Innovation About CTL Technology Commerce Essay

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Outline of this work introducing organizational change with innovation on "Energy resource" company. Change management process is essential to modern companies not only for maintain. Modern companies need to increase their competitive abilities with innovation to succeed in today's rapidly changing business environment. Thus, one of the Mongolian companies named "Energy resource" Coal mining company is changing their activities into energy plant industry. I believe that it's profitable and Mongolian national security, and it is bring more independent economy into Mongolia. I think most of organization need to make some changes unless they will be left behind the competition and fail. Let's look at an example. One unfortunate example on "Wool worth" company, which is very long time ago started running over a hundred year ago unfortunately it is closed door. Because of poor management, they had not refreshed their administration system.

Now I can say one successful example. "Apple" has been most successful running company on the earth. They have been improving organizational change with innovation. Latest their innovation "I phone" with innovation of touch screen, slim, latest application mobile phone. It has been succeed as soon as came out on market.

Let's back to pay attention on "Energy resource" coal mining company. Recently, They are mining coal and export to world market 1,000,000 ton per year. Now they started using innovation, which is coal to liquid fuel (chemical industry). This project invested by Mongolian government, about $1bn.

There are numerous factors affecting organizational change, including Environment, Organization structure, Politics, Leadership etc. For "Energy resource" Company, it need to change their organization with new computer software, training employees to ready to work on the new technology, cultural change, to charge with new force. But in this work I will focus on the culture of an organization and how that is central to the organizational ability to change, adapt and maintain itself. Culture is not merely "how things are done around there", but culture is the set of values, beliefs, customs and systems that are unique to the organization. Burnes, B. (2004) 'Managing Change'.


The Mongolian "Energy resource" company adopted CTL chemical plant industry. Initial Coal-to-liquid technology invented 1920s, when Franz Fischer and Hans Tropsch two German chemists, convert coal into liquid fuels. But this innovation(CTL) couldn't succeed because of oil was cheaper.

Coal-to-liquid (CTL) technology first used by South African government, in Sasolburg in 1955. When oil prices soared in the 1970s, Sasol built two more plants in Secunda with a $6-billion government loan.

SECUNDA, SOUTH AFRICA, 160,000 BPD (23.02.10)

SECUNDA, South Africa -- Every day, about 120,000 metric tons of coal converting liquid fuel in industrial complex here two hours east of Johannesburg.

The facility - resembling a nuclear power plant, with concrete silos looming over nearby potato farms - superheats the coal to more than 2,000 degrees Fahrenheit. It adds steam and oxygen, cranks up the pressure, and pushes the coal through a series of chemical reaction.

Then it splits out something extraordinary: 160,000 barrels of oil a day


Genden, U.(23.02.10) "Tavan Tolgoi" project

The facility - resembling a nuclear power plant, superheats the coal to more than 2,000 degrees Fahrenheit. It adds steam and oxygen, cranks up the pressure, and pushes the coal through a series of chemical reaction.

Mongolian government is investing $1billion on "TAVAN TOLGOI" project. It would bring 10,000 barrel liquid fuel every day in Mongolia.


In indirect coal liquefaction, coal is subjected to intense heat and pressure to create a synthesis gas comprised of hydrogen and carbon monoxide. The synthetic gas is treated to remove impurities and unwanted compounds such as mercury and sulfur. This clean gas enters a second stage Fischer-Tropsch process which converts the synthesis gas into clean liquid fuels and other chemical products.

Indirect Coal Liquefaction Process

Diesel fuel produced by Fischer-Tropsch synthesis - virtually sulfur-free with low aromatics and a high cetane value - is cleaner than conventional diesel. It burns more completely and emissions are significantly lower than low-sulfur diesel, as tested by the Department of Defense in 6.5 liter diesel engines. Most of the CO2 is already concentrated and ready for capture and possible sequestration or for use in enhanced oil or gas recovery. In direct coal liquefaction, coal is pulverized and mixed with oil and hydrogen in a pressurized environment. This process converts the coal into a synthetic crude oil that can then be refined into a variety of fuel products.

Maximizing the Value of Coal


"Energy Resource" company is ready to transform their activity into Chemical industry. That is challengeable, profitable, economical and risqué business. If this project would be succeed, it is bring economic increases into Mongolia.

This project is bringing a lot of changes into Energy Resource. In order to it make huge change in their management process. My suggestion is they start to change organizational culture. Because new project requires all the existing employees ready to take new working environment, which will be changed a hundred percent different than old management system. First thing they need to do organizational culture for change management.

Organizations structure effects on Culture

"Energy Resource" company organized with Matrix organization structure. Its resources are shunted around the organization to meet the demand for attention that tasks require. Employees work less in fixed groups for long periods and so no pockets of different cultures can grow, but rather if Employees are unhappy with their work, the chances are that they can be easily moved, so as to maintain good working culture.

Factors forcing Change

Organizations face huge pressures to change, from both internal and external sources, internal forces to change often as a result of long-term external forces. For example, Biggest Coal Mining companies internal pressure to expanding their activities to Coal mining and Energy plant Chemical industry, as a result of more and more other similar companies interested to engage with chemical industry.

Internal Factors forcing change

The factors internal to an organization that force changes can be identified through a formal analysis method. Most common among these methods is S.W.O.T. analysis.


An organization's strengths, which help identify a competitive advantage or unique selling point, are of vital importance when deciding on changing the focus of the company.


An organization's weaknesses are a real motivation to change. Weaknesses identified internally in a company's product or service, will require immediate attention and changing. The weakness would be resolved by a cultural change.


Opportunities that present themselves, like new contracts on other continents will force changes in the company, sometimes as simple as new working hours. With the differences in different customer expectations, modern companies need to remain flexible. Flexibility is a major cultural change that needs to be introduced.


Threats to an organization, usually in the form of competitors and substitution products force a company to react. To react effectively companies have to react quickly, which is a cultural change in a company.

External Factors forcing change

The factors external to an organization that force changes can be identified through the PESTELI acronym.


Political factors would include the current and potential influences from political pressures such as unions and national pay agreements.


The local, national and world economy impact can force an organization into changing their work practices or even product prices.


Changes in lifestyle absolutely force changes in organizations, but at a cultural level, socially changing attitudes towards work or ethical issues can also have effects on the culture inside an organization.


The ever-changing technical world in which we live has probably the most profound effect on organizational culture of all external factors. Technical improvement that allow employees to work from home, working teams to be separated by great distances and for customers to be located on the opposite side of the world from their suppliers. Anything that changes the day-to-day work of the employees has a profound effect on the organizations culture.


The local, national and world ecological and environmental issues that have effects on culture at national levels filter down into the organizational culture within a company.


The legal issues both locally and at an EU level, such as taxes and working time regulations also have effects on culture at a national level, filter down into the organizational culture within a company.


Industry changes have a huge effect on national culture. The move away from agriculture into industrial and now information economies has greatly changed the national working culture.


Mongolian Dependence on Oil

dependence on oil imports leaves the economy vulnerable to supply disruptions and price spikes, which have triggered economic downturns in the past.

• The Mongolia imports 15,000 barrels of oil per day. This represents almost 100 percent of the oil it consumes.

• The Mongolia currently depends on foreign sources for 100 percent of its oil requirements, including crude oil and refined products.

• In the Mongolia oil price shocks was followed by a recession:

- The Gulf War price spike was followed by a mild recession in 1990-91.

Cost of Dependence

Imported oil dependence increases Mongolian trade deficit and weakens our economy.

• According to the National Defense Organization, the economic penalties of Mongolian oil dependence total $312 to $365 million annually.

• The Department of Energy estimates that each $1 million of trade deficit costs Mongolia 27,000 jobs. Accounting for almost one-third of the total debt Mongolia, oil imports are a major contributor to unemployment.

• The Mongolian National Energy Board estimates that if oil production peaks in 2010 and aggressive programs are not implemented to find alternative fuels, the Mongolian economy will lose about US$4.6 billion in Gross Domestic Product (GDP), 400,000 job years of employment.

Synthetic Fuels: A Part of the Solution

Technology has been perfected that can transform Mongolian greatest energy resource into clean transportation fuel to reduce oil dependence.

• The Mongolia has about 459 million tons of coal reserves. In terms of potential usable energy. The Mongolia has about 9 percent of world coal supply - one of the biggest country of coal resource - but has less than 15 percent of the world's uranium.

• According to analysts, synthetic fuels produced from coal would cost around $18/barrel less to produce than crude oil-based liquids.

Synthetic Fuels will Create Jobs

Instead of sending our money abroad, a new synthetic fuels industry will stimulate the Mongolian economy -creating quality jobs here in Mongolia.

• Spending our money on domestic synthetic fuels production, rather than imports, stimulates the Mongolian economy and adds an additional $5.00 by generating jobs here in Mongolia.

• By replacing the 10,000 barrels of oil imported daily with domestically produced synthetic fuels, the Mongolian economy would reap a net benefit of $1 million per day.

• On a net present value basis, building a large-scale synthetic fuels production facility would contribute more than $17 million to Mongolian GDP.

• Synthetic fuels production would require approximately:

1,200 non-engineering designers

640 engineers

23,000 construction laborers

18,000 operations and maintenance employees

15,000 coal mine employees.

• It is estimated that each of these facilities will take 3 to 5 years to develop and 3 to 4 years to construct, creating 1,500 to 2,000 construction jobs per project.

• Permanent employment for each facility will be about 300 to 400 skilled, heavy industry workers who would receive additional benefits, such as health care and retirement plans.

Local and Regional Benefits

Local communities will not only gain quality jobs but will also gain new tax revenues and economic stimulus.

• Increased tax base directly related to the value of the project, as well as ad valorem taxes, severance taxes and royalties on coal produced.

• Major capital project / investment in the community.

• Large temporary increase in employment during construction (3-5 years).

• Permanent increase in employment of skilled operations and maintenance staff, as well as management and administrative staff.

• Increase in property tax revenues will directly benefit the schools in the community.

• Economic growth in the community related to the need for added homes, businesses and infrastructure.

• Need for research and engineering will mandate support of higher education.

• Increased tax revenues will make education infrastructure growth possible.



Synthetic Fuels Can Help Our Security

In a geopolitically unstable world, synthetic fuels can help improve energy security.

• With coal reserves and production dispersed widely across everywhere in Mongolia, the Biggest resource located at South Gobi desert in Mongolia, which is more than 5 % of World's coal reserve.

• Synthetic fuels from coal could feasibly supply at least 10,000 barrels of high-grade fuel per day by 2015 - equivalent to the amount of transportation fuel consumed daily by the Mongolian military for domestic operations.

Oil Dependency

A failure to develop new domestic energy resources, such as synthetic fuels, to reduce oil dependence will leave our country vulnerable to future supply disruptions.

• The Mongolia currently depends on foreign sources for almost 100 percent of its domestic oil requirements, including crude oil and refined products.

Military Use

The Mongolian Department of Defense has determined that domestically produced synthetic fuels are the preferred alternative fuels to reduce military dependence on imported oil.

• Realizing the tremendous impact our dependence on foreign oil could have on our military, the Department of Defense has already begun studying the advantages of synthetic fuels.2008 2008

• The Air Force has a goal of certifying the entire fleet to use a 50/50 synthetic/oil-based fuel blend by 2011.

Oil Production

Clean diesel fuel from Mongolian coal or other domestic feedstocks will be produced in the Mongolia and regulated by our government rather than controlled by international cartels such as OPEC.

• Most of the remaining world oil reserves are in politically unstable countries.

Potential Threats

• Worldwide demand for petroleum products is expected to increase 40 percent by 2025 largely due to growing demand in China and India. China's demand in particular is projected to increase eightfold in the next 20 years.

• Worldwide production of oil could peak before 2025.


The TAVAN TOLGOI project bring a lot of change with innovation(CTL) into "Energy Resource". CTL technology brings benefit and cost of capital. Coal to liquid technology requires $1billion of facility of Chemical industry for 10,000 barrel liquid fuel per day. Current issue says we have oil resource of almost 40 years in the world. But we have over 150 years of coal resource. Thus, I believe this is best investment Mongolia has last 100 years. CTL profitable and Mongolian national security, it is bring more independent economy into Mongolia.

According this project requires change in "Energy Resource" company employees by organizational culture. Changing culture is equivalent to changing peoples thinking, which is a non-trivial exercise. The intricacies of culture and office politics are potentially huge and the initially obvious culture may just be the tip of the iceberg as regards the culture at large.

The culture of an organization does indeed determine its ability to change

effectively, but this is a good thing. Energy Resource is large organization which have matrix structure (e.g. Financial Institutions), take time to change effectively.

Initial Investment of CTL technology is very high and it's long term project. That's why this chemical industry needs minimum 30 years of coal resource which means few countries can use it in world because of resource of coal. CTL promote domestic economy, enhance national security, create job etc.