Providing coverage of Alaska and northern Canada's oil and gas industry
January 2006

Vol. 11, No. 4 Week of January 22, 2006

Nikiski GTL plant continues to operate

BP’s technology demonstration plant providing valuable insights into issues involved in operating commercial-scale plant

Alan Bailey

Petroleum News

When BP first put its gas-to-liquids test plant into operation in the spring of 2003 at Nikiski on Alaska’s Kenai Peninsula, the company said that it would dismantle the plant once the company had proved out the GTL technology. Designed as a test-bed for GTL technology, the Nikiski plant is too small for commercial operation.

At the time of startup BP said that it thought that proving the technology would take 12 to 18 months. But, despite successfully demonstrating the GTL technology by the end of 2003, the plant is still in operation.

“We’re still here … the plant’s still running, and that’s certainly different than we thought where we’d be at and certainly different, I think, from what all of you have heard in the past,” Paul Jacobson, operations manager for the Nikiski GTL plant, told a meeting of the Kenai Chapter of the Support Industry Alliance on Jan. 17.

Last March plans had already been put in place to shut the facility down, Jacobson said. At that time the company expected to close the plant by the end of the year.

“(It’s) 2006 and we’re still running,” he said.

Jacobson said that the plant would continue operating as long as the work done at the plant added value to BP’s worldwide GTL initiatives. And the company management’s confidence in the usefulness of the plant has increased, he said.

Three-step process

The GTL process that the Nikiski plant operates involves three distinct steps: reforming natural gas and steam into syngas, a mixture of hydrogen and carbon monoxide; using what’s known as a Fischer-Tropsch reactor to string the syngas components into long-chain, waxy hydrocarbons; and cracking the wax into a series of shorter-chain hydrocarbons, to form syncrude. The syncrude can be refined into products such as diesel fuel that are a little denser than gasoline.

At Nikiski BP has been pioneering some new technologies to improve the economics of the process.

“There are really two key technologies … that we’re trying to prove (at Nikiski),” Jacobson said.

Those technologies consist of a compact gas reformer and a proprietary catalytic process in the Fischer-Tropsch reactor. The compact gas reformer is much smaller than the traditional reformer in a GTL plant and, hence, reduces development costs.

The Nikiski plant has been converting about 3 million cubic feet per day of natural gas into 300 barrels per days of syncrude. BP trucks the syncrude to the Tesoro refinery in Nikiski for refining.

And Jacobson particularly stressed his company’s focus on safety at the Nikiski plant.

“That’s a key piece of what we are,” he said.

Just one of the options

Jacobson said that GTL forms just one of a series of options for monetizing stranded gas.

“There are pipelines; there’s LNG,” he said.

The question of whether to use GTL or not in a particular situation depends on factors such as the availability of markets and the viability of other means of monetizing the gas. For example, LNG may be an attractive option if you have very large quantities of natural gas relatively close to marine transportation, Jacobson said.

But processes such as GTL or LNG generation use energy to covert gas into new products. And that use of energy introduces inefficiencies in transferring energy from the gas fields to energy consumers. Moving gas through a long pipeline also consumes energy, although if it’s possible to ship gas on a short pipeline to the consumer that will always be the best option.

BP is looking around the world for opportunities to use GTL. In the case of Alaska’s North Slope, the company has concluded that shipping gas through a pipeline to a major North American market presents more viable economics than shipping GTL products, even though those products could move down the existing trans-Alaska pipeline. But the company does see a very attractive opportunity for GTL in Colombia, where there are large gas reserves in the center of the country and mountain ranges between the gas fields and the coast.

“Here is an opportunity that looks very good for GTL,” Jacobson said.

Valuable role

Meanwhile the Nikiski GTL plant is fulfilling a valuable role in reducing the risk of building a commercial scale plant, such as a plant for Colombia. By testing technology in the relatively low-cost, scaled down facility at Nikiski, it is possible to safely discover how to apply technology developed in a laboratory before committing major expenditure on a full-size plant — the full-size plant might produce 15,000 barrels or more per day of syncrude, compared with the 300 barrels per day at Nikiski, Jacobson said.

“We’re a technology demonstration unit,” Jacobson said. “… We’re that last piece before you get to a commercial plant.”

And, in addition to testing the technology itself, the Nikiski plant enables the development of operating and maintenance procedures, and the training of operators.

More and more people are seeing the value of the type of testing and process demonstration that Nikiski does “and that’s why we’re still here today,” Jacobson said.

And so, although the original objectives for the plant have been satisfied, the company continues to see value in the plant.

“Will we be here tomorrow? Will we be here next month or next year?” Jacobson said. “… The good news is there are no shutdowns planned … there is a future for us. We are still learning.”

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