Small-Scale GTL Technologies on the Brink of Commercialization
Feb 23, 2015
Much of the world’s natural gas is classified as “stranded,” meaning it is located in a remote area, far from existing pipeline infrastructure. The volumes often are too small to make constructing a large-scale Gas-to-Liquids (GTL) or Liquefied Natural Gas (LNG) plant cost-effective. As a result, the gas is typically re-injected into the reservoir, left in the ground, or flared, which is harmful to the environment. However, the availability of this low cost, stranded gas has incentivized companies to develop innovative technologies that can economically and efficiently utilize this gas. Velocys, CompactGTL, and Greyrock Energy, for example, have designed modularized GTL technologies for monetizing stranded gas and converting it into a transportation fuel, like diesel and jet fuel. This topic recently has attracted a lot of attention since all three companies have announced commercial plants to be completed in the next few years, and a number of other companies are actively developing similar technologies.
Small-scale GTL plants are containerized units comprised of a reformer for synthesis gas production, a Fischer Tropsch (FT) reactor for syncrude production, and, in some cases, an upgrading package, which is used to further refine the FT products into the desired transportable fuel. Tail gas, wax, and water are typical by-products resulting from FT synthesis. In these units, the tail gas is sent either back to the reformer for further processing or used for power generation. In some technologies, both options are utilized. The water, on the other hand, is recycled and re-used in the process while the wax is recycled and entirely converted to lighter products, making the GTL process free of waste.
Since these containerized units already have about 70 percent of their construction complete before reaching the plant site, on-site construction costs are significantly reduced. In cases where capacity needs to be increased, additional units can be easily shipped via truck or ship and connected in parallel to the existing process. Depending on the technology, capacity can range anywhere from 100 barrels per day (bpd) to 15,000 bpd.
Capital costs for these projects range from about US$100,000 bpd to US$120,000 bpd for plants with capacities anywhere from 2,500 to 2,800 bpd. This cost may vary depending on the capacity and location of the plant.
Velocys has built demonstration plants in different regions of the world including Austria, Australia, and Brazil. The company has announced three commercial projects―a 1,000 bpd plant with Calmuet Specialty Products in Pennsylvania, a 2,800 bpd plant in Ashtabula, Ohio, and a plant in Oklahoma which is currently under construction. CompactGTL has a demonstration plant in Brazil and announced a commercial GTL project in Kazakhstan. It is important to note that Velocys and Compact GTL do not produce finished products. Their diesel requires blending with petroleum derived diesel in order to be used as transportation fuel.
Greyrock Energy, on the other hand, has developed a direct-to-diesel GTL technology which does not require blending after FT synthesis. Greyrock Energy’s process has been proven at its demonstration plant in Ohio. Additionally, the company recently announced plans to construct a commercial GTL plant in Houston, Texas.
Overall, these technologies are attractive as they allow gas producers to unlock resources which would have otherwise been wasted and turn them into viable products. However, because these technologies have not been commercially proven yet, their technical risks are considered to be high. Also, these plants will be exposed to considerable commercial risk since their profitability will primarily be influenced by the pricing for their products, which will be linked to uncertain international oil prices. Have you assessed these risks to determine if the time has come to implement these technologies on a commercial scale?