"BP plans to build an $86 million facility at Nikiski to test potential breakthrough technology to convert natural gas into high-quality synthetic fuels," Richard Campbell, president of BP Exploration (Alaska) Inc., said June 26. "By its nature the test facility at Nikiski will be a research project rather than a commercial development," he said. Significant work still needs to be done, Campbell said, to prove the technology and to drive down costs.

Along with a gas pipeline to the Lower 48 and a liquefied natural gas project, GTL is one of the ways natural gas owners have been exploring of moving the gas from Alaska's North Slope to market. Campbell called the GTL test project a demonstration of the company's commitment to commercialization of North Slope gas, and noted that the company is continuing to look at a gas pipeline to the Lower 48 and liquefied natural gas. Multiple projects are possible, he said.

"GTL offers the opportunity to monetize North Slope gas by converting it into high-value products such as white crude or potentially even clean diesel, jet fuel, those sorts of products," said Ken Konrad, business unit leader for BP Exploration's Alaska gas group. BP has been working with GTL since the early 1980s, he said, and had a technological breakthrough in 1989: compact reformer technology. The company has done a series of smaller-scale pilot tests, both at Warrensville, Ohio, and at its Hull facility in the United Kingdom. By 1997 the compact reformer technology was close to a place where it was ready for full-scale testing and in 1998 the company had a final recipe for its Fischer-Tropsch catalyst, the third process in the three-step conversion of natural gas into GTL, he said.

The compact reformer is the key to the facility, enabling the generation of synthetic gas with air, rather than with oxygen, and with a much smaller footprint, lower weight and in a more energy-efficient way than current technologies available in the marketplace, he said. "All that will factor into lower costs, which we think will be a major step forward in terms of making gas to liquids a viable technology for commercial applications," Konrad said.

The test facility will be on the Kenai Spur Highway about a mile south of the Tesoro refinery, just off the highway. The engineering effort for the test facility has been completed, site selection has been made and the construction phase will begin in the next six months. In the first half of 2002, the facility will be completed and producing syn crude. There will be some 200 to 250 construction jobs at the peak, he said, and 10 to 12 full time operators plus probably an equal number of maintenance and support staff once the plant is operational.

There is an Enstar gas line close to the plant site, and natural gas could be purchased from Enstar, Konrad said, or from Cook Inlet gas producers. The plant will use about 3 million standard cubic feet a day and produce about 300 barrels a day of liquid, which could be sold to the Tesoro refinery for processing, he said.