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Gas-to-liquids plants face challenges in the U.S. market
Energy Information Administration ^ | FEBRUARY 19, 2014 | Energy Information Administration

Posted on 02/19/2014 10:36:43 AM PST by thackney

Gas-to-liquids (GTL) is a process that converts natural gas to liquid fuels such as gasoline, jet fuel, and diesel. GTL can also make waxes. The most common technique used at GTL facilities is Fischer-Tropsch (F-T) synthesis. Although F-T synthesis has been around for nearly a century, it has gained recent interest because of the growing spread between the value of petroleum products and the cost of natural gas.

The first step in the F-T GTL process is converting the natural gas, which is mostly methane, to a mixture of hydrogen, carbon dioxide, and carbon monoxide. This mixture is called syngas. The syngas is cleaned to remove sulfur, water, and carbon dioxide, in order to prevent catalyst contamination. The F-T reaction combines hydrogen with carbon monoxide to form different liquid hydrocarbons. These liquid products are then further processed using different refining technologies into liquid fuels.

The F-T reaction typically happens at high pressure (40 atmospheres) and temperature (500o-840oF) in the presence of an iron catalyst. The cost of building a reaction vessel to produce the required volume of fuel or products and to withstand these temperatures and pressures can be considerable. Several companies are pursuing an alternative method that uses a different reactor design (called a micro-channel reactor) and proprietary catalysts that allow GTL production at much smaller scales.

There are currently five GTL plants operating globally, with capacities ranging from 2,700 barrels per day (bbl/d) to 140,000 bbl/d. Shell operates two in Malaysia and one in Qatar, Sasol operates one in South Africa, and the fifth is a joint venture between Sasol and Chevron in Qatar. One plant in Nigeria is currently under construction. Three plants in the United States—in St. Charles, Louisiana; Karns City, Pennsylvania; and Ashtabula, Ohio—are proposed. Of these, only the St. Charles facility is a large-scale GTL plant. In December 2013, Shell cancelled plans to build a large-scale GTL facility in Louisiana because of high estimated capital costs and market uncertainty regarding natural gas and petroleum product prices. The Annual Energy Outlook 2014 (AEO2014) Reference case projection does not include any large-scale GTL facilities in the United States through 2040. Other uses for available natural gas in industry, electric power generation, and exports of pipeline and liquefied natural gas are more economically attractive than GTL under AEO2014 Reference case facility cost assumptions and energy prices.

To improve the long-term profitability of GTL plants, developers have reconfigured their designs to include the production of waxes and lubricating products, which are another primary product of the F-T process. Because of the smaller size of the chemical market, smaller-scale GTL plants similar to those proposed in the Midwest are economically viable. U.S. imports of waxes similar to those produced out of the F-T process have experienced steady growth over the past decade because of increased demand in the chemicals market. F-T waxes are used in industries producing candles, paints and coatings, resins, plastic, synthetic rubber, tires, and other products.

Using projected natural gas and product prices in the AEO2014 Reference case and assuming a GTL plant can produce 2,800 barrels per day of products, a GTL plant is projected to be profitable only when it is configured to maximize wax production. As such, most GTL developers are looking to configure their plants to maximize wax production for the chemicals market instead of production of liquid fuels with minimum or no wax.


TOPICS: News/Current Events
KEYWORDS: energy; gtl; naturalgas


1 posted on 02/19/2014 10:36:43 AM PST by thackney
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To: thackney

You can make syngas from wood, waste products, etc so having good F-T plants is a good idea.


2 posted on 02/19/2014 10:46:14 AM PST by bigbob (The best way to get a bad law repealed is to enforce it strictly. Abraham Lincoln)
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To: thackney
I like GulfWax. It does a great job of coating the bottoms of skis at a low cost. Performs pretty well too.

Rather than flare gas off, GTL is an improvement.

3 posted on 02/19/2014 10:47:33 AM PST by Paladin2
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To: bigbob

Technically capable and economically profitable are both required. The first is done. The second is a lot harder in the US with GTL.

It is far more economically in locations where the supply is far larger than the local demand, like Qatar.


4 posted on 02/19/2014 10:47:53 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

on a
cost per unit of energy basis,
crude oil costs 5 or 10 times as much as NG.

there has to be a hitch somewhere.
perhaps someone here knows.


5 posted on 02/19/2014 10:58:24 AM PST by RockyTx
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To: RockyTx
there has to be a hitch somewhere

That would be the cost of converting to a liquid.

6 posted on 02/19/2014 10:59:39 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

“The F-T reaction typically happens at high pressure (40 atmospheres) and temperature (500o-840oF) in the presence of an iron catalyst.”

Funny. Sounds almost like the conditions you might expect to occur deep in the Earth’s crust, where we find plenty of petroleum products. We also know methane can be an abiotic product, since we find it on planets where there never was life.

Could abiotic methane just be undergoing a similar reaction naturally, to produce the more complex hydrocarbons?


7 posted on 02/19/2014 11:01:59 AM PST by Boogieman
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To: RockyTx

Despite the ample supplies of natural gas in the area, the company has taken the decision that GTL is not a viable option for Shell in North America, at this time, due to the likely development cost of such a project, uncertainties on long-term oil and gas prices and differentials, and Shell’s strict capital discipline.

http://www.freerepublic.com/focus/f-news/3102553/posts
05 Dec 2013


8 posted on 02/19/2014 11:02:01 AM PST by thackney (life is fragile, handle with prayer)
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To: Boogieman
We also know methane can be an abiotic product, since we find it on planets where there never was life.

Understanding that Carbon and Hydrogen, in an Oxygen deficient environment, eventually combine to its lowest energy state of Methane and depending on the element ratio, percentages of ethane and the like, is far different than proving a abiotic PRODUCT from another process.

9 posted on 02/19/2014 11:06:05 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

I seem to remember an article that stated a Texas university, I believe it was Texas A&M, had developed a modified, more economical version of the FT GTL approach. Any further info?


10 posted on 02/19/2014 11:13:05 AM PST by nomad
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To: thackney

prices, last time I looked.

diesel, $2.50 a gallon wholesale,,, 140,000 btu.

NG, at Henry, 1 million btu, $4.00.

do the math, even if half is lost,
still pays.


11 posted on 02/19/2014 11:21:07 AM PST by RockyTx
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To: nomad

This one?

http://www.freerepublic.com/focus/f-news/3059392/posts

Still just a pilot after many years. They seem to be selling lectures and presentation, not process licenses or product.


12 posted on 02/19/2014 11:21:37 AM PST by thackney (life is fragile, handle with prayer)
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To: RockyTx

Do you think Shell, who has three of these plants in commercial operation in other countries, can not do math?

You guess at half product loss does not consider energy input and capital expenses.


13 posted on 02/19/2014 11:23:07 AM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Hell with this, why aren’t we gasifying coal, Sasol-style? The US isn’t a country so much as an enormous coal deposit with some dirt on top.

(Not that we shouldn’t do this too)


14 posted on 02/19/2014 11:23:44 AM PST by Still Thinking (Freedom is NOT a loophole!)
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To: thackney

Press release -> spokes-speak to English conversion -> “There’s too much risk involved in building anything chemical- and energy-related in a country with an out-of-control E”P”A and a commie TOTUS”


15 posted on 02/19/2014 11:26:57 AM PST by Still Thinking (Freedom is NOT a loophole!)
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To: thackney

I don’t trust Shell.
perhaps they never wanted to succeed
.
other companies seem to be interested.


16 posted on 02/19/2014 11:29:30 AM PST by RockyTx
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To: Still Thinking

Remember that Sasol (and Germany) went FT on coal because they couldn’t get enough liquid fuel at any price. Prices matter.

There is a reason their Coal-to-Liquid commercial operation has not be built in any other country, in spite of their many years of marketing it.

They have had success in selling GTL technology.

http://www.sasol.co.za/about-sasol/south-african-energy-cluster/sasol-synfuels/business-overview-sasol-synfuels


17 posted on 02/19/2014 11:32:26 AM PST by thackney (life is fragile, handle with prayer)
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To: RockyTx

Right... That is why they own the largest GTL plant in the world.


18 posted on 02/19/2014 11:33:20 AM PST by thackney (life is fragile, handle with prayer)
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To: RockyTx
"crude oil costs 5 or 10 times as much as NG."

Hence LNG ships I guess.

19 posted on 02/19/2014 11:49:15 AM PST by Paladin2
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To: RockyTx
crude oil costs 5 or 10 times as much as NG.

Closer to 3~3.5 times as much. Then you have to guess how much Natural Gas is going to rise while it becomes used by more and more transportation demands.

Energy Price Spread: Natural Gas vs. Crude Oil in the US
http://www.cmegroup.com/education/files/energy-price-spread-natural-gas-vs-crude-oil-in-the-us.pdf

20 posted on 02/19/2014 12:03:33 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

When Sasol built their first plant in SA (Sasolburg), they got a guarantee from the government to buy product at $20/bbl equivalent, so at that time they could make a clear, un-subsidized profit at any crude price over $20. And now that SA’s pussed out and are no longer international pariahs and can buy crude wherever they want, they STILL built an additional gasification plant (Segunda). If it’s such a bad deal even in a nation with access to oil, why would they build it?

I’m sure operating costs are somewhat higher now, so figure maybe $40-50 crude should be break-even. We’re substantially above even that. Plus, part the the reason the Seffricans wanted it was strategeric, they wanted to be energy-independent (and besides, had no choice, as you note). So both from a strategic sense and a pure economic sense, it would seem to me to be a good idea, so long as there isn’t something about our coal that makes it more expensive or less feasible in some way.


21 posted on 02/19/2014 12:07:56 PM PST by Still Thinking (Freedom is NOT a loophole!)
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To: Still Thinking
they STILL built an additional gasification plant (Segunda).

You do know they built that 3 decades ago, right?

The first half of Secunda CTL, completed in 1980, cost U.S.$3.2 billion in dollars of the day. Sasol 3 (the mirror-image of Sasol 2), completed 1984, cost $2.5 billion in dollars of the day.

22 posted on 02/19/2014 12:14:48 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

Geez, time flies. I thought it was much more recent than that.


23 posted on 02/19/2014 12:17:44 PM PST by Still Thinking (Freedom is NOT a loophole!)
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To: Still Thinking

Notice they haven’t built one since.

I’m all for the process. And I had high hopes for Shell’s GTL in the US. With three commercial plants already in operation, they knew the real costs better than anyone.

CTL or GTL would be great because the distribution and consumption infrastructure is already in place.


24 posted on 02/19/2014 12:20:26 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

“there has to be a hitch somewhere
That would be the cost of converting to a liquid.”

Actually, the feedstock cost(i.e - raw gas price) is the main problem on commerciality.

Check out where those five GTL plants are

1. Malaysia(Bintulu) - lots of very cheap gas, also has LNG there for many years
2. Qatar - largest gas field in world, largest LNG in world

South Africa does not have cheap feedstock; however, they do have abundant supplies of coal which is synthesized into gas. This happened during aparthied when no one would sell them hydrocarbon liquids. Different situation, and they have become experts on this technology in the interim.


25 posted on 02/19/2014 12:39:12 PM PST by bestintxas (Every time a RINO bites the dust a founding father gets his wings.)
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To: bestintxas

Cheaper feedstock can overcome the profitability. But the feedstock cost is less than the conversion cost, or it would be already profitable already in the US


26 posted on 02/19/2014 12:45:21 PM PST by thackney (life is fragile, handle with prayer)
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To: bestintxas
South Africa does not have cheap feedstock;

BTW, in addition to their coal classification, they get significant amounts of Natural Gas from Mozambique.

http://www.sasol.co.za/about-sasol/south-african-energy-cluster/sasol-gas/business-overview-sasol-gas

27 posted on 02/19/2014 12:51:23 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

“Cheaper feedstock can overcome the profitability. But the feedstock cost is less than the conversion cost, or it would be already profitable already in the US”

I worked LNG many years and found this a true statement(feedstock cost must be cheap). Reason Mobil built Arun plant and the Algerians built those a long time ago.

GTL might have different metrics than LNG. Have you seen a comparison of the two?


28 posted on 02/19/2014 1:15:24 PM PST by bestintxas (Every time a RINO bites the dust a founding father gets his wings.)
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To: bestintxas

Not a direct dollars comparison. But the GTL plants in Qatar are economical because they really compete with exported LNG versus a significant local demand like in the US.

It is why companies like Shell built the GTL after the LNG facilities were already up and running in Qatar. Both were spending capital to build facilities to buy local natgas and export to another country. If there was greater profits to be made in LNG, I expect that they would have built that instead. With two other commercial GTL facilities, they had already proved their process and economics.


29 posted on 02/19/2014 1:19:12 PM PST by thackney (life is fragile, handle with prayer)
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To: bestintxas

For reference: Same country, same company and almost the same time frame

First LNG, then as the American Market began to shift and no longer would need Nat Gas imports, the GTL. But the start of that GTL economic justification is not firm to me.

http://www.shell.com/global/aboutshell/major-projects-2/qatargas.html

http://www.shell.com/global/aboutshell/major-projects-2/pearl/overview.html


30 posted on 02/19/2014 1:35:10 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

“It is why companies like Shell built the GTL after the LNG facilities were already up and running in Qatar. Both were spending capital to build facilities to buy local natgas and export to another country. If there was greater profits to be made in LNG, I expect that they would have built that instead. With two other commercial GTL facilities, they had already proved their process and economics.”

When I recall Bintulu GTL being built, it was representing a small-scale “test” of GTL as it had never been commercialized prior to that time. Shell’s LNG was up and running an very profitable but LNG had reached virtual saturation conditions so Shell had difficulty in building more LNG trains and instead tried to see if GTL could create new markets, since Shell still had access to the cheap Brunei gas.

Their target was the high-end industrial users who needed very high quality product. Since Fischer-Tropsch essetially rearranged the hydrocarbon atoms in order to turn natural gas into kerosene, gasoline, naptha, or whatever, the product was essentially contaminant-free.

So GTL followed LNG as GTL was a lot more complicated and needed new markets, whereas LNG industry was simply supplying gas via liquefaction instead of pipeline.

Both need sources of very cheap raw feed.

BTW, I read somewhere that as a grassroot endeavor, the GTL never made the economics, and is now only profitable if opcosts are considered, no capital included.


31 posted on 02/19/2014 1:37:52 PM PST by bestintxas (Every time a RINO bites the dust a founding father gets his wings.)
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To: bestintxas

Bintulu was a commercial test, could it be scaled up to commercial size economically.

But I don’t believe 15 years after Bintulu, they spent $18~19 billion as another test.


32 posted on 02/19/2014 1:57:37 PM PST by thackney (life is fragile, handle with prayer)
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To: thackney

“Bintulu was a commercial test, could it be scaled up to commercial size economically.

But I don’t believe 15 years after Bintulu, they spent $18~19 billion as another test.”

That’s a lot of money to bet so yes, I would agree on that statement.

A long-term approach here would be to undertake more GTL in this country as our unconventional supply of natural gas will enable us to procure the liquids we need, particularly for the transportation and lubricant sectors.

We will have difficulty on the feedstock cost, however, as we will be expensive on gas (at least $5/mmbtu) required to drill these gas resources, compared to the other countries that have the cheap($1-2/mmbtu) supplies.

But we will need it to keep our standard of living high enough and not be subservient to countries which are not our friends.


33 posted on 02/19/2014 2:25:03 PM PST by bestintxas (Every time a RINO bites the dust a founding father gets his wings.)
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