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Department of Energy presents gas-to-liquids program review Old technology holds exciting promise for the 21st century, DOE officials, private industry tell Society of Petroleum Engineers Tom Hall PNA Staff Writer
Gas-to-liquids technology, once little discussed, appears to be attracting more attention in the United States — and here in Alaska. The reason for the growing interest in GTL is that an estimated 23 percent of domestic natural gas reserves are considered remote and GTL technology holds promise of economically delivering that gas to the marketplace as clean liquids (primarily petrochemicals and fuels). But there are technical and economic challenges to overcome before that potential becomes reality.
As part of the Society of Petroleum Engineers’ western regional meeting held in Anchorage in late May, the U.S. Department of Energy’s Office of Fossil Energy presented a day-long public review of its gas-to-liquids research and development program.
Chaired by Venkat Venkataraman, gas processing and utilization product manager for the Office of Fossil Energy’s Federal Technology Center in Morgantown, W. Va., and Pittsburgh, Pa., the program brought together professionals from the public and private sectors to present and discuss the status of the DOE funded research.
What is GTL technology? GTL technology is centered on a process developed in the 1920s by two German scientists — Fischer and Tropsch. The goal of the Fischer-Tropsch process is to convert natural gas or coal into liquid fuels or petrochemicals.
It consists of three major steps, the first of which purifies natural gas feedstock (removing the sulfur) and, through one of several “reforming” techniques, produces synthesis gas (or syngas). Next, the syngas goes through the Fischer-Tropsch synthesis — a reactor process where the syngas is subjected to a catalyst — which results in liquid hydrocarbons and wax. The final step, product upgrading (similar to refining), determines what the end product will be: diesel fuel, gasoline, petrochemicals, etc.
Though interest in the technology is new in the United States, South Africa has used the Fischer-Tropsch process successfully for more than 40 years. Driven by a desire to decrease their dependence on foreign oil, South Africa produced fuels — and a host of other products — from its substantial reserves of coal.
Why GTL technology? Technology requires the resources to justify an initial capital outlay and Alaska has no problem when it comes to the natural gas required for the GTL process.
University of Alaska Fairbanks Professor Godwin Chukwu said that conventional gas resources on the North Slope exceed an estimated 38 trillion cubic feet, with another 31 trillion cubic feet in the Arctic National Wildlife Refuge and 590 trillion cubic feet of gas hydrates on the North Slope. DOE’s Venkataraman estimated that Alaska holds about 100 trillion cubic feet of stranded gas, and Alaska’s Department of Natural Resources estimates that there are an estimated 1,000 trillion cubic feet of coalbed methane in areas throughout the state.
The only question, then, is how best to get the product to market (i.e., is it profitable?). A number of factors suggest GTL technology holds the most promise.
As Venkataraman pointed out in his overview of DOE’s GTL program, gas-to-liquids technology offers several advantages over other technologies. Because Fischer-Tropsch liquids are transportable using the existing pipeline configuration, the technology would allow continued use, and extend the life (by at least 25 years) of the trans-Alaska oil pipeline. Liquid natural gas technology, by comparison, would require a separate pipeline and, at today’s prices, the capital investment required (approximately $14 billion) would far exceed the cost of the trans-Alaska pipeline. Second, GTL technology would allow the recovery and conversion of remote and deep gas to liquid fuels and petrochemicals that can be distributed through an existing infrastructure of tankers and refineries. Last, diesel fuels made with gas-to-liquids technology are environmentally superior to and more efficient than petroleum-derived diesel.
This last advantage is significant because, in 2004, emissions regulations will become increasingly more stringent. John Hackworth, senior consultant for K&M Associates of Pittsburgh, Pa., said that eventually sports utility vehicles and light trucks will have to meet the same emission standards as passenger cars, and gasoline and diesel fuel powered vehicles will have uniform emission standards. When that happens, the demand for ultra-clean diesel fuel will rise in direct proportion. Fischer-Tropsch liquids can fill that need. Making GTL a commercially attractive technology In a cost breakdown for a conceptual model GTL plant, Gerald Choi of Bechtel Corp. in San Francisco showed that the process of generating syngas accounts for 66 percent of the cost of converting natural gas to liquids and 38 percent of total costs. At about $1.8 billion for a 45,000 barrel-per-day plant, cutting the cost of syngas production is a major key in making GTL plants more attractive to investors.
Choi listed some other cost reduction factors that would improve the economics of GTL plants: development of a state-of-the-art Fischer-Tropsch slurry reactor design; better system integration, utility and infrastructure; minimal product upgrading (i.e., limiting the number of end-product choices from a given GTL plant); and power co-production (especially at small scale facilities). GTL in the future Research into improved efficiency of syngas generation is under way on several fronts by a number of private and public organizations.
Technical and economic challenges notwithstanding, DOE’s Federal Energy Technical Center timeline envisions demonstration plants on the North Slope capable of producing 10,000-50,000 barrels per day by the year 2008. By 2010, FETC predicts that natural gas to liquids will have penetrated the conventional transportation fuels market with a 2 percent share and then increase to 15 percent by 2030.
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