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BP Amoco to build test gas-to-liquids facility at Nikiski BP Exploration (Alaska) President Richard Campbell says company aims at gas sales in 2005-2010 time frame Kristen Nelson PNA News Editor
BP Amoco plans to build the first gas-to-liquids facility in Alaska — a 300-barrel a day test plant near Nikiski — to validate its GTL technology and to try to drive costs down.
Richard Campbell, president of BP Exploration (Alaska) Inc., said June 26 that the $86 million facility at Nikiski will “test potential breakthrough technology to convert natural gas into high-quality synthetic fuels.”
Along with gas pipelines 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.
“By its nature the test facility at Nikiski will be a research project rather than a commercial development,” Campbell said. Significant work still needs to be done, he said, to prove the technology and in particular to drive down costs.
Campbell called the 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 LNG. Multiple projects are possible, he said.
BP Amoco developed the proprietary technology to be used at the test plant in conjunction with Kvaerner Process Technology Ltd., a member of the Norwegian-based Kvaerner Group, one of the world’s largest engineering firms. Compact reformer key to facility Ken Konrad, business unit leader for BP Exploration’s Alaska gas group, called the announcement an exciting milestone in BP’s GTL history.
“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,” Konrad said.
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 since then, both at Warrensville, Ohio, and at the Hull chemical facility in the United Kingdom.
By 1997, Konrad said, 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 second process in the three-step conversion of natural gas into GTL.
The test facility will be a 2,000-ton facility about 80 feet by 100 feet and it will probably be about 10 stories high, Konrad said. It will be on the Kenai Spur Highway about a mile south of the Tesoro refinery, just off the highway. The test facility will use 3 million standard cubic feet of gas a day and produce 300 barrels a day of liquid product which would then be processed by a refinery into diesel or jet fuel. Konrad said that the facility site is near an Enstar gas line and that gas could be purchased from Enstar or from any of the area’s gas producers. Construction would begin at the end of this year or early next year, with first production projected for second quarter 2002, 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. The compact reformer is being manufactured in Toronto by a subsidiary of Kvaerner. Cost reduction a major step “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.
“We believe the technology offers the opportunity to reduce industry standard costs up to 20 percent.”
He said the BP-Kvaerner compact reformer “enables us to build a commercial scale facility, a), without the need to build a separate oxygen plant and b), at a much smaller size and weight… A significant portion of any commercial-scale GTL process costs are in that front end. So significant reductions in the front end of the process should hopefully achieve savings of up to 20 percent for the overall project cost.”
Additional savings, Konrad said, could come from mass producing the compact reformers — a full-scale plant would require 50 to 100 of them — and then from tweaking the process to get 1-2 percent cost savings out of the system, “as well as possibly looking at things like cogeneration or other uses. Hydrogen is a by-product of this technology. Those sorts of steps enhance the overall economics of the project.”
Plans are to use the hydrogen from the Nikiski facility as fuel at the facility. North Slope facility could be 100,000 barrels Konrad said a North Slope facility would be 50,000-100,000 barrels a day as a first step. Additional plants could be added.
“First you have to build the first plant. And there should be additional economies of scale.”
Konrad said that what the company is hoping to do here is “to deliver a step change in cost that will allow us to move beyond talking about it towards doing it, whether it be in Alaska or elsewhere on the globe.”
“The competition for North Slope gas, if you will, will be if a gas pipeline can deliver higher value at the wellhead than either LNG or gas to liquids — then that’s what the gas to liquids will be competing against is the relative markets and the markets will decide that. What we want is the technology available to do any of those three options.”
“But what we’ll be doing,” Konrad said, “is actually testing this piece of equipment at scale so that we have a high degree of confidence that we can commercialize it.”
The test facility is essentially a “plug and play” technology, he said, which means that new pieces of technologies that emerge can be tested. There are three major components: the compact reformer generates synthetic gas, the Fischer-Tropsch process where the syn gas is used to manufacture paraffin waxes and then hydro-cracking the waxes into shorter-chain molecules with commercially available equipment.
The facility will occupy about five acres on a 23-acre site, Konrad said, and would be dismantled when testing is complete.
“We would certainly hope that with a year or two of operations under our belt that we would then be in a position to have most of the information necessary to decide if this can be commercialized or not,” he said.
If the process is successful, life of the plant would be three to eight years, depending upon how much testing was done there. Nikiski selected for logistics BP looked at both the North Slope and Nikiski as sites for the facility, Konrad said. The advantages at Nikiski include a readily available skilled work force, a fairly mature process maintenance industry and a location that is easier to get to for BP technologists who will be spending a lot of time fine-tuning the plant.
“We know how to build things on the North Slope, so that piece of technology we have well in hand, but what we wanted was something that was accessible for further testing at the plant facility,” he said.
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 roughly double that in support staff once the plant is operational.
A commercial scaled plant would be quite a bit larger than the test facility, he said, and the space available at the Nikiski site would not be enough for a full-scale plant. Decision on commercialization not made Konrad said the fact that BP Amoco has decided to go ahead with this test facility does not mean the company has decided to use GTL to commercialize North Slope gas. That decision, he said, has not yet been made.
“The key thing now is just to demonstrate and validate the technology. …the fact that we’re going ahead with the gas-to-liquids test facility doesn’t mean that we’ve decided that that is the ultimate means we’ll use to commercialize North Slope gas. We’ve got a major study going on for gas pipelines to the Lower 48 as well as participating in the sponsor group (studying an LNG project),” Konrad said.
“It is safe to say, however, that there is enough gas on the North Slope to support more than one major project.”
Both Konrad and Campbell said that the GTL test facility is not an Alaska-focused project. Konrad said it is a technology the company would look at wherever it has large amounts of gas — in Indonesia, Australia, Malaysia, Trinidad.
“I think anywhere where you’re producing gas — where you’re producing largely crude oil with substantial gas… you have an application … where you can turn gas into liquid stream,” Campbell said.
He said that stranded gas is normally what you think of — gas which is not close to market, where you don’t want to build a very long pipeline. Another application, Campbell said, “is an offshore situation where you don’t want to flare.”
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