chemical Industrial Corp. Dalian Ammonia Plant China Asia/Australia GE 1995
Lu Nan Chemical Industry (Group) Co./CNTIC Lu Nan Ammonia Plant China Asia/Australia GE 1993
Shanghai Coking & Chemical (Shanghai Pacific) Shanghai Coking & Chemical China Asia/Australia GE 1995
Weihe Fertilizer Co. Shaanxi Ammonia Plant China Asia/Australia GE 1996
Zhenhai Refining & Chemical Co. Zhenhai Ammonia Plant China Asia/Australia GE 1983
Henan Puyang Ammonia Plant China Asia/Australia Sasol Lurgi Dry Ash 2000
Nanjing Chemical Industry Co. Nanjing Ammonia Plant China Asia/Australia GE 2002
China National Technology Import Co. (CNTIC) Shaanxi Ammonia Plant China Asia/Australia Sasol Lurgi Dry Ash 1987
Shanghai Pacific Chemical (Group) Co., Ltd. Wujing Gas Plant No. 2 China Asia/Australia GTI (IGT) U-GAS 1994
Jilin Chemical Industrial Corp. Jilin Ammonia Plant China Asia/Australia GE 2001
Huainan General Chemical Works Hefei City Ammonia Plant China Asia/Australia GE 2000
Qilu Petrochemical Ind. Zibu Methanol/Oxochemicals Plant China Asia/Australia Shell 1987
Fushun Detergent Co. Fushun Oxochemicals Plant China Asia/Australia Shell 1991
Exhibit 2.1 – WTI Crude Oil, European Fuel Oil and Henry Hub Natural Gas Prices
80
12
70
60 10
50 8
USD/Mmbtu
USD/Bbl
40
6
30
4
20
2
10
0 0
12-Jan-01
25-Jan-02
13-Jun-03
25-Jun-04
8-Jul-05
31-Dec-99
5-May-00
7-Feb-03
8-Sep-00
17-Oct-03
29-Oct-04
4-Mar-05
18-May-01
21-Sep-01
31-May-02
4-Oct-02
20-Feb-04
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
27
Notes
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
28
Notes
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
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Notes
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
30
The Research Analyst’s compensation is based on various performance and market criteria and is charged as an expense to certain
departments of Scotia Capital Inc., including investment banking.
Scotia Capital Inc. and/or its affiliates: expects to receive or intends to seek compensation for investment banking services from
issuers covered in this report within the next three months; and has or seeks a business relationship with the issuers referred to
herein which involves providing services, other than securities underwriting or advisory services, for which compensation is or may
be received. These may include services relating to lending, cash management, foreign exchange, securities trading, derivatives,
structured finance or precious metals.
For Scotia Capital Research Analyst standards and disclosure policies, please visit http://www.scotiacapital.com/disclosures.
* Legend
H4 The Canadian Index Analyst/Associate, in his/her own account or in a related account, owns securities of this issuer.
H6 The Portfolio Strategist/Associate, in his/her own account or in a related account, owns securities of this issuer.
S Scotia Capital Inc. and its affiliates collectively beneficially own in excess of 1% of one or more classes of the issued and
outstanding equity securities of this issuer.
T The Research Analyst/Associate has visited material operations of this issuer.
September 14, 2005 Coal Gasification – It’s a (Syn) Gas, Gas, Gas
31
We have a three-tiered rating system, with ratings of 1-Sector Outperform, 2-Sector Perform, and 3-Sector Underperform.
Each analyst assigns a rating that is relative to his or her coverage universe.
Our risk ranking system provides transparency as to the underlying financial and operational risk of each stock covered. Statistical
and judgmental factors considered are: historical financial results, share price volatility, liquidity of the shares, credit ratings, analyst
forecasts, consistency and predictability of earnings, EPS growth, dividends, cash flow from operations, and strength of balance
sheet. The Director of Research and the Supervisory Analyst jointly make the final determination of all risk rankings.
For the purposes of the ratings distribution disclosure the NASD requires members who use a ratings system with terms different
than “buy,” “hold/neutral” and “sell,” to equate their own ratings into these categories. Our 1-Sector Outperform, 2-Sector
Perform, and 3-Sector Underperform ratings are based on the criteria above, but for this purpose could be equated to buy, neutral
and sell ratings, respectively.
Coal Gasification – It’s a (Syn) Gas, Gas, Gas September 14, 2005
Scotia Capital Equity Research Team
Head of Equity Research Industrials
James McLeod, CFA (assoc. Leslie MacDonald)................................................. (416) 863-7291 Building Products & Machinery
james_mcleod@scotiacapital.com David Tyerman (assoc. Caren Fields) .................................................................. (416) 863-7108
Supervisory Analyst david_tyerman@scotiacapital.com
Claude King, CFA (assoc. Leslie MacDonald)...................................................... (416) 863-7985 Transportation & Aerospace
claude_king@scotiacapital.com James David (assoc. David Buma, CFA) ............................................................. (514) 287-4535
Director of Administration james_david@scotiacapital.com
Erika Osmond ....................................................................................................... (416) 945-4529 Information Technology
erika_osmond@scotiacapital.com Hardware & Equipment
China Strategy Gus Papageorgiou, CFA (assoc. Geoff Darling)................................................... (416) 863-7552
Eric Yan (assoc.)................................................................................................... (416) 863-7714 gus_papageorgiou@scotiacapital.com
eric_yan@scotiacapital.com Devan Moodley (assoc. Alexander Minatel) ......................................................... (416) 863-7430
Consumer Discretionary devan_moodley@scotiacapital.com
Automobiles & Components Software & Services
David Tyerman (assoc. Caren Fields) .................................................................. (416) 863-7108 Paul Steep (assoc. Kris Thompson) ..................................................................... (416) 945-4310
david_tyerman@scotiacapital.com paul_steep@scotiacapital.com
Cable Materials
John Henderson, P.Eng. (assocs. Kevin Kaminski, Warren Hastings) ................ (416) 863-7780 Chemicals
john_henderson@scotiacapital.com Sam Kanes, CA, CFA (assoc. Matthew Protti) ..................................................... (416) 863-7798
Hotels & Leisure sam_kanes@scotiacapital.com
Murray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) 863-2899 Gold
murray_gainer@scotiacapital.com Michael Durose, P.Geo. (assoc. Kevin Best) ....................................................... (416) 945-4526
Media michael_durose@scotiacapital.com
Andrew Mitchell, CFA (assoc. Kent Crosland)...................................................... (416) 863-7268 Metals & Mining
andrew_mitchell@scotiacapital.com Onno Rutten (assoc. Brian Mok, P.Eng.).............................................................. (416) 863-7484
Retailing onno_rutten@scotiacapital.com
Ryan Balgopal, CFA (assoc. Daniel Eisen) .......................................................... (416) 863-7902 Alec Kodatsky (assoc. Jasmit Gouri).................................................................... (416) 863-7141
ryan_balgopal@scotiacapital.com alec_kodatsky@scotiacapital.com
Consumer Staples Paper & Forest Products
Food & Beverages Benoît Laprade, CA, CFA (assoc. Yuri Lynk) ....................................................... (514) 287-3627
Murray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) 863-2899 benoit_laprade@scotiacapital.com
murray_gainer@scotiacapital.com Steel
Food & Staples Retailing David Tyerman (assoc. Caren Fields) .................................................................. (416) 863-7108
Ryan Balgopal, CFA (assoc. Daniel Eisen) .......................................................... (416) 863-7902 david_tyerman@scotiacapital.com
ryan_balgopal@scotiacapital.com Portfolio Strategy
Energy Vincent Delisle, CFA (assoc. Hugo Ste-Marie, CFA)............................................ (514) 287-3628
Energy Equipment & Services vincent_delisle@scotiacapital.com
Peter Doig, CFA ................................................................................................... (403) 213-7331 Quantitative Strategy
peter_doig@scotiacapital.com Darwin McGrath, CFA (assoc. Greg Prazmo) ...................................................... (416) 863-7293
Oil & Gas darwin_mcgrath@scotiacapital.com
Greg Pardy, CFA (assocs. Carl Landry, Gavin Wylie) ......................................... (403) 213-7349 Real Estate
greg_pardy@scotiacapital.com Himalaya Jain, CFA (assoc. Mario Saric, CA, CFA)............................................. (416) 863-7218
Peter Doig, CFA ................................................................................................... (403) 213-7331 himalaya_jain@scotiacapital.com
peter_doig@scotiacapital.com Special Situations
Financials Murray Gainer, CFA (assoc. Geoff Ho)................................................................. (416) 863-2899
Banks & Diversified Financials murray_gainer@scotiacapital.com
Kevin Choquette, CFA ......................................................................................... (416) 863-2874 Anthony Zicha (assocs. Vincent Perri, CA, CFA, Mark Neville) ........................... (514) 350-7748
(assocs. Deirdre Neary, Michael Fricker, Sarika Goel) anthony_zicha@scotiacapital.com
kevin_choquette@scotiacapital.com
Insurance
Telecommunication Services
John Henderson, P.Eng. (assocs. Kevin Kaminski, Warren Hastings) ................ (416) 863-7780
Tom MacKinnon, FSA, FCIA, MAAA (assoc. Airan Friedman, CFA)........................ (416) 863-7299 john_henderson@scotiacapital.com
tom_mackinnon@scotiacapital.com
Health Care Utilities
Campbell Parry, PhD .......................................................................................... (416) 863-7178 Electric Utilities/Gas Utilities
campbell_parry@scotiacapital.com Sam Kanes, CA, CFA (assoc. Matthew Protti) ..................................................... (416) 863-7798
sam_kanes@scotiacapital.com
John Maletic, BSc Pharm, CFA ............................................................................ (416) 863-7708 Economics
john_maletic@scotiacapital.com
Income Units Chief Economist: Warren Jestin ........................................................................... (416) 866-6136
Diversified Income Trusts Deputy Chief Economist: Aron Gampel............................................................... (416) 866-6259
Tony Courtright, CA (assoc. Manash Goswami)................................................... (416) 945-4536 Vice-President & Senior Financial Markets Economist: Andrew Pyle.............. (416) 863-7707
tony_courtright@scotiacapital.com Mark Chandler (416) 945-5252 Steve Malyon (416) 863-7719
Patricia Mohr (416) 866-4210 Pablo Bréard (416) 862-3876
Brian Ector, CFA (assoc. Kristian Schneck) ........................................................ (403) 213-7332 Mary Webb (416) 866-4202 Adrienne Warren (416) 866-4315
brian_ector@scotiacapital.com Portfolio Advisory Group (ScotiaMcLeod)
Chris Blake (assoc. Katie Tabesh, CA) ................................................................ (416) 863-7067 Managing Director: Derrick Strizic, CFA ............................................................. (416) 945-4980
chris_blake@scotiacapital.com
Navdeep Malik (assoc. Maggie Fanari, CA)......................................................... (416) 863-7499 Trading
navdeep_malik@scotiacapital.com Elliott Fishman (416) 863-7860 Dave Stephens (416) 862-3115
Alex Jemetz, CFA (416) 863-7489
Turan Quettawala, CFA (assoc. Matt Sheehan) ................................................... (416) 863-7065 Equity Advisory
turan_quettawala@scotiacapital.com Paul Danesi (416) 863-7735 June Anne Reid (416) 863-7939
Oil & Gas Royalty Trusts Andrew Guy, CFA (416) 945-5332 Gareth Watson, CFA (416) 863-7604
Brian Ector, CFA (assoc. Kristian Schneck) ........................................................ (403) 213-7332
brian_ector@scotiacapital.com
Grant Hofer, CFA (assoc. Karma Roste-Hagen, CA) ...................................... (403) 213-7345
grant_hofer@scotiacapital.com
REITs TM
Himalaya Jain, CFA (assoc. Mario Saric, CA, CFA)............................................. (416) 863-7218
himalaya_jain@scotiacapital.com
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