Steam Supply and Power Cogeneration at Yanshan Petrochemical Co., Ltd

04 NEDO-IC — 99 R 2 9

Steam Supply and PowerCogeneration at Yanshan Petrochemical Co., Ltd.

March 2000 NEDOBIS E99007

Industrial Technology Development Organization isignee: Japan Consulting Institute 020004916- Basic Survey on the Clean Development Mechanism of Steam Supply and Power Cogeneration at Yanshan Petrochemical Co. Ltd.

Japan Consulting Institute, March 2000, P.17 6

Objectives of the Survey Looking at situations concerning power generation in China, it is noted that a large proportion of its overall power generation relies on thermal power generation, especially on coal-burning thermal power generation, for the major part of the industry. It constitutes an important factor in the substantial increase in carbon dioxide emission (C02), which has become the major challenge confronting the world. Bearing in mind the possibility of connecting to the "Clean Development Mechanism (COM)" to be carried out with developing countries, this survey is intended as the general study of the project (the target of the survey), with the reduction of C02 emission, the profitability, and the diffusion of the technology in focus, and aims at materializing the cogeneration system project of Beijing Yanshan Petrochemical Co., Ltd. N EDO-IC-99R29

Steam Supply and Power Cogeneration at Yanshan Petrochemical Co., Ltd.

March 2000

New Energy and Industrial Technology Development Organization Consignee: Japan Consulting Institute Introduction

This report summarizes the results gathered through the "Basic Survey on the Clean Development Mechanism" addressed to the "Cogeneration by Beijing Yanshan Petrochemical Co. Ltd." as commissioned by New Energy and Industrial Technology Development Organization to Japan Consulting Institute.

Atmospheric pollution in the People ’s Republic of China (hereinafter referred to simply as "China") is creating grave environmental problems arising out of industrial emissions from heat supply and power generation facilities running on coal for fuel, and these emissions are constantly increasing every year.

Chinese government has been addressing the problem by reinforcing related statutory energy saving controls and environmental measures including the designation of "no coal-burning areas," while taking interest also in the use of natural gas as clean energy. Furthermore, the government has been actively developing natural gas resources as a part of the "Great West Development Plan," leading to the discovery of a number of large natural gas fields. In addition, natural gas pipelines are being built from the resources in Northwest China to major cities in coastal consumption areas. The importance of heat supply and power generation facilities using natural gas for fuel has been increasing along with the improvement in infrastructures for using natural gas, such as above, to promote the potential diffusion of the technology.

From these viewpoints, this survey has been carried out as a basic survey for the purpose of modifying the cogeneration facilities of "Beijing Yanshan Petrochemical Co., Ltd.," which is the representative petroleum complex of the municipal area running on heavy oil, to use natural gas for fuel instead. The following is the summary of reports from the survey.

We would like to express our sincere gratitude for the cooperation and guidance extended to us by the Ministry of International Trade and Industry and the New Energy and Industrial Technology Development Organization.

We are also deeply thankful to officials of Beijing Yanshan Petrochemical Co., Ltd. for their prompt acceptance of the research party, the provision of the volume of information required for the survey, and the extensive cooperation in the field surveys.

March 2000 Japan Consulting Institute CONTENTS

Chapter 1. Basic Points of the Project ...... 1-1 1.1 Profile of China ...... 1-2 1.1.1 Political, economical, and social situations...... 1-2 1.1.2 Energy conditions ...... 1-4 1.1.3 Clean Development Mechanism project needs ...... 1-6 1.2 Necessity of the implementation of the energy-saving technology by the subj ect industry ...... 1-6 1.3 Significance, needs, effects and diffusion of the results to other similar industries for this proj ect...... 1-7

Chapter 2. Materialization of the Project Plan ...... 2-1 2.1 Project Plan ...... 2-2 2.1.1 Outline of situations in areas covered by the project ...... 2-2 2.1.2 Contents of the proj ect...... 2-2 2.1.3 Targeted greenhouse gases...... 2-3 2.2 Outline of the implementing site (corporation) ...... 2-4 2.2.1 Interest level at the implementing site...... 2-4 2.2.2 Condition (outline, specification, and operation) of the related facilities of the implementing site (corporation) ...... 2-5 2.2.3 Project executive capacity of the implementing site (corporation) ...... 2-12 (1) Technical capacity ...... 2-12 (2) Management system...... 2-12 (3) Management base and policies ...... 2-12 (4) Financing capacity ...... 2-15 (5) Human resources...... 2-15 (6) Executive organization ...... 2-15 2.2.4 Specification of the related facilities of the implementing site (corporation) after the modification ...... 2-17 2.2.5 The range of funds, equipment, service, etc. to be contributed by the respective parties: ...... 2-78 2.2.6 Prerequisites for, and problems with, the implementation of this project ...... 2-81 2.2.7 Implementation schedule of the project ...... 2-82 2.3 Materialization of the funding proposal ...... 2-85 2.3.1 Funding proposal for the execution of the project (the required amount of funds and procurement plan) ...... 2-85 2.3.2 Fundraising prospects (Action plan of the assignee of the survey and the implementing site [corporation]) ...... 2-85 2.4 Issues related to Clean Development Mechanism ...... 2-86 2.4.1 Definition of the conditions of project implementation on the basis of the actual situation of the project implementation site, and necessary arrangement with the other party for the realization of the project such as the sharing of responsibilities ...... 2-86 2.4.2 Possibility of forming a consent to make this project an example ofClean Development Mechanism (an essential prerequisite for the other party to agree on the Clean Development Mechanism on the basis of the viewpoint of both the government agency and the implementing site [corporation] of the other party) ...... 2-86 Chapter 3. Effect of the Proj ect...... 3-1 3.1 Energy saving effects...... 3-2 3.1.1. Technical reasons for generating energy-saving effects...... 3-2 3.1.2 Baseline to calculate the energy-saving effects (the thoughts behind how to estimate potential emissions if the project were not implemented) ...... 3-2 3.1.3 Specific quantity, observed period, and accumulated quantity of energy saving effect...... 3-4 3.1.4 Practical way of verifying (monitoring) the energy-saving effect...... 3-9 3.2 Effect of reducing greenhouse gas...... 3-10 3.2.1 Technical grounds for the development of the effect of reducing greenhouse gas...... 3-10 3.2.2 Baseline to calculate the reducing effect of greenhouse gas (the thoughts behind how to estimate potential emission if the project were not implemented)...... 3-10 3.2.3 Specific quantity, observed period, and accumulated quantity of energy saving effect...... 3-10 3.2.4 Practical way of verifying (monitoring) the effect of greenhouse gas reduction ...... 3-14 3.3 Impact on the productivity ...... 3-24

Chapter 4. Profitability ...... 4-1 4.1 Economic effect of the return on investment ...... 4-2 4.2 Cost versus project effectiveness (Energy-saving [or alternative energy] effect and the effect of greenhouse gas reduction) ...... 4-5

Chapter 5. Verification of the Effect of Propagation ...... 5-1 5.1 Possibility of the propagation in the country of the technology subject to implementation by the proj ect...... 5-2 5.2 Effects with the propagation in mind ...... 5-6 5.2.1 Energy saving effects...... 5-6 5.2.2 Effect of the reduction of greenhouse gas...... 5-6

Chapter 6. Influence on other sectors ...... 6-1

Conclusion Conclusion 1 Abstract

This abstract presents the summary of reports from the Basic Survey on the Clean Development Mechanism of the Cogeneration Project With Beijing Yanshan Petrochemical Co. Ltd.

Chapter 1 outlines how the environmental measures, or improvements, have been taken in the Beijing District to abolish and switch from the small and inefficient old facilities running on coal for fuel to medium-sized, highly efficient facilities. And, then, it reports on the supply of natural gas to the Beijing District that natural gas pipelines are being installed from the natural gas fields in Jingbian District of Shanxi sheng to Beijing District, which is allocated with 300 million m3 of natural gas for annual consumption in order to improve the environmental conditions of the city. It discusses other factors to impede the diffusion of small gas turbines not only in Beijing City but also across the country, including import duty as high as 16% and value-added tax 17% imposed on gas turbines of 36-MW or lower output at the time of import.

Chapter 2 explains that this survey is a basic survey run by Japan Consulting Institute as commissioned by the New Energy and Industrial Technology Development Organization, according to the plan to save energy and reduce the emission of carbon dioxide (hereinafter abbreviated as "CO2") by abolishing and replacing some of the boilers of the cogeneration system burning heavy oil in Beijing Yanshan Petrochemical Co., Ltd. with the cogeneration facilities using natural gas for fuel.

It then goes on to report in detail on the structure of Beijing Yanshan Petrochemical Co., Ltd. which is the promoting body the "Thermal Cogeneration Plan," including how it came into existence (founded in 1968), its scope (employees 46,000 and capital 4.5 billion yuan), current business conditions, the implementation system of the planned project, and on the possible facility improvements to be carried out in line with the expected increase of future production.

Under the heading "Project Summary of Beijing Yanshan Petrochemical Co., Ltd.," the details of the optional modifications of the current facilities, the cogeneration system of steam output 600t/h and electric output 55 MW, are given as Case 1 to replace the existing two heavy oil- burning boilers (steam output of 240t/h each) with gas turbines and heat recovery steam generators, two units each (steam output of 241t/h and electric output of 136.9 MW), or Case 2 to replace with three gas turbines and three heat recovery steam generators (steam output of 210t/h and electric output of 79.5 MW). The system, layout, electricity, and instrumentation plans, as well as the related drawings, are presented to illustrate plans under both cases. The construction schedule covering a two-and-a half-years period from contracting to the commencement of the commercial operation and the shared supply plan are presented to describe the parts to be supplied from Japan (main components including gas turbines and heat recovery steam generators) and from China (all other plant facilities and auxiliary machines and equipment as well as engineering and installation works).

Finally, it presents the detailed financial plan including the funding resources of the promoting body, Beijing Yanshan Petrochemical Co., Ltd. (China Petrochemical Group Corporation) and the fund raising prospects (now under study by the petrochemical company with manifest interest in the Special Environmental Yen Loan from Japan.) With regard to the conditions related to issues of Clean Development Mechanism , the report comments that it is still too early to promote the project as a plan applicable to CDM since no official comments have been given by the Chinese government in this respect as yet.

Chapter 3 first deals with the advantageous points of the cogeneration system after switching from facilities using heavy oil to those using natural gas for fuel, including, for example, the effect of annual energy saving (in Case 1; 887,847 tons/year; in Case 2; 523,213 tons/year — both as expressed in the equivalence of heavy oil) and then with effects on the productivity; the annual reduction in the emission of green effect gases (mainly CO2) (in Case 1; 2,747, 187t- COa/year; in Case 2; 1,618,932 t-CCVyear); and the effect of environmental improvement.

Chapter 4 presents the total construction costs of the project aggregating both Chinese and Japanese investments (initial investment) as 700 million yuan ±100 million for Case 1 or 500 million yuan ±100 million for Case 2; the cost-effectiveness of the project estimated to be 97.57t/year per million yen; and the rate of the effective reduction of greenhouse gases to the total construction costs calculated to be 301.89t-CC>2/year per million yen. The cost of power generation with natural gas for fuel is calculated to be 0.403 yuan/kWh for Case 1 or 0.455 yuan/kWh for Case 2, meaning Case 1 offers a certain business opportunity while Case 2 offers a little or no such opportunities under the current natural gas price condition which, however, is subject to change depending on the gas price.

Chapter 5 gives the prospect of the future diffusion of the cogeneration systems using natural gas for fuel not only in Beijing City but also in its suburbs, and in Shanghai City in the coastal region from the results of additional surveys made in these districts together with the expected impacts of the system on other aspects such as energy saving and the reduction of greenhouse effect gases.

Chapter 6 touches upon the significant effects of the shift in fuel from heavy oil to natural gas used by cogeneration facilities and also discusses the advantageous effects of using coal-bed methane on the environment, economy, and society. Chapter 1. Basic Points of the Project

Beijing, the capital city of China, has been listed as one of the most polluted cities of the world on account of the fact that the city relies most of its electric power demand on thermal power generation using coal. This chapter describes the general situation of the nation with a focus on the capital city and on how the administration is striving on environmental improvement measures. It also discusses on the supply of natural gas as part of its specific measures coping with the problem, and also takes up the question on import duty imposed by the government on gas turbines. In addition, topics such as the necessity of the implementation of the energy-saving technology and the significance of this project have been discussed.

1-1 1.1 Profile of China

1.1.1 Political, economical, and social situations Beijing is situated in the northwestern part of the Huabei Plain subject to a continental climate which is known for cold and dry winter and very hot summer. Room heating is required for five months a year from mid-November to mid-March. In summer, room air-conditioning is required over three months from July to September every year but it is not yet used very commonly. With the stretch of 16,800 square kilometers in area, the city is divided into 18 wards and counties. There are four wards in the central part of the city, four wards in the surrounding districts, and ten wards or counties in the suburban districts. The city has a population of 10,855,000 now, and the population in the planned urban areas is expected to increase to 12,500,000 by 2010. As to the combination of energy types used in the city, it dominantly consists of coal today, or 70% of the total fuel consumption, and the total annual consumption of coal is 28,000,000 tons, making the city the world's largest coal consuming capital. Atmospheric contamination over the city caused by various pollutants such as soot and smoke, sulfur oxides (SOx), and nitrogen oxides (NOx) emitted from coal burning has now reached a critical stage to make the city ranked among ten top polluted cities of the world. Especially in the period of room heating, the soot and smoke resulting from coal burning account for the major part of the atmospheric contaminants, comprising 2/3 of all particles suspended in the air. The forecast has it that Beijing City's total consumption of coal will increase to 33,700,000 tons by 2002 and to 34,880,000 tons by 2005. The atmospheric pollution of this city, already in a grave condition, is expected to further worsen day by day unless efforts are made to decrease the percentage of coal in the composition of energies by introducing cleaner energy. Although Beijing City spread over a large 16,800 square kilometer area, which allows most parts of the city district to maintain relatively good atmospheric conditions, the situation in the central part of the city which accounts for about 6% (or 1,040 square kilometers) of the total municipal area with a large population, bustling business, and very high energy consumption, is always very pressing.

The average annual values of the total suspended particles (TSP), SOx (SO2 in this paragraph), and NOx — 378, 120, and 152 micrograms per cubic meter, respectively — of the central urban area represent 189%, 200% and 304%, respectively, of the reference values of the Class II National Emission Standards. Table 1.1-1 shows the atmospheric environment quality criteria of China. The air pollution mainly caused by soot and smoke emitted during the heating period is very serious and can prevail over a substantial area when the atmospheric conditions disturb the dispersion of pollutants, for example, when a so-called inversion layer where the air temperature rises with altitude, is formed or windless conditions persist over an extended period of several days. The air quality of the city's central urban districts depends not only on the large consumption of coal for heating, the sharp increase of automobiles, or the concentration of industrial pollutant sources, but also on such natural conditions peculiar to the city as dry climate with a little rain falls, inversion layers, days of calm wind during winter and the sandy wind in the spring time.

1-2 The soot-type pollution caused by the high consumption of fuel coal during the heating period is one of the critical causes for the atmospheric pollution. Particularly the central urban district of 6% of the total municipal area with the concentration of 50% population, 80% buildings, and 80% energy consumption of entire Beijing City suffers from the pronounced acute concentration of pollutants. Upon arrival of the heating period, 5,000 boilers, 3,000 water boiling stoves, and 4,000 large and over a million small kitchen ranges start working to increase the consumption of coal three times the consumption in non heating seasons. SO2 concentration jumps up from 30-40 micrograms in the non-heating seasons to 260 micrograms per cubic meter of the air in the heating period to far exceed the specified standard value. Atmospheric NOx, on the other hand, is generated mostly (80%) by the exhaust gases from automobiles, the number of which reached to 1,270,000 in Beijing City by 1997, and is increasing in volume in line with the growing number of motor vehicles running in the city. To solve the problem of soot-type pollution, it has been decided to transfer major coal- burning facilities out of the central district to suburbs, not to build any additional power generating plants, and to draw electric power from Nei Menggu, Shanxi. In the meantime, the central government is taking an active position toward environmental protection. The government has been investing trillions of yuan in a range of environmental protection measures from the emission control of CO2 and SOx to wastewater treatment and to the maintenance of ecological balance, designating the environmental protection as the critical local administrative issue. Natural gas is one of the cleanest types of energy with little or no SOx or NOx content and has been considered a promising energy toward future. Nonetheless, the reasons why the share of power generation using the gas for fuel remains at a level as low as 2% of all the power industry to date are nothing but the slow development and low technological level of this sector of Chinese industry. The central government has nominated the gas turbine cogeneration as one of the "industries worth encouraging" with an objective to speed up the development of the clean energy, and authorized the active utilization of foreign currencies for promoting the industry. With regard to problems posed by the import duty and VAT, the gas turbine units of output over 36MW are exempted from import duty and VAT unlike the power generation facilities that are subject to 16% import duty and 17% VAT. The following is an excerpt from the official notice of the State Council concerning the adjustment of the tax revenue measures on import facilities (December 29, 1997) (Refer to Attachment 1.1-1 for the full text of the notice and Japanese translation.) The imported facilities listed in the foreign trade investment items and domestic investment items ratified in the order stipulated by the national government during the period from April 1,1996 to December 31, 1997, and imported facilities by utilizing any foreign government loans or IMF loans during the period from January 1, 1995 to December 31,1997 shall be exempted from import duties and the import value-added taxes, with the exception of any items that are not eligible for any tax exemption as explicitly provided in this regulation. Eligible sectors may proceed to apply for the necessary tax exemption procedures to the competent customs office with an old ratification documents. The gas turbine units of 36 MW or lower are stated in the list of items not eligible for duty

1-3 and tax exemption. Therefore, gas turbines of 36MW or lower shall be liable to such duty and tax while gas turbines over 36MW shall be exempt from the duty and tax. Some say that the exemption may not always be applied as it would be applicable only after the filing of an application and may be still subject to the judgment of the competent customs office. If the exemption becomes applicable, however, the system using 70MW class gas turbines would be more advantageous from the taxation point of view, of the two types of 70MW class and 25MW class gas turbines that are the subject of this survey.

1.1.2 Energy conditions In line with the rapid development of the Chinese economy since 1980s, the energy industry has also made fast advancement to meet increasing demands. In the question of electric power, the shares between such key energy sources as thermal, hydraulic and nuclear powers are 78.9%, 19.83%, and 1.27%, respectively. The percentage of power generation using coal to the entire power generation industry is 76% to make China one of the world's largest contributors to CO% emission. The substantial volume of SOx and NOx generated in the process of burning coal are also additional elements to worsen the atmospheric contamination. Chinese government is now studying the possibility of introducing cleaner energy to replace coal. With the estimated deposits of 10.5 trillion cubic meters in China, natural gas is considered to be one of the most important energies. Notwithstanding a plan to transfer existing coal burning facilities to suburban areas as mentioned earlier, there is no other basically effective solution to the problem than replacing coal with natural gas as the leading player of the energy system. Beijing City aims to basically meet the national standards in its capital function district by 2002 by switching the staple fuel from coal to natural gas or oil by designating the following 40 areas burning coal as a secondary fuel as a part of its atmospheric environmental preservation initiatives.

1-4 Districts burning coal as a secondary fuel

No. District No. District No. District No. District Cu i we i I u Beijing Fuxingmen 1 11 21 Zuojiazhuang 31 Smal I Station District Xicheng District Sanhai 2 Gugong 12 22 Sanlitun 32 Yuyuantan Dongcheng District Haidian Municipa I 3 13 Tiantan 23 Hujialou 33 Xike office area Chongwen Dongerhuan Longtan Chaoyang Jianwai Haidian 4 14 24 34 Dongwang Lake District District Tianqiao Shuangjing 5 Ma 15 25 35 Fangzhuang District District Beitaiping- Jingsong 6 16 Xuanwu Daguanyuan 26 36 XiIuoyuan zhuang District Chaowai 7 Liupu 17 Niujie 27 37 Fengtai District Xicheng Fengtai Guangwai Baiyuan 1u 8 Zoo Debao 18 Yadacun 28 38 Smal I District District Chaoyang Haidian Baiwanzhuang- Huangsi 9 19 29 Zizhuyuan 39 Fengtaizhen yuan District 10 Sanheihe 20 Hepingjie 30 Enjizhuang 40 Shijingshan

The process of switching fuel from coal to natural gas will be carried out at the annual rate of volume equivalent to 6 to 7 million tons of coal. Existing thermal power stations will be replaced by cogeneration systems, or the fuel used by existing boilers will be switched to clean energy. It is also planned that the fuel used by the existing central heat distribution plants owned by the city government shall be switched from coal to natural gas while smaller distributed boilers (as targeted at apartment complexes) shall be either replaced by new boilers running on natural gas or modified to switch fuel from coal to natural gas. Beijing City relies on Huabei oil well and Shanganning/Changqing gas field for the supply of natural gas. Natural gas supply to Beijing City commenced upon completion of Shanjing Long Distance Natural Gas Pipeline in September 1997. The Shanganning/Changqing gas field will be the major source of natural gas supply for Beijing City as judged from the clarified volume of deposits at the gas source and the transport capacity of the network of pipelines. The gas supply capacity of Huabei oil well was 150 million cubic meters in 1998 while the initial estimated capacities of Shanganning gas field were 300 million cubic meters in 1998, 500 million cubic meters in 1999 and 700 million cubic meters in 2000. As the supply capacity can be increased by raising the gas pressure, the last two figures above will now be revised to 700 cubic meters in 1999 and one billion cubic meters in 2000. It is planned to raise the supply capacity of natural gas to three billion cubic meters by year 2010 by building new gas pressure boosting stations along the pipelines.

1-5 The 2,182 km long gas pipelines have four pressure levels from very high pressure (1.6- 2.5 MPa) to high pressure (1.0 MPa), medium pressure (0.2-0.4 MPa, which is currently operated at 0.1 MPa) and to low pressure (0.003 MPa). There are 264 pressure regulating stations and two storing stations with the total storage capacity of 200,000 cubic meters. The city has two other types of supplementary fuel, namely, "processed gas from coal (coal gas)" and "liquefied natural gas."

Coal gas: There are three plants producing the gas, the Cokes Plant, Capital Steel Corporation, and "751" Oil Gas Plant, with the annual output of 660 million cubic meters in total in 1998. The coal gas is currently in a balanced state of supply and demand but the consumption is expected to decrease as the natural gas supply increases. These plants are planned to be transferred to suburban areas in view of the need for environmental protection of Beijing City. Liquefied natural gas (LNG): The gas is mainly supplied from Beijing Yanshan Petrochemical Company through three pipelines (total 176 km long) to the West, South, and North Cylinder Plants in the city. LNG was supplied at the rate of 148,000 tons as of 1998.

1.1.3 Clean Development Mechanism project needs The leaders at the central government attach a very high value to the environmental protection of Beijing City with a slogan, "Let us transform Beijing to the nation's cleanest, most hygienic, and beautiful city in the foremost rank. Beijing City leaders, in the mean time, have no other option but to concentrate on the reducing of visible pollutants generated from coal, leaving the efforts for reducing CO2 through energy saving and fuel switch in the hands of more eligible corporation. Under such situations, the implementation of the Clean Development Mechanism (CDM) is very meaningful from technological and financial points of view. Although the Chinese Government as of January 2000 has not yet officially recognized the CDM, it is understood that a joint preparation committee has already been organized within the government with the intention to approve the mechanism in the near future.

1.2 Necessity of the implementation of the energy-saving technology by the subject industry This project is targeted at the petrochemical industry, which consumes a large amount of process steam as well as electric power. The shift from coal or heavy oil to natural gas for fuel may be considered an absolute must from the environmental protection point of view, not just for the subject industry but for all other industries. Also from the standpoint of energy saving and the reduction of CO2, by switching to natural gas, CO2 emissions can be reduced in volume to about 40% of those from coal burning, simply because of the difference in the material composition. The implementation of the cogeneration system using the gas turbine will result in raising the thermal efficiency about 1.5 times the

1-6 existing coal-burning thermal power station, while shifting to natural gas of high hydrogen contents will help cut down CO2 emission to 1/3-1/4 or less as compared with the system burning coal. Furthermore, the emission of SOx and soot and smoke particles will be next to none as the natural gas contains no sulfur and very few particles. Unlike coal, the gas has no risk of generating ashes, thus making easy the solution of the problem of disposing of ashes as characteristic of all coal-burning thermal power stations. The switch from coal-burning power station to natural gas-burning combined heat and power generation plant will help shorten the start-up and shutdown times and efficiently cope with the peak electricity problem. Thus the effect of conversion from the existing coal-burning thermal power station to natural gas-buming cogeneration station, greatly contributing to the improvement of environmental conditions and operating efficiency, is quite significant in various aspects.

1.3 Significance, needs, effects and diffusion of the results to other similar industries for this project With respect to the planned improvement of the atmospheric environment of the city, where the Olympic Site Review Committee is now in session in the Central Urban District, the unified view has not yet been clearly defined. There are mixed opinions as some opinion urges to achieve the Second Class National Standards by 2002 while the others insist that it may be achieved by 2008. The 3E (Energy, Environment and Economy) Institute working under joint efforts of Chinese and Japanese researchers to cope with the environmental improvement of Beijing City set the target of completion in 2010. The use of natural gas is considered as one of the most efficient method to fundamentally improve the atmospheric conditions of the city. By using natural gas which is high in quality and efficiency and free of the emission of pollutant, it will be possible to reduce the required number of transporting vehicles as it will be transported through pipelines and to minimize atmospheric contamination, noise and traffic accidents, all caused by the operation of motor vehicles. The quality of atmospheric environment would not only affect the health and living environment of the population but also has influence on the national image and on the execution of the strategy for the sustainable development of the capital itself. The significance and the meaning of the project are quite substantial as its implementation would result in the conversion of fuel to natural gas to help contribute to the attainment of above mentioned targets along with the anticipated expansion of the achieved results to the other associated industries.

1-7 Table 1.1-1 Chinese Atmospheric Quality Standards

Ceiling value Pollutant Time Class I Class II Class 111 Remarks standard standard standard Average annual value 20 60 100 S02 Average daily value 50 150 250 Average hourly value 150 500 700 Average annual value 80 200 300 TSP Average daily value 120 300 500 jug/m3 (Normal Average annual value 50 50 100 state) NOx Average daily value 100 100 150 Average hourly value 150 150 300 Average daily value 4,000 4,000 6,000 CO Average hourly value 10,000 10,000 20,000

Class I standard: Nature reserves, sight-seeing areas, resort districts Class II standard: Urban residential districts, mixed commercial-traffic-and-residents districts, cultural districts, and rural areas Class III standard: Town and villages of relatively severe atmospheric pollution, industrial districts and urban traffic intersections, trunk-road districts

1-8 Chapter 2. Materialization of the Project Plan

In order to bring this project into shape, this chapter describes the project, implementing corporation (outline), budget plan, and the matters related to CDM. The description of the details of the project mainly focuses upon the technological aspects. The outline of the implementing corporation summarizes the results of survey run on "Beijing Yanshan Petrochemical Co., Ltd." as the promoting body of this "cogeneration project", while the budget plan description sums up the corporation's opinions on the financing sources and prospective views on the fund-raising possibility. Description of the matters related to CDM compiles the related measures taken by the Chinese government and the standpoint of Beijing Yanshan Petrochemical Co., Ltd. With regard to the specification after the plant modification, this chapter itemizes the practical details of the system, layout, electric line and instrumentation.

2-1 2.1 Project Plan

2.1.1 Outline of situations in areas covered by the project The implementation-promoting entity for the project is Beijing Yanshan Petrochemical Co., Ltd., which was established in 1968 and is currently a division of the China Petrochemical Group Corporation. The company is located to the southwest of Beijing City at a distance of about one hour and a half by car through highways. It is on its premises of 36 square kilometers in area or 40 square kilometers including the living district. There are three power stations from No. 1 to No. 3 and the project plan is targeted at the Station No. 1. The industrial complex is authorized to consume 600 million cubic meters of natural gas a year which is supplied through a pipeline extending from the Jingbian District Gas Field in Shanxi sheng. The half of the quantity or 300 million cubic meters is allocated for use by the combined heat and power generation system in order to improve the atmospheric environment of Beijing City.

Note: The company brochure of Beijing Yanshan Petrochemical Co., Ltd. is shown in the Attachment 2.1-1. The name of the company "Beijing Yanshan Petrochemical (Group) Co., Ltd." as described should read as "Beijing Yanshan Petrochemical Co., Ltd."

2.1.2 Contents of the project As described in Chapter 1, many of the power stations currently running in China are thermal power stations, particularly plants operating on coal for fuel. The low energy utilization efficiency of the major thermal power stations causes an increase in CO2 emissions, thus raising the contributing factor to hazard the global environment. The purpose of this project is to study and summarize the effects of CO2 emission reduction, profitability and the diffusion of the technology and to materialize the project plan at Beijing Yanshan Petrochemical Co., Ltd. as the target station, with an intention to link the results to the "Clean Development Mechanism" (CDM), which is to be jointly implemented with developing countries.

2-2 2.1.3 Targeted greenhouse gases This survey should be carried out on the basis of the CDM system where a number of countries jointly endeavor to reduce the Greenhouse Gas (GHG) and share the reduced volume of GHG as the achievement of each cooperating country. Eventually, the subject GHG ought to coincide with the type of GHG to be handled under CDM. The methodology of trading in international permits for greenhouse gas emissions is now under study and it will be necessary to clearly define such questions as "What are the subjects of trading?" and "When is the trading considered to be realized?" As to the subject of trading, it is considered appropriate to include the six types of GHG (CO2, CH4, NO, HFC, HC, and SFe) that have been listed as "gases that can be subjected to the measurement of emission and absorption" in Annex A of the Kyoto Protocol with the trading unit of "CO2 equivalent ton" or "C equivalent ton" stated, although the protocol has not set any particular limitation.

We have decided to select CO2 as the subject Greenhouse Gas of this survey.

2-3 2.2 Outline of the implementing site (corporation)

2.2.1 Interest level at the implementing site Beijing Yanshan Petrochemical Co., Ltd. is anxious to realize this improvement plan by all means and the information has been submitted to their leaders. However, a project worth 50 million-yuan or more is subject to the approval of its superior authorities: China Petrochemical Group Corporation and the State Planning Commission. Yanshan Petrochemical Co., Ltd., therefore, is intending to file the application with the governing agencies on the basis of the results of this survey. We have obtained the letter of intention for the implementation of the project as attached herewith (Attachment 2.2.-1). The letter of intent has been issued by the Department of Beijing Yanshan Petrochemical Design Institute, which is in charge of designing the plants of the entire project, and signed by the deputy general engineering manager for consent. It cites the intention to plan the modification of the plant for the purpose of reducing CO2 emissions and protecting the environment, which includes the removal of a part of the facilities (Boilers No. 3 and 4). With regard to its interest on CDM, the letter has merely confirmed that Beijing Yanshan Petrochemical Co., Ltd., as a private enterprise, is in no position to comment on it on the ground that CDM is still in the stage of having formed the framework with the details currently under study and that, besides, the position of the central government is still indefinite. On the other hand, Beijing Yanshan Petrochemical Co., Ltd. is greatly interested in the improvement plan, as described above, holding high hopes for the application of the Yen Loan, particularly the Special Environment Yen Loan.

2-4 2.2.2 Condition (outline, specification, and operation) of the related facilities of the implementing site (corporation) The modification of the cogeneration facilities intends to abolish two out of the five 120t/h boilers running on heavy oil, belonging to the existing Power Station No. 1, and to newly install gas turbine power generation facilities (consisting of gas turbines and heat recovery steam generators) using natural gas for fuel so as to build up the cogeneration system, appropriating the existing steam turbines. The addition of the gas turbine generation facilities is expected to raise the efficiency of the power generation plant as a whole, including steam supply for the plant by recycling thermal energy contained in the hot exhaust gas from the gas turbines (560-600°C) with the heat recovery steam generators. Furthermore, the use of natural gas assists lowering pollution by soot and smoke and, in particular, reducing CO2 emissions as part of cutting back greenhouse gases. Beijing Yanshan Petrochemical Co., Ltd., as the subject of the survey, has five power stations: Power Stations No. 1 through No.3, oil refinery plant, and chemical plant, with the total power output of 180 MW. The Power Station No. 1, running on heavy oil, has been elected as the target of this research for the implementation of the cogeneration facilities. The Power Station No. 1 consists of five boilers (total steam generation = 600t/h) to satisfy three back-pressure turbines (total output = 30 MW) and a condensate turbine (output = 25 MW). Steam generated from the existing boilers is distributed through the steam header to every steam turbine and also for use by the plant. After the planned installation of the gas turbine power station, steam generated from the plant will be connected to the steam header to supply steam in place of the abolished two boilers. In order to maintain the power supply of the existing plants, the number of steam turbines to be operated is determined from the amount of steam required for use at the plant. The maximum requirement of the steam will be 111 t/h as high-pressure steam (3.82 MPa at 450°C) and 321t/h as the medium pressure steam (1.27 MPa at 250-300°C), including the increased volume at the end of 1999. Low-pressure steam (0.3 MPa at the saturating temperature) will also be supplied as supplementary steam. The principal requirement of this power station seems to be the supply of steam rather than electric power even after the planned modification. The gas turbine power facilities to form the cogeneration plant may be:

Case 1: Two systems of 70MW class gas turbine power plant facilities Case 2: Three systems of 25MW class gas turbine power plant facilities

The reason for recommending the above two cases is that the plan with three systems of 25MW generators, although lower (about 69%) in the electric output (total 126.9 MW) than two systems of 70MW generators (total output 184.3 MW), is expected to be more useful for this power station, which seems to be more steam-supply-oriented and flexible with respect to the power supply. It is also considered more suitable in terms of operation since the system is easily installable and capable of ensuring the required steam supply and, furthermore, the smaller electric output means a smaller impact on the total power supply in the case of a shutdown due to inspection or failure of the system.

2-5 (1) Outline of the Power Station No. 1

1) Boilers Steam Generation: 120 t/h x 5 boilers Steam pressure: 3.82 MPa (high-pressure steam) Steam temperature: 450°C Feedwater pressure: 6.4 MPa Feedwater temperature: 104°C Fuel: Heavy oil (low calorific value: 41,868 kJ/kg) Number of units: 5 (Of the existing seven boilers, one has been removed and one is out of service.)

2) Feedwater system for the boiler

a) Deaerator Type: Pressure seal and water spray Inner pressure: 0.02 MPa Heating steam source: Steam header Number of units: 7

b) Boiler feedwater pump Number of units: 6 (System No. 2 and No. 3 share one pump.)

3) Turbine bypass system Intended to ensure the supply of steam for use by the plant, the turbine bypass is used when more steam supply is needed by the plant while the back-pressure turbine is not operating or operating at a low power output. There are two systems of turbine bypass installed to reduce steam pressure from high 3.5 MPa to medium 1.27 MPa, and to lower steam temperature from 450°C to somewhere between 250°C and 300°C. The turbine bypass may also be used for regulating the medium pressure while the Power Station No. 1 is operating by itself (with only the back-pressure turbine operating).

4) Steam and water supply headers system It works under a common method where steam is led from each boiler to a single header and from that header to heat recovery steam generators. Water supply, on the other hand, is divided into two flows, one to No. 1 through No. 3 and the other to No. 4 through 7 via each of two headers that are interconnected with piping. While water is supplied to boilers from each header, each boiler has a separate water supply system so that each boiler can be supplied with water independently.

2-6 5) Steam turbine facilities

Turbine No. 1 Type: Back-pressure type Output: 6 MW Steam pressure at inlet: 3.5 MPa Steam temperature at inlet: 450°C Exhaust pressure at outlet: 0.78 to 1.27 MPa Exhaust steam flow at inlet: 92 t/h

Turbines Nos. 2 & 3 Type: Back-pressure type Output: 12 MW x 2 units Steam pressure at inlet: 3.5 MPa Steam temperature at inlet: 450°C Exhaust pressure at outlet: 0.78 to 1.27 MPa Exhaust steam flow at inlet: 174 t/h

Turbine No. 4 Type: Condensing type Output: 25 MW Steam pressure at inlet: 3.5 MPa Steam temperature at inlet: 450°C Exhaust pressure at outlet: 4.9 kPa (0.049 bar) Exhaust steam flow at inlet: 110 t/h

6) Removal of existing boilers The two oldest boilers of the five boilers above are planned to be removed but the new gas turbine generators will have to be installed and successfully test-driven in advance before removing the old boilers because of the following reasons: Removing existing boilers ahead of new installation makes it impossible to maintain necessary steam supply to the plant. Furthermore, it will be difficult to successfully install the gas turbine in the space vacated by the old boilers. The turbine generator facilities must be installed in a new empty space to facilitate installation work and subsequent operation; therefore, the existing boiler can be removed only after the completion of the work.

2-7 7) Consumption of steam and electric power by the plant

a) Steam consumption (maximum) A) High-pressure steam Pressure: 3.5 MPa Temperature: 450°C Consumption: 33 t/h (This amount was further increased by 78 t/h to 111 t/h from the end of 1999.)

B) Medium-pressure steam Pressure: 1.27 MPa Temperature. 250 to 300°C Consumption. 292 t/h (This amount was further increased by 29 t/h to 321 t/h from the end of 1999.)

b) Electricity consumption The maximum electricity consumption of Beijing Yanshan Petrochemical Co., Ltd. as a whole is about 180 MW while the electricity output from the Power Station No. 1 (subject of the survey) is 47.4 MW after the steam flow to the plant reaches its maximum (of which 25 MW is supplied from the condensing turbine). Since the steam supply to the plant takes preference over electricity output, the latter will be dependent on the steam flow through the back-pressure turbine. Turbine No. 4 (25 MW condensing turbine) will be the only turbine dedicated to the power generation purpose and is to be operated or suspended depending on the required quantity of the power. Electricity may be bought from outside sources if the output drops below the overall power requirement of Beijing Yanshan Petrochemical Co., Ltd.

8) Detailed introduction of the entire existing power generation facilities of Beijing Yanshan Petrochemical Co., Ltd. Beijing Yanshan Petrochemical Co., Ltd. has 13 steam turbines including those that are currently out of service.

a) Power Station No. 1 (subject of the current survey) 6 MW x 1 unit 12 MW x 2 units 25 MW x 1 unit Total 55 MW 4 units

b) Power Station No. 2 8 MW x 2 units 12 MW x 2 units Total 40 MW 4 units

2-8 c) Power Station No. 3 25 MW x 1 unit Total 25 MW 1 unit

d) Oil refinery plant 6 MW x 1 unit 20 MW x 1 unit Total 26 MW 2 units

e) Chemical plant 12 MW x 1 unit 17.5 MW x 1 unit Total 29.5 MW 2 units f) Gross total 175.5 MW 13 units

Figure 2.2-1 shows the structure of the existing system of Power Station No. 1 and Figure 2.2-2 shows the flow balance including the power output.

2-9

Steam Steam

Factory

0 to condition

Process Process h->to ^ Output

CP 450°C

Operation ;Rated

33t/h 300°C Note * ** "292t/h — — No.4 Condensate Turbine o V 3.82MPa ** 30 1.27MPa 234- 250 ** Q 3

Back Pressure No. Turbine % I in o 12MW \ -0 L h CONFIGURATION BFP Back Pressure No.2 Turbine

-0 i a \ 0.3MPa SYSTEM

Deaerator No.7 V Back Pressure No.1 Turbine ox -

°ox Steam

■0 Aux. O No.7 Boiler ------__ 450°C

104°C o 2

6.4MPa +J 3.82MPa **

------

O O E EQ ®. z No.6 Boiler O ** Steam o ” 1> a

o E o EQ i z « .27MPa .27MPa Aux. 1 1

o 2 m

—

O E O >E z from

CURRENT 3.5MPa 0.05 3.5MPa 0.78— 3.5MPa 0.78' Steam; 450°C,3.82MPa

o ” m a> +£

O E o J=Q Z Steam

o No.4 Boiler

Press.; Press; Press.;

Press.; Press.; Press.; 2 n 0) o

o O E to •N z

Heating Outlet (0.3MPa) Outlet Inlet Inlet Inlet 2.2-1 Outlet

m 0) o No.3 Boiler

o E tEQ t/h t/h t/h

92 units __ figure 104°C,6.4MPa 110 Feedwater:

174 n 2 0-

units

service)

5 1 2

in demand

x x t/h) Press.) Press.) Capacity

of x

t/h)

parenthesis 30Q°C

t/h t/h MW —

units

2MW

the Steam: Steam: 7 1 25 (2units (Condensate) (Back 6MW (Back (+78

120 120 250 increase t/h(+29

t/h 1999. the

within

of MPa,450°C MPa,

Pressure Pressure end

.DOC

Figure 1.27 234-292 3.82 30-33 indicates by

Boiler Control Deaerator Valve Turbine ): Low High

4 2 1 2-2-1 3

Capacity 1) 2) Demand ( m 2-10

Steam e Steam

t/h t/h Factory

Factory 321

111 -0 futur to >to 47.4MW

Process Process : ^ in

ro 0) ro o o V Z O T No.4 CondensateyNC__ Turbine quantity ro

3.82MPa (Gr) 12MW — s/Maximum

m 0) 6 2 Z O Tf V facilitie generating

Total (0 0) ro o> d o V Q

OMW a 0.3MPa

7 t/h total

Deaerator No. No.1 Back Pressure Turbine COGENERATION STEAM 72.5

No.7

—

1 oi

- No 542t/h Steam

7 CURRENT PROCESS Aux. O Boiler No. ------450°C

104°C 6.4MPa 2 ro (U o

t; 3.82MPa

------o E O ® z 4=0 No.6 Boiler o Steam 2 ro 1) ti

E o o 4=0 "lb z ,27MPa .27MPa Aux. 1 1

m o 2 tt) No.5 Boiler +d o ata

INCREASING — — TIT

o E O BALANCE 'T 4=0 z

from

3.5MPa 0.05 3.5MPa 0.78 0.78 3.5MPa Steam: 450°C,3.82MPa

O 2 0) ti

o Em O IT « z •to Steam o

No.4 Boiler Press; Press.; Press.; FLOW

Press.; Press.; ro

E O O ^ z 4=0

Outlet Heating Inlet Outlet Inlet (0.3MPa) Inlet Outlet ro o 2

: 2.2-2 O E o T_ Z 4=0

t/h t/h t/h

92 units ___ 104°C,6.4MPa Feedwater: 174 110

n 2 0-

Figure units

service)

5 1 2

demand in 1

x x x Press.) t/h) Press.)

Capacity

of x

t/h)

parenthesis

t/h t/h MW

units

2MW

the Steam: Steam: 7 1 25 (2units (Condensate) (Back 6MW (Back (+78

120 120 250~300°C increase t/h(+29

t/h 1999. the

within

of MPa, MPa,450°C 33

Pressure Pressure — end

Figure 1.27 234-292 30 3.82 indicates by

Boiler Control Deaerator Valve Turbine ): Low High

4 2 3 1 2-2-2.DOC

Capacity

( 2) 1) Demand d 2-11 2.2.3 Project executive capacity of the implementing site (corporation)

(1) Technical capacity As described later, Beijing Yanshan Petrochemical Co., Ltd. has sufficient engineering capability with ample human resources, and has a design division in the group. It has experience in a range of processes, related to the implementation of a plant, from the installation to test operations; therefore, it is believed to be quite competent.

(2) Management system Beijing Yanshan Petrochemical Co., Ltd. (about 4.46 billion yuan capital and 46,000 employees) is formed of a parent company managing corporate bodies (such as a school and a training center, a hospital, and a research institute, Administrative Dept., Refining Dept., Utility Dept , Environment Protection Dept, and Communication Dept ), the subsidiary companies (i.e. controlled subsidiaries of which 50% or more equity is owned by the parent company as well as unlisted wholly-owned subsidiaries), and affiliated companies (i.e. participating companies and combination companies). Figure 2.2-3 displays the organization of Beijing Yanshan Petrochemical Co., Ltd.

(3) Management base and policies In terms of production scale, Beijing Yanshan Petrochemical Co., Ltd. processes 9.5 million tons of crude oil and produces 450,000 tons ethylene besides 440 items (158 types) of petrochemical products. The company's production of petrochemical products from the very first project of 1969 add up to 155 million tons to date. To show the most recent profit performance as one of the managerial indices, the company has recorded 370 million yuan in last fiscal year (FY1998) and has budgeted 450 million yuan for this year (FY1999). It has been found through this survey that the company is planning to expand the ethylene production facilities from 450,000 tons to 660,000 tons in capacity in order to cope with the increased production of ethylene by Japanese manufacturers for Southeast Asian markets. The company is looking to further expansion of the business. The company's main international trading partners count more than 45 countries around the world, including Japan, Hong Kong, the Philippines, Thailand, Malaysia, Singapore, Pakistan in Asia, U K., Germany, Italy, France, the Netherlands in Europe, U.S.A., Canada, and Australia, with a trading value of 480 million dollars or more, exporting more than 70 commodity items.

2-12 Beijing Yanshan Petrochemical Co. LTD Yanhua High School Affiliated to Beijing Normal University. (^S^iUttJEiE) Education & Training Center

Worker ’s Hospital (#5K) Technology Center (Research Institute)

Communication Dept. (mmmmm) Environmental Protection Dept.

wtimmmUtility Dept. Refining Dept.

Subsidiaries

Wholly- owned Subsidiaries Controlled Subsidiaries 15 companies (in which Beijing Yanshan owns 50% or more equity) 4 companies

Affiliated companies

Participating Companies Combination Companies 16 companies 16 companies

Figure 2.2-3 ORGANIZATION OF BEIJING YANSHAN PETROCHEMICAL CO.. LTD.

2-13 The main products of Beijing Yanshan Petrochemical Co., Ltd. are petroleum products (eg. gasoline, paraffin oil, diesel oil, lubricant, paraffin wax, asphalt, toluene, xylene, and others). It is the largest ethylene manufacturer and also in the production of resin, plastics, synthetic rubber besides chemical products such as synthetic fiber carpets. The other indicators of the scope of the company are as listed in Table 2.2-1 below. It should be added, among other things, that the presence of many foreign nationals including Japanese as observed by the survey team members during their visit to the company had indicated the active exchange of business as described above.

Table 2.2-1 Scope of Beijing Yanshan Petrochemical Co., Ltd. (FY1998)

Item Description Area of the premises 36km2 (excluding Living District) 40km2 (including Living District) Corporate organization Beijing Yanshan Petrochemical Co., Ltd. • 19 subsidiaries • 32 affiliated companies Number of employees 46,000 (Entire organization of Beijing Yanshan Petrochemical Co., Ltd.) Scope of production Annual processing capacity of crude oil: 9.500.000 tons (Ent i re organization of Beijing Yanshan Petrochemical Co., Ltd.) Annual production capacity of ethylene: 450.000 tons (Entire organization of Beijing Yanshan Petrochemical Co., Ltd.) Capital 4.46 billion yuan (registered capital) Profit 370 million yuan (after tax) Import-export amount 480 million US dollars (trading partners: 45 countries and territories)

2-14 (4) Financing capacity As mentioned earlier, Beijing Yanshan Petrochemical Co., Ltd. is in a sound operating position on a firm management base with a 4.46 billion yuan capital and has no difficulty in the fund raising capacity. The practical situation, however, largely depends on the type of financing to be employed for the project according to which accompanying conditions such as own fund requirement and interest rate may vary.

(5) Human resources Beijing Yanshan Petrochemical Co., Ltd. with 46,000 employees is quite resourceful in well- qualified personnel and is prepared to employ Beijing Yanshan Petrochemical Design Institute of own group for the design work. The company expects no difficulty the supply of manpower as it plans to freely recruit necessary human resources from various departments and affiliated companies of the corporate group to organize its own project team for the execution of the project.

(6) Executive organization The management organization chart of Beijing Yanshan Petrochemical Co., Ltd. is displayed in Table 2.2-4. As soon as the project comes into existence, the company plans to organize a management system to be led by the company leaders, the management and supervisory departments, and the project management group below them to govern the administrative aspects of the project. Necessary personnel will be exploited from various departments, including Design Control, Design Institute, Process Control, Cost Control, Site Control, Procurement, Quality Assurance and Utility Departments, to organize an executive system that report to the above management and supervisory department.

2-15 Company leaders

Management Dept. xmms., sus. xw&G&m.

Planning Project Project plan Project Quality General project technology coordination assurance management

Executive Group

Deputy Site Manager Deputy Production Preparation Manager

Design Design Site Civil control Institute Planning Budge control engineering Process

Facility Electricity Instrumentation Procurement Quality Manufacturing control plant

Figure 2.2-4 PROJECT MANAGEMENT ORGANIZATION CHART

2-16 2.2.4 Specification of the related facilities of the implementing site (corporation) after the modification

(1) System planning specification of the facilities related to the implementing site (corporation) after the modification This is the proposed plan for the additional installation of gas turbine power generation facilities (gas turbines and heat recovery steam generators) running on natural gas by appropriating the existing steam turbine power generation facilities and three heavy-oil boilers. After the modification, the system will become combined heat and power generation facilities consisting of five existing steam turbine power generation facilities and three existing boilers. With regard to the planned scope of the gas turbine power generation facilities, the details can be planned with the alternative of two systems of 70 MW class gas turbines as Case 1 or three systems of 25 MW class gas turbines as described below.

Case 1 System configuration, operation, specification and facility composition of the cogeneration system of 70 MW class x 2 Gas turbine plant.

1) System configuration This is a basic system to supply steam to the existing steam turbines and also to the plant (factory) by installing two systems of gas turbine power generation facilities and a heat recovery steam generator to send steam generated by the heat recovery steam generator to the existing steam header. Feedwater for the two heat recovery steam generators will be supplied from the feedwater supply header of the existing plant. Steam generated by the heat recovery steam generator that collect heat from the gas turbine exhaust gas (580 to 600°C) is led into the existing steam header and mixed with steam generated from the existing boilers and then to the existing power generation facilities. The existing power generation facilities will supply high-pressure steam to the plant (factory) and to steam turbines as in the past while steam from the outlet of the back pressure turbine will be supplied and used as medium-pressure steam to and by the factory. The condensing turbine will be used solely for the purpose of power generation. The volume of steam generated by a system of 70 MW class is 120.5 t/h, or about the same as the amount of steam generated by one of the existing boilers (120 t/h in the case of the existing boilers). Therefore, the two of such systems will exactly replace the two existing boilers to have the facilities operated with three existing boilers and two heat recovery steam generators, or total five boilers. While the steam pressure generated by the heat recovery steam generator varies according to the amount of load on the gas turbine, the resultant steam header pressure controlled by the existing boiler will determine it. The steam header pressure would thus be maintained so as to keep the system working in the same way as it was before the gas turbine power generation plant has been installed. No problem would be expected in the actual operation because the existing boilers will always keep working since the steam consumption by the plant (factory) always exceed the amount of steam generated by the two systems of heat recovery steam generators.

2-17 For starting up the gas turbine generators, steam generated from the heat recovery steam generator will be kept being released from the boiler until such time when such conditions of the steam as the pressure and temperature reach an appropriate level to be sent to the existing steam header. Once the level is acquired, steam will be supplied to the steam header to enable starting up the gas turbine. The supply of natural gas (32 t/h) required to fuel the two systems of 70 MW class gas turbines can be sufficiently maintained from the 350A diameter pipeline that are already laid down to a point near the power station. The supply pressure 1.08 MPa of the natural gas is much higher than that of the domestic pipelines in Japan, so that the shaft power of the gas compressor for raising the pressure can be lowered. As mentioned earlier, the potential demands for the supply of natural gas, electricity and steam make the company quite adaptable to the cogeneration system implementation plan.

2) Operation The study on the operation of the cogeneration system following the installation of the gas turbine power generation facilities was made on the assumption that the steam consumption of the plant (factory) which was increased in the end of 1999 has now reached to its maximum.

a) Normal operation The total amount of steam to be generated with the three existing boilers operating is assumed to be 301 t/h (with 84% load on each boiler). The same with the two systems of the gas turbine power generation facilities is assumed to be total 241 t/h (the maximum generation). The total amount of steam, therefore, will add up to 542 t/h. At the existing back-pressure turbine, which is one of the planned consumers of steam, the steam used for power generation and lowered in pressure will be supplied as medium-pressure steam to the plant (factory). The other flow of high-pressure steam bypassing the turbine for use by the plant (factory) at the rate of 111 t/h is supplied directly to the plant (factory) to bring the total amount of steam for plant consumption up to 432 t/h. The difference between the amount, 542 t/h, of steam generated from boilers and that, 432 t/h, of steam supplied to the plant (factory), i.e. 110 t/h, will be the amount to flow into the existing condensing turbine (maximum intake flow 110 t/h), and then the existing power generation facilities would be producing its peak power. The generated power will be 47.4 MW from the existing turbine generators and 136.9 MW from the gas turbine generators to add up to total 184.3 MW. As the maximum quantity of required power is said to be 200 MW, additional 15.7 MW power will have to be bought from outside if the full power is required.

b) Operation with one boiler shut down This study will be necessary because such a situation will be possible under a normal condition for maintenance or other purposes, and it is the basic requirement that steam supply to the plant would be secured under such conditions. The study was made on the assumption: one of the existing boilers is shut down and yet the maximum supply quantity to the plant (factory) needs to be ensured.

2-18 Two of the existing boilers are to be operated to produce steam at the rate of 240 t/h of steam (maximum steam generation). Two systems of gas turbine facilities are to be operated to obtain 241 t/h of steam (maximum generation). Thus the total amount of steam to be generated by the boilers add up to 481 t/h. At one of the steam users, i.e. the existing back-pressure turbine, the steam that has flowed through the turbine to generate electric power and lost some pressure would be sent to the plant (factory) as medium-pressure steam at the rate of 321 t/h. The other flow of high-pressure steam that has bypassed the turbine, 111 t/h, would be directly sent to the plant. The total amount of steam for the plant will be 432 t/h. The balance of the amount, 481 t/h, of steam generated from boilers less the amount, 432 t/h, of steam supplied to the plant (factory), i.e. 49 t/h, will be the amount to flow into the existing condensing turbine (maximum intake flow 110 t/h) and it will still be capable of operation even though the power output will drop to 8.7 MW. Obtainable power output then will be 31.1 MW from the existing turbine power generation facilities and 136.9 MW from all the gas turbine power generation facilities and the total power to be generated will be 168 MW Since the required peak power is said to be about 200 MW, 32.0 MW will have to be bought from outside.

The drawings related to the cogeneration system after the installation of 70 MW class gas turbine facilities are shown below:

Figure 2.2-5 Cogeneration flow balance (Case 1) using 70 MW Class GT/future peak Figure 2.2-6 Cogeneration flow balance (Case 2) using 70 MW Class GT/one boiler stopped Figure 2.2-7 Heat balance diagram for new GT & HRSG (Case 1) Figure 2.2-8 Heat balance diagram (70 MW Class GT x 2 systems; per system) Figure 2.2-9 Flow diagram for fuel gas & utility

GT: gas turbine HRSG: heat recovery steam generator

2-19

t/h t/h

Factory 111

321 Factory

to peak to — 25MW %>

—

300 GT/future

~ No.4 Condensate/^* Turbine o 0) O O z CM V 3.82MPa 12MW 1.27MPa 250

-©

V Class

0) o t/h o z V

221

No.3 Back Pressure Turbine 70MW V 1-1)

V 10.4MW -© (Case

V Back Pressure No.2 Turbine BFP y e OMW BALANCE -0

0.3MP

t/h

Deaerator No.7 total

FLOW No.1 Back Pressure Turbine

72.5 t-i 'No.7 V t/h Qt

-----

No.1 V 542

0 ------o Aux. 450°C Boiler No.7

ft ft COGENERATION 3.82MPa ------

104°C o 6.4MPa ® 0)

----- Boiler No.6

E o II 4=0

% peak

Future 111 321 ra 0)

2.2-5

steam peak

E O

It 4=

Current 33 O 292 No.5 Boiler flow

0) average

ft O Current 30 Process 234 Figure —

ft E O ii 4:

t/h) o E

1! 4= 47.4MW (+78 184.3MW 136.9MW 0>

250~300°C

t/h(+29

O 4=0 if t/h

MPa,450°C MPa,

steam

£L 1.27 30~33 3.82 234~292 No.2 HRSG

generated GT

l Steam; Steam:

£ Existing New Total HRSG No.1 =ftr a a Pressure Pressure

Low High

1) 2) Demand;

2-20

t/h t/h

Factory 111

321 Factory

— 8.7MW -© )-^to ^to *-D CP 450°C C boiler

V 300

~ No.4 Condensate/^er" Turbine o Q CM V 0 3.82MPa 12MW 1.27MPa 250

GT/one H

V t/h

V 160 Class

No.3 Back Pressure Turbine V 1-2)

70MW o Z V 10.4MW -0 boiler) 3L

o (Case by Q co V

No.2 Back Pressure Turbine BFP y generated

±Jc OMW V -© i 0 BALANCE steam 0.3MP

t/h —

Deaerator No.7 total

No.1 Back Pressure Turbine Ti 64.4 FLOW (Maximum

'No.7 \l/ t/h 03

No.1 V 481 03 Steam

D O Aux. 450°C No.7 Boiler

3.82MPa COGENERATION 104°C 6.4MPa o 2 CD CD CD O -*-> Q No.6 Boiler

o E o 7<

CO z peak

»+:

Future 111 321

— o 2 CD CD CD

ti Q steam peak 7K o E o

LO Z

2.2-6 Current 33

O 292 ih No.5 Boiler flow

K # o E o 1 Current Z 4= 30 Process 234 Figure ---- o 2 m 0) ti Q

7K O E O z «? 4= o 2 ro

t/h) o 7K E O

^ z 4: 168.0MW (+78 136.9MW 31.1MW ---- o 2 0) <0 <0 ti Q

250~300°C t/h(+29

7K d E o i- Z £ t/h

MPa,450°C MPa,

steam

n. 1.27 30~33 3.82 234~292 No.2 HRSG

generated GT

Steam: Steam:

Existing New £L Total No.1 HRSG 0- 0- Pressure Pressure

High Low

1) 2) Demand;

2-21 -a) ) )

* 2

Condition)

kcal/kg KJ/kg MW

(ISO

5.0°C

1 60% 0.1013MPa 78.7% 136.9 :°C :MPa-a(kg/cm 68.45 Gas 46863

( (11193

P YANSHAN G:Vh °

Legend 1)

GROUP.

Press. Humidity Natural

Conditions : BEIJING Temp.

Performance

Output

by (Case

Efficiency

Fuel

Value(LHV) Relative Amb. Ambient

(LHV) Turbine Gene advised

HRSG PETROCHEMICAL As Calorific Co

Gas

* &

120.5G Generator

Recovery

New 104°

Steam Heat

for

No.1 .0G 241

Diagram

450°

Header

xr O in m 8 O Existing 3.9P(40

To Balance

cl f 8 Heat

GT)

9= O co Turbine

Class

i Gas

i MW

i 16.12G No.1 2.2-7 (70 2

15.0° Air GT

Figure Generator Class

No.1 MW

2-2-7.DOC

H Type:70

2-22

78. output MW

t/h

system

68.45 120.5 Steam by Generation terminal efficiency:

PPE-00-0060 heat

balance

the

32.6% Cogeneration

shows

and

systems) Chart

losses 2

Note: (1)

Mechanical other GTx

Class

turbine

Gas exhaust 70

(Case

% 1 . 66 DIAGRAM

turbine

Steam Gas BALANCE

loss HEAT

heat

gas

2.2-8

Exhaust Figure loss loss

heat 0.4%

loss

heat

HRSG Piping

2 -2 3 maiirnL

B o No,2 UNIT

DEAERATOR FEED VATER> iDRUM. SILENCER

CHEMICAL INJECTION FROM No.2 UNIT SYSTEM EXISTING MAIN 3.9MPqA 435r 200A

No.l HEAT RECOVERY BLOW TANK STEAM GENERATOR To No,2 UNIT To No.l HRSG To No.l GAS TURBINE HOSE STATION To No,2 UNIT To No.l GAS COMPRESSOR 0 INSTRUMENT AIR „ 50A To No.l HRSG To No.l GAS TURBINE

To No.2 UNIT GAS VENT

NITROGEN GAS > To No.l HRSG SILENCER E

e GAS VENT AIR INTAKE

F F

GAS TURBINE TYPE : GAS FLOW 70,000kW CLASSxEunits METER CDMBUSTER

250A GAS COMPRESSOR j NATURAL GAS GAS FILTER .OIL MIST G JSEPARETER To No,2 UNIT ICOMPRESER TURBINE

No.l : ]*---- - J GENERATOR 1 UNIT j No.l GAS TURBINE UNIT To No.l HRSG —A'------TT'/jR---- I-----'

DRAIN

To No,2 UNIT COOLING WATER (SUPPLY) COOLING VATER(SUPPLY). FROM No.2 UNIT 1 250A = COOLING WATER (RETURN)

lea jrauE I I flow diagram I —s SOU FOR FUEL GAS i UTILITY Figure 2,2-9 FLOW DIAGRAM FOR FUEL GAS 8. UTILITY (COGENERATION POWER PLANT GAS TURBINE 70,00QkW CLASS x 2) KBL

in4iaMXX/XXsXX-X>il«^6mi i 4Q

2-24 3) Specifications and details of gas turbine power generation facilities

a) Main specifications of 70 MW class gas turbine Type: Simple-cycle and single-shaft Output: 68,450 kW Atmospheric pressure : 1,011 hPa Atmospheric temperature: 15°C (ISO standard) Revolutions: 5,235 r/min Fuel: Natural gas Noise value: 93 dB (A) (at one meter from a side of the equipment) Gas turbine package includes the following attachments: Turbine package Air compressor Combustor Air inlet plenum Base and anchor bolt Piping and valves inside the package Enclosure Ventilation fan inside the enclosure Attachments not included in the Gas turbine package Reduction gear box Gas turbine starter (motor driven) Exhaust frame-cooling blower Intake duct Intake silencer Exhaust diffuser Exhaust duct Exhaust silencer Lubrication unit Oil tank Oil cooler Main oil pump Emergency pump Main oil tank valve and mist separator & fan Control oil pump Oil filter

2-25 b) Fuel gas compressor Type: Either one of the screw, centrifugal, or reciprocal types will be adopted. Intake pressure: 1.08 MPa Discharge pressure: 2.94 MPa Temperature: Normal temperature Flow rate: 16,120 kg/h (Atmospheric temperature 15°C; per system) Drive unit: Electric motor c) Fuel gas system: Fuel gas strainer Flow regulator & shut-off valves Fuel gas flow meter d) Main specification of electric generator Type: Totally enclosed, forced lubricated, air-cooling, cylindrical rotor type, synchronous alternator Capacity: 76,060 kVA Voltage: 11.000 V Power factor: 90% Frequency: 50 Hz Revolutions: 3.000 r/min Short-circuit ratio: About 0.5 Insulation type: F-class Cooling system: Closed circuit ventilation type Noise value: 90 dB(A) or lower (at one meter from a side of the equipment)

Generator includes the following attachments: Air cooler Coolant piping & valves Base & anchor bolts e) Main specification of the heat recovery steam generator Type: Single-pressure, vertical natural-circulation boiler Steam pressure: 3.82 MPa Steam temperature: 450°C Steam flow rate: 120.5 t/h Feedwater temperature: 104°C Ventilation type: Forced ventilation with gas turbine Heat recovery steam generator attachments: Chemical injection system Sampling system Piping and valves installed in the boiler battery limit

2-26 f) Gas turbine generator controls As a rule, the start/stop control of the gas turbine generator is performed at the local control room, while the full-time monitor and load controls will be performed from the control center. The gas turbine power generation system is automatically operated with a variety of controls in a predetermined sequence, provided that all utilities are made available in operable conditions through a preparatory procedure prior to start-up. It is required, in addition, that the cooling circuit is filled with water as prescribed, that the fuel gas system is pre-purged, and that the gas compressor is activated on the site. Water shall be filled manually. The controls of the turbine power generation system include: DCS (Distributed Control System) Gas turbine control panel Generator control panel Heat recovery steam generator control panel (flow rate/pressure/temperature controls shall be performed manually). Fuel gas compressor control panel g) Electric facilities The main transformer and the subsequent high-voltage devices are to be provided by Chinese concerns while the following components will be supplied from Japan: Generator switchgear cubicle 6-kV switchgear 400-V distribution board Control center DC system (Battery charger, battery, DC distribution board) Uninterruptible power supply system (UPS)

2-27 Case 2: System configuration, operation, specification and facility composition of the cogeneration system of 25 MW Class Gas turbine x 3 systems

1) System configuration The basic system is similar to the preceding 70 MW class x 2 systems except that three systems of gas turbine power generation facilities will be installed. Water is supplied to the three systems of heat recovery steam generators from the water header of the existing plant. Steam generated by the heat recovery steam generator that is intended to collect heat from the gas turbine exhaust gas (550 to 570°C) is led into the existing steam header to be mixed with steam generated from the existing boilers and then to the existing power generation facilities. The existing power generation facilities supply high-pressure steam to the plant (factory) and to steam turbines as before while steam from the outlet of the back-pressure turbine will be supplied and used as medium-pressure steam to and by the factory, and the condensing turbine is used solely for power generation purposes. The volume of steam generated by a system of 25 MW Class turbine shall be at the rate of 70 t/h to add up to 210 t/h with three systems. Total 542 t/h is required; therefore, the balance of generated steam from existing boilers, 332 t/h, can be provided by the three boilers (the total capacity of the three boilers is 360 t/h). Since the amount of steam to be generated from a heat recovery steam generator is about 45 t/h without any supplementary fuel firing, the required rate of generation 70 t/h has to be secured by additional combustion by the boiler. The heat recovery with supplementary fuel firing functions is the characteristic feature of this case. While the steam pressure generated by the heat recovery steam generator varies according to the gas turbine load, it will be determined by the resultant steam header pressure as controlled by the existing boiler. The steam header pressure would thus be maintained, so that the system can be operated in the same way as it was before the installation of the gas turbine power generation plant. No problem would be expected in the actual operation because the existing boilers will always keep working since the steam consumption by the plant (factory) always exceed the amount of steam generated by the three systems of heat recovery steam generators. For starting up the gas turbine generators, steam generated from the heat recovery steam generator will be kept being released from the boiler into the atmosphere until such time when such conditions of the steam as the pressure and temperature reach an appropriate level to be sent to the existing steam header. Once the level is acquired, steam will be supplied to the steam header to enable starting up the gas turbine. The supply of natural gas (about 22.5 t/h) required to fuel the three systems of 25 MW class gas turbine can be sufficiently maintained from the 350A diameter pipeline that is already laid down to a point near the power station. The supply pressure of the natural gas, 1.08 MPa, is much higher than that of the domestic pipelines in Japan, so that the shaft power of the gas compressor for raising pressure can be lowered. As mentioned earlier, the 25 MW Class cogeneration system plan should be quite adaptable to the project as seen from the potential demands for the supply of natural gas, electricity and steam. The drawings related to the system configuration after the installation of the 25 MW Class cogeneration system are shown below:

2-28 2) Operation The study on the operation of the cogeneration system following the installation of the gas turbine power generation facilities was made on the assumption that the steam consumption of the plant (factory) which was increased in the end of 1999 has now reached to its maximum.

a) Normal operation The total amount of steam to be generated with the three existing boilers in operation is assumed to be 332 t/h (with 92% load on each boiler). The amount of steam to be supplied by operating the two systems of the gas turbine power generation facilities is total 210 t/h (maximum generation). The total amount of steam, therefore, will add up to 542 t/h. At the existing back-pressure turbine, one of the planned consumer of steam, the steam used for power generation and lowered in pressure is supplied to the plant (factory) as medium-pressure steam. The other flow of high-pressure steam bypassing the turbine for use by the plant (factory) at the rate of 111 t/h is supplied directly to the plant (factory) to bring the total amount of steam for use by the plant up to 432 t/h. The balance of the amount, 542 t/h, of steam generated from boilers less the steam, 432 t/h, supplied to the plant (factory), i.e. 110 t/h, will be the amount of steam to flow into the existing condensing turbine (maximum intake flow 110 t/h). The power to be generated by the existing power generation facilities, then, would be at its peak. The power to be generated by the existing turbine will be 47.4 MW and 79.5 MW by the gas turbine generators, that add up to total 126.9 MW. As the maximum quantity of required power is said to be 200 MW, additional 73.1 MW power will have to be bought from outside if the full power is required.

b) Operation with one boiler shut down This study will be necessary as such a situation is possible under a normal condition for maintenance or other purposes and it is the basic requirement that steam supply to the plant should be secured under such conditions. This is possible with one boiler shut down, as shown below. The study was made on the assumption, one of the existing boilers is shut down and yet the maximum supply quantity to the plant (factory) needs to be ensured. Two of the existing boilers are to be operated to produce steam at the rate of 222 t/h (maximum generation). Three systems of gas turbine facilities are to be operated to obtain 210 t/h of steam (maximum generation). Thus the total amount of steam to be generated by the boilers add up to 432 t/h. At one of the steam users, the existing back-pressure turbine, the steam that has flowed through the turbine to generate electric power and lost some pressure would be sent to the plant (factory) as medium-pressure steam at the rate of 321 t/h. The other flow of high-pressure steam that has bypassed the turbine, 111 t/h, would be directly sent to the plant. The total amount of steam for use by the plant will be 432 t/h. Then the total amount of steam generated by the boilers and the amount of steam for use by the plant will equal and the condensing turbine power generation system will be shut down.

2-29 Although it may be possible to supply 18 t/h to the condensing turbine by increasing the amount from the boilers to the maximum of 240 t/h, it would not be economical as the electric output would be so small as 0.4 MW and additional power would be needed to activate cooling water. Therefore, the condensing turbine will be shut down. Power output to be obtained will be 22.4 MW from the existing turbine power generation facilities and 79.5 MW from all the gas turbine power generation facilities to add up to 101.9 MW. Since the required peak power is said to be about 200 MW, 98.1 MW will have to be purchased from outside.

Figure 2.2-10 Cogeneration flow balance (Case 2-1) 25-MW Class GT used/future peak Figure 2.2-11 Cogeneration flow balance (Case 2-2) 25-MW Class GT used/one boiler stopped Figure 2.2-12 Heat balance diagram for new GT & HRSG (Case 2) Figure 2.2-13 Thermal balance chart (25-MW Class GT x 3 systems; per system) Figure 2.2-14 Flow diagram for fuel gas & utility

Although no problem is expected in the operation of either 70 MW class x 2 or 25 MW class x 3 gas turbines, the preference of this power station is placed on the steam supply to the plant (factory) while demands for electric power can be accommodated otherwise within the total capacity of Beijing Yanshan Petrochemical Co., Ltd. The plan using 25 MW class x 3 Gas Turbine Power Plant is also applicable by contriving the ON/OFF operation of the cogeneration facilities to fit to the operating rate of the plant.

2-30

t/h t/h

Factory 111

321 Factory

to — 25MW

peak -0 ^-^to

^ M/ $ CP 450°C C

300

~ No.4 Condensate/^; Turbine Y 3.82MPa used/future 1.27MPa 12MW

250

\l/ GT t/h

221

No.3 Back Pressure Turbine o O Class Q Y

2-1)

o 4> Q CO Y No.2 Back Pressure Turbine BFP y OMW 3/ -© BALANCE 0

0.3MP

t/h Deaerator No.7 total

No.1 Back Pressure Turbine FLOW 72.5

'No.7 OX t/h

----- No.1 \/V 542 0-i

Steam

■0 O Aux. 450°C No.7 Boiler

% COGENERATION 3.82MPa 104° 6.4MPa o 2 4) (0 4) O +■> O

No.6 Boiler

o" E o CO peak z *t

7\ IK

Future 111 321

o 4) ro 2 4)

■H — a steam peak o E o

7K to z it

2.2-10 Current 33

O 292 No.5 Boiler flow

o 2 0) ro 4) A -H average Q

A o E o Z Current 4= 30 Process 234 — Figure o 2 ra 4> Q

7K o E o z 4: o ro — 2 +i t/h) Q

t/h) 7K o E

z 4= £i (+78 — o No.3 HRSG 126.9MW 2 0) <0 4> 79.5MW 47.4MW ti Q

250~300°C t/h(+29

ft o" E o Z 4= t/h

MPa,450°C MPa,

steam

n. 1.27 30~33 3.82 234~292 No.2 HRSG

generated GT

l Steam: Steam:

£ New Existing Total No.1 HRSG a- a-* Pressure Pressure

High Low

1) 2) Demand;

2-31

t/h t/h

Factory 111

321 Factory

to OMW to 3>

-0 )- ^ *-D

stopped

CP 450°C 0)

Q V boiler

No.4 Condensate, Turbine

O % 0) Q CM V 3.82MPa 1.27MPa 12MW 250~300°C

V s o t/h I Q W V

GT/one

111

No.3 Back Pressure Turbine V 2-2)

Class

s Q 10.4MW ~0 (Case

Q 25-MW V Back No.2 Pressure Turbine boiler)

V ®BFP 0MW 3/ BALANCE 0

0.3MP generated

t/h

No.7 Deaerator total

FLOW No.1 Back Pressure Turbine steam

60.2

Vi 'No.7 05

----- No.1 (Maximum M Steam

f) o ----- Aux. 450°C No.7 Boiler

iA V

7 COGENERATION 3.82MPa ------104°C 6.4MPa 0) O Q No.6

Boiler \

7 O i! 4= peak

-cA Future

111 321

o 2 S

steam peak

7K E

z « 4= 2.2-11 Current 33 o 292 No.5 flow Boiler

2 «

7R E o z Is 4: Current 30 Process 234 Figure

0) ! O

7K O 4= 1

S 0) Q t/h)

t/h) E o

ii 4= D. (+78 101.9MW No.3 HRSG 2 S 79.5MW 22.4MW A

250~300°C

_c o >

t/h(+29

dS E

z ir t/h

292

MPa, MPa,450°C

steam ~

Q 1.27 30~33 3.82 < 234 No.2 HRSG y

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generated GT

Steam: Steam:

Q Existing New Total No.1 HRSG A a Q- Pressure Pressure

Low High

1) 2) Demand;

2-32 ) )

x Condition)

MW kcal/kg KJ/kg

(ISO

MW 5.0°C

1 60% 0.1013MPa 85.0%

79.5 26.5 :°C :t/h :MPa-a(kg/cm-a)

Gas 46863 (

(11193

P YANSHAN G °

Legend 2)

GROUP.

Press. Humidity Natural

Conditions : BEIJING Temp.

Performance

Output

(Case by

Efficiency Fuel

Value(LHV) Relative Amb. Ambient

(LHV) Turbine

Gene advised

HRSG PETROCHEMICAL As Calorific

Gas * &

70.0G

New Generator

104° Recovery

for

Steam Heat

No.1 OG 21

Diagram Generator

450°

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No.1 Existing 3.9P(40

To Balance

GT)

Turbine

Class

Heat Gas

No.1 (25 2-12 . 2

GTX3 Figure

Class

2-2-12.DOC

H Type:25

2-33

85.0%

output

system. MW

t/h including per

26.5 efficiency: Steam 70 Generation terminal

PPE-00-0061 heat 32.5%.) balance

condition

in GT

a thermal

Cogeneration shown

combustion.

systems)

and indicates

efficiency x

losses

figure

efficiency

Mechanical other GT supplementary (Simple This Note: (1) (2)

Class

turbine

Gas exhaust 25-MW

(Case

DIAGRAM

:ombbstion

turbine

Steam BALANCE Gas

Supplementary HEAT loss

heat

gas 2.2-13

Exhaust Figure loss loss

head 0.4%

loss

heat HRSG

Piping

2-34 afVBHUt 1 It- MILflf JUL jey J aomeum ------1 evil am m i «rt iffi,

•To No.3 UNIT •To No,2 UNIT 80A [DEAERATOR FEED VATER>------!H- ECO.

SILENCER EVA.

FROM No.3 UNIT CHEMICAL INJECTION •FROM No,2 UNIT SYSTEM S/H EXISTING MAIN ID 3.9MP0.A 40Q-C EOOA STEAM HEADER ------!(»>- >To No.l HRSG ->To No.3 UNIT —-To No.l GAS TURBINE HOSE STATION T 25A -^To No,2 UNIT •To No.l GAS COMPRESSOR

[ INSTRUMENT AIR>------^ To No.l HRSG To No.l GAS TURBINE 0^- • To No.3 UNIT • To No,2 UNIT GAS VENT r\ 50A NITROGEN GAS ■To No.l HRSG SILENCER 100 A JJ LJ t— 01©I Y 50A SUPPLEMENTARY FIRING -e GAS FILTER I GAS FLOV | AIR INTAKE ,v GAS VENT ^METER j

No.l GENERATOR GAS TURBINE TYPE : I GAS FLOV UNIT 25,000kW CLASSxOunits METER

generator ! 100A OIL MIST X SEPARETERW -eCDMPRESER TURBINE L L_ LUBE OIL TANK ln °X gas-turbine UNIT To No.l HRSG 3 t DRAIN —»To No.3 UNIT 50A

JtittMU;JUL. mtu i tec | FLOW DIAGRAM SX1 FOR FUEL GAS l UTILITY

Figure 2.2-14 FLOW DIAGRAM FOR FUEL GAS 8. UTILITY (COGENERATION ROVER PLANT GAS TURBINE 25.0C0kV CLASS x 3) 2-35 9i |«V. I I i I i I im4&.JXX/Xm-XX||.3&mXX 3) Specifications and details of gas turbine power generation facilities

a) Main specifications of 25-MW class gas turbine Type: Simple-cycle and single-shaft Output: 26,500 kW Atmospheric pressure: 1,011 hPa Atmospheric temperature: 15°C (ISO standard) Revolutions: 7,275 r/min Fuel: Natural gas Noise value: 93 dB (A) (at one meter from a side of the equipment)

Gas turbine package includes the following attachments: Turbine package Air compressor Combustor Auxiliaries-driving gear Oil tank Oil cooler Main oil pump (driven by the auxiliaries-driving gear. Auxiliary oil pump (AC and DC motors are coupled in tandem.) Main oil tank, mist separator, and fan Oil filter Base and anchor bolts Start-up motor and torque converter Piping and valves in the package Air inlet plenum Enclosure Ventilation fan inside the enclosure

Attachments not included in the gas turbine package Reduction gear box Intake duct Intake silencer Exhaust diffuser Exhaust duct Exhaust silencer C02 fire extinguisher

2-41 b) Fuel gas compressor Type: Either one of the screw, centrifugal, or reciprocal types will be adopted. Intake pressure: 1.08 MPa Discharge pressure: 2.45 MPa Temperature: Normal temperature Flow rate: 6,270 kg/h (at atmospheric temperature 15°C; per system) Drive unit: Electric motor c) Fuel gas system: Fuel gas strainer Flow regulator & shut-off valves Fuel gas flow meter d) Main specification of electric generator Type: Totally enclosed, forced lubricated, air-cooling, cylindrical rotor type, synchronous alternator Capacity: 29,450 kVA Voltage: 11.000 V Power factor: 90% Frequency: 50 Hz Revolutions: 3.000 r/min Short-circuit ratio: About 0.5 Insulation type: F-class Cooling system: Closed circuit ventilation type Noise value: 90 dB (A) or lower (at one meter from a side of the equipment) Generator includes the following attachments: AC exciter Rotating exciter Air cooler e) Main specification of the heat recovery steam generator Type: Single-pressure, vertical natural-circulation boiler Steam pressure: 3.82 MPa Steam temperature: 450°C Steam flow rate: 70 t/h Feedwater temperature: 104°C Ventilation type: Forced ventilation with gas turbine Heat recovery steam generator accessories consist of the following items: Chemical injection system Sampling system Piping and valves installed in the boiler battery limit

2-42 f) Gas turbine generator controls As a rule, the start/stop control of the gas turbine generator is performed at the local control room, while the full-time monitor and load controls will be performed from the control center. The gas turbine power generation system is automatically operated with a variety of controls in a predetermined sequence, provided that all utilities are made available in operable conditions through a preparatory procedure prior to start-up. It is required, in addition, that the cooling circuit is filled with water as prescribed, that the fuel gas system is pre-purged, and that the gas compressor is activated on the site. Water shall be filled manually. The controls of the turbine power generation system include: DCS (Distributed Control System) Gas turbine control panel Generator control panel Heat recovery steam generator control panel (flow rate/pressure/temperature controls shall be performed DCS). Fuel gas compressor control panel g) Electric facilities The main transformer and the subsequent high-voltage devices are to be provided by Chinese concerns while the following components will be supplied from Japan: Generator switchgear cubicle 6-kV switchgear 400-V distribution board Control center DC system (Battery charger, battery, DC distribution board) Uninterruptible power supply system (UPS)

2-43 4) Utility connection condition The following items commonly applicable to both 70-MW class and 25-MW class facilities:

a) Natural gas Supply pressure: 1.08 MPa Supply temperature: Normal temperature Composition (Unit = mol%) CH, 96.332 C2H6 0.605 c3h 0.084 iC4Hio 0.012 nC^io 0.011 iC5H12 0.011 nCsHi 2 0.003 h 2s 0 h 2o 0.005 h 2 0.039 N2 + Ne 0.723 Total 100.0 Calorific value: 46,863 kj/kg (11,193 kcal/kg)

b) Calorific value of heavy oil: 41,868 kJ/kg (10,000 kcal/kg) c) Boiler feedwater: 104°C d) Low-pressure steam: 0.30 MPa, saturated temperature e) Air for pneumatic control: 0.49 MPa f) Air for miscellaneous use: 0.49 MPa g) Nitrogen gas: 0.30 MPa k) Cooling water: 32°C

5) Site conditions a) Atmospheric temperature (°C): Highest: 43.5; Average: 6 to 11. b) Relative humidity (%): Highest: 79 (summer); Average: Lowest: 51.3 (winter) c) Atmospheric pressure (hPa) Average 1,011

6) Design condition of gas turbine generation facilities a) Atmospheric temperature: 15°C b) Atmospheric pressure: 1,011 hPa c) Relative humidity: 60%

2-44 7) Comparative study of facility specifications for renewal

(1) Facility specifications to be renewed Given that Beijing YanShan Petrochemical Co., Ltd. gives preference to steam supply over power generation, the following two cases have been checked for renewal so that the performance of steam generation of the new facilities would be equivalent to that of the facilities slated to be removed. In Case 2 below using 25-MW class facilities, the waste heater will be provided with the means of supplementary combustion, so that the system can generate more steam (70 t/h per unit) than it could with the heat recovery steam generator alone (about 45 t/h per unit). Against the total generation of 240 t/h by the two existing boilers, we have selected the total amount of generation from the 25 MW x 3 gas turbine plants to be 210 t/h because the specified quantity is deemed to be a definitely deliverable under the normal operating condition of the plant.

Case 1: Cogeneration facilities of 70 MW x 2 Gas Turbine Power Plant Amount of steam generated: 120.5 t/h x 2 = 241.0 t/h Generated power: 68.45 MW x 2 = 136.9 MW Case 2: Cogeneration facilities of 25 MW x 3 Gas Turbine Power Plant Amount of steam generated: 70.0 t/h x 3 = 210.0 t/h Generated power: 26.5 MW x 3 = 79.5 MW

(2) Balancing various items Comparative study was made between 70 MW x 2 Gas Turbine Power Plant and 25-MW x 3 Gas Turbine Power Plant with details as shown in Table 2.2-2 (a) and (b).

(A) Amount of generated steam While the gas turbine output depends on atmospheric temperature conditions, the total amount of generated steam is 241 t/h with 70 MW x 2 Gas Turbine plant at the atmospheric temperature 15°C according to the ISO conditions, and the same with 25 MW x 3 plant was assumed to be 210 t/h, taking into consideration the economic efficiency of the supplementary combustion in addition to the heat recovery steam generators. The quantity of generation was selected by considering the required amount of steam during the normal operation of the plant as the deliverable quantity.

(B) Generated power The 25-MW class system generates 79.5 MW or 58% of the total power, 136.9 MW, generated by the 70-MW class system.

2-45 (C) Supply and demand balance of steam A study was made on the following two types of operating conditions, assuming the maximum required amount of low-, medium-, and high-pressure steam as 111 t/h, 321 t/h, and 432 t/h, respectively:

i) With three existing boilers in operation It is possible to strike a balance between supply and demand by either 70 MW x 2 or 25 MW x 3 GT power plant by generating steam at the rate of 100 to 112 with the heat recovery steam generator working under the rated operating conditions. It is also possible in both cases to supply steam to the existing condensing turbine at the rate of 110 t/h to allow the turbine to produce its maximum output.

ii) With one of the existing boilers suspended A study was made on a situation where one of the existing three boilers is suspended (temporarily stopped) for a regular maintenance service or any other reason and with the newly installed heat recovery steam generator operating under the rated conditions similar to the above. The system can also supply the required amount of steam to the plant (factory) either with 75 MW x 2 or 25 MW x 3 GT. However, steam supply to the condensing turbine decreases to as low as 18 t/h with 25-MW class turbines, vis-a-vis 49 t/h with 70 MW x 2 GT; therefore, the condensing turbine will have to be suspended while operating with the former.

(D) Supply/demand balance of electric power The balance of electric power as generated by the respective systems have been checked under the conditions described in (C) above and with the peak demand for steam by the plant. Comparisons were made on the condition that there are below listed turbines included in the existing facilities getting steam supply and generating electric power as indicated in Figs. 2.2-5 through 6 and Figs. 2.2-10 through 11, respectively. Rated output of the existing steam turbines: No. 1 Back-pressure turbine — Rated output 6 MW No. 2 Back-pressure turbine — Rated output 12 MW No. 3 Back-pressure turbine — Rated output 12 MW No. 4 Condensing turbine — Rated output 25 MW

i) With all three existing boilers operating As shown in Tables 2.2-2(a) and (b), the power generated by the existing turbines No. 1 through 4 is 47.4 MW in both instances and the difference of overall generated power derives from the difference in the power generated by the gas turbines of the respective systems. The total generating power is 184.3 MW by the 70 MW x 2 GT and 126.9 MW by the 25 MW x 3 GT and neither system can produce the required 200 MW.

2-46 ii) With one boiler in suspension The steam requirement of 432 t/h will have to be maintained despite the suspension of one existing boiler by reducing steam supply to the existing condensing turbine. With the 25-MW class system, the balance of steam available to the condensing turbine would be so little as 18 t/h, only 0.4 MW of power being generated by that amount of steam. Thus, it only will have to be suspended. The power to be generated in this instance will decrease to 168.0 MW with the 70-MW class system and 101.9 MW with the 25-MW class system from case i) above.

(E) Ratio between generated steam and generated power The ratio of the generated steam to the generated power will be as shown in Figs. 2.2-8 and 2.2-13. The figures illustrate the loss of generated steam and power in percentage to the fuel as 100%. In the comparison of generated steam, the 25-MW class is higher at 57.8% than with the 70 MW x 2 GT at 46.1% because of the auxiliary combustion. With respect to generated power, on the contrary, the 70 MW x 2 GT is higher at 32.6% because of higher unit efficiency of the gas turbine than the 25 MW x 3 GT, which is lower in the rate at 27.3% as the auxiliary combustion lowers the electric power in proportion.

(F) Impact of the suspension of a gas turbine The impact of the suspension of a gas turbine is larger with the 70-MW class system in terms of the generation of both steam and power, as well as on the plant operation, in comparison with the 25-MW class system because of the higher rates in both respects per unit of turbine.

(G) Operational reliability and operability The three-turbine system is believed to have higher reliability and operability than two-turbine system because of the smaller impact on operation in the case of suspension of any one unit.

(H) Comparison of plant performance Table 2.2-3 shows the plant performance of 70-MW class and 25-MW class, and Figs. 2.2-15 through 19 illustrate the cross sectional views of 70-MW as well as 25-MW class gas turbines and rotors.

(I) The level of contribution to environmental improvement The level of contribution to environmental improvement is discussed more in detail in Chapter 3. The effect of CO2 reduction is larger with the 70-MW class system, as compared with the 25-MW system.

2-47 Table 2.2-2 (a) Comparison of 70 MW X 2 Gas Turbine Power Plant and 25 MW X 3 Gas Turbine Power Plant

70 MW x 2 Gas Turbine No. I tom 25 MW x 3 Gas Turbine Power Plant Power Plant 1 Steam generation 120.5 x 2=241. Ot/h 70 x 3=21Ot/h 2 Electric power generation 68.45 x 2=136.9MW 26.5 x 3=79.5MW 3 Supp I y/demand ba I ance of steam at the time of peak consumption of steam by the plant (factory) (Figure 2.2-5) (Figure 2.2-10) 3.1 Balance of steam while all three existing boilers are in operation 1 No. 5 Boiler 101 t/h 112t/h 332t/h 2 No. 6 Boiler 100 » 301t/h 110 3 No. 7 Boiler 100 110 4 No. 1 HRSG 120.5 70 21Ot/h 5 No. 2 HRSG 120.5 ► 241t/h 70 ► 6 No. 3 HRSG - 70 7 No. 4 Condensing turbine -110 -11Ot/h -110 -11Ot/h Amount of deliverable steam to 8 432 t/h 432 t/h the process - - 9 Required amount of steam - 432 - 432 10 Over- or short supply of steam - 0 - 0 3.2 Balance of steam while one of the existing (Figure 2.2-6) (Figure 2.2-11) boilers is in suspension 1 No. 5 Boiler Ot/h Ot/h 2 No. 6 Boiler 120 » 240t/h 111 » 222t/h 3 No. 7 Boiler 120 111 4 No. 1 HRSG 120.5 70 5 No. 2 HRSG 120.5 ' 241t/h 70 h 21 Ot/h 6 No. 3 HRSG 0 70 7 No. 4 Condensing turbine -49 } -49t/h 0 0 Amount of deliverable steam to 8 432 t/h 432 t/h the process -

9 Required amount of steam - 432 432 10 Over- or short supply of steam - 0 0

4 SuppIy/demand balance of electric power at the time of peak consumption of steam by the plant (Figure 2.2-5) (Figure 2.2-10) 4.1 Balance of electric power while all three existing boilers are in operation No. 1 Back-pressure turbine- 1 0MW 0MW generator No. 2 Back-pressure turbine- 2 10.4 10.4 generator ' 47.4MW ^ 47.4MW No. 3 Back-pressure turbine- 3 12.0 12.0 generator 4 No. 4 Condensing turbine 25.0 25.0 5 No. 1 Gas turbine-generator 68.45 26.5 6 No. 2 Gas turbine-generator 68.45 » 136.9MW 26.5 » 79.5MW 7 No. 3 Gas turbine-generator - 26.5 8 Total generated power - 184.3MW 126.9MW 9 Required power - 200MW 200MW 10 Over- or short supply of power Electric power 15.7 MW in Electric power 73.1 MW in short supply shalI be short supply shall be purchased from Beijing purchased from Beijing Electric Power Co. Electric Power Co.

2-48 Table 2.2-2 (b)

70 MW x 2 Gas Turbine 25 MW x 3 Gas Turbine No. 1 tern Power Plant Power Plant 4 4.2 Balance of electric power while one of the (Figure 2.2-6) (Figure 2.2-11) existing boilers is in suspension. No. 1 Back-pressure turbine- 1 OMW OMW generator No. 2 Back-pressure turbine- 2 10.4 10.4 generator " 31.1MW ^ 22.4MW No. 3 Back-pressure turbine- 3 12.0 12.0 generator 4 No. 4 Condensing turbine 8.7 0 5 No. 1 Gas turbine-generator 68.45 6 No. 2 Gas turbine-generator 68.45 » 136.9MW 26.5 ► 79.5MW 7 No. 3 Gas turbine-generator 26.5 8 Total generated power - 168.OMW - 101.9MW 9 Required power - 200MW - 200MW 10 Over- or short supply of power Electric power 32.0 MW in Electricpower 98.1 MW in short supply shalI be short supply shalI be purchased from Beijing purchased from Beijing Electric Power Co. Electric Power Co.

5 The percentage of generated steam and power (to fuel as 100%) 1) Percentage of generated steam 46.1% 57.7% 2) Percentage of generated power 32.6% 27.3% 6 Impact of the suspension of one gas turbine. Large rate of decrease of Smal I rate of decrease of elect r ic power and steam. elect r ic power and steam. 7 Operational reliability and operabiIity Smaller than three- Larger than two-system system method method 8 Comparison of plant performance - - ■ (refer to the table for detail) 9 Level of contribution to the environmental Reduction of C02- Reduction of C02- improvement contaminated waste water contaminated waste water is larger than in thecase is smaller than in the of 25 MW X 3 Gas Turbine case of 70 MW X 2 Gas Power Plant. Turbine Power Plant.

2-49 Table 2.2-3: Cogeneration System Performance Chart

1 tern Unit Case 1 Case 2 25 MW A3 Gas Turbine System configuration — 70 MW A2 Gas Turbine Power Plant (with Power Plant auxi Mary combustion) GT Load % 100 100 Atmospheric temperature C 15.0 15.0 Relative humidity % 60 60 GT output MW/unit 68.45 26.5 Number GTs - 2 3 Total GT output MW 136.9 79.5 Fuel - Natural gas Natural gas GT? Fuel consumption kg/h/unit 16,120 6,265 Auxi Mary fuel consumption kg/h - 3,615 Total fuel consumption kg/h 32,240 22,410 HRSG? Outlet steam temperature C 450 450 HRSG? Outlet steam pressure Mpa?a 3.9 3.9 HRSG? Outlet steam flow rate kg/h/unit 120,500 70,000 HRSG? Total Outlet steam flow rate kg/h 241,000 210,000

Cogeneration % efficiency 78.7 85.0 Heat balance reference diagram - Figure 2.2-7 Figure 2.2-12

2-50 (2) Related facilities layout plan after modification at the Implementing Site (Corporation)

1) Installation site Beijing Yanshan Petrochemical Co., Ltd., the implementation site of the new cogeneration facilities, is located about 80 km to the southwest of Beijing (about one hour and a half by car on a highway). A rectangular lot of 84 m in east-west direction and 97 m in north-south direction is already reserved for installation on the premises of the existing Power Station No. 1, facing a boundary.

2) Layout plan

(a) Topography of the installation site The topography of the installation site for the new cogeneration facilities, as shown by Beijing Yanshan Petrochemical Co., Ltd., is a slowly undulating land of shrubby woods, thus in need of some improvement including ground leveling at the actual installation of the facilities. The drawing is made with the site's north side oriented to the right.

(b) Layout plan of the major components of the facilities The major components of the new cogeneration facilities will be roughly divided into a variety of groups, including turbine facilities, boiler facilities, cooling water facilities, and fuel gas facilities, and will be laid out in a rational manner to follow the flow of materials, as described below:

Turbine facilities: With the electric transmission lines directed to the eastern side where the existing distribution facilities are located, the facilities will be located on the western side of the existing cooling tower, with an ample space reserved as described below.

Boiler facilities: Vertical-type boilers will be employed as they will have to be installed in a limited space. With stacks placed on top, the boilers will be installed so as to make the duct work as simple as possible.

Cooling water facilities: The new cooling tower will be placed on the northern side of the existing cooling tower.

Fuel gas facilities: Fuel gas facilities will be built on the eastern side of the turbine facilities and laid out so as to be well separated from the other installations in conformance with the blast separation requirements stipulated by the law.

The points of note concerning the layout plan by facility

2-51 (c) Turbine facilities • Gas turbine-generators and boilers that are the heaviest of all components and must be installed on selected bases on firm grounds. However, with the ground conditions being unknown to us as it is, we have laid out the plan with two points in mind to have the electrical transmission lines oriented to east and to keep a distance from the existing cooling tower. • The gas turbine-generators are placed as “I” shape layout and as indoor arrangement. The traveling crane should be planned as a common facility for all the gas turbines. • The unloading bay shall be placed between gas turbine shafts so as to economize on buildings. The plan will allow the entrance area to be effectively utilized, as access to the crane should in no way be restricted. • The electric room building for the new cogeneration facilities will be for a common use for all the shaft gas turbine-generators and shall be built next to the turbine building. • The main transformer shall be placed on the eastern side of the turbine room so that it can be oriented to the common electrical transmission lines installed along with the existing distribution plant. The station auxiliary transformers shall be placed close to the electrical room building in consideration of the connection to the electric board installed in the building.

(d) Boiler facilities • The overall height of the stacks for the new cogeneration facilities shall be 45 m from the base of the vertical boilers and each unit shall be provided with an individual stack. • Boilers for the new cogeneration facilities shall be built outside and placed so as to be provided with an ample space for pathways for carrying goods and a space for dismounting.

(e) Cooling water facilities • With regard to the cooling water system, the cooling tower for the new cogeneration facilities shall be planned adjacent to the existing cooling tower. • The facilities must be planned with an utmost care in view of the rules of Chinese Thermal Power Station Engineering Standards stipulating a separation (50 m or more) between a natural-draft cooling tower and a major building and between a natural-draft cooling tower and a transformer (40 m or more). (Data: Chinese Thermal Power Station Technical Code DL 5000-94 1994-04-09, "Technical code for designing fossil fuel power plants.")

(f) Fuel gas facilities • Fuel gas facilities shall be laid out collectively in a specified area, taking into consideration the distance from the other facilities so as to facilitate emergency activities, in accordance with the applicable plan, laws and ordinances. • Fuel gas facilities contain hazardous articles and should never be built by the side of the party lines of the premises.

2-52 (g) Other points of notice related to the plant layout • Although the existing boilers are planned to be disused and removed, the vacated area should not be used to install the new cogeneration facilities (as it is too small to accommodate all of the new facilities). • The turbine building is planned as indoor facilities according to this plan, but may be planned as outdoor or semi-outdoor (under roof but without side walls) facilities to save the building costs, if necessary. This issue, therefore, shall be left for consideration.

3) Results of the facilities site plan The results of our study on the site plan for the new cogeneration facilities, based on the building conditions described above, are illustrated in Figure 2.2.-20 (for 70 MW x 2 Gas Turbine Power Plant) and Figure 2.2.-21 (25 MW x 3 Gas Turbine Power Plant).

Figure 2.2-20 Site plan — 70 MW x 2 gas turbine power plant Figure 2.2-21 Site plan — 25 MW x 3 gas turbine power plant

4) Survey on the existing power plant We have run the field survey of the Power Station No. 1 in which the new cogeneration systems are planned to be built prior to the technical meeting to be held with Beijing Yanshan Petrochemical Co., Ltd. Figure 2.2.-22 shows the site plan of the existing power station and spots taken in pictures in the course of the survey.

2-53 Fiei Oil T NLET HOUSE FL. 8000 Water Treatment TL. 4500 Plant Area GL. 0 (PL-200) (Exist inn) Pipe Hack BUILDING / (Existing) E x i I t i n q) ~\ ----- 1 S/S Stack (Exist ingj J AUX. IB. Dnc tlFena (Undergroan \ -r

Boils rs (Ex is \ / \'A FUEL o77 COMPRESSOR \ Boilers (Scrapped, FUEL GAS FILTER SEPARATOR. UJlLUM. (TOP OF RAILlI Turbine Building (Existin

COOLING TOWER FOR 1 POWER PLANT I (FL-200) HRSG (PL-200) LOCAL CONTROL Central BUILDING Control Bui ldinc Sun Stations (Exi sting]-

NOTES

1. MINIMUM REQUIRED VACANT DISTANCE BETWEEN COOLING TOWER L TRANSFORMER. 2. MINIMUM REQUIRED VACANT DISTANCE BETWEEN COOLING TOWER t MAIN BUILDING. 3. HAZARDOUS AREA.

BEIJING YANSHAN PETROCHEMICAL GROUP SITE PLAN COGENERATION POWER PLANT (70MWX2 GAS TURBINE POWER PLANT) Figure 2.2-20

2-54 2 0 0 0 0 ‘5 6 0 0 0

\ \llOC|AL H«s:

Fuel Oil Tanks GL+35000 (Existing) MONORAIL Water Treatment Plant Area (Exie ting) Pine Rack iP OP RAIL) xis t ing) I1NLET ‘house ----- 1 Stack (Exis t ingjj i_____ ! l_T7 (PL-200) Duct&Fana (Underground) ?LOW METER -—nIEL GAS' COMPRESSOR

Boilers (Existing) (Existing) Boilers (Scrapped, FUEL GAS FILTER LOCAL CONTROL SEPARATOR BUILDING \j. 2 2 5 0 0 FL. 9000 (Existing) FI. 4500

COOLING (FL-2O0) (PL-200) TOWER FOR POWER PLAINT

Central Control Bui Idinc Sun Stations (Existing)

NOTES

1. MINIMUM REQUIRED VACANT DISTANCE BETWEEN COOLING TOWER 1 TRANSFORMER. 2. MINIMUM REQUIRED VACANT DISTANCE BETWEEN COOLING TOWER & MAIN BUILDING. 3. HAZARDOUS AREA.

BEIJING YANSHAN PETROCHEMICAL GROUP Co. Ltd. SITE PLAN COGENERATION POWER PLANT (25MWx3 GAS TURBINE POWER PLANT) Figure 2.2-21

2-55 c=z=3 ,sm-mm

ism.

Note:Numbers in cicle indicate sports where the pictures were taken and arrows indicate the shooting direction

BEIJING YANSHAN PETROCHEMICAL GROUP CO. Ltd. COGENERATION POWER PLANT

Site plans of existing power station and picture-shooting points

Figure 2.2-22

Supplied from the Chinese party at the Feasibility Study meeting with Beijing YanShan Petrochemical Co .Ltd.held on December 13,1999 (Scale:1/1000)

2-56 (3) Electric-plan specifications after the modification of the related facilities of the implementing site (corporation)

1) Entire electric system (Key Plan) The power generator output will be transmitted through the main transformer to the 110-kV transmission system in Beijing Yanshan Petrochemical Co., Ltd. The transmitted power will then be shared flexibly among Power Stations No. 1, No. 2, and No. 3. The transmission voltage across the transmission system of Beijing Power Network is 220 kV and is stepped down to 110 kV to hook up to the 110-kV system of Beijing Yanshan Petrochemical Co., Ltd.

The electric power consumed within the target power station is planned to be supplied over two systems from the 6-kV system for use as the power to the new power generation facilities. The breaking capacity of the breaker of this circuit will be set to 40 kA to keep in phase with the existing system. The power from the 6-kV system is supplied to the power supply and power transformer of large electric motors (160 kW or larger), stepped down to 400 V to be supplied to the 400-V distribution board, and redistributed from the distribution board to the motor control centers of the gas turbine and heat recovery steam generator. This 400-V system may also be interconnected to the UPS (Uninterruptible Power Supply) system to supply power to the charger for DC supply and to the DCS (Distributed Control System) both within the premises. The power is also supplied for lighting and engineering equipment in the plant.

The 6-kV and 400-V power lines are divided into two groups and interlocked with a bus tie breaker installed between the groups, which is kept open under a normal condition and automatically closed whenever an upper breaker is tripped. One-line diagrams showing the power lines and generator circuit are given as the following figures: 70 MW Class x 2 One-Line Diagram Key Plan — Figs. 2.2-23 and 24 25 MW Class x 3 One-Line Diagram Key Plan — Figs. 2.2-25 and 26

2) Points of note upon formulating the Key Plan The plan was formulated with the following points in mind:

(a) One way of realizing in-plant power supply may be to install an in-plant transformer by branching out from the line between the generator and the main transformer, but it will require a GMCB (Generator Main Circuit Breaker) to be installed at the outlet from the generator.

Requiring too large a rated current capacity, such a breaker may not be generally acceptable. It was decided, therefore, to supply power to the new facilities from an existing in-plant source, considering the availability of an ample capacity of power supply in the plant and the proven reliability.

2-68 (b) With regard to the grounding method of the generator, the neutral grounding transformer-type method of a smaller grounding current was selected. The reason for this is that the generator will be hooked up to the line through the main transformer.

(c) The bus duct method is to be employed for connecting lines between the generator and the outdoor cubicle of the main generator circuit and between the cubicle and the main transformer in view of the large current involved (in the case of 70 MW). The cubicle of the main generator circuit consisting of P T/SA (Transformer/Surge absorber) cubicle and the neutral ground cubicle is to be installed outside near the bus duct so as to minimize the length of large-current lines.

(d) The in-plant power supply to the new facilities is to be realized as dual systems from the existing power source to ensure its reliability. In this way, the power supply can be switched from one system to another in case of a system failure.

3) Applied voltage The following Chinese standard voltages are to be applied: Transmission line voltage: 110 kV and 220 kV Generator voltage: 11 kV (General voltage for 50 Hz current) In-plant AC voltage: 6 kV (160 kW or higher) 380 V (below 160 kW) 220 V (Control, in-plant power, and lighting circuits) 110 V (Manufacturer's standard and other imported equipment) DC current: 220 V (General control and emergency lighting circuits) Secondary voltage of transformers for instrumentation: 100 V Secondary current of transformers for instrumentation: 5 A

4) Requirements from the Chinese party regarding power line plan It was decided that the following requirements presented concerning power line plan are going to be reflected in this fundamental plan:

(a) It was first planned with combination starters in mind, which use a vacuum contactor for the breaker to be installed in the closed distribution board; however, the plan was revised to use vacuum breakers to comply with requests filed from the Chinese party.

(b) In connection with the generator, it was planned to install separate current transformers for meters and protective relays.

(c) It was decided to install a separate current transformer for the purpose of recording accidental currents on the generator circuit.

2-69 5) Interface of power circuits between the new cogeneration facilities and the existing facilities is as follows (the following is an example for 70 MW x 3 GT):

(a) Hookup to 110-kV lines — two circuits Main transformer capacity: 80 MVA (for one unit)

(b) Hookup to 6-kV lines — two circuits Required capacity: 9,000 kVA (for one circuit)

(c) Hookup to 400-V lines — two circuits Required capacity: 80 kVA (for one circuit) For a backup supply for the charger.

(d) Hookup to 400-V line — one circuit Required capacity: 120 kVA (for one circuit) for a UPS

(e) Secondary voltage for the transformer of 110-kV instrumentation

2-70 110kV SUB STATION NO. 4 BUS nOkVSUB STATION NO. 5 BUS t LEGEND GEN. :GENERATOR n V—ll' HRSG :HEAT RECOVERY STEAM GENERATOR 52G2 GT :GAS TURBINE 1/—|l' HV :HIGH VOLTAGE LV :LOW VOLTAGE

NO. 1 NO. 2 SWGR :SWITCHGEAR GEN. STEP-UP TRANSF. GEN. STEP-UP TRANSF. MCC :MOTOR CONTROL CENTER 80MVA (ONAF) X 80MVA (ONAF) HV : HOkV WITH OFF-CIRCUIT TAP CHANGER HV : HOkV WITH OFF-CIRCUIT TAP HUNGER DB :DiSTRiBUTiON BOARD LV : 11kV LV : 11kV YNdl YNdl VCB :VACUUM CIRCUIT BREAKER MCCB :MOLDED CASE CIRCUIT BREAKER 52G :GEN. CIRCUIT BREAKER TRANSF. :TRANSFORMER UPS :UNINTERRUPTIBLE POWER SUPPLU SYSTEM 1 n INV :INVERTER

CUSTOMER CUSTOMER 1 u

VT | 9000kVA | | 9000kVA | -GD CUSTOMER ■00 SC ___ *

t NOTE 6kV STATION SWGR A (40kA) ^ 6kV STATION SWGR 8 (40kA) I 1.GT STRATING MOTOR (88CR) HAS T VCB n OVERLOAD FACTOR 16OX. ^VCB ^VCB 'j'VCB ^

V V \r v

GTG1 GTG2 77.7 MVAUt 15*0 88CR1 GAS 88CR2 GAS 77.7 MVAUt 15*C) 11 kV (1500kW) COMPRESSOR 1 (1500kW) COMPRESSOR 2 11 kV 50 Hz (1500kW) STATION A (1500kW) STATION B 50 Hz 0.9 PF AUX. TRANSF AUX. TRANSF. 0. 9 PF 3000 min ' JZbUUkVA (UNAN) SOOOrair,-' r® ZbUUkVA (UNAN) HV : 6kV WITH OFF-CIRCUIT HV : 6kV WITH OFF-CIRCUIT V TAP CHANGER TAP CHANGER LV : 400V LV : 400V FROM EXISTING 2k Dyn1 Dyn1 FROM EXISTING FROM EXISTING 400V ENERG. A 400V ENERG. 400V EMERG. POWER SUPPLY POWER SUPPLY EXISTING POWER SUPPLY I EXISTING (CUSTOMER) (CUSTOMER) \ f ACB V. . INTERLOCK VACB (CUSTOMER) V | 10kVA | |BOkVA| ^ _____4 80k VA k . V J4 t__ __ l\___ 400V MAIN DB A 400V MAIN DB B yl MCCB 1 MCCB MCCB MCCB v) yX MCCB T ti MCCB MCCB V V

400V GT1 l HRSG1 MCC 400V GT2 t HRSG2 MCC SPARE T r UPS X^MCCB •LIGHTING SYSTEM •AIR CONDITIONER & I VMCCB (LOCAL CONTROL BUILDING. VENTILATION SYSTEM EQUIPMENT. OTHERS) (LOCAL CONTROL BUILDING. ■COMMUNICATION SYSTEM OTHERS) •POWER SOURCE FOR •POWER SOURCE FOR * I MAINTENANCE MAINTENANCE •OTHERS ■OTHERS 1 VMCCB

V, J V. J VMCCB \*MCCB 150 °AH Y~ "V" 110V UPS DB GT1 1 HRSGI GT2 i HRSG2 AUXILIARIES AUXILIARIES BEIJING YANSHAN PETROCHEMICAL GROUP Co. Ltd. VMCCB COGENERATION POWER PLANT Xk 70MW CLASS x 2 vmccb 1 220V DC GT

| MCC t OB ONE LINE DIAGRAM KEY PLAN

NO. PEI-99-1213 (1/2) Rev. 2

Figure 2.2-23

2-71 LEGEND 24 VOLTS/Hz

110V SUB STATION 32 REVERSE POWER LOSS OF EXCITATION 1\*----- 520 40 46 NEGATIVE SEQUENCE OVER CURRENT 51V VOLTAGE RESTRAINED PHASE OVER CURRENT <)3xCT 110kV /100V /100V /100V •T3 / V3/ V"3Z V3 59 OVER VOLTAGE CUSTOMER <—I 59GN STATOR EARTH FAULT GEN. STEP-UP TRANSF. I 80MVA (ONAF) 60FL VT FUSE FAILURE I HV: 110kV WITH OFF-CIRCUIT 87T , TAP CHANGER 87G DIFFERENTIAL ILV:11kV 86 ELECTRICAL LOCKOUT YNd1 (OPD) 50/51ET EXCITATION TRANSF. OVER CURRENT TO FAULT W RECORDER SYN. GTG1 A CUSTOMER A LOCATION L. DCS DISTRIBUTED CONTROL SYSTEM (EXISTING CONTROL ROOM) __t EXCITATION OPD OPERATOR DESK (EXISTING CONTROL ROOM) TRANSF. kVA (GPP) EXP EXCITATION PANEL (LOCAL CONTROL ROOM) (PULSE) in (GEN. SWGR) (OMAN) -p-> TO DCS HV : 11kV GPP GENERATOR PROTECTION RELAY PANEL (LOCAL CONTROL ROOM) 3 x CT 3 x CT /5A Z5A LV : V <5 TCS GAS TURBINE CONTROL SYSTEM (LOCAL CONTROL ROOM) 5P20 CL.1.0 %Z = X 50VA 15VA -e- t (GPP)1 3 x CT 5000/5A GENERATOR MEASURING & PROTECTION SYSTEM 5P20 50VA O GEN. METERING & MONITORING 3 x CT 5000/5A, (FOR MEASURING) CLO. 2 O 50VA -> TO DCS (A) (V) (W) (V.r) 3 x CT (FOR PROTECTION) © © © © © © (Wh) (Varh) (PF) (Hz) 5000/5A1 5P20 O 50VA PF Hz

3 x CT

“CD^^50VA 5P20 11kV2XVT / 100V CL. 1.0 CT 2' ry (PH. 2) 100 V A

•60> ANALOG A — 20mA (W) OUTPUT -> TO TCS

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NG. TR. kVA(ONAN) 0© BEIJING YANSHAN PETROCHEMICAL GROUP Co. Ltd. 11kV/100V GEN. 10s COGENERATION POWER PLANT GENERATOR 77. 7 MVA 70MW CLASS x 2 (Base Load) at 15°C GEN. PHASE I______I 11 kV SEQUENCE ONE LINE DIAGRAM KEY PLAN 50 Hz PH.1=A=U=R=R 0.9 PF PH.2=B=V=S=Y 3000 min" 1 PH.3=C=W=T=B NO. PE I-99-1213 (2/2) Rev. 2 Figure 2.2-24

2-72 UOkV SUB STATION NO. 4 BUS 110kV SUB STATION NO. 5 BUS LEGEND GEN. :GENERATOR HRSG :HEAT RECOVERY STEAM GENERATOR GT :GAS TURBINE HV :HIGH VOLTAGE LV :LOW VOLTAGE NO. 1 NO. 2 NO. 3 SWGR :SWITCHGEAR GEN. STEP-UP TRANSE. GEN. STEP-UP TRANSF. GEN. STEP-UP TRANSF. 30MVA (ONAF) 30MVA (ONAF) 30MVA(0NAF) MCC :MOTOR CONTROL CENTER HV : UOkV WITH HV : 1lOkV WITH HV : 110KV WITH OFF-CIRCUIT TAP CHANGER OFF-CIRCUIT TAP CHANGER OFF-CIRCUI DB [DISTRIBUTION BOARD IV : 11kV LV : 11kV LV : 11 kV VCB [VACUUM CIRCUIT BREAKER YNd1 YNd1 YNd1 MCCB [MOLDED CASE CIRCUIT BREAKER 52G :GEN. CIRCUIT BREAKER TRANSF. [TRANSFORMER UPS [UNINTERRUPTIBLE POWER SUPPLU SYSTEM INV [INVERTER

VT VT VT -QD -QD

NOIE 1.GT STRATING MOTOR (88CR) HAS e OVERLOAD FACTOR 160%.

id NCR NGR

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V V

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v — •

VMCCB

110V IPS DB

L BEIJING YANSHAN PETROCHEMICAL GROUP Co. Ltd. V'MCCB COGENERATION POWER PLANT

L 25MW CLASS x 3

GT3 i HRSG3 220V DC GT AUXILIARIES MCC l DB ONE LINE DIAGRAM KEY PLAN

NO. PE I-00-0049 (1/2) Rev. 0

Figure 2.2-25

2-73 LEGEND 24 VOLTS/Hz

110V SUB STATION 32 REVERSE POWER 40 LOSS OF EXCITATION V 52G 46 NEGATIVE SEQUENCE OVER CURRENT

()3XCT 110kV /100V /100V /100V 51V VOLTAGE RESTRAINED PHASE OVER CURRENT V"3 / 7*3/ fa/ f3 59 OVER VOLTAGE

1 GEN. STEP-UP TRANSF. 59GN STATOR EARTH FAULT Zj\30MVA(0NAF) 59N BUS EARTH FAULT VMHV-.IIOkV WITH OFF-CIRCUIT CUSTOMER (OPD)l 60FL VT FUSE FAILURE 87T r^\ TAP CHANGER "1 ( SYN. GTG1 86 ELECTRICAL LOCKOUT TO FAULT RECORDER A CUSTOMER J LOCATION DCS DISTRIBUTED CONTROL SYSTEM (EXISTING CONTROL ROOM) OPD OPERATOR DESK (EXISTING CONTROL ROOM)

(GEN.SWGR) EXP EXCITATION PANEL (LOCAL CONTROL ROOM) GPP GENERATOR PROTECTION RELAY PANEL (LOCAL CONTROL ROOM) 1 TCS GAS TURBINE CONTROL SYSTEM (LOCAL CONTROL ROOM) 3 x CT «2000/5A (GPP? '5P20 (OPD) | SOVA TO DCS TO DCS St! GENERATOR MEASURING & PROTECTION SYSTEM . _ .J GEN. METERING & MONITORING

3 x CT ^ (FOR MEASURING) 2000/SA Q V ^ TO DCS CL. 0.2 ^ (FOR PROTECTION) ©©©©©© (A) (V) (W) (Var ) 50VA (Wh) (Varh) (PF) (Hz)

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2 x VT CT 2‘ ry (PH. 2) 11kV / 100V 3 x CT CL. 1.0 2000/5 A 100VA 5P20 ANALOG 4~20mA(W) SOVA OUTPUT -SB- TO TCS

1 X3PH.SC 11kV 0. 25

ANALOG 4~20mA(V) 59GN 60FL 87G OUTPUT

kVA (ONAN) ( | ft | )------0 BEIJING YANSHAN PETROCHEMICAL GROUP Co. Ltd. nkv/ioov vx_y W GEN. COGENERATION POWER PLANT GENERATOR 29. 5 MV A 25MW CLASS x 3 (Base Load) at 15°C GEN. PHASE L 11 kV SEQUENCE ONE LINE DIAGRAM KEY PLAN 50 Hz PH.1=A=U=R=R 0. 9 PF PH.2=B=V=S=Y 3000 min* 1 PH.3=C=W=T=B NO. PE I-00-0049 (2/2) Rev. 0

Figure 2.2-26

2-74 (4) Specification of instrument and control plan after the modification of the related facilities at the implementing site (corporation)

1) Basic principles of the control The control method is planned on the basis of the following context:

(a) Preparatory work for starting up the plant, such as operating drain valves and filling up heat recovery steam generator with water, shall be carried out on the site. The drain valve operation after shutdown shall also be made on the site.

(b) The plant operation following the completion of the pre-start-up work, as well as the normal handling to stop the system, shall be carried out from the control panel installed in the local control room.

(c) After the gas turbine revolution reaches the rated speed, the gas turbine will be automatically incorporated into the power transmission system by the automatic synchronizer when the kick command to start the detection of synchronism is issued from the central control room. The turbine will increase load automatically until it reaches the preselected load. Subsequently, the normal operation and monitoring will be carried out by the DCS (Distributed Control System) and the CRT installed in the central control room.

(d) The emergency switch of the plant will also be installed in the central control room.

2) Control functions

(a) Gas turbine The controls, or the most critical element of the gas turbine control, are constructed of digital control devices and their main control parts (start, speed/load, and temperature controls) are triplexed (i.e. provided with two functional equivalents for use in case of unavailability of the primary and secondary parts) to increase system reliability. The gas turbine control has the following functions: • Start/stop control • Speed/load control • Exhaust temperature control • Inlet guide vane control

(b) Generator The exciter for the generator has the following functions: • AYR (Automatic Voltage Regulator) • APFR (Automatic Power Factor Regulator) The generator operates under APFR when operating in parallel with the power transmission system and under AYR when it is separated from such a system and operating independently.

2-75 3) System configuration of controls The system configuration of additional control equipment is as shown in Figure 2.2-27. The following control equipment will be installed in the central and local control rooms. The local control room building will be built near the gas turbine with the local control room on the second floor and with the electrical control room on the first floor.

Central control room The following control equipment will be installed in this room: • Operator console for DCS monitor control This console set up with three sets of a CRT display and a keyboard performs monitoring and control functions while the plant is in operation. • Operator console desk board (CRT and control board) This desk board will incorporate the power and synchronism detectors for each generator. It will be equipped with operating switches for generator breaker ON/OFF, voltage control, and load control to also enable load control from the central control room. The board will be equipped with an emergency stop switch for the gas turbine, too. • The following DCS printers will be provided: A printer for forms and printouts A printer for CRT screen hard copies • Control cubicle and distribution board for DCS control.

Local control room The following control boards will be installed in the local control room: • Gas turbine control panel • Gas turbine CRT display and printer These devices will be used for the initial start-up as well as start-up after the regular inspection of gas turbines. • Gas turbine generator control and protection panel • Fuel gas compressor control panel

Local electric control room The following electrical boards will be installed in the local electric control room: • 6-kV metal-clad switchgear • 400-V distribution board • DC distribution board • Battery cubicle • Battery charger • UPS • DC motor starter board • Other distribution board (illumination and service)

2-76 2.2.5 The range of funds, equipment, service, etc. to be contributed by the respective parties: Beijing Yanshan Petrochemical Co., Ltd. looks to the realization of this improvement project, or the subject of this survey, as it is fully aware of the necessity. The important aspect of the project is the financing. Although Beijing Yanshan Petrochemical Co., Ltd. knows that it is a CDM issue, the company seems to consider the project with the premise of more practicable yen loan. This section will deal with the aspects of equipment and service while discussing the issue of funding in Section 2.3.

(1) Basic principles about the extent of the contribution of the respective parties We have determined the extent based on the following principles:

1) In principle, items obtainable by the Chinese party shall be prepared by the party while power generation facilities centered on gas turbines shall be arranged from Japan. 2) Civil engineering works most of which is to be carried out on the local site shall be taken on by the Chinese party. 3) All items to be provided from Japan shall be supplied on CIF Tianjin. Items to be taken on by Japan but actually produced locally shall be delivered on ex-works basis. 4) Chinese party shall execute all works to be actually carried out at the local site on its responsibility even with products that will be delivered from Japan. 5) The provision of engineers from Japan shall be limited to the extent of engineers to supervise the installation, field test operation, and performance test of products to be provided by the Japanese party.

The arrangement as proposed above may be subject to further study between both parties.

(2) Specific range of burdens to be shared between the respective parties The specific job allocation chart is shown in Tables 2.2.-4 (a) and (b). The special notes below describe further details specified during consultation with the Chinese party to decide upon the above allocation:

1) The fuel gas compressors initially planned to be provided from China were later revised to be procured from Japan, including the related control panels, at the request of the Chinese party who prefers Japanese products to the available Chinese technology. 2) Feed water pumps for the heat recovery steam generators will no longer be required as hot water of 104°C will be supplied from the existing feed water pumps. 3) Existing steam turbines shall be used in combination with the new gas turbine generators and heat recovery steam generators to be constructed within the cogeneration facilities. 4) With regard to the water cooling equipment to be used for cooling newly installed equipment, the choice between the radiator type and the cooling tower type discussed between the parties concerned was finally concluded on the latter type as being more economical.

2-78 Table 2.2-4(a) Job allocation plan for the cogeneration facilities of Beijing Yanshan Petrochemical Co., Ltd. (draft)

Job allocation Item Remarks China Japan 1. Gas turbines equipment 1) Gas turbine package - 0 2) Intake/exhaust devices, silencers and ducts - 0 3) Exterior piping of gas turbine package - O Fuel gas feed pressure: 5 kg/cm'g (fuel gas, cooling water, CO, extinguisher, and miscellaneous piping) 4) Fuel gas compressor - 0 5) Fuel gas skid (flow meter) - 0 6) Fuel gas filter - O If necessary 7) Fuel heater - 0 If necessary 8) Special tools - O 9) GT water cleaning equipment - 0 If necessary

2. Gas turbine-generator 1) Generator - O 2) Automatic voltage regulator - O Further negotiation is request about the 3. Heat recovery steam boiler equipment sharing of responsibilities on the arrangement of boilers. 1) Main body and accessories, Boiler (1) Main body, Boiler - O (2) Deaerator 0 - Existing equipment to be exploited. (3) Boiler feedwater pump 0 - Existing equipment to be exploited. (4) Boiler recirculation pump - 0 If necessary (5) Scaffolding, handrail, ladder - o (6) Steel frame, casing - o (7) Refractory material, insulation material - o 2) Chemical injection and sampling devices For new installations only. Existing (1) Chemical injection device - 0 equipment shall be handled by the Chinese party. For new installations only. Existing (2) Sampling cooler - o equipment shall be handled by the Chinese party. For new installations only. Existing (3) Piping and valves 0 - equipment shall be handled by the Chinese party. 3) Piping work From heat recovery steam generator to (1) Main steam piping and valves - 0 existing steam header From heat recovery steam generator to (2) Main water supply line and valves - 0 existing water system From heat recovery steam generator to (3) Drain and blow piping and valves - 0 existing equipment 4) Blow tank 0 - 5) Exhaust duct 0 - 6) Lightening rod 0 - If necessary 4. Steam turbine 1) Main body, Steam turbine 0 - Existing equipment to be exploited. 2) Speed governor 0 - Existing equipment to be exploited. 3) Gland steam condenser 0 - Existing equipment to be exploited. 4) Turning gear 0 - Existing equipment to be exploited. 5) Lubricator 0 - Existing equipment to be exploited. 5. Condensing equipment 1) Condenser 0 - Existing equipment to be exploited. 2) Vacuum ejector, Condenser 0 - Existing equipment to be exploited. 3) Condensate vacuum pump 0 - Existing equipment to be exploited.

2-79 Table 2.2-4(b) Job allocation plan for the cogeneration facilities of Beijing Yanshan Petrochemical Co., Ltd. (draft)

Job allocation Item Remarks China Japan 6. Cooling water equipment 1) Cooling water recirculation pump, Cooling tower 0 - Existing equipment to be exploited. 2) Cooling water equipment, Auxiliary equipment 0 - Existing equipment to be exploited. 7. Pure water facilities 1) Pure water equipment 0 - Existing equipment to be exploited. 2) Pure water tank O - Existing equipment to be exploited. 3) Pure water feed pump 0 - Existing equipment to be exploited. 8. Air compressor for instrumentation 1) Air compressor for instrumentation 0 - Existing equipment to be exploited. 2) Air dehumidifier for instrumentation 0 - Existing equipment to be exploited. 9. Water feed and drain equipment O - Existing equipment to be exploited. 10. Piping set 0 11

12. Fire fighting equipment (excluding that in gas turbine - Fire fighting equipment inside the gas package) 0 turbine package shall be provided by Japan. 13. In-plant electric equipment 1) Generator main circuit panel/transformer panel - o For GTG 2) Main transformer (110 kV) 0 - 3) For existing ST plant o - 4) For new GT & HRSG - o 110-kV transformer facilities to be 5) New and existing facilities to be coupled - 0 provided by China 14 Instrumentation 1) Distributed control system (DCS) - o For new plants 2) Gas turbine control panel - 0 3) Generator control panel - o For GTG 4) Steam turbine control panel o - Existing equipment to be exploited. 5) Heat recovery steam generator control panel - o 6) Fuel gas compressor control panel - o 15 Equipment and material shipment 1) GIF Chinese port and Ex works in China - o 2) Local land transportation after GIF or ex-works - delivery o 16. Local work 1) Installation work and alignment 0 - 2) Provision of supervisory engineers for installation - 0 3) Piping work 0 - 4) Instrumentation and electric work o - 5) Wiring, cable racks and cable pit o - 6) Removal of existing installation (equipment and - civil engineering work) o 17. Test Japan shall provide supervisory engineers 1) Local test operation 0 o only. Japan shall provide supervisory engineers 2) Performance test 0 o only. 18. Improvement of existing facilities 1) Machinery and piping work o - 2) Electrical equipment o - 3) Control equipment 0 - 19. Buildings 1) Buildings 0 - 2) Utilities work 0 - 3) Foundation work 0 - 4) Pit work 0 - 20. Land improvement and planting 0 - If necessary 21. Environmental assessment o - If necessary 22. Utility piping and valves outside the battery limits 0 - 23. Outdoor lighting o - 24. Communication facilities o - 25. Import duty o -

2-80 2.2.6 Prerequisites for, and problems with, the implementation of this project The following two points have been verified in connection with the prerequisites for, and problems with, the implementation of this project:

(1) Any project worth 50 million yuan or more is outside the authority of Beijing Yanshan Petrochemical Co., Ltd. and is subject to the approval of the upper agencies: China Petrochemical Group Corporation and the State Planning Commission. Beijing Yanshan Petrochemical Co., Ltd. is not in the position to comment on the issue.

(2) With regard to the CDM, we could do no better than to confirm the statement of Beijing Yanshan Petrochemical Co., Ltd. to the effect that it is not in the position to comment on the point as a mere private corporation, considering the fact that the position of the central government remains obscure.

2-81 2.2.7 Implementation schedule of the project In reference to the construction schedule, the commencement time of the project remains indefinite mainly because of the financial reasons, although Beijing Yanshan Petrochemical Co., Ltd. is anxious to start operating as early as possible. We have, therefore, reviewed the process from the time to commence promoting the project until start-up. Upon the commencement of the project, we will start detailed design work after running a detailed local survey and defining the basic design, including basic principles, with Beijing Yanshan Petrochemical Co., Ltd. Regarding the total construction time schedule, we estimate two and a half years with the 70 MW x 2 GT plant or two years with the 25 MW x 3 GT plant to start practical operation, as depicted in the following tables. We are to decide on the specific time schedule after further consultation between the parties involved.

• With 70 MW x 2 GT plant, see Table 2.2.-5. • With 25 MW x 3 GT plant, see Table 2.2.-6.

2-82

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design run engineering design

Installation Improvement performance Trial existing Civil construction Equipment Detail Basic 5 6 4 3 1 2 2-84 2.3 Materialization of the funding proposal

2.3.1 Funding proposal for the execution of the project (the required amount of funds and procurement plan) We still have to determine the funding plan in details as it was not possible to finalize the design within the scope of this survey; however, the total requirement was tentatively surmised to 700 million yuan (±100 million yuan) for the 70 MW x 2 GT plant (Case 1) or 500 million yuan (±100 million yuan) for the 25 MW x 3 GT plant (Case 2) as a guideline to calculate the effect of the project. As to the fund raising method, it was not clearly defined since the amount of self contribution by the Chinese party and interest rate would depend on how the project might be financed.

2.3.2 Fundraising prospects (Action plan of the assignee of the survey and the implementing site [corporation]) Beijing Yanshan Petrochemical Co., Ltd. is interested in the yen loan as the fund's resources. According to the system requirement of yen loan, Beijing Yanshan Petrochemical Co., Ltd. will need to have sufficient funds on hand to pay 25% of total construction costs. Beijing Yanshan Petrochemical Co., Ltd. insists that the procurement of the own funds will be of no problem, considering the scope of the corporation and the business situation. It also entertains the idea of commercial loan as a possible alternative. Such an alternative appears, however, more unlikely as the profitability of the plan would be strongly pursued by the higher authority when applied for necessary approval. The advantage of the substantial reduction of CO2 emissions expected by this project may be accepted as environmental measures rather than as profitability when considering the unsavory progress of COP. Under these circumstance, Beijing Yanshan Petrochemical Co., Ltd., as mentioned earlier, gives priority to the funding plan based on the yen loan.

2-85 2.4 Issues related to Clean Development Mechanism This survey was carried out as part of CDM activities. Meanwhile, we have also proceeded with a local research to confirm the following points after reviewing the funding plan in the process of negotiation with Beijing Yanshan Petrochemical Co., Ltd. The company is highly aware of the necessity of the improvement project addressed by the survey, so much so that it is endeavoring to find a way to realize the plan. The important element in realizing the plan is the finance. Beijing Yanshan Petrochemical Co., Ltd. seems to ponder the question with a focus on the yen loan as the most effective measure for materialization, despite its knowledge of the matter being subject to CDM. This chapter summarizes our recognition of the current state of CDM and the attitude of the Chinese party as the CDM-related issues:

2.4.1 Definition of the conditions of project implementation on the basis of the actual situation of the project implementation site, and necessary arrangement with the other party for the realization of the project such as the sharing of responsibilities With regard to CDM, the central government of China made it clear at the Third Conference of the Parties to the U.N. Framework Convention on Climate Change (COP) that it will actively promote CDM. The final policy of the Chinese government has not yet been established as the methodology of CDM is still under discussion among the member countries aiming to finalize it by COP6.

2.4.2 Possibility of forming a consent to make this project an example of Clean Development Mechanism (an essential prerequisite for the other party to agree on the Clean Development Mechanism on the basis of the viewpoint of both the government agency and the implementing site [corporation] of the other party) As mentioned in the preceding paragraph, CDM has been defined only in its framework while the details are still under discussion. We have failed to obtain a formal comment from Beijing Yanshan Petrochemical Co., Ltd. on its perception of CDM, partly because of the central government being indefinite about the issue. The context of the issue may be summarized as follows:

(2) With regard to CDM, we could do no better than to confirm the statement of Beijing Yanshan Petrochemical Co., Ltd. to the effect that it is not in the position to comment on the point as a mere private corporation, considering the fact that the position of the central government remains obscure.

We have failed to obtain any formal opinion on CDM but Beijing Yanshan Petrochemical Co., Ltd. has indicated its strong interest on the construction of this project and wish to realize it by working with yen loan.

2-86 Chapter 3. Effect of the Project

This chapter discusses such effects as energy saving and the reduction of greenhouse gas after switching from crude oil combustion to natural gas cogeneration, as the advantageous factors of the project. About the energy-saving effect, it first describes the technological backgrounds of the effect and, then, quantifies the saved energy, as the result of modification, in the equivalent of crude oil as 887,847t/y for Case 1 using a 70 MW x 2 gas turbines generators for power generation and 523,213t/y for Case 2 using a 25 MW x 3 gas turbines generators. Concerning the effect of the reduction of greenhouse gas emissions, it again clarifies the technological backgrounds by taking CO2 as an example and quantifies the controlled emission of greenhouse gas in the equivalent of crude oil as 2,747, 187t-CC>2/y for Case 1 using the 70 MW x 2 gas turbines generators for power generation and l,618,932t-CC>2/y for Case 2 using the 25 MW x 3 gas turbines generators. It then explains about the method of monitoring the effects of energy saving and greenhouse gas reduction, and closes the discussion with the observation of the impact of this project on the productivity.

3-1 3.1 Energy saving effects

3.1.1. Technical reasons for generating energy-saving effects In the case of a thermal power station running on heavy oil, steam must first be generated by a boiler burning heavy oil to drive a steam turbine which, in turn, generates electric power. In the case of a cogeneration plant using gas turbines that run on natural gas, in contrast, it is characterized by highly efficient energy utilization found in the process that thermal energy contained in the hot exhaust gas discharged from the gas turbine after having generated electric power can be recycled as steam energy so as to raise the overall efficiency of the plant. It will, therefore, generate energy-saving effects by modifying the existing thermal power station running on heavy oil into a gas turbine cogeneration plant. The quantitative study of how the implementation of the natural gas turbine cogeneration system to the Power Station No. 1 (subject of this survey) generates such energy-saving effects will be discussed in Section 3.1.3 below in details.

3.1.2 Baseline to calculate the energy-saving effects (the thoughts behind how to estimate potential emissions if the project were not implemented)

(1) Precondition The following conditions are assumed for evaluating the effects of energy saving and reducing greenhouse gas (CO2) emissions with the implementation of the project in question (see Table 3.1.-1). The cases studied are 70 MW x 2 gas turbine systems (Case 1-1 and Case 1-2) and 25 MW x 3 gas turbine systems (Case 2-1 and Case 2-2).

1) Demands for heat (steam) and power are assumed to remain constant before and after the implementation of the project. Demands for heat (steam) and power shall be as described in Table 3.1.-1. These values are determined by considering the future operation of the Power Station No. 1. Since the operation of the Power Station No. 1 gives priority to maintaining the amount of steam supply, the supply of steam shall be planned to match before and after the implementation of the project while electric power is adjusted to maintain the base quantity by purchasing any amount from outside to keep the basis of comparison. The heat consumption for the power bought from outside is to be calculate on the same condition as that of the Power Station No. 1.

2) The condition of steam (pressure and temperature) after the implementation of the project shall match the current steam conditions.

3) The availability factor of the Power Station No. 1 is determined to be 80% (the annual number of operating hours 7000 hours).

4) The boiler efficiency of all the existing boilers shall be constant at 92.45% (as informed from the Chinese party).

5) The lower calorific value of the heavy oil used for the existing boilers are 41,868 kJ/kg (converted from the value 10,000 kcal/kg obtained from the Chinese party).

3-2 6) For the converted calorific value of heavy oil, the value 41,868 kJ/kg (as converted from 10,000 kcal/kg) is used in accordance with the Article 3 of the Law Enforcement Regulation Concerning the Rationalization in the Use of Energy (abstract).

7) The effect of CO2 emission reduction is calculated by using a formula from the "Guideline for the calculation of greenhouse gas emission" (see Attachment).

(2) Baseline The flow balance to form the basis of the review needs to be assumed to review the effect of the reduction of greenhouse gas emissions at a power station. The flow balance depicted in Figure 2.2-2 has been assumed by Beijing Yanshan Petrochemical Co., Ltd. on the basis of the existing equipment to establish the underlying standard. It is applied as the underlying standard for estimating the operating conditions prior to the implementation of the project. The target flow balance shall be set up as shown in Figs. 2.2-5 and 2.2-6 for the 70 MW x 2 GT power plant (Case 1-1 and Case 1-2) and in Figs. 2.2-10 and 2.2-11 for the 25 MW x 3 GT power plant if the similar flow balance needs to be achieved after the implementation of the project. The operating conditions of the respective equipment is summarized on the basis of the flow balance as shown in Tables 3.1.-2 and 3.1.-3. Cases 1-2 and 2-2 are to be studied for reference purposes by assuming that one of the boilers is suspended due to a regular maintenance service or other similar reasons.

3-3 3.1.3 Specific quantity, observed period, and accumulated quantity of energy-saving effect

(1) 70 MW x 2 GT plant (Case 1)

1) Before the implementation of the project

(a) Heat consumption of the existing boilers In order to generate the required amount of steam, 542 t/h, as shown in Table 3.1-1, it is necessary to operate all of the five existing boilers, as depicted in Table 3.1.-2. The necessary amount of heat consumption (input energy) will be as calculated below:

542 X103 X ( 3332.7 - 440.5) ------= 1,695.59 X106 kJ/h 0.9245

(b) Heat consumption to compensate for power shortage Heat consumption needed to generate 136.9 MW to compensate for a power shortage (to be supplied from a power station in another district) should be calculated by assuming the same conditions of power generation for the other power station, including the performance of the steam turbine, the condition of steam, and the boiler efficiency, as for the Power Station No. 1. It can be calculated as follows:

(( 136.9/12) X170 X103) X ( 3332.7- 440.5) = 6,067.26 X I06 kJ/h 0.9245

(c) Total heat consumption The necessary heat consumption to satisfy the power and thermal requirements will be the sum of (a) and (b).

1,695.59 X106+6,067.26 X106 = 7,762.85 X106 k J/h

(d) Annual heat consumption By assuming the availability factor of this power station to be 80% as presented by the Chinese party (for the annual operating hours: 7000 hours), the annual heat consumption will be:

7,762.85 X106 X 7,000=54,339.95 X109 kJ/y

3-4 (e) Equivalent annual consumption of heavy oil The equivalent annual consumption in heavy oil converted from the above heat consumption at the rate of 41,868 kj/kg to 10,000 kcal/kg will be:

54,339.95X109 ------=1,297.887 X106 kg/y 41,868 = 1,297,887 t/y

2) After the implementation of the project

(a) Heat consumption of the existing boilers It is reviewed for the basic operating pattern of Case 1-1. The number of operating boilers is 3 according to Table 3.1.-2 with the steam output of 301 t/h. The heat requirement (input energy) will be:

301X103X ( 3332.7-440.5 ) ------=941.65X106 kJ/h 0.9245

(b) Heat consumption of two gas turbines The power supply of 136.9 MW bought from another power station to compensate for the electric shortage before the implementation of the project will be supplied from the gas turbine. The heat consumption of the two gas turbines will be:

755.43 X IQ3 x 2=1,510.86 X10® kJ/h

(c) Total heat consumption The heat consumption to meet the power and thermal requirements will be the sum of (a) and (b) as shown below:

941.65X106 + 1,510.86X106 = 2,452.51X106 kJ/h

(d) Annual heat consumption For the availability factor of this power station, the same factor of 80% as the condition prior to the implementation of the project (annual operating hours: 7000 hours) is used. The annual heat consumption , therefore, will be as follows:

2,452.51 X106 X 7,000= 17,167.57 X109 kJ/y

3-5 (e) The equivalent annual consumption in heavy oil as calculated from the converted calorific value of 41,868 kj/kg (converted from 10,000 kcal/kg) for the figure in the same way as before the implementation will be as follows:

17,167.57X109 ------=410.040X106 kg/y 41,868 = 410,040 t/y

3) Energy saving effect

The annual consumption in heavy oil before and after implementation compare as: Before implementation: 1,297,887 t/y After implementation: 410,040 t/y with the balance:

1,297,887 —410,040 =887,847 t/y (Reduction percentage = 68.4%)

reflects the energy saving effect. In addition, assuming the effect as lasting for 15 years (from start-up in 2003 to 2017), the consumption over the period of 15 years sums up to

887,847 X15= 13,317,705 t

3-6 (2) 25 MW x 3 GT plant (Case 2)

1) Before the implementation of the project

(a) Heat consumption of the existing boilers In order to generate the required amount of steam, 542 t/h, as shown in Table 3.1.-1, it is necessary to operate all of the five existing boilers, as shown in Table 3.1.-3. The necessary amount of heat consumption (input energy) will be as calculated below:

542 X103 X ( 3332.7-440.5) = 1,695.59 X106 kJ/h 0.9245

(b) Heat consumption to compensate for power shortage Heat consumption needed to generate 79.5 MW to compensate for a power shortage (to be supplied from a power station in another district) should be calculated by assuming the same conditions of power generation for the other power station, including the performance of the steam turbine, the condition of steam, and the boiler efficiency as for the Power station No. 1. It can be calculated as follows:

( ( 79.5/12 )X 170 X 10s)X (3332.7-440.5 ) = 3,523.35X106 kJ/h 0.9245

(c) Total heat consumption The necessary heat consumption to satisfy the power and thermal requirements will be the sum of (a) and (b).

1.695.59X 106 + 3,523.35X 106 = 5,218.94X 106 kJ/h

(d) Annual heat consumption For the availability factor of this power station, the same factor of 80% as proposed by the Chinese party (annual operating time 7000 hours) is used, which is the same value as used in the preceding section. The annual heat consumption , therefore, will be as follows:

5,218.94X106X7,000=36,532.58X10 9 kJ/y

(e) Equivalent consumption of heavy oil The equivalent annual consumption in heavy oil as calculated from the converted calorific value of 41,868 kJ/kg (converted from 10,000 kcal/kg) will be as follows:

36,532.58X109 ------=872.566X106 kg/y 41,868 = 872,566 t/y

3-7 2) After the implementation of the project

(a) Heat consumption of the existing boilers It is reviewed for the basic operating pattern of Case 2-1. The number of operating boilers is 3, according to Table 3.1.-3, with the steam output of 332 t/h. The heat requirement (input energy) will be:

332 X103 X( 3332.7-440.5) ------= 1,038.63 X106 kJ/h 0.9245

(b) Heat consumption required for the supplementary combustion for three HRSGs The heat consumption required for the supplementary combustion for the HRSGs is:

56.7X 106 X 3= 170.1 X106 kJ/h

(c) Heat consumption for three gas turbines The power bought from a power station in another district as the shortage of power, 79.5 MW, will be supplied from gas turbines of that power station. Heat consumption for the three gas turbines will be:

293.6 X106 X 3 = 880.80 X106 k J/h

(d) Total heat consumption The heat consumption to meet the power and thermal requirements will be the sum of (a), (b) and (c) as shown below:

1,038.63 X106 +170.1 X106 + 880.80 X106 = 2,089.53 X106 kJ/h

(e) Annual heat consumption For the availability factor of this power station, the same factor of 80% as prior to the implementation of the project (annual operating hours: 7000 hours) is used. The annual heat consumption , therefore, will be as follows:

2,089.53 X106 X 7,000= 14,626.71 X109 kJ/y

(f) The equivalent annual consumption in heavy oil as calculated from the converted calorific value of 41,868 kJ/kg (converted from 10,000 kcal/kg) for the figure in the same way as before the implementation will be as follows.

14,626.71X109 ------= 349.353 X106 kg/y 41,868 = 349,353 t/y

3-8 3) Energy-saving effect

The annual consumption in heavy oil before and after implementation compare as: Before implementation: 872,566 t/y After implementation: 349,353 t/y with the balance:

872,566 —349,353 = 523,213 t/y (Reduction percentage = 60.0%)

reflects the energy-saving effect. In addition, assuming the effect as lasting for 15 years (from start-up in 2003 to 2017), the consumption over the period of 15 years sums up to:

523,213 X15 = 7,848,195 t

3.1.4 Practical way of verifying (monitoring) the energy-saving effect The party to verify or monitor the energy-saving effect of the project is, in general, expected to be the proposer (Japanese) or the implementor (Chinese). In the instance of this project, it is considered appropriate for the Chinese party to monitor the effect since the Japanese party will be the supplier of the equipment. As to the methodology, the point in question may be how the credibility of the measured results should be proved if the implementing corporation is to monitor the effect on its own. It may be solved by utilizing the audit function of a third-party institution but the question of the time and expenses may arise.

3-9 3.2 Effect of reducing greenhouse gas

3.2.1 Technical grounds for the development of the effect of reducing greenhouse gas Natural gas mainly composed of methane, ethane, propane, and butane has come into focus of interest in China as a clean energy of high quality. The main component, methane, accounts for 85795% of all components and it contain more hydrogen than carbon. The amount of CO2 generated by combustion is about 40% as compared with coal and 70% with heavy oil. The effect of CO2 emission reduction by the implementation of gas turbine cogeneration using natural gas for fuel will further enhance the advantageous effects together with the improvement of operating efficiency and energy saving described in Section 3.1.1. Table 3.2-1 shows the results of comparative study made on various pollutants contained in emissions, the study that was made based on a reference document obtained from the Chinese party (source: "Improvement of Environmental Quality — Construction of a cogeneration plant using gas and steam," Electric Power Technology: Vol. 32, Term 2, 1999). It is observed that natural gas is low in the generation of SO2, cinder, NOx, and soot and total suspended particles (TSP) in addition to the inherent effect of C02 reduction, and that it is thus growingly recognized in China as a clean energy. The quantitative study of how the implementation of the natural gas turbine cogeneration system to the Power Station No. 1 (subject of this survey) generates such an effect of reducing greenhouse gas will be discussed in Section 3.2.3 below in details.

3.2.2 Baseline to calculate the reducing effect of greenhouse gas (the thoughts behind how to estimate potential emission if the project were not implemented) The emission of greenhouse gas coincide with the combustion of fuel and is inseparably related to the element of energy-saving effects. The assumption and baseline described in Section 3.1.2 are also applied to the study of this section.

3.2.3 Specific quantity, observed period, and accumulated quantity of energy-saving effect The formula given in the attached "Guideline for the calculation of greenhouse gas emission" will be used for the calculation of annual CO2 emissions as shown below.

Converted amount Converted amount crude oil (toe/y) 44 in CO2 (t-C02/y) = ------X 42.62 X 20 X 0.99 X ------1,000 12

3-10 (1) Case 1 — 70 MW x 2 Gas Turbine plant

1) Before the implementation of the project Annual CO2 emissions can be calculated by substituting the values with applicable figures. The annual quantity in crude oil and annual CO2 emission before the implementation of the project will be as shown below:

~ ^ J , (54,339.95X109 /4.1868) Converted amount in crude oil (toe/y) — 1*297.887 X103 toe/y 107

1,297.887X103 44 Converted amount in CO2 (t-CCWy) = X 42.62 X 20 X 0.99 X------1,000 12

=4,015,938 t-C02/y

2) After the implementation of the project Case 1-1 which is the basic pattern of operation is considered hereinafter. Calculate in the same manner as the case before implementation to find the annual C02 emissions:

(17,167.57X109 /4.1868) Converted amount in crude oil (toe/y) 410.040 X103 toe/y 107

410.040 X103 44 Converted amount in CO2 (t-C02/y) X 42.62 X 20 X 0.99 X ------1,000 12

= 1,268,751 t-COs/y

3-11 3) Effect of CO2 emission reduction The reduced effect of CO2 emission before and after the implementation calculated above compare as follows: Before the implementation of the project: 4,015,93 8 t-CCVy After the implementation of the project: 1,268,751 t-C02y therefore: the annual CO2 reduction effects will be:

4,015,938 —1,268,751 = 2,747,187 t-COg/y (Reduction percentage = 68.4%)

In addition, assuming the effect as lasting for 15 years, the effect of C02 emission reduction over the period of 15 years sums up to:

2,747,187 X 15=41,207,805 t-C02

Table 3.2.-2 summarizes the comparison of these values between before and after the implementation together with the energy-saving effects. Table 3.2.-3 shows the results calculated likewise for Case 1-2 although the related formulae have been omitted.

(2) Case 2 — 25 MW x 3 Gas Turbine plant

1) Before the implementation of the project Annual CO2 emission can be calculated on the basis of the annual equivalent in crude oil calculated in Section 3.1.3. Annual CO2 emission before the implementation, therefore, will be as shown below:

(36,532.58X10 9 /4.1868) Converted amount in crude oil (toe/y) = 872.566X103 toe/y 107

n , , . 872.566X103 44 Converted amount in CO2 (t-COg/y) = ------X 42.62 X 20X 0.99 X------1,000 12

=2,699,904 t-COg/y

3-12 2) After the implementation of the project Case 2-1 which is the basic pattern of operation is considered hereinafter. Calculate in the same manner as the case before implementation to find the annual CO2 emission:

(14,626.71X10 9 /4.1868) Converted amount in crude oil (toe/y) 349.353 X103 toe/y 107

349.353X103 44 Converted amount in CO2 (t-COs/y) X 42.62 X 20 X 0.99 X------1,000 12

= 1,080,972 t-C02/y

3) Effects of CO2 emission reduction CO2 emission reduction calculated as above compare between before and after the implementation, as shown below: Before implementation: 4,015,938 t-C(Vy After implementation: 1,268,751 t-CC^y Annual CO2 emission after the implementation, therefore, will be:

2,699,904-1,080,972=1,618,932 t-COg/y

In addition, the effect of CO2 emission reduction for the 15 years period following the implementation of the project will be:

1,618,932 X15=24,283,980 t- COs/y

Table 3.2.-4 summarizes the comparison of these values between before and after the implementation together with the energy-saving effects. Table 3 .2.-5 shows the results calculated likewise for Case 2-2 although the related formulae have been omitted.

The energy-saving and CO2 emission reduction effects discussed above are summarized in Table 3.2 -6. Under the basic operation as planned at the Power Station No. 1, the energy-saving effect in the case of 70 MW x 2 Gas Turbine plant using gas turbines of larger capacity will sum up to 880,000 tons in the equivalent volume of crude oil, which aggregates to 13,310,000 tons over 15 years (the rate of reduction: 68.4%). On the other hand, the corresponding figures when using the 25 MW x 3 Gas Turbine plant will be 520.000 tons a year or 7,840,000 tons over 15 years (the rate of reduction: 60.0%). With regard to the reduction of greenhouse gas (C02) , the reduction per year will be 2.740.000 tons (the rate of reduction: 68.4%) or 41,200,000 tons over 15 years in the case of 70 MW x 2 Gas Turbine plant. Even with the 25 MW x 3 Gas Turbine plant, the annual reduction will be 1,610,000 tons (the reduction rate: 60.0%) and 24,280,000 tons over 15 years to demonstrate the effectiveness of the plant.

3-13 The larger effect of CO2 emission reduction with the 70 MW x 2 GT plant as compared with the 25 MW x 3 GT plant merely derives from the difference in the absolute output of the two plants. The comparison of the effects per unit output of the two plants indicates the similar performance in the effect of reduction on the annual basis, 20t- CCVy-kW or more, and 300-C02/kW or more over 15 years.

3.2.4 Practical way of verifying (monitoring) the effect of greenhouse gas reduction

The party to verify or monitor the effectiveness of CO2 reduction should preferably be the same entity as the one monitoring the energy saving effects of the plant. As to the methodology, the direct measurement is, although considered desirable, may be difficult from technical and economical point of view. It is, therefore, more appropriate to calculate it from the fuel consumption by using the method described in this report. Regardless of the measuring method, the point in question may be how the credibility of the measured results should be ensured in view of the possibility that the implementing corporation and the monitoring body will be one and the same entity. It may be necessary to exploit the audit function of a third-party institution.

3-14 Table 3.1-1 Precondition for the calculation of the effects of the project

70 MW x 2 Gas 25 MW x 3 Gas Item Remarks Turbine plant Turbine plant

Case 1-1 and Case 2-1 and Subject case Case 1-2 Case 2-2

The same values before and after the Steam flow 542t/h 542t/h implementation of the project

The same values before and after the implementation of the project. Should there be any difference in the generated electric Electric power 184. 3MW 126.9MW power between the two periods, any shortage in power shall be compensated by buying necessary quantity from a power station in another district.

Steam pressure 3.82MPa 3.82MPa Adjust to the existing facilities

Steam temperature 450°C 450°C Adjust to the existing facilities

3332.7kJ/kg 3332.7kJ/kg Steam enthalpy Adjust to the existing facilities (796.0kcal/kg) (796.0kcal/kg)

Boiler feedwater 104°C 104°C Adjust to the existing facilities temperature

Boiler feedwater 440.5kJ/kg 440.5kJ/kg Adjust to the existing facilities enthalpy (105.2kcal/kg) (105.2kcal/kg)

Annual operating hours Availability factor = 80% (as provided by 7000 hours 7000 hours of the power station the Chinese party)

Working efficiency of Planned value (as provided by the Chinese 92.45% 92.45% the existing boilers party)

Calorific value of the 41,868kJ/kg 41,868kJ/kg With crude oil, 10,000 kcal/kg (as provided existing boilers (10,000kcal/kg) (10,000kcal/kg) by the Chinese party)

Conversion rate of the "Law Enforcement Regulation Concerning the 41,868kJ/kg 41,868kJ/kg calorific value of Rationalization in the Use of Energy (10,000kcal/kg) (10,000kcal/kg) crude oil (abstract)"

3-15 - - - of 481 542 542 184.3 184.3 184.3 Total supply quantity

be - - -

0 e 0 0.0 16.3 from 136.9 power to bought outside Electric project

- - - 0 0 25 0 25 ST 8.7 25MW No. the

3 of ------12 turbines 0 12 12 O 0 2MW ST

47.4 47.4 184.3

1 No. steam 2

- - - A A A ST 10.4 10.4 10.4 12MW No. 1 Existing

------• • e ST 6MW No. plant)

implementation 7 t/h - - - 0 A A 120 100 108 No. Boiler 120. the

Turbine 6

t/h

- - - 0 A A 120 108 100 No. Boiler after 120.

Gas

boilers 5 2

t/h and

0 ------

• A A

240 101 108 301 542 No. x Boiler

120.

Existing MW 4 be be

t/h

- - - - -

A before 108 No. To To

Boiler removed removed 120. 70

3 be be t/h - - - - -

A 1-2: 110 No. To To

Boiler removed removed 120. conditions

yet HRSG Case - - - -

0 0 2

120.5 120.5 Not 120.5t/h installed No. - - - - 241 241 and

yet HRSG - - - -

0 0

HRSG 120.5 120.5 1-1 operating Not 120.5t/h installed

No.1

and

GT 2

yet BMW - - - -

0 0 GT No. New 68.45 (Case 68.45 69. Not installed operation - - - -

136.9

136.9 1

yet load BMW

- - - -

0 0 GT 68.5 No. 68.45 69. Not installed Comparison Operation Partial Suspended

O #: A: (MW) (MW) (MW) (t/h) (t/h) (t/h) power steam power steam steam power

Generated Generated Operating Generated Operating Generated Generated Generated Operating conditions conditions conditions 3.1-2

symbols 1-2 1-1 Item

of Capacity

Table Case Case (Reference)

Before

t r fte A mpe entation plem im implementation Description

3-16 - - - of 542 542 432 184.3 126.9 126.9 Total supply quantity

be - - -

# O o 0.0 16.3 79.5 from power to bought outside Electric project 4

- - - O O O 25 ST 25 BMW

8.7 No. 2 the - - - 3 3

turbines 47.4 47.4 - - - 126.9

O 12 12 O 12 0 ST 12MW No. of

2 2 steam - - -

A A ST A 10.4 10.4 10.4 12MW No.

------• e • ST 6MW No. Existing

7 t/h - - - 0 A A 111 110 108 No. Boiler 120. plant)

implementation

t/h - - - 0 A A 110 111 108 No. Boiler 120. the

Turbine 5 boilers t/h

0 ------e A A 222 108 112 542 332 No. after Boiler 120.

Gas

4 Existing

be be t/h 3 - - - - -

and A

108 No.

To To x Boiler removed removed 120.

3 be be t/h MW - - - - -

A 110

No. To To before Boiler removed removed 120.

3 yet 5t/h - -

0 0 70 70 HRSG No. Not 1-2: installed 84.1

2 yet ------

0 0 70 15t/h 70 conditions 210 210 HRSG No.

Not Case installed 84.

yet - - - -

70 0 0 70 and HRSG HRSG No.

Not installed 84.15t/h and

2-1 operating 3 GT yet

BMW

- - - -

O 0 GT

26.5 26.5 No. of 26. New Not installed

2 yet (Case BMW ------

0 O GT 26.5 79.5 26.5 79.5 No. operation

26. Not installed

load

yet BMW - - - -

0 O GT 26.5 26.5 No. 26. Not Comparison installed Operation Suspended Partial

•: O A:

(MW) (MW) (MW) (t/h) (t/h) (t/h) power steam power power steam steam Operating Generated Generated Generated Operating Generated Operating Generated Generated 3.1-3 conditions conditions conditions

symbols

Item 1-2 1-1 of

Capacity

Table Case Case

(Reference)

Before

t r fte A mpe entation plem im implementation Description

3-17 Table 3.2-1 Discharged volume of pollutants from a power station

S02 NOx TSP co 2 Cinder Fuel t/GWh t/GWh t/GWh kt/GWh t/GWh

Coal 4.61 3.32 0.57 1.586 63.01

Oi I 5.49 0.68 0.30 0.860 0.00

Gas 0.00 0.40 0.06 0.605 0.00

Source: ’’Improvement of Environmental Quality - Construction of a cogeneration plant using gas and steam" Electric Power Technology: Vol. 32, Term 3, 1999.

3-18 Table 3.2-2 Result of review on the effects of energy saving and C02 emission reduction (Case 1-1: 70 MW x 2 Gas Turbine plant)

After Before Item Unit implementation Remarks implementation - Case 1-1 Steam Existing boiler Fuel - C Heavy oil C Heavy oil Rated steam generation (per unit) t/h 120 120 Number of operating boilers Unit 5 3 Generated steam (total) t/h 542 301 (1) Steam enthalpy kJ/kg 3332.7 3332.7 Feedwater enthalpy kJ/kg 440.5 440.5 Boiler efficiency % 92.45 92.45 HRSG Auxiliary combustion fuel - - Amount of steam generation per unit t/h - 120.5 Recycled amount of waste heat Consumption of auxiliary combustion GJ/h 0.0 fuel Number of units Unit - 2 Total steam generation t/h - 241 (2) Total heat consumption GJ/h - 0 Total steam generation t/h 542 542 (3X1 M2) Portion of steam for power generation t/h 431 431 (of ST) Portion of steam for heat supply t/h 111 111 Electricity ST 25MW Generated power MW 25 25 (4) 12MW Generated power MW 12 12 (5) 12MW Generated power MW 10.4 10.4 (6) 6MW Generated power MW 0 0 (7) Total power generation MW 47.4 47.4 (8)=(4)+(5)+(6)+(7) Electric power bought from outside MW 136.9 0.0 (9) GT Fuel - - LNG Power generation per unit MW - 68.45 Heat consumption per unit GJ/h - 755.43 Operating number of units Unit - 2 Total power generation MW - 136.9 (10) Total heat consumption GJ/h - 1510.86 Total power generation MW 184.3 184.3 (11)=(8)+(9)+(10) Heat consumption Existing boilers GJ/h 1695.59 941.65 (12) HRSG auxiliary combustion 0.0 0.0 (13) GT GJ/h 0.0 1510.86 (14) Power bought from outside GJ/h 6067.26 0.0 (15) Total GJ/h 7762.85 2452.51 (16)=(12)+(13)+(14)+(15) Operating hours hr 7,000 7,000 (17) Annual heat consumption Real consumption TJ/y 54,339.95 17,167.57 (18)=(16)*(17) Amount of reduction in energy TJ/y BASE 37,172.38 consumption Equivalent calorific value of crude oil kJ/kg 41,868 41,868 (19) Annual crude oil consumption t/y 1,297,887 410,040 (20)=(18)/(19) Annual reduction in crude oil Energy-saving effect t/y BASE 887,847 consumption Energy saving effect % BASE 68.4 Reduced quantity of crude oil t BASE 13,317,705 consumption over 15 years Effect of C02 emission Equivalent amount of crude oil toe/y 1,297,887 410,040 (21 )=(( 18)/4. 1868)/10*7 reduction Annual C02 emissions t-C02/y 4,015,938 1,268,751 Note: Reference Effect of reducing annual C02 t-C02/y BASE 2,747,187 emissions Effect of reducing C02 emissions % BASE 68.4 Effect of reducing C02 emissions over t-C02 BASE 41,207,805 15 years Equivalent C02 (t-Co2/y) = Equivalent quantity of crude oil (toe/y)/1000 x 42.62 x 20 x 0.99 x 44/12 (Source: "Greenhouse gas emission calculation guideline")

3-19 Table 3.2-3 Result of review on the effects of energy saving and C02 emission reduction (Case 1-2: 70 MW x 2 Gas Turbine plant)

After Before Item Unit implementation Remarks implementation - Case 1-2 Steam Existing boiler Fuel - C Heavy oil C Heavy oil Rated steam generation (per unit) t/h 120 120 Number of operating boilers Unit 5 3 Generated steam (total) t/h 542 301 (1) Steam enthalpy kJ/kg 3332.7 3332.7 Feedwater enthalpy kJ/kg 440.5 440.5 Boiler efficiency % 92.45 92.45 HRSG Auxiliary combustion fuel - - Amount of steam generation per unit Recycled amount of t/h - 120.5 waste heat Consumption of auxiliary combustion GJ/h - 0.0 fuel Number of units Unit - 2 Total steam generation t/h - 241 (2) Total heat consumption GJ/h - 0 Total steam generation t/h 542 542 (3)=(1>(2) Portion of steam for power generation t/h 431 431 (of ST) Portion of steam for heat supply t/h 111 111 Electricity ST 25MW Generated power MW 25 25 (4) 12MW Generated power MW 12 12 (5) 12MW Generated power MW 10.4 10.4 (6) 6MW Generated power MW 0 0 (7) Total power generation MW 47.4 47.4 (8)=(4)+(5)+(6)+(7) Electric power bought from outside MW 136.9 0.0 (9) GT Fuel - - LNG Power generation per unit MW - 68.45 Heat consumption per unit GJ/h - 755.43 Operating number of units Unit - 2 Total power generation MW - 136.9 (10) Total heat consumption GJ/h - 1510.86 Total power generation MW 184.3 184.3 (11)=(8)+(9)+(10) Heat consumption Existing boilers GJ/h 1695.59 941.65 (12) HRSG auxiliary combustion 0.0 0.0 (13) GT GJ/h 0.0 1510.86 (14) Power bought from outside GJ/h 6067.26 0.0 (15) T otal GJ/h 7762.85 2452.51 (16)=(12)+(13)+(14)+(15) Operating hours hr 7,000 7,000 (17) Annual heat consumption Real consumption TJ/y 54,339.95 17,167.57 (18X16X17) Amount of reduction in energy BASE 37,172.38 consumption TJ/y Equivalent calorific value of crude oil kJ/kg 41,868 41,868 (19) Annual crude oil consumption t/y 1,297,887 410,040 (20)=(18)/(19) Energy-saving effect Annual reduction in crude oil t/y BASE 887,847 consumption Energy saving effect % BASE 68.4

Reduced quantity of crude oil BASE 13,317,705 consumption over 15 years t Effect of C02 emission Equivalent amount of crude oil toe/y 1,297,887 410,040 (21)=((18)/4.1868)/10' ‘7 reduction Annual C02 emissions t-C02/y 4,015,938 1,268,751 Note: Reference Effect of reducing annual C02 t-C02/y BASE 2,747,187 emissions Effect of reducing C02 emissions % BASE 68.4 Effect of reducing C02 emissions over t-C02 BASE 41,207,805 15 years Equivalent C02 (t-Co2/y) = Equivalent quantity of crude oil (toe/y)/1000 x 42.62 x 20 x 0.99 x 44/12 (Source: "Greenhouse gas emission calculation guideline")

3-20 Table 3.2-4 Result of review on the effects of C02 emission reduction (Case 2-1: 25 MW x 3 Gas Turbine plant)

After Before Item implementation Remarks Unit implementation - Case 1-1 Steam Existing boiler Fuel - C Heavy oil C Heavy oil Rated steam generation (per unit) t/h 120 120 Number of operating boilers Unit 5 3 Generated steam (total) t/h 542 332 (1) Steam enthalpy kJ/kg 3332.7 3332.7 Feedwater enthalpy kJ/kg 440.5 440.5 Boiler efficiency % 92.45 92.45 HRSG Auxiliary combustion fuel - LNG Amount of steam generation per unit t/h 70 Recycled amount of waste heat Consumption of auxiliary combustion GJ/h - 56.7 fuel Number of units Unit - 3 Total steam generation t/h - 210 (2) Total heat consumption GJ/h - 170.1 Total steam generation t/h 542 542 (3)=(1)+(2) Portion of steam for power generation t/h 431 431 (of ST) Portion of steam for heat supply t/h 111 111 Electricity ST 25MW Generated power MW 25 25 (4) 12MW Generated power MW 12 12 (5) 12MW Generated power MW 10.4 10.4 (6) 6MW Generated power MW 0 0 (7) Total power generation MW 47.4 47.4 (8)=(4)+(5)+(6)+(7) Electric power bought from outside MW 79.5 0.0 (9) GT Fuel - - LNG Power generation per unit MW - 26.5 Heat consumption per unit GJ/h - 293.60 Operating number of units Unit - 3 Total power generation MW - 79.5 (10) Total heat consumption GJ/h - 880.80 Total power generation MW 126.9 126.9 (11)=(8)+(9)+(10) Heat consumption Existing boilers GJ/h 1695.59 1038.63 (12) HRSG auxiliary combustion 0.0 170.10 (13) GT GJ/h 0.0 880.80 (14) Power bought from outside GJ/h 3523.35 0.0 (15) Total GJ/h 5218.94 2089.53 (16)=(12)+(13)+(14)+(15) Operating hours hr 7,000 7,000 (17) Annual heat consumption Real consumption TJ/y 36,532.58 14,626.71 (18X16X17) Amount of reduction in energy TJ/y BASE 21,905.87 consumption Equivalent calorific value of crude oil kJ/kg 41,868 41,868 (19) Annual crude oil consumption t/y 872,566 349,353 (20)=(18)/(19) Annual reduction in crude oil Energy-saving effect t/y BASE 523,213 consumption Energy saving effect % BASE 60.0 Reduced quantity of crude oil t BASE 7,848,195 consumption over 15 years Effect of C02 emission Equivalent amount of crude oil toe/y 872,566 349,353 (21 )=((18)/4.1 868)/10~7 reduction Annual C02 emissions t-C02/y 2,699,904 1,080,972 Note: Reference Effect of reducing annual C02 t-C02/y BASE 1,618,932 emissions Effect of reducing C02 emissions % BASE 60.0 Effect of reducing C02 emissions over t-C02 BASE 24,283,980 15 years Equivalent C02 (t-Co2/y) = Equivalent quantity of crude oil (toe/y)/1000 x 42.62 x 20 x 0.99 x 44/12 (Source: "Greenhouse gas emission calculation guideline")

3-21 Table 3.2-5 Result of review on the effects of C02 emission reduction (Case 2-2: 25 MW x 3 Gas Turbine plant)

After Before Item implementation Remarks Unit implementation - Case 1-1 Steam Existing boiler Fuel - C Heavy oil C Heavy oil Rated steam generation (per unit) t/h 120 120 Number of operating boilers Unit 5 3 Generated steam (total) t/h 542 222 (1) Steam enthalpy kJ/kg 3332.7 3332.7 Feedwater enthalpy kJ/kg 440.5 440.5 Boiler efficiency % 92.45 92.45 HRSG Auxiliary combustion fuel - LNG Amount of steam generation per unit t/h - 70 Recycled amount of waste heat Consumption of auxiliary combustion GJ/h - 56.7 fuel Number of units Unit - 3 Total steam generation t/h - 210 (2) Total heat consumption GJ/h - 170.1 Total steam generation t/h 542 542 (3X1X2) Portion of steam for power generation t/h 431 321 (of ST) Portion of steam for heat supply t/h 111 111 Electricity ST 25MW Generated power MW 25 0 (4) 12MW Generated power MW 12 12 (5) 12MW Generated power MW 10.4 10.4 (6) 6MW Generated power MW 0 0 (7) Total power generation MW 47.4 22.4 (8)=(4)+(5)+(6)+(7) Electric power bought from outside MW 79.5 25.0 (9) GT Fuel - - LNG Power generation per unit MW - 26.5 Heat consumption per unit GJ/h - 293.60 Operating number of units Unit - 3 Total power generation MW - 79.5 (10) Total heat consumption GJ/h - 880.80 Total power generation MW 126.9 126.9 (11X8X9X10) Heat consumption Existing boilers GJ/h 1695.59 694.50 (12) HRSG auxiliary combustion 0.0 170.10 (13) GT GJ/h 0.0 880.80 (14) Power bought from outside GJ/h 3523.35 1107.97 (15) Total GJ/h 5218.94 2853.37 (16X12X13X14X15) Operating hours hr 7,000 7,000 (17) Annual heat consumption Real consumption TJ/y 36,532.58 19,973.59 (18X16X17) Amount of reduction in energy BASE 16,558.99 consumption TJ/y Equivalent calorific value of crude oil kJ/kg 41,868 41,868 (19) Annual crude oil consumption t/y 872,566 477,061 (20X18X19) Energy-saving effect Annual reduction in crude oil t/y BASE 395,505 consumption Energy saving effect % BASE 45.3 Reduced quantity of crude oil t BASE 5,932,575 consumption over 15 years Effect of C02 emission Equivalent amount of crude oil toe/y 872,566 477,061 (21 X( 18)/4. 1868)/1 0~7 reduction Annual C02 emissions t-C02/y 2,699,904 1,476,128 Note: Reference Effect of reducing annual C02 t-C02/y BASE 1,223,776 emissions Effect of reducing C02 emissions % BASE 45.3 Effect of reducing C02 emissions over t-C02 BASE 18,356,640 15 years Equivalent C02 (t-Co2/y) = Equivalent quantity of crude oil (toe/y)/1000 x 42,62 x 20 x 0.99 X 44/12 (Source: "Greenhouse gas emission calculation guideline")

3-22 Table 3.2-6 Effects of the Project

70 MW x 2 Gas 25 MW x 3 Gas Turbine plant Turbine plant Item Unit Remarks Case 1-1 Case 1-2 Case 2-2

Basic One boiler Basic One boiler Operation - operation suspended operation suspended

Reduction Equivalent t/y 887,847 798,974 523,213 395,505 1 quantity crude oil *+— Annual 0) Reduction O) % 68.4 61.6 60.0 45.3 c rate £ (fl Reduction Equivalent t 13,317,705 11,984,610 7,848,195 5,932,575 quantity crude oil O) Over 15

Reduction t-COg/y 2,747,187 2,472,195 1,618,932 1,223,776 quantity U 42 Reduction % Annual % 68.4 61.6 60.0 45.3 rate 8 1 Reduction t-C02/y*kW 20.1 18.1 20.4 15.4 rate per kW £ Reduction I t-CO; 41,207,805 37,082,925 24,283,980 18,356,640 quantity to0) 1 Over 15 Reduction % 68.4 61.6 60.0 45.3 1 years rate CD Reduction t-C02/kW 301.0 270.9 305.5 230.9 rate per kW

3-23 3.3 Impact on the productivity

a) Improved productivity This plant is a cogeneration plant to supply both electric power and steam, which in no way contributes directly to the improvement of petrochemical products. But it can indirectly contribute to the final productivity by the substantial increase of generated power as it helps reduce the amount of purchased power from outside in the past.

b) Reduction of the basic unit of energy consumption The selling price of steam is 110 yuan/t for medium-pressure steam (35K series) and 90 yuan/t for low-pressure steam (10K series). The fuel price per unit amount of heat will rise when the fuel is switched to natural gas as the current price of steam is based on the heavy-oil cost. The cost of steam tends to rise in future and the gain from steam will drop in proportion. However, the consumption of heavy oil purchased hitherto will decrease significantly.

3-24 Chapter 4. Profitability

This chapter first estimates the total construction costs (initial investments) including the shares of both the Chinese and Japanese parties as 700 million yuan (±100 million yuan) for Case 1 and 500 million yuan (±100 million yuan) for Case 2. It then continues to estimate the cost versus project effectiveness at 97.57t/y/million yen for Case 1 and 80.49t/y/million yen for Case 2. With respect to the cost versus the effect of greenhouse gas reduction, it is estimated at 301.89t-C02/y/million yen for Case 1 and 249.07t-CO 2/y/million yen for Case 2. Although Case 1 appears more advantageous than Case 2, the chapter suggests that detailed design will be needed to finalize the point since the above figures are subject to some allowance.

4-1 4.1 Economic effect of the return on investment With regard to the economic effect of the return on investment, this section will review the initial investment as the construction cost, and the profit as the difference between the power generation costs and the selling price of the generated power. Concerning the initial investment as the construction cost, it was roughly estimated on the basis of the job allocation of Section 2.2.5 as 700 million yuan in Case 1 (70 MW x 2 GT plant), or 9.1 billion yen as converted at the rate of 1 yuan =13 yen, and in Case 2 (25 MW x 3 GT plant) 500 million yuan, or 6.5 billion yen. It is noted, however, that the initial investment could not be definitely defined as the design details have not yet been clarified. A tentative amount was thus given with an allowance of ±100 million yuan for the above two cases. The values given in the following discussion, therefore, should be assumed with the allowance of about 14% more or less in Case 1 and about 20% more or less in Case 2. With respect to the power generation cost, it was estimated under the common conditions of calculation for both cases: the annual availability factor 80%/y or about 7000h/y as shown in Table 4.1-1; the depreciation period, or the service life, of 15 years as normally applied by electric power companies; and the interest rate 0.75% of the Special Environment Yen Loan. Other values used for estimation include the heavy oil cost at 1,100 yuan/t and the price of steam at 90 yuan/t as the mean price. From the premise, the power generation cost decreases in proportion to the decrease of the buying price of natural gas in both cases; however, the rate of decrease is larger in Case 2 than in Case 1. In other words, the power generation cost in Case 2 is more susceptible to changes in the natural gas cost. Another point of note is that the power generation cost of Case 1 gets cheaper than that of Case 2 if the cost of natural gas becomes higher, and the generation cost of Case 2 get cheaper if the power generation cost of Case 2 becomes cheaper than that of Case 1. For example, if the natural gas cost is 1.4 yuan/Nm 3, Case 1 will have an edge over Case 2 in the generation cost and vice versa if the natural gas cost gets 0.7 yuan/Nm 3 or less. Since the selling price of the generated power and buying price of the same in Beijing are both 0.45 yuan/kWh, both the selling and buying prices of power are 0.45/kWh or lower in cases where the buying price of natural gas is 1.4 yuan/kWh, so one can earn profit by selling generated power and cut back on electric consumption if one is buying power from outside. Natural gas fired co-generation power plant, therefore, is believed to be economically feasible. The initial investment may be recovered in the same 15 years as the depreciation period, assuming the residual value to be 10% of the initial investment. The use of a loan other than the "Special Environmental Yen Loan" will be less favorable as the payback period will be extended because of the 0.75% higher interest rate. What remains to see is the choice between Case 1 and Case 2, but we should wait for detail design to come out as there are certain since the final cost is still subject to certain allowance.

4-2 Table 4.1-1 Conditions prerequisite for the estimation of the economic evaluation

Case 1 Case 2 Input data 70 MW x 2 25 MW X 3 Rema r ks GT plant GT plant 1 Generated power rate kW 136,900 79,500 2 Generated steam rate t/h 241.0 210.0 Mean value: 700 and 500, 3 Initial investment Million yuan 600 to 800 400 to 600 respectively 4 Steam cost yuan/t 75 to 110 Mean value: 90 Fuel gas consumption 5 rate kg/h 31,780 22,400 6 Operating hours h/d 24 7 Fuel gas price yuan/m 3N 0.5 to 2.0 Annual availability 8 factor Vy 80.0 Rate of price 9 increase % 7.0 10 Rebate in rate °/o 5.0 11 Returnon investment years 15 Special environment yen 12 Interest % 0.75 loan Data from verbal °/o information: 1.5-2.0. 13 Tax 2.0 Tentatively estimated as 2.0 14 Insurance % 0.576 Number of operating 30 15 personnel man Thousand 16 Labor cost yuan/man/y 40 17 Maintenance cost % 5.0 Existing boiler Data from verbal 18 % 92.45 information: Planned efficiency value by Chinese party Calorific value of 19 heavy oiI kJ/kg 41.868 10, OOOkcaI/kg Data from verbal information: 975 and 20 Heavy oiI cost yuan/t 1,100 subject to change. Tentatively estimated as 1100

4-3 4.2 Cost versus project effectiveness (Energy-saving [or alternative energy] effect and the effect of greenhouse gas reduction)

4.2.1 Cost over one-year period based on the initial investment versus energy-saving effect In Case 1, the cost versus energy-saving effect will be 97.57t/y/million yen with the equivalent heavy oil consumption of 887,847t/y and the initial investment of 650 million yuan. In Case 2, with the equivalent heavy oil consumption of 523,213t/y and the initial investment of 650 million yuan, the cost versus energy-saving effect will be estimated as 80.49t/y/million yen.

4.2.2 Total annual cost based on the initial investment versus the effect of greenhouse gas reduction In Case 1, the effect of greenhouse gas reduction is 2,747, 187t-C02/y and the initial investment is 9.1 billion yen; therefore, the cost versus the effect of greenhouse gas reduction is 301.89t-CO2/y/million yen. In Case 2, the effect of greenhouse gas reduction is l,618,932t-CC>2/y and the initial investment is 6.5 billion yen; therefore, the cost versus the effect of greenhouse gas reduction is 249.07t-CO2/y/million yen. However, the possible tolerance of estimation — about ±14% for Case 1 and about ±20% for Case 2 — will have to be taken into consideration.

4-5 Chapter 5. Verification of the Effect of Propagation

This chapter presents the results of a survey run in not only the city of Beijing but also its suburbs as well as Shanghai of coastal region concerning the possibility of propagation of the cogeneration system using natural gas for fuel in place of heavy oil. It has also estimated the effects of energy saving and greenhouse gas reduction.

5-1 5.1 Possibility of the propagation in the country of the technology subject to implementation by the project

5.1.1 Outline of the prospective district for propagation The natural gas deposit in China is said to be 30 trillion cubic meters that have already exceeded oil resources. Claimed to satisfy the demands of 100 years ahead, it is promoting the trend to actively utilize the resource for the improvement of environment. This section tries to describe the general situation in three most likely districts as the target for propagation, namely, Beijing (the center of political activities), Ianzhou (close to the gas producing areas), and Shanghai (the nation's economic center):

(1) Beijing District The price of natural gas is going up along the increasing oil price, which was 1.4-1.8 yuan per cubic meter at the time of the survey. With the completion of a pipeline with the annual throughput capacity of a billion cubic meters, it has been resolved by the administration to push ahead environmental improvement on its honor as the capital city and to restrict the use of coal as a fuel from

2002. With the competent agencies already in motion to utilize natural gas to support the above measures, the trend is developing to solve the problem at the initiative of the administration.

(2) Ianzhou District Thanks to the proximity to the gas field, the price of natural gas remains low at 0.8-1.8 yuan. Coal is also produced in the area and is cheap. The price of natural gas per unit calorific value is about 7 to 8 times the coal price and this makes it barely marketable even though useful for environmental improvement.

(3) Shanghai District Natural gas is already in practical use with the pipeline laid down from the Donhai offshore gas field, and the supply is expected to increase by 4 billion cubic meters from west in 2002 and to 19 billion cubic meters by 2010. The price is relatively high at 1.3- 1.4 yuan when compared with gas-producing districts, but the price per unit calorific value is less than twice the price of coal, as the coal is also expensive here, to make the price economically feasible. Institutions including Shanghai Science and Technology Committee, Shanghai Economic Committee, and Shanghai Traffic University, an elite university in the field of science, have started to advocate CO2 reduction plan including environmental improvement activities, while major heat and electricity consumers, such as petrochemical and refinery sectors, are showing the trend to take initiatives to promote the use of natural gas.

5-2 The following is a summary of the efforts to promote power generation using natural gas that have been specifically confirmed to have commenced or already in progress in municipal areas and related suburbs of Beijing, Xian, Shanghai to which gas pipelines have already been laid down:

(4) Beijing City and its suburbs — total 690 MW (in Case 1) Yanshan (Case 1) 136.9 MW (with 70 MW X 2 GT units) (Case 2) 79.5 MW (with 25 MW X 3 GT units) Qinghua University: 50 MW Inside Beijing: 500 MW (10 sites)

(5) Xian City and its suburbs — total 410 MW Xian Traffic University: 80 MW Xian North suburbs: 200 MW Yangling District: 50 MW Baoji District: 80 MW

(6) Shanghai City and its suburbs — total 685 MW Jinshan Petrochemical Co., Ltd.: 285 MW Shanghai Gaoqiao Petrochemical Co., Ltd.: 300 MW Songjiang Thermal Power Station: 100 MW

There are industrial complexes, such as Jinshan Petrochemical Co., Ltd. and Shanghai Gaoqiao Petrochemical Co., Ltd., that are comparable in size to Yanshan Petrochemical near Shanghai, and the desire to improve atmospheric environment is growing. We expect the demands for the facilities to be at least on the similar level as Beijing. We will discuss more in details later on Shanghai Gaoqiao Petrochemical Co., Ltd. and Songjiang Power Station on which field surveys were run by us as specifically prospective sites for implementation.

(7) Others There are still more rich gas fields in regions including Guangdong, Sichuan, and Xinjiang in China and, at the same time, there are many potential sites for propagation of the technology using natural gas. These sites, however, are not discussed in this survey as we have had no opportunity to survey the areas as yet.

5-3 5.1.2 Results of field survey in Shanghai district

(1) Shanghai Gaoqiao Petrochemical Co., Ltd. The company is located about 30 minutes away from the center of Shanghai city in Pudongqu. With 20,000 employees and 11-billion-yuan annual sales, the company is the fifth largest corporation in Shanghai, producing petroleum products including gasoline, paraffin oil, acetone, and synthetic rubber. The company has an unusual power generation system installed underground (consisting of three boilers and three turbines, but all of them are currently out of operation). The company operates six boilers and five turbines (total 175 MW) installed gradually since 1989 in another building. They initially used heavy oil for fuel but switched to coal later. The main use of the equipment is to produce steam while electric power is sold or purchased occasionally, depending on the overs and shorts of electricity. The company considers the use of natural gas economically unprofitable but useful from the environmental standpoint. Should the company decide to adopt gas turbine system with utilizing waste heat in future. The company desires to discard the underground power generation facilities consisting of three boilers of 220t/h each, two generators of 50 MW and one 25 MW (total 125 MW output) and replace them with a cogeneration plant.

Table 5.1-1 Operating equipment of Shanghai Gaoqiao Petrochemical Co., Ltd.

Capacity and number Equipment Remarks of equipment 50MW x 2 Steam turbine The faci 1ities have been 25MW x 3 installed gradually at the 220t/h x 6 interval of six months from Boiler (8.83Mpa, 535°C) 1989 and are operating (total Heavy oil and coal for fuel 175 MW)

(2) Shenneng Group Corporation Shenneg is an investment company located in the center of Shanghai and the city owns 80% of the shares. In conformance with the view of the municipal administration, the company is highly concerned about environmental protection, particularly in atmospheric pollutants, such as NOx and SOx. The city administration is enforcing the regulation of total emissions (12,000 MW) by power stations burning coal and insists that the coal thermal power station of Shanghai Gaoqiao Petrochemical Co., Ltd. would be the last installation of the kind to be permitted. The city also advocates an industrial control to move industrial developments to areas outside the loop line. There are currently nine industrial development sections and the Sonjiang Power Station is one of them. The plant has 37 small boilers ranging in size from 1 to 11 t/h (using coal, heavy oil or paraffin oil for fuel). It plans to dispose of all these facilities and replace them with a cogeneration plant. The following is a list of the boilers owned by the company.

5-4 Table 5.1-2 Configuration of boilers operated by Sonjiang Power Station

Amount of steam Group of boilers Number of units FueI in use general ion 1 18 74.6 t/h Coal 2 2 12.0 t/h Heavy oiI 3 17 86.4 t/h Paraffin oiI Total 37 173.0 t/h -

They seem to have ordered the design to the Design Institute and made a feasibility study. No details of the FS were available at the meeting but we have obtained the following information in response to our inquiry in the form of questionnaires: • Steam cost: 120 yuan/t (depending on the market) • Power cost: 0.43 yuan/kWh when sold (including tax) • Buying price of power: 0.6 yuan/kWh • Fuel cost: Coal 410 yuan/t (including tax) • LPG cost: 2,360 yuan/t (including tax) • Natural gas: 1.5yuan/m 3N • Annual operating hours of the facilities: 7,500 h • Annual utilizing hours of the facilities: 6,330 h • Values applied to the feasibility study: Depreciation period of 11.2 years Interest rate of 6.12% • Labor cost 3500 yuan/year • Maintenance personnel (1.5% of total investment) • Tax: VAT 17%, income tax 33% • Amount of investment now under study: 35 million to 40 million yuan (40% of which is to be self-financed.) • Construction schedule: Commencement of the initial stage of the plan — 2000 Planned completion — 2001 • Others: No experience in the use of natural gas for fuel.

5-5 5.2 Effects with the propagation in mind

5.2.1 Energy saving effects In the case of Beijing Yanshan Petrochemical Co., Ltd., the planned power output as the result of the implementation of Case 1 (70 MW x 2 GT units) will be 136.9 MW. The effect in the possibility of propagation can be estimated as 11,576,383 toe/y based on the total output of Beijing, Xian, and Shaghai Districts as shown below:

Beijing District: 690 MW Xian District: 410 MW > Total 1,785 MW Shanghai District: 685 MW

256,768toe/y = 3,347,925toe/y

5.2.2 Effect of the reduction of greenhouse gas Similar to the estimation of the preceding section, the possibility of propagation of the effect of greenhouse gas reduction can be estimated to be 35,819,787 t/CCV/y by the following calculation:

803,777t-CO 2/y x ^g^W = 10,480,219t-C02/y

5-6 Chapter 6. Influence on other sectors

This chapter touches upon the advantage of using coal bed methane, which is attracting attentions lately as an important strategic energy, and also discusses the impact of implementing this project on the energy policy of China besides the energy-saving and greenhouse reduction effects.

6-1 In addition to such positive effects of the execution of this project as energy saving, the reduction of greenhouse gas, and the improvement of atmospheric environment by the reduction of soot, dust, NOx, and SOx, the wide range of propagation of the cogeneration process adopted by this project can also lead to the lowering of the price of natural gas by the scale merit of the large and stable demands for natural gas (partly due to the reduced cost of pipeline construction) and accelerate the popularization of the system. Furthermore, the replacement of decayed facilities with the new cogeneration system will also a favorable impact on the employment situation for employees working at the new power plants. Another major advantageous effect of this project is the proposal for fuel shift from the combustion of coal or heavy oil to natural gas as specific measures to effectively reduce CO2 emissions, the major cause of greenhouse effects. It will have substantial impacts on the energy and environmental protection policies of China. The other material coming into focus as the alternative fuel to supplement the potential shortage of natural gas is the coal bed methane. As the execution of this project promotes the use of natural gas, it is also expected to accelerate the utilization of coal bed methane. The following section will address the effect of the utilization of coal bed methane together with other related issues.

6.1 Outline of Coal Bed Methane Coal bed methane is a type of gas formed and stored in the coal bed and absorbed in the surface layers of coal. Methane accounts for 95% or more of the total component of this gas with a calorific value of 33,494 kJ/m3 (8,000 kcal/m3), which is about the same as natural gas if not higher. While demands are increasing for natural gas, there is a general shortage of supply in China with the annual deficit of about 2 billion to 5 billion cubic meters, which is expected to further increase to 20 billion to 40 billion cubic meters by the year 2010. The coal bed methane is eyed as a hopeful clean energy to fill up the demand and supply gap. The total deposits of coal methane resources amounting to 30 to 35 trillion cubic meters exists underground to about 2000 m in depth in China, which compares to the natural gas deposit and is the world's third largest of such resources. Methane emission to atmosphere from Chinese mines almost compare to the annual production of natural gas and increasing every year at the rate of 170 million cubic meters.

6-2 6.2 Utilization effect of coal bed methane

(1) Security of coal mines The serious threat of the coal bed methane to the security of the coal mine is quite well known and the efflux of methane is one of the major causes of coal mine accidents. The economic effect of coal production will no doubt increase if it is possible to avoid the risk of coal mine explosions by the extraction of coal bed methane prior to mining activities to ensure safety.

(2) Effect of greenhouse gas reduction The greenhouse effect of the efflux of coal bed methane with the chief ingredient of methane is twenty folds of CO2 and its function to deplete ozone layers is comparable to carbon dioxide. The successful extraction and utilization of coal bed methane will no doubt contribute greatly to the conservation of the global environment. Reported by the U.N. that it amounts to one third of the total global emissions, the coal bed methane released into the atmosphere from Chinese mines is now the focus of world's concern. As the world's largest producer and consumer of coal, the appropriate cultivation and exploitation of coal bed methane by China should significantly contribute to the protection of the global environment.

6.3 Coal bed methane as the strategic alternate energy Coal bed methane as a strategic alternate energy abundantly exists in China. The deposits of 16,400 billion cubic meters are lying in underground to the depth of 1,000 m mainly in the north and northwest of China. It is now utilized in abundance in China as a clean source of fuel and is expected to become the nation's strategic alternate fuel next to coal, oil, and natural gas in the near future. The following taxation system is enforced by the central government of China. While the value added tax (VAT) of 5% is imposed on the joint coal bed methane project with foreign investments, China Integrated Coal Bed Methane Co., Ltd. (established by the Ministry of Coal, the Ministry of Minerals, and China Oil Natural Gas Corporation with the approval of the National Council) is exempted from import duties and charges on imported materials, machinery, equipment and accessories required for the exploration and development of coal bed methane. Thus, the Chine Coal Bed Methane industry enjoys a wide range of potentials of development and hopeful prospective.

6-3 6.4 Target areas of the utilization of coal bed methane The main options for the utilization of coal bed methane are city gas service and thermal power generation running on coal bed methane for fuel. The use of coal bed methane as city gas will not only eliminate the discharge and emission of coal waste and soot generated from coal used as a home fuel but also minimize the emission of carbon dioxide and sulfurous acid gas to significantly improve environmental conditions. In view of the investment and economic effects, the utilization as city gas is considered to be the most effective solution. The utilization of coal bed methane for thermal power generation, the most basic way of its use (used as a boiler fuel to power steam turbines and generators), has not been subjected to an extensive study in China because of the low calorific value. In the case of a combined cycle operation driving gas turbines to collect and reuse waste heat to power steam turbines used in combination, it is possible to raise the thermal efficiency of the fuel to 50% or more. The essential feature of this project is to enable cogeneration by using gas turbines running on natural gas and effectively utilizing the waste heat. The implementation and propagation of this technology is expected to promote the use of coal bed methane in place of natural gas and to dramatically popularize the exploitation of coal bed methane for power generation purposes (such as cogeneration and combined-cycle generation.)

6.5 Coal bed methane development plan The development of coal bed methane is now under way in three stages: the first stage from 1997 to 2010 for the evaluation and test exploration, the second stage from 2010 to 2020 for the preparatory step for commercial development and utilization period, and the third stage from 2020 to 2030 for the wide range of full scale commercial development and utilization period.

6.6 Summary on coal bed methane The advantageous features of coal bed methane are the absence of ash or SOx and less than 10% content of NOx in emission. The gas turbine power generation by coal bed methane fuel, on the other hand, is exceptionally advantageous for use in major cities, such as Beijing, Ganzhou, and Shanghai, because of the relatively small amount of circulation feed water and land area required for the construction.

6-4 Conclusion With the basic survey on the joint implementation of the cogeneration system project with Beijing Yanshan Petrochemical Co., Ltd., we have been able to learn the actual state of environment measures and the supply condition of natural gas in Beijing District. At the same time, we have been able to investigate the basic items pertaining to the modification plan of Yanshan Power Station No. 1 for the purpose of achieving energy-saving effects and the reduction of greenhouse gas to be provided by the natural gas fired cogeneration plant. It has been made clear that the plan to remove two boilers running on heavy oil (steam output 240 t/h) from the existing facilities and replace them with two gas turbines and two waste heaters (steam output 241 t/h, electric power output 136.9 MW) will enable saving about 910,000 tons of crude oil and reducing CO2 emissions by 2,830,000 tons. As the basic elements of the modification plan, we formulated plans for the system, layout, electric and instrumentation control. We also reviewed the construction schedule and the job allocation between the Chinese and Japanese parties. It was then followed by the investigation of economic and environmental aspects on the basis of the energy-saving and greenhouse gas reduction effects. It was verified that the construction schedule would extend over a period of about two and a half years and. As to the job allocation, the responsibility of the Japanese party would be the transportation to the CIF Chinese port, installation guidance, test operation guidance of main components including gas turbines and heat recovery steam generators. The initial investment for construction cost was estimated to be 700 million yuan (±100 million yuan). On the above basis, the cost versus energy-saving effect was estimated at about 98t/y/million yen (equivalent crude oil cost) and the cost versus greenhouse gas reduction effect was estimated at about 302t-CO2/y/million yen. Concerning the profitability, the power generation cost was estimated at 0.4 yuan/kWh on the basis of the depreciation period of 15 years and funding by yen loan (interest rate 0.75%) and it was confirmed to be lower than the buying cost of power, 0.45 yuan/kWh, in the Yanshan District. The possibility of propagation of the natural gas cogeneration system was verified by the fact that there are ten prospective sites (550 MW) for the implementation of the cogeneration system in Beijing District alone. As a future issue, we proposed the necessity of detailed designs in order to correctly estimate the scope of initial investment. We sincerely hope that the further promotion of this plan will help develop the natural gas fired cogeneration system as an effective source of power to contribute to the development of the thermal power generation of China in the 21st century. Last but not least, we would like to express our sincere gratitude to the officials of Beijing Yanshan Petrochemical Co., Ltd. for their cooperation in our field survey and their participation in useful deliberations in connection with this survey.

Conclusion-1 List of Attachment

Attachment 1.1-1 The Ministry of State Notice on the adjustment of the tax revenue policy related to imported equipment • Appendix IV Non-Exempted List • Customs tariff of import duties and value added tax

Attachment 2.1 -1 Company brochure: Beijing Yanshan Petrochemical Co., Ltd.

Attachment 2.2-1 In-house application concerning the removal of boilers of Beijing Yanshan Petrochemical Co., Ltd.

Attachment 3.1-1 Guidance for the calculation of greenhouse gas emissions

A —1 Attachment 1.1-1

(1997 -¥- 12 n 29 a )

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A —2 Cabinet Notice on the adjustment of the tax revenue policy related to imported equipment

(December 29, 1997)

The Cabinet has resolved to exempt from import duty and taxes within the stipulated scope, the imported equipment of domestic investment items and international trade items that are specifically promoted and developed by the central government from January 1, 1998, for the purpose of intensifying the influx of advanced technology and equipment from foreign countries so as to accelerate the regu lation of industrial structures and advancement of technology, and to strive for the quick, successful, and continuous development of the national economy.

1. Scope of the tax exemption of imported equipment (1) Concerning items listed under the incentive and limited Class-B categories of the "Guidance schedule for foreign investment industry" and the foreign investment items accompanying technology transfer, imported equipment for own use within the total amount of investment shall be exempted from import duties and value added tax, with the exception of items listed as "not eligible for tax exemption under the foreign investment items" in the list of imported products. Articles of imported items for own use and articles supplied from foreign industry for an improvement trade purpose without indicating a price shall be handled under the provision of (1). More specifically, such articles shall be exempted from import duty and value added tax with the exception of items listed as "not eligible for tax exempti on under the foreign investment items" in the list of imported products. (2) Domestic investment items qualified as such under the "List of industries, products, and technologies that are currently promoted and developed by the central government by priority" shall be exempted from import duty and value added tax with the exception of items listed as "not eligible for tax exemption under the foreign investment items" in the list of imported products. (3) Technology and parts and accessories thereof that are imported together with equipment under contract for articles that are qualified under the above provisions shall also be exempted from import duty and value added tax. (4) The exemption of import duty for any imported equipment outside the above provisions shall be made in accordance with the decision by the Cabinet

2. Tax exemption control of imported equipment (1) The authority and procedures for examining the feasibility study of the investment item shall be enforced by the government in accordance with the related regulations. Items above the standard level of investment shall be examined and approved by the National Planning Committee and the National Economy and Trade Committee. Items at or below the standard level of investment shall be examined and approved by the corporate group to be implemented as commissioned by the People's State Government, Cabinet-related agencies, People's Government of municipality of specially planned group commissioned by the Cabinet. Foreign investment items, however, must be examined and approved by the group in accordance with the "Provisional regulation for the guidance of the foreign investment trend." To examine and approve the feasibility study report, the examination and approval institution shall file the letter of confirmation in the form applicable to the incentive category and the limited Class-B category of the "Foreign investment industry guidance list," or key items in compliance with the items of "List of industries, products, and technologies that are curr ently promoted and developed by the central government by priority," and items utilizing a foreign government loan or International Monetary Fund loan must be filed in the specific unified form. In connection with items below the investment standard value, the letter of confirmation must be reported to, and registered with, the National Planning Committee and the National Economy and Trade Committee together with the FS

A —3 report. (2) A subject corporation shall apply for import duty exemption to the competent customs office with the letter of confirmation issued by the institution in charge of the examination and approval of the FS report in question, and for foreign investment items contained therein, together with the articles of association of the corporation approved by the External Economy and Trade Department and business license issued by the Industry and Commerce Administration Control Department. When a processing and trading corporation imports equipment provided by a foreign supplier without stating the price, it shall apply for import duty exemption by submitting an approved processing and trading contract to the competent customs office. The customs office in charge shall examine the application against the list of products that are not eligible for tax exemption. (3) The customs office shall reinforce the examination and control activities in coordination with related departments and improve the performance by consolidating the numbers of the tax -exempt items and preparing a necessary database. (4) The related department shall endeavor to efficiently carry out this important tax -exempt policy by simplifying the procedure and speeding up the examination and approval processes.

3. Tax exemption of previously installed equipment (1) Concerning imported equipment of improved technology approved in the order as provided by the government on or before March 31, 1996, the exemption of import duty and the import VAT exemption may be applied from January 1, 1998 within the range of equipment exempted from taxes as formerly approved. The subject corporation shall apply to the customs office for tax-exemption by submitting the original approval documents. (2) Concerning imported equipment of foreign investment items and domestic investment items approved in the order as provided by the government during the period from April 1, 1996 to December 31,1997, and items imported by utilizing foreign government loans and the International Monetary Fund during the period from January 1, 1995 to December 31, 1997 shall be exempted from import duty and import VAT from January 1, 1998, with the exception of items not eligible for tax exemption under the clearly defined rule of this regulation. The subject corporation shall apply to the customs office for tax-exemption by submitting the original approval documents.

Attachment: "List of industries, products, and technologies that are currently promoted and developed by the central government by priority" Combined Gas Turbine Power Generation Appendix

Appendix IV Non-Exempted List 3 miiiiimm :O00mm

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1 84158220 ifusawL ;G 000-A-|<-~20 7j-A-K-

2 ------3 SWimMSIl------50 — 500 Jj X-|v^Jrf4< 1 000 f /-L

4 84186110

5 84186110 30—300 ^

6 3iM?5>7kt/iffl #$<8oo -TK

7 84186110 xMiii'mtiuji

(A) 84431100 % 6, E|i Him m^ = i2 ooo *//]\ii't a 84431200 K‘F 84431910 vo 84431100 SMEiKEnm En$1]3$tic: 60 000 'JK/'MlJW r

<—) 300MW E&MTAAS: ititilfflfUMtll:

i iMLslOOMW—300MW

2 84145990 ARE cm 9imm)

3 84145930 «it:30~l 800 S-;/AV#MEJ|-< m 1 9Kpa 4 84138100 WSiVkE ?rfih<2 400 2 800 *

5 84138100 %mym

A —6 m\wn ix & #

•6 84138100 E/H:<4 800 a:**M

7 84138100 ooo 22Mpa,SJi£,<380'C

9 84798990

10 84814000

(:::) Enttwim 36MW #MT

(H) ?M E A 400MW & a -f, till E A 200MW & VJ.T < St'l&A 200MW & y.T-SfiBt/L31 ioomw &WT.M' iJjit 25MW SKIT

cm) 600MW j&WT aiiiS) (ID 84021190

(A) ft.

(-k) .I'lEtoltiKA-tito: + 250KVAWT

i 2 MiifEEffi 3 85045000 T mill we 4 85438990 5 85363000 tiVMWiSffr 6 85446011 I'liffi 85446019

(A) 85461000 ±r>00KV,300KN 24WT 85462010 85462090 85469000 dL) 6 OOOKW&tiT The number of regulation Number or ordinance Name of equipment Technical standards concerning the collection of tax

3 Injection molding machine S300mm

4 Vinyl injection molding machine for packing ^ 150mm materials

5 Tube injection molding machine S200mm

Industrial air -conditioning machine

1 84158220 Unitized air-conditioning machine Freezing capacity: 6,000 to 200,000 kcal

2 Centrifugal freezing machine

3 Cooling machine for air-conditioning system 50 to 5,000,000 kcal Output: 1000 kW max.

4 84186110 Centrifugal-type industrial freezer

5 84186110 Screw-type freezing machine 30 to 3,000,000 kcal

6 Water cooling machine for air-conditioning Output: 800 kW max system

7 84186110 Industrial freezing machine

84431100 Sheet paper offset rotary press Multicolor printing speed 12,000 sheets/hour max.

84431200

84431910

84431100 Spooling paper offset rotary press Printing speed: less than 60,000 sheets/hour

Power generator and the associated transmission and transformer system

Thermal generation equipment and auxiliary unit of 300 MW or smaller

1 (Gas turbine, boiler, generator and control Single unit: 100MW to 300 MW and regulator equipment)

2 84145990 Auxiliary equipment : Propeller fan for power plant (Blower and induction fan)

A — 8 The number of regulation Number or ordinance Name of equipment Technical standards concerning the collection of tax

3 84145930 Centrifugal propeller fan for power plant Flow rate: 30 to 1800m 3/s (blower and induction fan) Pressure: ^ 300mm

4 84138100 Feeder pump for boiler Flowrate: S2400m3/hr Pressure: ^300mm

5 84138100 Condensate pump

6 84138100 Water circulation pump Flow rate: ^4800m 3/hr

7 84138100 Forced circulation pump for boiler Flow rate: ^4000m3/hr Pressure: Flow rate: S22MPa Temperature: ^380°C

8 Transportation and distribution equipment of coal, powder mill and pneumatic scrubber, and ash transporter p lant

9 84798990 Feed water and condensate water treatment facility

10 84814000 Safety valve for boiler

Gas turbine unit 36 MW or lower

Large- and medium-size hydro-power plant Mixed flow type of 400 MW or equipment smaller Axial flow type of 200 MW or smaller Through flow type of 200 MW or smaller Heat storage unit of 100 MW or smaller Rum type of 25 MW or smaller

Nuclear power plant (Nuclear power island 600 MW or lower and ordinary island equipment)

84021190 After heat boiler

Computer monitor control system and devices for power plant

DC transmission equipment and details: ±250kV or lower

1 Inverter valve

2 Inverter transformer The number of regulation Number or ordinance Name of equipment Technical standards concerning the collection of tax

3 85045000 Reactor

4 85438990 Filter

5 85363000 Controls maintenance equipment

6 85446011 Cable

85446019

85461000 Suspended-type DC insulator ±500 kV, 300 kN max. (Ceramic and organic glass materi al

85462010 85462090 85469000

Medium- to large-size electric equipment 6,000 kW max. and transmission equipment

A —10 ita" itij * on - titi 1fi 1/tm mm tl 11 m

8502

8502 11 00 < 7 5 T ft $ § S * m ffl (H tB ij^ 15.0 45.0 17.0 e/fi OoB gy 75 Tft$,

8502 12 00 >75fft$<375 f 15.0 45.0 17.0 6/TS OoB (#tb#$>75 fft$<375 f ft$, 6

8502 13 10 >375 f ft$<2^ft$Sie$*tJlffl 15.0 45.0 17.0 erne OoB (#&%$>375 fft$<2%ft$,@

8502 13 20 15.0 30.0 17.0 e/f ^ Oo ay 2

8502 20 00 *w.6isss$§6ta6

8502 39 00.9 16.0 30.0 17.0 e/f3[ OoB 8502 40 00 ittssstt 18.0 30.0 17.0 e O 8503 8501 S 8502 #r

8503 00 10 12.0 70.0 17.0 O 8501.1010 X 8501.1090 .#)

8503 00 20 >350 3.0 11.0 17.0 O 8501.6420 # 8501.6430 #r ?!i # % W #) 8503 00 30 3.0 30.0 17.0 =t% O 85023100

8503 00 90 9.0 30.0 17.0 O 8504 *ffa.»itssafS(«SDBaa)5 %®ts

8504 10 00 . 15.0 35.0 17.0 t OB 8504 21 00 <650 fft$itMME8($iSSl 18.0 50.0 17.0 t BO *S 650 fft$to) 8504 22 00 650 Eft$g io 20.0 50.0 17.0. t BO (ssstay 650 Tft$, (iipay io ^6ft^^)

8504 23 10 10 S 400 25.0 50.0 17.0 t . BO ay io @,j\f 400 m$w) 8504 23 20' 400 Sft$ti±«MKS ' 6.0 11.0 17.0 t BN

A-11 3 of and

Import duty § Product number Product name (remarks) VAT i Unit

5 control

§ Conditions ipervision 8 Special Normal

8502 Power generation equipment and rotating current transformer

8502 11 00 S?5 kVA diesel generator (75 kVA 15.0 45.0 17.0 Set/kW OoB max. output, including semi -diesel power generator)

8502 12 00 >75 kVA ?375k VA diesel generator 15.0 45.0 17.0 Set/kW OoB (Output >75 kVA ?375 kVA, including semi-diesel power generator) 8502 13 10 15.0 45.0 17.0 Set/kW OoB >75 kVA ?2 MVA diesel generator (Output >375 kVA ?2 MV A, including semi-diesel power 8502 13 20 generator) 15.0 30.0 17.0 Set/kW Oo

>Diesel generator of 2 MV A or larger (Output > 2 MVA, including 8502 20 00 semi-diesel power generator) 15.0 45.0 17.0 Set/kW Oo

Igniting piston engine (internal 8502 31 00* combustion) 10.0 30.0 17.0 Set/kW OB

8502 39 00.5* Wind-driven generator 16.0 30.0 17.0 Set/kW OB

Methane gas generator (Methane gas compound generator; Excluding 8502 39 00.9 wind-driven generator) 16.0 30.0 17.0 Set/kW OoB

Other generator (Excluding 8502 40 00 wind-driven generator) 18.0 30.0 17.0 Set O

Rotating current transformer

A —12 X c3 of and

a Import duty c Product number Product name (remarks) VAT 1 Unit

5 control a Conditions U supervision Special Normal

8503 Used mainly or exclusive for the parts of equipment listed under No. 8501 or 8502.

8503 00 10 Miniature motor parts of toys, etc. 12.0 70.0 17.0 kg O (Motor parts listed under No. 8501.1010 and 8501.1090)

8503 00 20 Parts of AC generator >350 MVA 3.0 11.0 17.0 kg O (generator parts listed under Subdirectory Nos. 8501.6420 and 8501.6430)

8503 00 30 Wind-driven generator parts 3.0 30.0 17.0 kg O (generator parts listed under Subdirectory Nos. 8502.3100)

8503 00 90 Parts of other type of motors or 9.0 30.0 17.0 kg O generators (equipment)

8504 Transformer, still-standing current transformer (such as rectifier) and inductor.

8504 10 00 Discharge lamp or ballast resistor for 15.0 35.0 17.0 pcs OB discharge tube

8504 21 00 Liquid-media transformer ?650 kVA 18.0 50.0 17.0 pcs BO

8504 22 00 Liquid-media transformer between 20.0 50.0 17.0 pcs BO 650 kVA and 10 MVA (rated capacity of 650 kVA or larger but not to exceed 10 MVA)

8504 23 10 10 to 400 MVA liquid transformer 25.0 50.0 17.0 pcs BO (the rated capacity is 10 MVA or higher but not to exceed 400 MVA)

8504 23 20 Liquid-media transformer of 400 6.0 11.0 17.0 pcs BN MVA or larger

A 13 Attachment 2.2-1

i1M ?s|t lLj 5 ^ tt, I H @3 £■ f|:

§b^JV-^lkoP 7T KW

134MW , %-r 240 nifi//jNEt^ffiEn- ® ig ^ jum&to mu, JS3#, 4m^m#±m#. iss^wssa C02ffil:i3tf6, FF#y9^%^a; IW, SESiSJE, ay61nl*±S*, SSE^toSy* 4^6^76, WiS -^ns^ggp^fl. @itb, 3#, 4mm

199^)2 ^ 15 FfW X

/T. '?? V

A —15 Application for the removal of Boilers No. 3 and No. 4

Beijing Yanshan Petrochemical Group Co., Ltd.

The Power Station No. 1 Section of the Power Division is going to build a 70,000 KW x 2 gas turbine plant of 134-MW power generating capacity, which concurrently generates 240 tons/h of medium-pressure steam. The existing Boiler Nos. 3 and 4 will be suspended depending on the state of the medium -pressure steam and the balance of low-pressure steam. Main reasons: The two boilers running on heavy oil for fuel emit a substantial amount of CO 2 to cause acute environmental pollution. In addition, the amount of heavy oil for refinery has increased since the improvement of the catalytic device of the Oil Refining Division. Furthermore, the demands for heavy oil has increased for the production of paraffin oil in order to raise the economic efficiency. Boilers No. 3 and No. 4 will be removed after the completion of the gas turbine power generation plant to reduce the area of the premises as well as investment, so that we can implement new equipment by utilizing the vacated ground.

December 15,1999 Design Institute, Beijing Yanshan Petrochemical Co., Ltd.

Letter of Consent December 17,1999

This is to confirm our consent to the above plan.

Luy Co., Ltd.

Letter of Consent December 17,1999

This is to confirm our consent to the above plan.

Lu Yu zhang

A — 16 Attachment 3.1-1 Guidance for the calculation of greenhouse gas emissions

For the purpose of this proposal, the effect of the reduction of greenhouse gas emissions dealt with in the entire project are to be uniformly calculated by using the simplified method described below, in order to objectively verify the effect (and the extent) itself:

1. Prescribed conditions (1) Calculation should be made by using the energy-saving (or alternative -energy) effect (equivalent volume of heavy oil). (2) The calculated result shall be multiplied by each of the specified indices (Attachment 1) with respect to greenhouse gases other than CO 2. (3) When estimating effects in the instance, use the formula defined by the Intergovernmental Panel on Climate Change (IPCC) if the factor of the effective reduction of greenhouse gas emissions is attributable to causes other than the saving of energy (or alternative -energy).

2. Formula (1) If the factor of the effective reduction of greenhouse gas emissions is attributable to the effect of energy saving (or alternative-energy) only.

Equivalent amount of C02 (t - CO^y)

Energy-saving (or alternative-energy) effect converted into the equivalent amount of heavy oil (toe/y)

x 42.62 x 20 x 0.99 x 44/12 1000

Note: The following values should always be used as the simplified calculation method: a) Energy-saving (or alternative-energy) effect (as equivalent heavy oil toe/e)

Fill in the formula used for the calculation of equivalent crude oil to describe the energy-saving (or alternative-energy) effect: a) The type and the point of use of retrieved energy for energy recirculation. b) Use the value 10,000 kcal/kg for converting into equivalent calorific value of crude oil. c) Use the value 2,646 kcal/kWh when converting into equivalent electric power. d) State the condition of steam when recycling steam. e) State the numerical value used for the conversion of other energy. b) Conversion into the unit of energy (calorific value: TJ) (conversion factor) c) Conversion into the basic unit of C02 emission (the basic unit of C02 emission) d) Correction for the part of insufficient combustion: (oxidation ratio factor of carbon)

A —17 Ref.l Reference Materials

1. Encyclopedia of Chinese Power Generation "General" 2. Encyclopedia of Chinese Power Generation "Thermal Power Generation" 3. Electricity 3 1999 Vol. 10 (China Electric Engineering Society) 4. Electric Power - INDUSTRY IN CHINA -1999 5. China Electric Power Journal (Edit: State Electric Power Corporation and China Electric Power Industry Association: published by China Electric Power Journal) 6. Northwest Electric Power Journal (Edit: Northwest Electric Power Control Agency and China Northwest Electric Power Group Corporation: published by Northwest Electric Power Journal) 7. Chinese Electric Power Industry (Tozai Boeki Tsushinsha Co., Ltd.) 8. "Technical Regulation of Power Station Design": The Peoples Republic of China — Power Industry Standards 9. “Improvement of the environment quality - Construction of a Gas-Steam Cogeneration Plant ”; Electric Power Technology, Vol. 32, Term 2, 1999

R — 1 Ref.2 Field Reports

• Field Survey Schedule

• First Local Survey — Overseas business trip report (9/26/99 to 10/1/99)

• Second Local Survey— Overseas business trip report (11/3/99 to 11/10/99)

• Third Local Survey — Overseas business trip report (12/12/99 to 12/18/99)

Fourth Local Survey — Overseas business trip report (1/24/2000 to 1/29/2000) Field Survey Schedule Survey Team Name: Steam Supply and Power Cogeneration at Yanshan Petrochemical Co. Ltd.

First Local 9/26/99 to © Shibuya Toshinori Setting up the framework of the including Survey 10/1/99 Tagishi Akinobu energy-saving plan Shanghai District Site Survey survey

Second Local 11/3/99 to © Shibuya Toshinori Deliberation of the numeric including Survey 11/10/99 Ogihara Masahiro values contained in various Shanghai District Meguro Kazutoshi Basic Plans and Survey survey Koizumi Naoto Reports. Site research and survey of the premises with various facilities to be removed.

Third Local 12/12/99 to © Ogihara Masahiro Deliberation of various plans Survey 12/18/99 Meguro Kazutoshi including line, layout, electric, Mizuno Shizuka instrument a number of Chines Matsuura Shinji regulations (on the compulsory separation of various equipment).

Fourth Local 1/24/2000 to © Ogihara Masahiro Technological explanation on Survey 1/29/2000 Meguro Kazutoshi the additional plan (25 MW x Mizuno Shizuka 3 GT plant) Arrangement of funding proposals Review on survey reports

R-3 Overseas Business Trip Report

October 7,1999 Survey Team Name: Yanshan Petrochemical Co.Ltd. Cogeneration Planning Survey No. 1 Team Leader: Shibuya Toshinori

Below, please find details of the captioned business trip:

1. Destinations: Beijing and Shanghai, China 2. Survey period and schedule: September 26 to October 1, 1999 (6 days) (Refer to the Overseas Business Trip Schedule) 3. Members: (Leader): Shibuya Toshinori (Team member): Tagishi Akinobu 4. Description: (1) Date of visit: Mornings of September 27 and 28 Place visited: Yanshan Petrochemical Participants: Chinese party: (Name and title) Liu, Deputy chief engineer; Wu, Planning Manager; and others Survey team: Beijing Yanshan Petrochemical Co., Ltd. Cogeneration Plan Survey Team (First) Work description: To set up the framework of energy-saving plan and local survey

(2) Date of visit: Morning of September 29 Place visited: Shanghai Office, Hitachi, Ltd. Participants: Advisor Zhou, Shanghai Branch of East Group Work description: Discussed on the natural gas cogeneration plan on the Chanjiang Delta.

(3) Date of visit: Afternoon of September 29 Place visited: Shanghai Lei ying Consultant, Lei ri Consultant Participants: Chairman Chu, General Manager Cheng, General Manager Kawahara, and others Work description: The details of the "Regulatory Ordinance concerning research work" newly promulgated by the National Statistics Bureau. Deliberation on the details of the survey items planned to be commissioned to Lei ri.

(4) Date of visit: September 30 Place visited: Shanghai Traffic University Participants: Professor Tong, Dean of the International Exchange Department Work description: Environmental improvement plan in Shanghai District

R —4 Overseas Business Trip Report

November 16, 1999 Survey Team Name: Yanshan Petrochemical Co. Ltd. Cogeneration Planning Survey No. 2 Team Leader: Shibuya Toshinori

Below, please find details of the captioned business trip: 1. Destinations: China 2. Survey period and schedule : November 3 to November 10,1999 (8 days) (Refer to the Overseas Business Trip Schedule) 3. Members: (Leader): Shibuya Toshinori (Team members): Ogihara Masahiro, Koizumi Naoto, Meguro Kazutoshi 4. Description: (1) Date of visit: November 4 to November 5, Place of visit: Yanshan Petrochemical Co., Ltd. Participants: Chinese party: Deputy chief engineer Liu Wang Zhang and ten others Survey team: The above listed members and an interpreter Work description: Discussed on various basic plans prepared on the basis of data obtained in the first field survey and the values of the feasibility study. Visited sites from where different facilities are to be removed and taken measurements. (2) Date of visit: November 8 Place visited: Shanghai Lei Ri Consultant Company Interviewed: President Kawahara and the officer in charge of the survey Survey team members: Same as above Work description: Received interim reports on the import duty and the tax -exempt requirements, and coal bed methane resources in Shanxi and pointed out particular points that require especially careful attentions. (3) Date of visit: Morning of November 9 (arrangement) and morning of 10th (visit on sites) Place visited: Head Office of Shanghai Gaoqiao Petrochemical and field site Interviewed: Chinese: Chief Engineer Ma bo wen and seven others. Plant Manager Sun and five others (on the site) Survey team (same as above) Work description: Inquired on the equipment configuration and operating conditions of the power plant facilities currently in operation, and surveyed the state of the suspended power plant and a site of partially removed facilities. (4) Date of visit: Afternoon of November 9th Place visited: Shen neng Plant Corporation (meaning Shanghai Energy Investment Corporation; visited to survey Song jiang Power Station). Interviewed: Direct Liu (also Vice President) and ten others Survey team (same as above) Work description: The company plans to built a new central thermal generation plant after suspending small boilers (37 boilers of total evaporation 173 t/h) running on coal that are currently in use. The feasibility study has already been completed.

R —5 Overseas Business Trip Report

December 24, 1999 Survey Team Name: Yanshan Petrochemical Co. Ltd. Cogeneration Planning Survey No.3 Team Leader: Ogihara Masahiro

Below, please find details of the captioned business trip:

Text:

1. Destinations: Beijing, China 2. Survey period and schedule: December 12 to 18, 1999 (7 days) (Refer to the Overseas Business Trip Schedule) 3. Members: (Leader): Ogihara Masahiro (Team member): Meguro Kazutoshi (Team member): Mizuno Shizuka (Team member): Matsuura Shinji 4. Description: (1) Date of visit: December 13, 14, 16, and 17 Yanshan Petrochemical, Beijing Participants: Chinese party: (Name and title) Deputy chief engineer Liu, Manager of Planning Dept. Wu and 18 others Survey team: The above listed members and an interpreter Work description: Discussed on various plans including system, layout, electric, control instruments, and fundin g plans, and field survey including the measurement of the site.

(2) Date of visit: December 15th Work description: Made technical reviews (previously made a pending items). A part of the results was translated into Chinese and faxed to the Chinese party and the remaining part was presented at the meeting on the following day.

(3) Date of visit: December 15th Work description: (at a specialized book store in Beijing) purchased reference books.

R —6 Overseas Business Trip Report

January 31, 2000 Survey Team Name: Yanshan Petrochemical Co. Ltd. Cogeneration Planning Survey No.4 Team Leader: Ogihara Masahiro

Below, please find details of the captioned business trip:

1. Destinations: Beijing, China 2. Survey period and schedule: January 24 to 29, 2000 (6 days) (Refer to the Overseas Business Trip Schedule) 3. Members: (Leader): Ogihara Masahiro (Team member): Meguro Kazutoshi (Team member): Mizuno Shizuka 4. Description: (1) Date of visit: January 25, 27, and 28 Yanshan Petrochemical, Beijing Participants: Chinese party: (Name and title) Deputy chief engineer Liu, Manager of Planning Dept. Wu and ten others Survey team: The above listed members and an interpreter Work description: • Making of an outline of the FS Report • Comparison of 70 MW x 2 GT and 25 MW x 3 GT plants • Description of additional reference materials • Points to be checked with Chinese Party • About the budget of the construction costs • About the Chinese fund-raising plan • Confirmation of the comments of Chinese party on the FS Report.

(2) Date of visit: January 26th Work description: Made technical reviews (remained as pending items). Review was made after parting from Chinese party.

(3) Date of visit: January 26th Work description: (at a specialized book store in Beijing) purchased reference books.

R-7 List of Technical Inspectors

Name Business, in charge of Research items investigated General supervision of entire project Yokoyama Akira Project Manager activities Effects of the project (to grasp the Environment systems and details of environmental systems and Sato Hideyuki control controls, and to review every effect and impact Noda Taiji Economy and finance Funding plan and profitability Basic elements of the Shibuya Toshinori Basic elements of the project project Formulation of the project plan and the Hoizumi Shinichi System Summary evaluation of the effects Formulation of the project plan from the Murata Shigeto Line design aspect of system design, and the evaluation of the effects Formulation of the project plan from the Thermal profits and losses Koizumi Naoto aspect of thermal profits and losses, and planning the evaluation of the effects Formulation of the project plan from the Kubo Yoshifumi Total layout plan aspect of total layout plan, and the evaluation of the effects Formulation of the project plan from the Matsuura Shinji Turbine building aspect of the system design, and the evaluation of the effects Formulation of the project plan from the Nakamura Yasunori Electric System aspect of electric system, and the evaluation of the effects Formulation of the project plan from the Meguro Kazutoshi Instrumentation control aspect of system control, and the evaluation of the effects Project effects (specification and effect Environmental measures Mizuno Shizuka of equipment and the evaluation of the equipment influence) Examination of the effect of the project Otomo Toshihiro GT equipment plan from the aspect of GT equipment Examination of the effect of the project Kabutoya Naoki HRSG equipment plan from the aspect of HRSG equipment Examination of the effect and influence General control of Tagishi Akinobu of the realization of the project plan technology from the aspect of HRSG equipment Formulation of the project plan from the Yasuda Koji Utility aspect of utility, and the evaluation of the effects Examination, contact arrangement, and the investigation of other necessary Ogihara Masahiro Project promotion matters for the promotion of the project as COM. Examination of funding plan, project Kikuchi Toshio Equipment summary effects, and profitability from the aspect of equipment.

R —8 Please contact the New Energy and Industrial Technology Development Organization (NEDO) for permission in advance when you are intending to make any reference to the contents of this report or the part thereof.

Tel: 03 (3987) 9466 Fax: 03(3987)5103