Since 2010, biofuel-fired power projects have not been economic due to declining prices for electricity, which are driven by lower natural gas prices. Prior to 2010, higher natural gas and electricity prices in combination with government subsidies made biofuel-fired power projects economically attractive. This is no longer the case.
Gas-to-liquids (GTL) is a process that converts natural gas to liquid fuels such as gasoline, jet fuel, and diesel. GTL can also make waxes. The most common technique used at GTL facilities is Fischer-Tropsch (F-T) synthesis invented by the Germans in the 1920s.
No. The first commercial plant was developed in the 1930s and the modern versions have been used commercially since the 1950s. The Germans used this process to produce billions of gallons of fuel during World War II. Although F-T synthesis has been around for nearly a century, it has gained recent interest because of the growing spread between the value of petroleum products and the cost of natural gas.
There are currently five GTL plants operating globally, with capacities ranging from 2,700 barrels per day (bbl/d) to 140,000 bbl/d. In recent years, companies have announced $30 billion in new GTL projects in North America.
Shell operates two in Malaysia and one in Qatar, Sasol operates one in South Africa, and the fifth is a joint venture between Sasol and Chevron in Qatar. One plant in Nigeria is currently under construction.
BFLS will build, own and operate multiple small-scale GTL plants each capable of producing up to 500 bbl/d in US oilfields.
There are several reasons:
- Attractive oil and gas price spreads in the United States
- Significant volumes of stranded gas reserves and associated gas production - New legislation and regulations against flaring associated natural gas production
Most GTL sector participants develop large-scale fixed facilities and upgrade the product slate to comply with market specifications. BFLS will deploy small-scale GTL plants as modular field processing units at the wellhead and produce a synthetic crude oil suitable as feedstock for refineries or petrochemical plants. BFLS and Liberty (the S. African technology partner) have contracted with ThyssenKrupp to design the plant. The German company Krupp has been involved with the GTL industry since its inception and remains one of the world’s largest construction companies.
Estimates of remote or stranded gas reserves range from 40% to 60% of the world’s proven gas reserves.
BFLS will earn attractive margins building, owning and operating small-scale GTL plants. BFLS will also consider joint ventures and/or selling commercial plants to 3rd parties.
BFLS intends to install a GTL pilot plant (approximately 30 bbls/d) at its HO Clarke property by the end of 2014. It will complete engineering on its first commercial GTL plant (500 bbls/d) by the end of the 3rd quarter of 2014.
Key risks include the following- - Gas and oil price spreads collapsing. The US has an abundance of natural gas. Due to gas-on-gas competition, domestic natural gas prices are de-linked from global crude oil prices, which are projected to remain at current levels for the foreseeable future. - Technology. Existing GTL process technology is mature and well demonstrated in commercial applications. New technology developments are moving into the commercialization stage, which provides pathways to both conversion efficiency for smaller scale plants and lower capital costs.