|
ExxonMobil signs $7B GTL deal Company to pay entire capital cost of Qatar plant to produce 154,000 bpd Allen Baker Petroleum News Contributing Writer
Exxon Mobil Corp. has moved a step closer to building a large-scale plant to turn Qatar’s immense deposits of natural gas into a liquid fuel starting in 2011.
Once it’s completed, it will be the world’s largest single, fully integrated GTL project, putting out 154,000 barrels of high-quality liquids each day, half of it diesel fuel. The facility would be built at the Ras Laffan Industrial City in Qatar.
ExxonMobil spent $600 million developing its gas-to-liquids process over the course of two decades, and earned a long string of patents, but commercial development was shelved for years as oil prices remained too low for it to be worthwhile.
Talks with Qatar on a GTL project began years ago, and a letter of intent was signed three years ago. The Heads of Agreement signed July 14 represents a major step forward for the technology, which dates back to German processes developed before World War II.
With high world demand for energy, and oil prices remaining above $35 a barrel, the GTL process may get increasing attention as a way to cash in on remote reserves of natural gas. High oil price vital In an analysis of the commercial potential prepared by the U.S. Department of Energy in the late 1990s, the conclusion was that GTL development, with its high capital costs, wouldn’t be viable unless oil prices were above $30 a barrel, which was far above their level at the time. But the study also assumed that remote gas could be purchased for something in the range of 50 cents (U.S.) per thousand cubic feet.
But liquefaction, the competing technology for moving natural gas long distances, has been refined substantially in recent years, especially with sharp reductions in the cost of LNG tankers.
As supply issues arose in the North American gas market, driving up prices, LNG rose to the forefront. BP and its partners developed the huge plant in Trinidad that now ships large quantities of LNG to the United States. ExxonMobil also forged deals with Qatar for two LNG projects to export gas from the giant North Field there. Other Qatar projects But now interest in GTL appears to be reviving, and ExxonMobil isn’t the only game in town for Qatar. The Middle Eastern country is already working on GTL projects with South Africa’s Sasol, which refined the technology when South Africa was under an embargo over its racial policies, and ChevronTexaco. Other Qatar GTL agreements have been signed with ConocoPhillips and Shell.
The ExxonMobil agreement calls for the company to design, build and operate the plant, as well as providing all the capital. ExxonMobil will have the rights to develop and produce natural gas, associated liquids, and other hydrocarbons to meet the plant’s capacity. ExxonMobil plans to drill an appraisal well this year and kick into higher gear its engineering and design work, which is already well along. Low-sulfur products One advantage of the GTL process is that the liquids produced are essentially free of sulfur, which means a premium prices for the diesel that will comprise half of the new plant’s output. The complex will produce about 20 percent lube stocks, with the remainder in naphtha and other products.
Next step in the ExxonMobil-Qatar GTL negotiations is a Development and Production Sharing Agreement. The term of that agreement will be 25 years from the start of production.
ExxonMobil has a long history in Qatar, dating back to 1935, and bills itself as the leading foreign investor in the country.
| 