A Magical Transformation: Natural Gas to Diesel Fuel & Gasoline

It’s not alchemy. Cheap and abundant methane can be converted to more valuable diesel and gasoline (and many other materials) via “gas to liquids” (GTL) processes. Most GTL approaches utilise the Fischer-Tropsch approach, but other chemical methods show promise of economic viability.

gas vs oil prices in million btu

gas vs oil prices in million btu


North America’s natural gas boom is attracting a number of GTL players — both large and small. Sasol — from South Africa — aims to invest up to $15 billion in a GTL plant in Louisiana:

The logic behind Sasol’s big capital spend is relatively simple: Sasol is making a bold bet that natural gas in the U.S. will remain relatively cheap compared to oil on a BTU basis. Since 2009, the price ratio of crude oil to natural gas has spread significantly, with oil gradually rising, while natural gas has remained relatively flat.

… With the help of Shell’s Middle Distillate Synthesis (SMDS) process, which carries over 3,500 patents, both Qatar and Malaysia are among the few with success in building viable [GTL] plants. Qatar’s Pearl project began in 2012 and produces 140,000 b/d, while Malaysia’s Bintulu plant, which began in 1993, produces 14,700 b/d. South Africa’s national oil company, PetrolSA, holds the distinction of operating the world’s first GTL plant, which began in 1992 and produces 22,000 b/d. __OilPrice (Chris Pedersen)

Smaller GTL players are also attracted to cheap North American natural gas.

Biofuels Power Corp. plans to build a small-scale plant to convert natural gas to synthetic crude on a former power plant site about 1o miles south of downtown Houston as it looks to capitalize on abundant supplies of cheap natural gas, the company announced Monday.

The gas-to-liquids plant is a pilot project, the first step in the Humble-based company’s plans to build several small plants at oil fields across the U.S. to capture and convert natural gas now stranded at well sites that don’t have processing or transportation infrastructure to carry the gas to market. __ Fuel Fix (Rhiannon Meyers)

If gas is cheap and the things you can make from gas are valuable, it makes sense to take advantage of the cost differential — if you have the expertise and raw material to proceed. Gas to liquids technology is old, but it is becoming more efficient and cost effective — which is why it is beginning to show up in more places now.

Approximately 4.9 trillion cubic feet (140 billion cubic meters) of natural gas was flared in 2011 according to the World Bank, and there are obvious environmental benefits for using small-scale GTL to reduce this figure.

However, the far more sizable prospect is stranded gas. Conservative estimates suggest that between 30 and 40 percent of the world’s natural gas resources are stranded, meaning that the resources are not technologically or economically feasible to develop. Small-scale GTL, in many cases, overcomes the barrier of economic infeasibility. When you add to this gas that is re-injected, it becomes easy to calculate a figure of in excess of 50 billion barrels of oil, readily available, that small-scale GTL can access. __ Rigzone (Grant Rudgley)

An even larger prospect for GTL than flared or stranded gas, is cheap and abundant shale gas — such as one may find in any number of North American regions. But it is the economics of GTL that will determine the number and size of GTL projects.

Velocys and CompactGTL, both based in the U.K., are working on gas-to-liquids plants with a maximum capacity of 15,000 barrels a day, which is about a 10th the size of Shell’s Pearl venture in Qatar, the world’s largest. Chevron Corp. this year started work on a 33,000 barrel-a-day Escravos plant in Nigeria, expected to cost $8.4 billion.

Even on a smaller scale, gas to liquids is expensive. The plants cost about $100,000 for each barrel of capacity to produce liquid fuels. Both companies say that they can make the business profitable. __ Bloomberg (Eduard Gismatullin)

Global GTL capacity has been estimated to grow at the rate of about 8% annually between now and 2018. That is not a monstrous rate of growth, but not all of the potential GTL players are satisfied that the economics of GTL will always be as favourable as at the present. In reality, the economics of GTL are likely to get better, as long as the rabid Russian bear is kept in its cage, and prevented from causing WWIII.

Turkey and Japan have signed a $1.7 billion GTL project with Turkmenistan. That is only the beginning, as huge and underdeveloped gas deposits are seen in the new light of GTL alchemy.

http://alfin2100.blogspot.com/2012/03/new-era-of-hydrocarbon-fuels-gas-to.html

http://alfin2100.blogspot.com/search/label/natural%20gas

http://alfin2300.blogspot.com/search/label/GTL

Note: Gas-to-liquids (GTL) should not be confused with liquified natural gas (LNG) or natural gas liquids.

Liquified natural gas is natural gas that has been purified and cooled to liquid temperatures (-162 C or -260 F). This process reduces the bulk of natural gas to only 1/600 th of its previous volume. In that form it can be more easily shipped long distances by sea (and other forms of transport, depending upon safety regulations).

Natural gas liquids (NGL) are valuable short-chain liquid hydrocarbons that can be found in natural gas wells. The uses to which NGLs are put can be found in the table below:

Natural Gas Liquids

Natural Gas Liquids
http://www.eia.gov/todayinenergy/detail.cfm?id=5930&src=email%5B/caption%5D

Comparing the cost and availability of gas-fired electricity with wind & solar energy

Global supply of discovered methane has barely been tapped. The undiscovered supplies of methane will dwarf what has already been discovered. The global supply of methane hydrates (clathrates) will dwarf the global supply of natural gas.

[caption id="attachment_2373" align="aligncenter" width="640"]Abundant Methane Clathrates Abundant Methane Clathrates

With wiser global leaders will come the priority development of high temperature gas cooled nuclear reactors. These new reactors will be able to create massive new supplies of hydrocarbons of all kinds from any carbonaceous resource.

Nuclear Process Heat Opens the Door to Thousands of Years of Abundant Energy

Nuclear Process Heat Opens the Door to Thousands of Years of Abundant Energy

Lefty-Luddite Green Faux Environmentalists have squandered $trillions in a futile attempt to substitute wind & solar for carbon-based energy such as natural gas, oil, coal, etc. These corrupt carbonaceous politicians and activists might better be burned themselves as fuel, thus doing some good while thus being prevented from doing further harm. 😉

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5 Responses to A Magical Transformation: Natural Gas to Diesel Fuel & Gasoline

  1. jabowery says:

    As one of the folks in rural America dependent on propane for heat during the winter, last winter saw an unprecedented spike in propane price right in the middle of winter — when the first tank-loads of the year burn out for heat. Someone made out like a bandit on this and a lot of retired people — people in the upper midwest who are still living in their ancestral rural homes — nearly died. There was a lot of bluster about getting to the bottom of what happened and multiple explanations have been put forward, but one thing is for sure:

    There is a lot of money to be made in converting natural gas to propane — and at this point there are a lot of US Senators willing to foot the bill.

  2. bob sykes says:

    Here in rural north central Ohio, our small town is about to get a natural gas fueling station for trucks and cars.

    We experienced the same propane problem last year, too. We were on a contract so price wasn’t the problem, but supplies nearly ran out.

    Propane comes from petroleum, so its price is linked to oil.

    • alfin2101 says:

      Many North American natural gas wells are rich in “natural gas liquids.” These include propane, butane, and other hydrocarbons. Most of these are used in the complex refining of oil and in plastics manufacture, but are also used for heating purposes.

      http://www.eia.gov/todayinenergy/detail.cfm?id=5930&src=email

      Converting natural gas to propane requires the proper catalysts and apparatus. To be economical, on a large scale, more work is needed. I would be willing to bet that in the long run, microbial (or microbial enzyme) approaches will prove the most scalable for such purposes.

    • jabowery says:

      True, people on contract were protected from the pathology. However, a lot of people retired in old farm houses don’t have the income or credit rating to be on contract. Of course, those people are being targeted for elimination from the Social Security and voter registration rolls by the Federal government so as to have more money available for young immigrant voters, so there are countervailing political forces to those that want to contain future price spikes in propane.

  3. Ismael Valigy says:

    Dear AlFin2101
    The article is very interesting and helpfully to my research. I writing an academic research for a MBA in Oil & Gas Management. The research topic is about the effects of Converting natural gas to a liquid fuels on GDP – A Case of Mozambique.
    Do you have available any research that’s compare the cost production of diesel and gasoline from crude oil (Refinery) and natural gas trough GTL process?
    Kindly, hope to receive some feedbacks.

    Regards,
    Ismael

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