Is Shale a game changer

Despite substantial investment and effort in improving the GTL technology, the process has remained an expensive and energy intensive venture, which has resulted in a limited number of commercial-sized GTL plants – but things could be about to change?

Recent developments in the gas sector are having an important impact on the global gas market and are likely to continue doing so for the foreseeable future.

The most important of these developments concerns the recent Shale Gas boom. This is particularly the case in the US.

With this new and abundant resource in gas, the US natural gas supply fundamentals have been permanently altered and this in turn could have a positive impact on GTL projects and installations. GTL is well placed to become the next “game changer” in the natural gas value chain – providing the link between abundant gas reserves and higher-valued liquid fuels markets.

GTL Background
The majority of GTL technologies are based on the original Fischer-Tropsch chemical process. This process converts a synthesis gas mixture of hydrogen and CO-called syngas into longer chained intermediate products, such as liquid fuel and various petrochemicals. This is accomplished using iron, nickel, or cobalt-based catalysts.

GTL is often considered within the industry as the ‘ideal’ gas technology – this notion comes from the many benefits:
– Exploiting a maximum of the world’s gas reserves that are considered remote (50%) —not easily or economically accessible to markets.
– Making use & monetising the considerable volume of gas produced in association with liquid hydrocarbons. This gas if often wastefully flared into the atmosphere due to lack of transportation options.
– By exploiting the associated gas many oil fields could optimize their oil production capacity.
– Environmental benefits by producing clean burning fuels, which can also be blended to improve conventional fuels quality.

The promise of converting otherwise, wasted or underused resources into valuable products that can command a premium price, due to their purity, is an attractive one.

However, the success of GTL projects is driven by the economics; and in order for GTL projects to become viable, they need a number of conditions to be met. When these conditions align, GTL can become a competitive technology, when compared to more “classic” refining technologies.

It is for this reason, that we see GTL technology and GTL plants come to the fore in countries, where there are favourable natural gas prices; or with access to large gas resources, at significantly lower prices.

Today, commercial plants are in operation or under construction in Qatar, South Africa, Malaysia & Uzbekistan.

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Historical Key Players (Operators & Licensors) & Milestone Project(s) SASOL
A Pioneer in gas-to-liquids (GTL) and coal-to-liquids (CTL) technology SASOL has been operating large coal-to-liquids plants in South Africa since the 1950s.

Back in 2007, partnered with Qatar Petroleum, Sasol started up their 1st synthetic fuel facility outside South Africa – ORYX GTL – using natural gas as feedstock. ORYX GTL is Sasol’s flagship GTL plant:
– Design capacity = 32 400 bbl/d
– Product slate = ultra-low sulphur diesel, naphtha and LPG
– Stable operation at 80-90% capacity utilisation
– Achieving 105% capacity utilisation
– World class safety

Shell
Shell has been one of the frontrunners in the GTL landscape – over 40 years in developing & researching technology to convert natural gas-to-liquid (GTL) into products used for transport fuel, lubricants and the raw materials for chemicals.

Shell operated the first commercial GTL plant in Bintulu, Malaysia, and built the largest GTL plant, Pearl GTL, in Qatar:
– Developed in two phases
– 1st phase started up in early 2011 – with 1st commercial gasoil expedited in June 2011.
– Phase 2 started up in early November 2011 (sour gas from offshore wells)
– Process around 1.6 billion cubic feet a day of wellhead gas from the world’s largest
– The plant will process approx. 3 billion barrels of oil equivalent over its lifetime.

ExxonMobil
ExxonMobil are also present in the Gas to Liquids technology field but their technology differs from those proposed by Sasol & Shell in that the second step of the process is not a FT synthesis but a Methanol synthesis.

The technology was developed in the 1970’s and uses the unique shape selective chemistry of MTG catalyst (discovered in the early 1970’s). The main steps of the process involve de-hydrating the methanol, which produces free water and converts the carbon & hydrogen into hydrocarbons.

The 1st MTG plant, a fixed bed design, was commercialized by New Zealand Synfuel in 1985 and converted natural gas to gasoline. The plant, located in New Plymouth, had a capacity of 14,500 BPD and was jointly owned by ExxonMobil and the NZ State.

Gas phase conventional fixed bed reactors
– Design & Construction simplicity
– Scalability
– On-stream MTG catalyst regeneration & replacement
– High On-stream Factor

GTL Technologies Innovations & Project Updates SASOL
Technology
The Sasol Slurry Phase Distillate Process™ (SPD process) is a 3-stage process that combines three leading proprietary technologies.

Natural gas is combined with oxygen to form a syngas, which is then subjected to a Fischer-Tropsch conversion, resulting in waxy syncrude. The final step involves cracking the syncrude to produce end products.

Using 60 years worth of experience in Synthetic Crude field the process is highly integrated to increase efficiency & optimise output.

Innovation
The next generation GTL plant design is ready for commercialization, main attributes are:
– New design is Capex neutral (same capacity basis) but better efficiency
– Reduced CO2 emissions (30%)
– Increased Single train capacity (+50%)
– Improved GTL economics due to: lower operating cost due to catalyst & efficiency improvements.
– Reduced required plot space (-10%)
– Improved operating flexibility/reliability Projects

Escravos, Nigeria
Escravos GTL (EGTL) is a joint venture between Chevron, the Nigerian National Petroleum Corporation (NNPC) and Sasol – The aim of the project is to firstly reduce flaring and secondly to produce high value products from this recovered gas. The plant is currently in the construction phase and will be a similar design to the ORYX GTL plant.

Uzbekistan
JV between Uzbekneftegaz, Petronas & Sasol is entering the final stages of planning a GTL plant that will convert part of Uzbekistan’s gas reserves into transportation fuel.  This new plant will change the countries outlook and its energy security, as it currently has to import fuel of a lesser quality. Another benefit will be the positive environmental impact by reducing emissions.

Louisiana GTL Plant, North America
As previously mentioned the shale gas boom in the US presents exciting opportunities for GTL. The advances in technology have helped to reduce the cost of extracting shale and as a result the price differential between natural gas and oil has risen considerably.

These are favourable conditions for GTL to produce oil equivalent fuels from a natural gas feedstock – Sasol is presently in the feasibility stage of establishing a GTL project in Louisiana in the USA.

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Shell

Technology
The proprietary Shell Middle Distillate Synthesis (SMDS) process is at the heart of the two-train Pearl GTL plant. Developed over the last three decades, the process has been proven on a commercial scale at the Bintulu GTL plant in Malaysia, which began operation in 1993.
Catalyst improvements have helped reduce unit capital expenditure.

Innovation
Technology Advances have been very important in making the process work efficiently on a large scale. One of the key issues for Shell has been the development of a new advanced proprietary cobalt synthesis catalyst – this new catalyst has significantly increased the output of the GTL products on the existing plant in Malaysia. Pearl GTL’s 24 reactors have also been equipped with this new catalyst. The cobalt within the spent catalyst is recovered to make new catalysts.

Projects
Shell is looking into the specifics to implement a GTL plant on the Gulf Coast of the United States.

Ken Lawrence, Shell’s vice president for investor relations in North America, stated recently that the company was still two years away from a final decision on an American plant.

Axens – GASEL Process
Axens is a leading licensor and has added to its portfolio GTL capabilities – since 1996 Eni and IFP Energies Nouvelles have been responsible for the development and scale-up of the process.

Technology
Axens is responsible for the Process design, Integration and Licensing. Some of the characteristics of the process are listed below:
– LT-FT in Slurry Bubble Column
– Axens hydrocracking technology for Upgrading
– Tailored Cobalt FT & upgrading catalysts
– Formulated & validated by Eni & IFP Energies Nouvelles
– Developed & manufactured by Axens
– Propose a complete FT + Upgrading technology chain for the conversion of Syngas to Middle Distillates (Jet, Diesel)
– Manufacturing associated FT and Upgrading catalysts
– Providing a single point guarantee from Syngas to Final Products

The Fischer-Tropsch Pilot Plant at Eni’s Sannazzaro Refinery started up in 2001 and numerous scale up tests have been carried out; Catalyst Performance notably activity & selectivity; Liquid/Solid separation; Slurry handling (mixed waxes + solid catalyst; Operation: over 20,000 hrs-on-stream.

Projects
Forest BtL Oy have signed a license with Axens for the use of Gasel technology suite in the Biomass to Liquid (BtL) plant to be constructed in Ajos, near the city of Kemi, Finland.

ExxonMobil (MTG)

Technology
The process reaction de-hydrates the methanol, which produces free water and converts the carbon & hydrogen into hydrocarbons.

Innovations
The second generation of the MTG process includes the following innovations:
– Second Generation Design based on 10 years operating data & feedback from New Zealand plant.
– Improved heat integration / process efficiency
– 2nd Generation Catalyst Development

Projects
The 1st second generation MTG plant is located in the Shanxi Province of China and is operated by the Jincheng Anthracite Mining Group (JAMG) – this plant is the 1st Coal to Liquids (CTL) plant that uses the MTG technology. The JAMG plant has a capacity of 2,500 B/D and was successfully started up in 2009.

In September 2011, JAMG licensed and announced plans for an additional 25 KBD MTG capacity in Shanxi Province.

In today’s market there is a growing trend to create GTL opportunities from smaller gas fields. Up until very recently scale has been a limiting factor but recent estimates show that by scaling down to the 2,000 bpd mark this could mean a further 40% of the world’s gas fields becoming economically viable.

A number of companies are now developing smaller capacity modular plants.

Outlook for GTL
Despite a number of economic constraints GTL technology processes have certain industrial benefits notably producing cleaner products with a smaller carbon footprint.

If the conditions are right GTL could develop into the viable solution that the industry is looking for, by reducing flaring and in turn producing clean and profitable products from previously unwanted gas.

GTL is a leading edge, commercial technology that can be implemented immediately, which can provide energy diversity and security.