COLUMN-Extreme project risk still holds back GTL: John Kemp

Mon Nov 26, 2012 8:28am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By John Kemp

LONDON Nov 26 (Reuters) - Plentiful and cheap supplies of natural gas, coupled with near-record prices for diesel and gasoline, provide a seemingly ideal environment for projects that convert natural gas into liquid transportation fuels. Yet most gas producers have hesitated to commit to new projects.

Gas-to-liquids (GTL) beats other options like pipelines, liquefied natural gas (LNG) and compressed natural gas (CNG) for smaller gas deposits stranded thousands of kilometres from consuming markets.

GTL plants are the most attractive way to realise the value in natural gas when oil prices are above $60 per barrel and gas prices are below $8 per million British thermal units, according to the 2012 "Global Energy Assessment", a landmark study compiled by the International Institute for Applied Systems Analysis.

Four commercial GTL plants have become operational over the last 20 years: Mossel Bay in South Africa (1992), Bintulu in Malaysia (1993), Oryx at in Qatar (2007) and Pearl also in Qatar (2011-14).

Combined capacity will be almost 225,000 barrels per day once Shell's Pearl project is fully operational (mostly diesel with smaller quantities of naphtha, lubricants and waxes).

South Africa's Sasol (Mossel Bay and Oryx) and Royal Dutch Shell (Bintulu and Pearl) dominate the market, though other companies including BP, Chevron and Exxon have proposed projects or built demonstration facilities over the last decade.