US gasi­fi­ca­tion tech­nol­ogy thrives in China

China Daily (USA) - - ACROSS AMERICAS - By MAY ZHOU in Hous­ton mayzhou@chi­nadai­lyusa.com

When Gas Tech­nol­ogy In­sti­tute (GTI), a non-profit re­search fa­cil­ity based in Chicago, be­gan to de­velop the gasi­fi­ca­tion tech­nol­ogy for low-rank qual­ity coal, it was part of the en­ergy se­cu­rity strat­egy of the US De­part­ment of En­ergy.

Decades later, the de­vel­oped tech­nol­ogy, which turns low-qual­ity coal into clean gas, found its first com­mer­cial ap­pli­ca­tion not in the US but China, through Hous­ton-based Syn­the­sis En­ergy Sys­tems, Inc. (SES).

“GTI specif­i­cally de­vel­oped gasi­fi­ca­tion tech­nol­ogy for coal with the ini­tial re­search be­gin­ning in the 1970s. It was an al­ter­na­tive to gas which was be­lieved to be scarce and ex­pen­sive at that time,” said DeLome Fair, pres­i­dent and CEO at SES.

SES was formed in 2004 with the in­ten­tion of com­mer­cial­iz­ing the GTI tech­nol­ogy, which was adopted as SES Gasi­fi­ca­tion Tech­nol­ogy (SGT) by the com­pany. The first mar­ket the com­pany looked at was China, not the US.

SES considered China to be the best place to com­mer­cial­ize pri­mar­ily for two rea­sons, said Fair. “China was al­ready a ma­ture mar­ket for coal gasi­fi­ca­tion and very in­ter­ested in this tech­nol­ogy. It has abun­dant sources of coal but lacks in gas and oil. Its econ­omy is grow­ing very quickly and needs a lot of gas prod­ucts.

Ini­tially SES was also look­ing at op­por­tu­ni­ties in the US when coal projects were still un­der con­sid­er­a­tion. How­ever, the 2008 fi­nan­cial cri­sis stopped a cou­ple of coal projects. By the time the fi­nan­cial sit­u­a­tion im­proved, nat­u­ral gas was abun­dant and cheap due to new shale gas ex­tract­ing tech­nol­ogy. Coal is not needed in the US, at least for now.

SES turned their fo­cus on China, where more than 60 per­cent of en­ergy con­sump­tion comes from coal, to com­mer­cial­ize SGT. It formed joint ven­tures and worked with var­i­ous Chi­nese com­pa­nies in­clud­ing the Alu­minum Cor­po­ra­tion of China.

SES first li­censed its SGT to Chi­nese com­pa­nies for com­mer­cial­iza­tion. Af­ter see­ing how eco­nom­i­cally suc­cess­ful the plants were, it de­cided to be an in­vestor too. This year, it signed an agree­ment with China En­vi­ron­ment State In­vest­ment Com­pany to jointly de­velop, in­vest and build 20 projects. Two new projects in the industrial park in Dongy­ing, Shan­dong were re­cently an­nounced from this agree­ment.

Hav­ing gained a foothold in the Chi­nese mar­ket, SES now hopes to ex­pand be­yond China. It has signed an agree­ment with China Coal Re­search In­sti­tute (CCRI) with the in­ten­tion of jointly de­vel­op­ing projects in­ter­na­tion­ally us­ing SGT.

“We are ea­ger to ex­pand in and be­yond China and we are lever­ag­ing our Chi­nese ties to do that. Many coun­tries as­so­ci­ated with One Belt One Road have abun­dant re­sources of low-rank coal and lim­ited ac­cess to af­ford­able nat­u­ral gas. Our con­nec­tion with China gives us a strong base to ex­pand to the rest of the world,” said Fair.

The big­gest chal­lenge for Fair to do busi­ness in China is the dif­fer­ent ap­proach to con­tracts.

“The Chi­nese think we are very bu­reau­cratic. ... Chi­nese peo­ple are more about re­la­tion­ships and faces. Shak­ing hands is as good as a con­tract in a lot of cases. Find­ing a bal­ance be­tween the two is an in­ter­est­ing process,” said Fair.

Dif­fer­ent busi­ness styles aside, China is an ex­cit­ing place to do busi­ness, said Fair. “It’s a fun place be­cause de­ci­sions are made quickly and the strat­egy of the govern­ment is very ap­par­ent. It’s easy to see where SES fits in the strat­egy of the Chi­nese govern­ment,” said Fair.

MAY ZHOU / CHINA DAILY

DeLome Fair, pres­i­dent and CEO at Syn­the­sis En­ergy Sys­tems, Inc., talks about the com­pany’s suc­cess in China.

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