Smaller scale GTL technologies are becoming the preferred option to large scale GTL. Why is that?
There aren’t very many gas resources that are big enough or conveniently located enough for large scale GTL technology to be appropriate. Conventional GTL has been tremendous for countries like Qatar with huge gas resources and very good infrastructure. It has been a major force for that economy and a great contributor to the profits of Sasol and Shell. But what is really needed for the world’s gas reserves is something to deal with the smaller quantities that have no convenient access to pipelines or LNG terminals. A special case for that is associated gas that is produced alongside oil and is often flared because it has no economic route to market. Gas-to-liquids is a really attractive solution for both stranded gas and associated gas and also for other carbon containing resources provided it can be done at a scale that matches the resource.
Could you tell us more about the technology that Velocys uses?
What we’ve done is make the Fischer-Tropsch technology, which is essential to gas-to-liquids plants, modular, economically more attractive and therefore available on a smaller scale. We’ve got two primary innovations. One is microchannel reactor technology, which is about doing chemical reactions in small tubes. This originally came out of the Pacific Northwest National Laboratory in the US. Actually the original idea was around making chemicals in space – so it was trying to solve some very challenging technical problems. But once the technology was invented it became clear that it had a wide range of potential applications and gas-to-liquids was one of the most favourable. The economy comes from not making things very big but making them repeatedly. Conventional GTL plants have a few very big reactors and a “stick-built” approach. A typical gas-to-liquids plant with our technology will have a number of trains of smaller reactors. Each individual sub-unit of our reactors is made according to a highly automated process so we are doing the same thing many many times and thus driving the cost down and therefore making the technology economic at a relatively small scale. Modular construction methods for smaller scale GTL plants also contribute to a reduction to on-site build cost and risk.
Tell us more about your project to build a biomass-to-liquids plant in the US. Do you think renewable fuels have a future in the market?
If you think of the GTL process, it’s a three-step process. First of all, you make what’s called synthesis gas or syngas. The second is the Fischer-Tropsch process, which does the actual synthesis of hydrocarbons and the third is a refining or normally a hydrocracking process similar to what’s used in many refineries. To make the syngas you can do it by reforming natural gas or you can do it by gasification of solids such as waste or biomass. And that is one of the few roots to renewable fuels. If you make diesel and jet fuel by that route it is actually a very good quality drop-in replacement to conventional hydrocarbon fuels.
That’s very much in demand compared to some of the other routes to biofuels that result in a product that requires changes to existing engines. This renewable route to conventional-looking fuels is particularly important for aviation. We are all thinking about electric cars at the moment but electric planes are a long way away. You don’t have the energy density to fly a plane on electricity and nor can you fly it on compressed natural gas. You need a high energy density and that’s what kerosene or its Fischer-Tropsch-produced alternative provides.
How do you see the smaller-scale GTL market developing in the future?
Over the next few years we expect the mass market to grow as arbitrage opportunities return. And that applies to the Middle East as much as anywhere else. I think that both Egypt and Iran have a good potential for GTL. We did look at a GTL project in Egypt a number of years ago. In the end in that case the owner discovered a much bigger gas field and it was sufficiently big that it was worth building a pipeline to. So the size of the reserve does matter but there are plenty where other viable methods of gas monetisation don’t exist.
