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EIA says GTL faces economic hurdles Viability of producing liquid fuel from natural gas may require wax and lubricants as side products and relatively small plants Alan Bailey Petroleum News
There has been much interest of late in the construction of industrial plants that operate a gas-to-liquids, or GTL, process that converts natural gas to syncrude, a liquid fuel similar to diesel refined from crude oil. A major appeal seems to lie in the possibility of arbitraging relatively low cost natural gas as a feedstock against high-priced liquid fuel as a product.
But the U.S. Energy Information Administration, or EIA, says that a decreasing likelihood of the construction of large-scale GTL plants in the United States suggests that the plants face some significant economic challenges. Only one large-scale U.S. plant, at Lake Charles in Louisiana, is currently proposed, and Shell has cancelled its plans to build a large scale facility, also in Louisiana.
Technically viable GTL is a process with a proven track record going back many years as a technically viable means of producing liquid fuel. The most common process, known as the Fischer-Tropsch synthesis, involves reforming natural gas and steam into syngas, a mixture of hydrogen, carbon dioxide and carbon monoxide. A reactor uses a catalytic process to convert syngas into long-chain hydrocarbons. The long-chained hydrocarbons are then cracked into shorter-chain hydrocarbons to form syncrude.
The process, while effective in producing liquid fuel, is energy intensive and, therefore, expensive. And the cost of building the equipment needed to perform the GTL reactions is high. However, several companies have been developing an alternative GTL method that enables GTL production on much smaller scales that a classic Fischer-Tropsch plant, EIA says.
The agency says that, worldwide, there are currently five working GTL plants, with operating capacities ranging from 2,700 barrels per day to 140,000 bpd. Shell operates two plants in Malaysia and one in Qatar; Sasol operates a plant in South Africa; while Sasol and Chevron jointly operate a plant in Qatar. A sixth plant is under construction in Nigeria.
Three U.S. plants proposed Three plants have been proposed for construction in the United States. These consist of the large-scale facility at Lake Charles and smaller facilities at Karns City, Pa., and at Ashtabula, Ohio.
But EIA’s Annual Energy Outlook 2014, in its reference case forecast, does not include the construction of any large-scale GTL plants in the United States through 2014: Other uses of natural gas, such as power generation and the export of natural gas by pipeline, or as liquefied natural gas, appear more economically appealing, the agency says.
Wax and lubricant production To improve the economics of GTL facilities developers have designed plants that include the production of waxes and lubricating products, alongside the production of the liquid fuels that form the plants’ primary output, EIA says. The synthetic waxes find application in the chemical industry for the manufacture of candles, paints, coatings, resins, plastic, synthetic rubber and other products, the agency says.
However, the small size of the chemical market relative to the market for fuels limits the scale of a GTL plant that can benefit from wax and lubricant production. And that factor renders smaller scale U.S. plants, such as those proposed for the Midwest states, more economically viable than the larger scale plants, EIA says.
Using EIA’s projected gas and product prices “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,” the agency says. “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.”
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