DME-A New Clean Fuel for the 21st

Century:
OPPORTUNITIES and CHALLENGES

by
Dr. Ron Sills
Gas Conversion Network Leader, EPTG, BP
Senior DME Advisor, International DME Association

Presented at
Zeus Development Workshop – DME
Houston, January 20, 2005
Outline

• Context and history

• Opportunities
• Feedstocks
• Markets
• Challenges
• Commercial
• Technical
• Global
• IDA and global collaboration
• Conclusion

Not included in this

slide set
 Source: CO-OP Eco

Butane Gas DME

Vehicles (Japan),
DME1
Why DME?

Multiple Sources
Multiple Markets
Ready technologies

Green
Economic viability
Methanol and DME: Twin Pillars

DME can be manufactured from multi-feedstocks similar to

methanol production ...
Conventional Two Step Process

Methanol
Natural Gas Dimethyl-ether
Biomass Syngas
Coal (CO+H2) (DME)
Combined
Petroleum Coke Methanol/DME
Processes

• Today: Current suppliers for propellant market include Akzo Nobel,

DuPont, and Mitsubishi Gas Chemcials.
• Tomorrow: Future mega-plant technology providers include Haldor
Topsoe, Lurgi, Toyo Engineering, Mitsubishi Gas Chemicals and JFE
Holdings.
A brief history of DME
Major Activity/Event Companies

1963 First use as aerosol Akzo Nobel

1992-95 Diesel fuel demonstration AVL, BP, DTU, HTAS, Navistar

Jan 1995 DME multi-purpose fuel strategy BP visit with NEDO, TEPCO,
EPDC and others

Feb. 1995 BP press conference and first papers in Detroit AVL, BP, DTU, HTAS, Navistar

1996-2001 IEA DME Annex XIV and XX (workshops and studies) TNO and 16 companies

1996-now Multiple commercial projects pursued Japan DME Ltd, DME

International, India DME,
Chinese ventures, Iran Project

2000/01 Formation of IDA and JDF 160+ members

2004 DME 1 – First International DME Conference 137 delegates, 40 presentations

 The First Papers in Detroit
International Congress & Exposition, Detroit February 1995

Low-Cost Manufacturing
Process
Diesel Engine Research

Emissions Demonstration
DME literature and patent search show
dramatically increasing global efforts.

250

200
Articles and
Meeting Papers
Number

150
Patents
100
Business/Trade
50 Press Articles

0
1970
1973
1976
1979
1982
1985
1988
1991
1994
1997
2000
2003
Year
Outline

• Context and history

• Opportunities
• Feedstocks
• Markets
• Challenges
• Commercial
• Technical
• Global
• IDA and global collaboration
• Conclusion
The changing methanol business

Methanol Derivatives
Formaldehyde

Today’s Markets Acetic Acid

32MMtpa MTBE

Gas
DME
Coal Methanol
Olefins
(MTO/MTP)
Biomass
Power,
Fuel Cells
New Markets
New
>>32MMtpa Products
Markets: Methanol or DME ?
Methanol DME
Acetic Acid/Formaldehyde/MTBE ---
Power

LPG ---
Diesel Engines ---
Fuel Cells

Gasoline Engines ---

MTO,MTP and MTG
(Chemically, methanol is first converted to DME)
Important Issues:
• Delivered Cost (per Btu or Carbon)
• Performance
• Customer Acceptance
• EHS – Performance and Perception
Market Comparison
Annual production
Target Products
MMTPA
LNG 140
Diesel 1100
Crude Oil 3800
Ammonia 130
Methanol, chemical 32
Gasoline 900
Methanol to Olefins 140
Methanol to LPG (DME) 215 Potential
DME (power, diesel) 200
Opportunities

MULTI-SOURCE PRODUCT MULTI-PURPOSE PRODUCT

Supplier Interests Market Interests

Gas monetization Fuel diversification

Clean Coal utilization LPG alternative
Biomass conversion Ultimate diesel
Methanol marketing Power generation
Hydrogen carrier
Chemical Feedstock
Role of DME in gas monetization
1. Moving Gas to Markets
Pipelines
Power
Generation
LNG

Supply Markets
GTP

Gas by Wire

2. Create New Markets for Gas

Diesel, gasoline
Chemicals, plastics
Cooking, power
 Role of DME in coal and biomass

COAL BIOMASS

Abundant, cheap Niche business (Sweden)

Domestic vs imports (China) Environmental drivers
Clean conversion technology CO2 mitigation
CO2 sequestration
Methanol Plant Costs are Decreasing
Trends in methanol capex BP and Methanex announced that the industry pacesetter 5,000
TPD Atlas plant started-up on June 2, 2004.
600
M$/Mtpa

400
200

0
1 2 3 4 5 6 7 8 9 10 11 12
Projects over last 15 years
Atlas

Titan

Titan and Atlas Methanol Plants

Trinidad, Early 2004
Transition: Chemical to New Markets
8
Today

6 Conventional Fuels at
$20/BBL crude oil
$/MMBTU

4
Future

0
0 50 100 150
(70) (140) (210)
Methanol (DME) Price/Cost,
$/ton
Large Methanol/MTO/DME plants
(built, proposed)

NPC/Iran Methanol
5,000 TPD
Oman Methanol Oman
- 5,000Methanol
TPD
Qatar Fuels Additives 6750
5,000 TPD
TPD

Trinidad – (2) 5,000 TPD

Atlas Methanol
Methanol Holdings

Methanol Australia
5,000 TPD

Methanol
Methanol for Power/Olefins
DME

Memo: Not including <5,000 MTPD methanol plants

Large Methanol/MTO/DME plants
(built, proposed)

NPC/Iran Methanol
5,000 TPD
Oman Methanol Oman
- 5,000Methanol
TPD
Qatar Fuels Additives 6750
5,000 TPD
TPD

Qatar/PetroWorld
>12,000 TPD
Trinidad – (2) 5,000 TPD
Atlas Methanol
Methanol Holdings
Nigeria/Eurochem
7,500 TPD MTO

PetroWorld/Starchem Methanol Australia

>12,000 TPD 5,000 TPD

Methanol
Methanol for Power/Olefins
DME

Memo: Not including <5,000 MTPD methanol plants

Large Methanol/MTO/DME plants
(built, proposed)

NPC/Iran Methanol
5,000 TPD China DME Plants
3,000 TPD
Oman Methanol - 5,000 TPD
Qatar Fuels Additives 6750 TPD

Qatar/PetroWorld
>12,000 TPD
Trinidad – (2) 5,000 TPD Iran/Japan DME
Atlas Methanol 2,500-4,500 TPD
Methanol Holdings and
Iran Methanol/DME Japan DME Ltd
Nigeria/Eurochem 5,000 TPD
7,500 TPD MTO 5,000 TPD

DME Int’l Corp.

PetroWorld/Starchem Methanol Australia
>12,000 TPD 2,500-4,500 TPD
5,000 TPD

Proposed Supply for New Methanol/DME Markets: 23

Methanol
MMTPA methanol
Methanol for Power/Olefins
(Equivalent to 200,000 BBL/D GTL-FT)
DME

Memo: Not including <5,000 MTPD methanol plants

Potential DME Demand in Asia (2010)

52 Total = 105 Million T/yr

28
25

Source: JFE, “ Feasibility Study of DME from Brown Coal in Australia, 2001
DME as an LPG Substitute – Why?

• DME’s physical properties similar to LPG

• LPG is domestic fuel and chemical feedstock
• LPG market is large (180MMTPA in 2000) and
growing fast (5MMTPA through 2015; 9/13MMTPA
DME/methanol equivalent)
• Regional supply/demand imbalances/shortages
• Attractive pricing/economics
• Developing countries (China, India) need portable
(bottled) fuel – even faster demand growth
• Strong quality of life improvement and
environmental driver
LPG/DME Interchangeability
• LPG/DME Blends:

• Up to 20% blend of DME with LPG:

no or very minor system
modifications

• Pure DME Systems:

• Storage/Pumps: 20-35% increase

A commercial gas stove can be
in fuel storage/pump capacity; used for DME without
more frequent delivery is required modification.
• Material Compatibility: seals
Picture courtesy of NKK Corp.
 DME for Power Generation – Why?

Because… Combined Cycle Gas Turbine

• CCGT are power plants of choice Natural Gas

Combustor

• Large market: 300 GW

or DME
~
Power
Exhaust
• Growth can be fuel constrained Air Compressor Power
Turbine
• DME is an excellent fuel for CCGT Steam Boiler
Steam Turbine
• Price Competitive Steam
Power
• Guaranteed Turbine performance
~
• 1 MW requires 5.5 tons of DME
• 5000tpd DME feed a 0.85GW plant Combined Cycle Gas Turbine
(CCGT) is the power plant of
• Also suited for diesel generators choice today with up to 60%
efficiency fired with natural gas
• Fuel for stationary fuel cells
 DME as Diesel Alternative – Why?

• Completely SOOTLESS (No

smoke or particulates)
• 100% SOx reduction
• 90% NOx reduction
• Meets/exceeds 2007
emission standards
• Performs in conventional
diesel engines with modified
fuel injection system AFFORHD
• Quiet combustion Alternative
• High Cetane Fuel for Heavy
• Fuel Distribution: needs Duty Engines
LPG like infrastructure

Pictures Courtesy of Volvo Truck Corp

and NKK Corp.
 Methanol and DME for Power Generation

• Methanol/DME are excellent gas turbine fuels

• GE, Siemens Westinghouse provide
commercial offerings of Methanol /DME-fired E
class and F class gas turbines
• GE, SW guarantee power output, heat rate
and performance
• Methanol/DME exhibit record efficiencies and
low emissions
• MHI (Japan) extensive studies

Fuel Grade Methanol for Power Generation-

PetroWorld:
• Qatar (QP): 12,000-15,000 T/D, Heads of Agreement Signed
September 14, 2003
Picture Courtesy of GE
• Africa West Coast: 12,000-15,000 T/D, StarChem, July 2003
Outline

• Context and history

• Opportunities
• Feedstocks
• Markets
• Challenges
• Commercial
• Technical
• Global
• IDA and global collaboration
• Conclusion
DME: An Integrated Project

Upstream Gas Field

Production Manufacturing Transportation Multiple Markets

• Remote gas • Modified methanol • Shipping

monetization • Fuel marketing
plants
• Coal mine • Chemical marketing
• 5,000 tpd+
• Biomass collection • Pricing formulas
• Gas refinery
or manufacture • Well to wheel value
chain integration

Big, multi-party projects

>$1,000,000,000
Commercial challenges

• Resistance to new alternative fuels

• New infrastructure costs
• Need for new partnerships (value chain)
• Large integrated projects
• High investments costs – financability?
• Lack of leadership
• Competition with LNG and GTL
• Customer acceptance of DME
• No industry momentum
Technical challenges

• DME manufacturing (record plant sizes, new

technology)
• LPG tanker modifications/optimization
• Diesel>LPG>power generation
• DME/LPG blends (handling, seals)
• DME diesel fuel injectors
• DME lubricity additives
• Long-term performance
Global challenges

• International standards
• Raising awareness of DME
• Global collaborations
• Strategic partnerships with other industries
(methanol, LPG, clean transportation fuel)
• Competition with LNG, GTL-FT and hydrogen
fuel cells
• Lack of first successful plant
Outline

• Context and history

• Opportunities
• Feedstocks
• Markets
• Challenges
• Commercial
• Technical
• Global
• IDA and global collaboration
• Conclusion
DME - Global Activities
Over the past 3 years, global recognition of DME’s potential manifested
by the formation of three associations representing about 160
companies, technical institutes, universities and individuals
• To promote public awareness and DME application.
• www.aboutdme.org

• To coordinate Japanese National DME lnitiative - $200 million over

2002-2005
• To develop DME manufacturing technology, shipping/distribution
and marketing for multiple end-use applications

Korea DME Forum • To advance understanding and use in Korea.

International DME Association
OBJECTIVES

• Promote public awareness of DME

• Serve as unifying force for all regional developments
• Monitor global DME developments
• Collect and provide all relevant DME information (website)
• Deliver presentations, organize workshops and conferences
• Provide platform for international contacts
• Assist in the creation of business opportunities
• Develop strategic partnerships with related organizations
 DME in China
Shandong Jiutai Chemical Industry,
Linyl, Shandong
• 30,000 T/yr. December 2003 start-up.
• 60,000 T/yr. Construction started January
2004
•Plans to increase production capacity to
300,000 T/yr by end of 2005; then to 1
million T/yr by 2009.

Luthianhua Group Inc, Luzhou,

Sichuan
•In the next 5 - 10 years, China will
• 10,000 T/y – Commercial DME plant for construct a group of large dimethyl ether
fuel use - August 2003 start-up. Toyo units.
Engineering methanol dehydration •Besides the units in Shandong and
technology. Sichuan, dimethyl ether units with
• 110,000 T/y – with 2005 start-up different capacities will also be put up in
Ningxia, Shanghai, Xinjiang and Shaanxi.
So: China Chemical Reporter, May 26,
2004
 DME in Iran
Zagros Petrochemicals Project
(June 16, 2004 Press Release)

•To be constructed at Bandar Assaluyeh,

Iran with a capacity of 800,000 MTPY of
DME.
•Based on technology and catalyst
developed by Haldor Topsøe A/S for
dehydration of methanol.
DME in Japan
Japan DME Forum coordinates multiple programs…..

•Utilization
•Power generation systems
•Household/industry fuel
•Diesel related technologies
•Emission tests from diesel engine
•Marketing study
•Road test of DME vehicles

•Production
Direct process (JFE)
•Production technologies 100t/d demonstration plant (2003-
)
•Ocean transportation
DME Commercial Projects - Studies
•Codes & Standards • Japan DME Ltd: 5,000 t/d, Western
Australia
•Studies for standardization of DME fuel
• DME International Inc, 2,500-4,000 t/d,
Qatar/Indonesia/Australia
• Mitsui & Co, TEC: 7,000 t/d, Iran, Indonesia
DME in Korea
• KIER/SK/Inha Univ. Project: First prototype truck (2003)

• Conducting engine research, elaster testing

• DME Pilot Plant (100 kg/d), KOGAS R&D Center

 Other DME Activities Around the World *
Sweden Europe/USA
•DME from Biomass •AFFORHD. Alternative
Gasification Project Fuel for Heavy Duty
Engines
•Fossil Fuel Free Växjö
•Volvo, AVP/PTI, DTU, BP,
Russia
TNO, Växjö
•Moscow program: "Alternative fuels use in
city’s motor transport for 2002-2004”.. • 2002-2005, 4 million euro
•VNIIGAZ (GAZPROM Research Institute)
developing technology to manufacture DME
Ocean Transport
USA • DME has been accepted in the IMO
• DME-Fueled Shuttle Bus Gas Carrier Code, according to
Demonstration, Penn State University,
Norske Veritas, DNV. DNV can
Italy issue safety certificates for gas
•Snamprogetti Program : DME as LPG substitute, and carriers to transport DME
LPG/DME interchangeability in diesel engines (with SwRI) (September 2003)

Brazil
A network, headed by the Petrobras Research Centre,
was established including one Research Institute and
three University Laboratories.

* Only a partial list of the extensive global efforts

 Conclusions
Dramatic progress has been made in the past 10 years in
understanding and advancing the DME business

• DME is a very promising new fuel

• Many drivers and opportunities
• Significant challenges have to be overcome
• A global DME effort has evolved - led by Asia.
• International DME Association, Japan DME Forum and Korea DME Forum
have been formed.
• DME community must join forces for DME acceptance and growth

The Future is Now