Having long been a niche sideshow of the energy business, GTL now has the potential to enter center stage with solutions poised to enable access to more than 50 billion barrels of oil equivalent.
Small-scale Gas-to-Liquids (GTL) solutions are poised to enable access to more than 50 billion barrels of oil equivalent: more than Libya's total oil reserves. Long a highly niche sideshow of the energy business, GTL now has the potential to enter center-stage.
GTL technology owes its intellectual heritage to exceptional historical circumstance. Pioneered by Nazi Germany to meet oil shortages, the Coal-to-Liquids process – GTL's predecessor – was further developed by a South African Apartheid regime enduring heavy sanctions. The process created synthetic gas from coal before producing longer-chain liquid hydrocarbons via the Fischer-Tropsch process. GTL replaces coal with natural gas as the feedstock.
The theme of exceptional circumstance has remained crucial for GTL. A facility requires scale to access favorable economics. It therefore needs plentiful, inexpensive natural gas reserves to exploit. It also requires a demand market for petroleum products – predominantly diesel – where prices are strong.
According to London-based research firm Visiongain, the price of oil needs to be at least 15 times the price of gas to make GTL a viable prospect. As a result, GTL facilities are a rare breed and only four such facilities are currently in operation: Mossel Bay (South Africa), Bintulu (Malaysia), Oryx (Qatar) and Pearl (Qatar). Later this year a fifth, the much delayed and over budget Escravos facility in Nigeria, is due to open.
Oryx, Pearl and Escravos represented a second wave of large-scale GTL construction. A third wave is now on the horizon, with optimistic outlooks seeing six additional facilities as probable over the next 10 years: an arbitrage opportunity between gas and liquid hydrocarbon prices in North America – thanks to the exploitation of shale rock – has created the exceptional circumstance GTL requires.
But small-scale GTL will put an end to this theme of exceptional requirement.
The Promise of Small-Scale Gas-to-Liquids
By removing the 'economies of scale' requirement, smaller scale GTL solutions require far less natural gas (small-scale GTL solutions produce less than 10,000 bpd and consume approximately 10 million British thermal units for each barrel they produce). The result is a truly remarkable increase in the number of natural gas sources viable for GTL exploitation. Stranded and associated natural gas become targets, as liquefying them provides the hydrocarbons with market access.
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