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BP’s GTL plant meets its objectives Capital cost of Nikiski demonstration-scale facility at around $20,000 per daily barrel Kristen Nelson Petroleum News Editor-in-Chief
BP’s demonstration scale gas-to-liquids technology facility at Nikiski on the Kenai Peninsula in Southcentral Alaska has met its short-term objectives and BP is now doing longer-term testing on the technology which turns natural gas into synthetic crude oil. Once work is done at the facility it will be dismantled, BP’s Steven Fortune told the Alaska Support Industry Alliance in Anchorage Dec. 11. Fortune, formerly team leader at the GTL facility, is now assigned to BP’s deepwater Gulf of Mexico projects, but was back in Anchorage to talk about Nikiski.
The Nikiski facility was built to help move GTL technology to a commercial application, Fortune said. BP ran pilot plant trials from the early 1990s, but needed to reduce the technology risk to take GTL from pilot plant to commercial scale.
And compared to previous BP pilots, at Nikiski BP brought all the pieces of the process together, “with all the recycle and integration that you’d expect on a commercial facility.”
The plant was built to scale, so it “would give us really good confidence to be able to move from that up to a facility that’s maybe a hundred times the size of what we have in Nikiski.”
While the facility was built to scale, the new piece of technology at Nikiski, the compact reformer, was built “on a unit commercial scale, so what we expect to do from this point is … build multiples,” of the compact reformer, Fortune said.
While Nikiski is delivering a small amount of syncrude to the nearby Tesoro Petroleum refinery, product is not the most important thing being produced at Nikiski, but rather the data BP gathers as it produces that syncrude.
“It was really around data: gathering up data to help benchmark our design,” Fortune said.
The data is especially important since the new technology involved, the compact reformer, is roughly a fortieth the size of conventional reformers. Frustration with conventional technology It took BP longer to get up and running than planned, Fortune said, and a startup planned for the second quarter of 2002 stretched out to July 2003.
“One of the quite annoying things about these challenges (in startup), is the challenges weren’t truly due to the new technology pieces. We had some significant issues, really, about the old technology pieces, most centered around the syngas compressor, where we compress the syngas from the first stage and put it into the second state with the Fischer-Tropsch (process).”
There were repeated compressor failures, he said, although that equipment is commonplace in the industry. Then there was a problem with seals in the compressor, where the technology was old, but “some of the seal design was kind of unique and that caused a lot of problems.”
There were a couple of challenges around the new technology, Fortune said, but those were very minor.
“So we were very pleased with the performance of the new technology, but very frustrated with some of these problems with the old technology that really slowed us down.” Full operation in July BP got the Nikiski GTL facility into full operation in July, and Fortune said the company is “delighted with the way the technology is now performing.”
Once the compressor problems were solved, the facility was up and running within a couple of weeks.
Since July, the Nikiski facility has met all of BP’s short-term performance targets, about 50 percent of the technical performance targets for the facility.
The other 50 percent, he said, are longer-term targets, most around BP’s new compact reformer design, “really much longer-term tests where we now have to run and prove those out.”
The short term tests went well. “From an actual technology standpoint, the compact reformer is meeting its design intent,” Fortune said. “All those short-term targets have been met. And they looked extremely good.”
BP also eliminated “quite a chunk of equipment” from original designs for the plant, “and that would make a significant savings when we move to a commercial application,” Fortune said.
Results as of early December: 4,110 barrels of syncrude. Although, Fortune said, product isn’t really the goal here, “it’s about optimizing how best to run the process (and) how we get … meaningful data.” What’s next? “Gas-to-liquids is another step for getting natural gas to the marketplace,” Fortune said, one that will “be applied to remote gas reserves around the world.”
Pipelines, liquefied natural gas and GTL are the competitors to get gas to market.
The challenge is to reduce “the capital cost of thousands of dollars per daily barrels.”
The GTL industry average of capital cost per daily barrel has been around $25,000, that is if you plan a 30,000-barrel per day plant, you multiple that 30,000 by $25,000 to get the capital cost of the facility.
The technology BP has employed at Nikiski, and the compact reformer, has reduced that cost to around $20,000 per daily barrel, Fortune said.
A big chunk of the capital cost was taken out at startup, and “a key part of what we’re doing now is trying to optimize the technology to reduce that cost and keep bringing down” the capital cost per daily barrel. Pipelines dominant In BP’s portfolio, a pipeline will always win out — “if the distance is right, you’re going to get your gas to market by pipeline…,” Fortune said.
LNG is the next best option.
To make GTL competitive with LNG, the capital cost will have to come down into the range of $17,000 per daily barrel. One thing BP is doing at Nikiski is trying to optimize the plant, so it can get more gas through the compact reformer, reducing the number of compact reformers needed for a commercial scale plant, thus reducing the per daily barrel cost.
To compete with a petroleum refinery — and use natural gas as the basis for products now generated from crude oil — the capital cost would have to come down to between $11,000 and $12,000 per daily barrel. That, Fortune said, would require “some kind of new breakthrough technologies.
“But if you could do that, then you’d see that whole kind of gas refinery concept come to fruition and see that implemented and our products would be derived from natural gas.” Technology would be licensed Davy Process Technology, BP’s partner in the Nikiski technology, will license the technology for use in the industry. “And at the moment we are in some very encouraging commercial negotiations around hydrogen, around methanol, around all sorts of uses for the compact reformer.”
Bolivia, which has land-locked gas and a big diesel market, is interested. And Indonesia, where there are big gas fields at Tangguh.
Once testing is complete at Nikiski, the plant will be dismantled and the site will be sold.
That facility, Fortune said, was built “to prove the technology.” The demonstration technology size is not commercial and BP does not make money running it.
A commercial facility would be much larger — but the compact reformer size would remain the same, a commercial plant would just use multiple reformers. So the more BP can optimize performance of the compact reformer, the closer the company will be to having a commercial GTL project.
But gas would have to be cheap. Fortune said BP has modeled a GTL facility on gas at 50 cents per million British thermal units.
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