Speakers at the 2012 Gastech Conference Spoke Optimistically about the Future of GTL
GTL - Some of the major doubts about the long-term viability of gas-to-liquid (GTL) technologies for producing fuels and chemicals from natural gas are now beginning to be eliminated. Several speakers at the 2012 Gastech Conference and Exhibition held in London in early October spoke optimistically about the future of GTL because of the promise being shown by new gas-to-liquids projects.
Two large-scale GTL plants in Qatar, recently brought on stream by Shell and Sasol of South Africa, have shown that the gas-to-liquids process can be highly profitable when based on cheap feedstocks and producing high quality fuels and high grades of feedstocks like naphtha. Like with all GTL technologies both Shell and Sasol use Fischer-Tropsch (F-T) synthesis of syngas into syncrude with Shell having a fixed-bed system and Sasol a slurry bed one.
In the first stages of their commercialization, a second string of small-scale GTL schemes based on mini or micro F-T reactors are demonstrating that gas-to-liquids has the potential for broad applications, particularly in the processing of relatively small amounts of gas in remote areas and for the production of speciality chemicals. With micro-channel reactors it can also be used for processing biomass into liquids (BTL).
It has taken a long time for GTL to come to full commercial fruition-being derived from a discovery made in the 1920s for turning carbon monoxide and hydrogen into long-chained hydrocarbons. Yet there is still some uneasiness about its future. "The GTL industry still faces considerable uncertainty -from competing technologies and policies yet to be decided," Alex Forbes, director of Forbes Communications, Brighton, England, told the conference.
Technology issues holding back gas-to-liquids over the past decade are being resolved while the market fundamentals for GTL produce look promising because of wide divergencies between oil prices and gas prices in some areas, he said. "GTL will need to compete with other gas monetisation options, such as LNG and chemicals," he explained. "The biggest constraint to growth will be the availability of proven technologies."
Michael Phillipson, study manager and principal consultant at engineers Foster Wheeler, said that gas producers in their quest to add value to their output now have a choice between liquefied natural gas (LNG) and gas-to-liquids with several economic factors now favouring GTL.
One of the biggest of these are derivatives which are more valuable than LNG. These include liquefied petroleum gases (LPG), naphtha, diesel, kerosene, base oils and paraffins. Also liquefied products from the F-T process command premium prices because of enhanced characteristics, such as higher cetane numbers, lower sulphur levels, lower exhaU.S.t particulates, lower toxicity and biodegradability. GTL kerosene, for example, is more energy efficient than conventional kerosene and emits 65 % less CO and 79 % less particulates.
The value of the premium products has bolstered even further after the differential between oil and gas prices widens to an historic high in areas like the U.S. and the Middle East. In the U.S. the shale gas boom has reduced gas prices to around $3 million British thermal units (MMBtu), which has meant in terms of MMBtu-equivalent the price of low-sulphur diesel, a typical GTL product, being 4-5 times higher in the country.
In Qatar the gap between oil and gas prices is even wider where gas feedstocks have been supplied to local downstream industries at around $1-1.25 MMBtu.
Shell's Pearl GTL plant, the world's largest gas-to-liquids facility, is now close to running at its full capacity of 140,000 barrels per day (b/d) with its economics being enhanced by an adjacent LNG unit of 120,000 b/d which Shell jointly owns with the state oil and gas company Qatar Petroleum (QP), according to Mr Forbes.
Return on Investment
The GTL facility, which cost $19 billion to build, is making a net annual income of up to $8.5 billion with oil prices of over $100 per barrel, which is equivalent to a internal rate of return (IRR) of 44 %, Mr. Forbes said.
"According to our scenarios, Pearl GTL remains an economic project even at surprisingly low oil prices," Mr. Forbes added. If crude oil prices plummeted to around $30, the unit would still have an IRR of 10 %.
The six-year-old Oryx GTL facility of Sasol, which also runs a GTL unit of 23,000 b/d in Mossel Bay, South Africa, has an even higher top IRR rate of 55 %, according to Mr. Forbes. But with a capacity of 34,000 b/d its net annual income with high oil prices is around $770 million.
A GTL unit of similar capacity to Oryx with Sasol's F-T technology which is being built at Escravos in Nigeria by a joint venture of Chevron Nigeria and the Nigerian National Petroleum Company has capital costs per barrel a day almost 8 times higher than the Qatar facility. But after its scheduled start-up next year its net annual income with high oil prices should be up to $834 million equivalent to an IRR of close to 9 %, said Mr. Forbes.
Both Sasol and Shell are reported to be planning GTL plants in the U.S. to take advantage of low-cost and plentiful supplies of shale gas while having the added benefit of easy access to a large domestic market for gas-to-liquids products. The availability of shale gas feedstock is likely to bolster demand for the new generation of small F-T reactors with capacities ranging from as low as 500 b/d to 15,000 b/d.
These are based on microchannel-structured reactor designs which accelerate the process by 10-1,000 fold and "allow use of novel, much more active catalysts", Neville Hargreaves, business development director at England-based Oxford Catalysts Group told at a Gastech GTL session. His company's reactors achieve a catalyst productivity around 14 times higher than the Shell F-T process and 7 times that of Sasol's.
Iain Baxter, business development director at CompactGTL, Abingdon, England, which with Oxford Catalysts is the leading pioneer of the global application of micro F-T reactors, explained that one of his company's 5,000 b/d units would fit into one football field while the Shell's Pearl facility in Qatar took up 450 football fields.
Oxford Catalysts with its U.S. subsidiary Velocys Inc, which like CompactGTL uses modules to build plants to ensure flexibility of scale, said that several gas producers are evaluating the company's microchannel GTL technology for making synthetic fuels from shale gas in the U.S., according to Mr. Hargreaves.
The process is also attracting the interest of downstream operators in the country. In September, Oxford Catalysts' technology was selected by Calumet Specialty Product Partners, Karns City, Pennsylvania, whose portfolio includes lubricating oils, solvents and waxes, for use in a 1,000 b/d GTL unit due to open in 2014.
Oxford Catalysts is also involved in GTL projects with Petrobras of Brazil and Rosneft, the Russian oil company. In the biomass segment, it is joining with Solena Fuels Corp of the U.S. to convert municipal waste into jet fuel for British Airways with its GTL technology.
"GTL is ‘for the masses' because there are a large number of opportunities for projects of the 1,000 - 15,000 b/d range," Mr. Hargreaves said. "We see more and more companies like Calumet wanting to use our GTL technology to exploit local gas supplies to make their speciality products. As this demand increases there will be opportunities for us to license out our technology, which is ultimately the business model we want to follow."
CompactGTL, which like Oxford Catalysts works with several partners in engineering, reactor and equipment manufacture and catalyst production, is focusing on the growing market for small GTL facilities for processing associated gas from oil production in offshore fields. Due to the growing number of government bans on the flaring of offshore gas, oil companies are increasingly attracted to using GTL to convert associated gas into syncrude.
"GTL is enabling oil producers to develop oil fields, which they would not have otherwise been able to do because of the prohibition on flaring," Mr. Baxter explained. "It also increases the amount of recoverable reserves because the syncrude is blended with the oil output of the field."
CompactGTL, whose reactors are placed on ships using floating production, storage and offloading systems (FPSO) to serve oil fields, is currently involved in eight projects with international and national oil companies across the world. These include an on-shore demonstration plant for Petrobras in Brazil.
Infra Technology of Russia has a strategy of using small and medium sized GTL reactors to convert on location remote offshore and onshore gas into syncrude, fuels, waxes and other products to avoid what Vladimir Mordkovich, its chief technology officer, called the "colossal investment and complexities" of gas transportation.
"GTL plants would produce motor fuel and/or syncrude (which) can be shuttled directly to the customers by traditional oil tankers," Mr. Mordkovich said. "This solution changes the very paradigm of offshore gas development that exists today."
Although a limited number of technology companies are now bringing micro- or mini-channel GTL reactor processes to the market, they are providing a platform for its expansion across the world. "The time has come for small-scale GTL," Mr. Hargreaves said.