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Another option for North Slope gas? Janus Methanol chairman suggests converting gas to methanol on the Slope and converting the methanol to gasoline in Valdez Alan Bailey Petroleum News
With an increasing air of pessimism around the prospects for a pipeline to export natural gas from Alaska’s North Slope, there is interest in finding alternative ways of monetizing the vast quantities of gas currently stranded in Arctic Alaska.
On April 15 Deo van Wijk, chairman of Swiss company Janus Methanol AG, talked to the state House Resources Committee about one of those alternative possibilities, the use of North Slope natural gas to synthetically produce gasoline for export from Valdez. The gasoline production would involve two stages: the production of methanol from natural gas on the North Slope and the production of gasoline from the methanol in Valdez. The methanol produced on the slope would be blended with crude oil for transportation through the trans-Alaska oil pipeline to Valdez, where it would be distilled back out of the oil for processing into gasoline.
TAPS antifreeze In addition to providing a market outlet for North Slope gas, this proposal would boost the volumes of fluid flowing down the trans-Alaska pipeline and, with methanol being an excellent antifreeze, would help prevent problems with ice formation in the line, van Wijk said.
And, rather than being some far-fetched piece of science fiction, the processes involved are already in commercial operation in several parts of the world, van Wijk said. Economies of scale require gas supplies of at least 640 million cubic feet per day, he said.
The complete two-stage process of manufacturing gasoline from natural gas is an alternative to the perhaps more familiar gas-to-liquids, or GTL, process, in which natural gas is converted to a fluid closely similar to diesel fuel. But GTL produces wax as a side product, with the wax potentially causing problems with pipeline clogging, van Wijk said.
Exxon originally developed the process for converting methanol to gasoline, known as MTG, and successfully constructed an MTG plant in New Zealand in the 1980s, van Wijk said. However, falling oil prices in the 1990s rendered that plant uneconomic, he said.
Some years later the Chinese resurrected the process to produce gasoline from methanol generated from coal, van Wijk said.
Improved technology Over a number of years Janus Methanol engineers have improved the methanol generation part of the process, eliminating the need for some processing modules that were part of early plant designs and dramatically reducing production costs, while increasing production output and opening up the possibility of large-scale methanol production at reasonable cost, he said.
But with world demand for methanol being quite low, the best use for the huge volumes of methanol that can now be produced is to feed the methanol into the MTG process, van Wijk said. Gasoline produced from methanol contains relatively low volumes of benzene and no sulfur, while the process for generating the gasoline only produces gasoline and water he said.
Van Wijk said that his company is interested in the possibility of natural gas to gasoline production in Alaska and that he has done some rough estimates of the economics of doing this in the state. Assuming that construction costs in Alaska would be double the cost elsewhere in the U.S., the construction cost of a complete system that could produce about 63,000 barrels per day of gasoline would come in at about $5.2 billion, van Wijk said. With labor costs for operating the plant perhaps averaging $150,000 per person and taking into account all costs, including the return on investment in the plant and depreciation of the plant, gasoline could be delivered for shipment from Valdez at a price in the range of $2.65 to $2.85 per gallon, including a $1.45 margin, he said.
“If you compare that with today’s wholesale prices in excess of $3 per gallon you still have more margin,” van Wijk said.
450,000 barrels? Those figures relate to an operation that would only consume a portion of the gas available from the North Slope. Were the entire 4.5 billion cubic feet per day of North Slope gas, currently envisaged flowing down a North Slope pipeline, instead be converted into gasoline, that would result in a gasoline production rate of 450,000 barrels per day from a massive plant that would likely take 15 to 18 years to complete, he said.
Van Wijk said that the natural gas to gasoline process is economically viable on a worldwide basis and that countries with natural gas resources can now produce gasoline. The United States has the potential to reduce its massive oil imports to zero in 10 to 15 years, he said.
“This is so simple, so revolutionary, that this can change the future of this country, not only of Alaska but of the United States of America,” Wijk said.
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