Synthetic Natural Gas in South Korea's Future

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Researched by Industrial Info Resources (Sugar Land, Texas)--South Korea's concerns about fossil fuel dependence and greenhouse gas emissions have spurred the development of the country's first energy plan since gaining independence more than 60 years ago. The country is ranked among the G-20 major economies of the world and has become a hotbed of electronics and clean energy technology. South Korea has a highly developed nuclear program, which has stretched abroad into the Middle East, and is becoming a pioneering nation in regard to its dedication to renewable and alternative energies. The first energy plan, aptly named the First Basic Plan of National Energy, is guiding South Korea toward energy security.

In the next 10 years, South Korea will experience a massive bloom of power projects that will seek to lessen the country's dependence on fossil fuels, including natural gas and coal. With a lack of natural reserves, South Korea is the world's 10th-largest energy importer, and is the world's second-largest importer of liquefied natural gas (LNG) and coal. In terms of expense, coal-derived energy is cheaper than natural gas, although it carries a far heavier carbon weight. South Korea seems indifferent to expense, as the prevalence of natural gas-fired power plants is expected to rise in the next decade. The number of new coal-fired power plants will decrease and will be replaced with integrated coal-gasification combined-cycle (IGCC) facilities. Coal gasification is anticipated to take a giant step forward as synthetic natural gas (SNG) edges into the picture. SNG is gas mix of varying amounts of carbon monoxide and hydrogen formed through one of three main processes: steam reforming of natural gas, waste-to-energy (WTE) gasification or coal gasification.

POSCO (NYSE:PKX) (Pohang, South Korea) is currently in the midst of constructing South Korea's first SNG production plant in Gwangyang that will utilize coal gasification and SNG-treatment technologies from ConocoPhillips Company (NYSE:COP) (Houston, Texas), Linde AG (ETR:LIN) (Municj, Germany), and Haldor Topsøe (Lyngby, Denmark). The Gwangyang plant is expected to produce at least 500,000 metric tons per year of SNG.

POSCO is also working on another SNG plant in association with SK Energy Company Limited (Seoul, South Korea), a subsidiary of SK Holdings Company Limited (SEO:003600 ) (Seoul). The SK-POSCO plant, which will be located in Ulsan, will utilize about 1.8 million metric tons of coal per year to produce 500,000 metric tons of SNG annually. The $55 million Ulsan SNG plant will also utilize technologies garnered from POSCO's association with ConocoPhillips, Linde, and Haldor Topsøe. In total, POSCO-related SNG production will total about 1 million metric tons per year by the end of 2013.

As coal gasification and SNG production gain momentum, so too will the development of SNG-fired power plants. Most future power plants in South Korea falling outside of nuclear and renewable energy have the potential to be developed as combined heat and power plants (CHPs). These CHPs will be devoted to district heating and cooling, as well as energy production. As power plants give way to CHPs, new fuels such as SNG will be in demand. Korea East-West Power Company Limited (Seoul), a part of Korea Electric Power Corporation (NYSE:KEP) (KEPCO) (Seoul), is currently building its first SNG-fired CHP in Incheon. The $40 million Incheon SNG CHP is expected to produce about 5 MW of electricity for the local grid while supplying energy to local district heating blocks when commissioned in 2012.

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