Shell Oil's Gas to Liquids Plant in Qatar could Earn $ 10 Billion a Year

This article is cross-posted from an article originally published on Al Fin Energy blog

Gas to liquids (GTL) is becoming a very profitable enterprise. Not everyone can invest $20 billion in a GTL plant. But to reap $10 billion per year in profits from an investment of $20 billion, is very close to true alchemy.

More on Pearl Qatar GTL:

Now gradually increasing production, Pearl sucks in huge volumes of natural gas from the gargantuan North Field under the aquamarine Gulf and — in a feat of seeming alchemy — transforms the gas into jet fuel and diesel and other liquids far more valuable than natural gas these days. Eventually, Pearl could earn Shell $10 billion per year, justifying its nearly $20 billion cost. _NYT

Notice that the $10 bn figure is for "eventual profits." For now, Shell will have to settle for a mere $4 bn free cash flow per year -- at an oil price of $70 per barrel. At higher oil prices, profits will exceed $4 bn proportionately.

Shell has said that the project would generate USD 4 billion of free cash flow a year at full production in a market with crude oil prices, the main determinant of the price of diesel, at USD 70 per barrel.

Shell will say only that returns are in line with other integrated gas projects, but given that Brent crude now sells for over USD 110 per barrel while the gas going into Pearl is effectively free, it could clearly be a significant contributor to one of the world's biggest corporate capital spending budgets at some USD 30 billion this year alone.

Analysts said that crude prices would have to fall below USD 40 per barrel before the plant loses money. The Qatari government's decision to buy a stake in Shell, reported to be approaching 3% may be further evidence of Pearl's cash delivery potential. _SteelGuru

Russia's Gazprom needs to take a long hard look at Shell's GTL achievements in Qatar -- particularly at a time when global gas prices are falling, and Gazprom's customers are pulling out the long knives for the corrupt Russian national gas company:

Gazprom said Thursday its profit plunged by a quarter due top falling gas exports and billions in back payments to EU nations now probing the Russian giant for price fixing and intimidation tactics. The world's largest natural gas company attributed its 23.5 percent drop in first-quarter net income to a sharp decline in sales to both Europe and the ex-Soviet states - two of the slowest-growing regions in the world.

It also reported a one-off $2.4 billion (78.5 billion ruble) payment to European clients who managed to negotiate a lower price after threatening to take the Russian state firm to court. The profit was still a strong $11.1 billion (357.8 billion rubles) and debt was down heavily. Brussels is formally probing Gazprom for effectively trying to bully eastern and central European nations into buying its pipeline gas at elevated prices and then preventing them from trading any excess supply.

The probe comes a year after official raids on the offices of Gazprom's European partners and amid widening EU efforts to diversify its sources of energy supplies. Gazprom on Wednesday suggested that Russia's broader national interests were being threatened by the investigation and demanded respect for its "status as a strategic organisation" under federal law. _Profits Plunge at Gazprom

Al Fin energy analysts have promoted scalable GTL for years now. While a $20 billion plant is not considered small scale, several companies are competing to provide technology for small and medium scale GTL plants -- to take profitable advantage of stranded gas, offshore gas, and currently flared gas.

These small and medium scale GTL plants will not earn $10 bn a year -- or even $4 bn a year -- but they will provide a handsome profit return on investment as long as oil prices remain high.

The best long term solution for global energy involves advanced factory-built scalable nuclear technology, along with advanced development of unconventional liquid fuels from gas, coal, bitumens, kerogens, gas hydrates, and biomass.

The move to GTL, in the light of high oil prices and low gas prices, is a good place to start.

Russia, Gazprom, Change Their Tune On Shale Gas

Cross-posted to Al Fin Energy

Gazprom's top managers have for years said that shale gas production would never threaten demand for Russian gas. Gazprom has recently started to change its view...

Russia's economy ministry sees "serious" risks posed by shale gas to the revenue of Gazprom (GAZP.RS) beginning in 2014, as higher supply from the nontraditional hydrocarbons may hurt prices and demand for Russia's pipeline gas.

"Gazprom had undervalued the importance of shale gas, but is starting to look at it seriously," Deputy Economy Minister Andrei Klepach said Tuesday as he presented a weaker outlook for the country in 2012 and beyond.

Russia satisfies about a quarter of Europe's demand for gas, which generates revenue for the budget.

Mr. Klepach added that the ministry also saw a lower outlook for gas prices in Europe, driven by both the euro-zone economic crisis and a higher supply of shale oil and gas from other sources. _WorldOil

After years of denial by Putin and Gazprom's top executives, Russia is finally acknowledging what Al Fin energy analysts have been saying all along. But political deception is nothing new for Russia or Putin. It is only those who still give the Russian government credibility who were fooled.

Meanwhile, Russia is jumping into shale fracking for oil & gas big-time, despite all that Putin has said about the evils of shale fracking. I suppose the shale oil & gas bonanza would look evil to a corrupt pol such as Putin, when it threatened his corrupt system.

Present recovery rates at various tight oil projects across Russia are between 2 to 8 percent. However, tight oil reserves could account for as high as 62 percent of Russia’s total reserves.

In the face of all this, Russia looks eagerly to the success experienced by North America in its shale revolution. The geology of the Bazhenov is quite similar to that of the Bakken shale here in the U.S., meaning fracking could be the solution to Russia’s oil situation.

The Russian oil producer Rosneft has already paired up with ExxonMobil (NYSE: XOM) to jointly work the Bazhenov formation. They will begin drilling in the Bazhenov and Achimov formations in 2013, following completion of an ongoing geological study. Rosneft has also reached an arrangement with Norwegian firm Statoil (NYSE: STO) to develop Russian oil assets in Southern Russia and West Siberia.

Other major oil companies like Lukoil (PINK: LUKOY) and Gazprom (MCX: GAZP) are also exploring ways of developing tight oil reserves.

The Russian unconventional oil and gas market could be heading for a time of profit and success. _Energy & Capital

This development points out some interesting things about Russia's economic future:

1. Russia's "prosperity" depends primarily on its energy production
2. For Russia to maintain its production, it must attract the expertise of foreign companies
3. Everything that Russia has said about the dangers and the inconsequential nature of shale oil & gas, was nothing but a politically expedient smoke screen
4. Russia needs to exploit its own vast shale oil & gas reserves

There are other interesting tidbits that can be read from between the lines, but that is enough for now.

Meanwhile, Europe's emerging recession is already having an effect on Russian gas profits:

Russia’s Economy Ministry is reportedly cutting its gas export forecast for this year due to sluggish demand from recession-mired Europe.

The forecast is said to be reduced to 193 billion cubic metres (bcm) from an earlier 212 bcm.

A government source has told Reuters that it will also reduce its average export price estimate.

State-controlled Gazprom has a monopoly on Russian gas exports.

Earlier this week the Deputy Economy Minister Andrei Klepach had said the gas export forecast would be reviewed, in the face of competition from US shale gas and liquefied natural gas. _Euronews

This tells us that Russia is reluctant to admit its earlier lies, when it claimed that US - style development of the global shale gas resource was no threat to future Gazprom profits.

It is important to understand that Russia's budget (official and unofficial) not only depends upon oil profits, but also depends upon gas profits. If Gazprom profits begin to fall because its customers in Europe and Asia begin to develop their own tight oil & gas resources, Russia's government will come under serious financial pressure.

So Many Jobs, Even Obama Can't Kill These Economies

In towns and counties across the North American oil patch, there are so many jobs that employers cannot find enough people to fill them. The shortage of employees applies not only to service jobs, but also to government jobs that offer good pay, benefits, and a lifelong pension after 20 years.

In Montana and North Dakota:

Rapid oil and gas development in the “oil patch” of western North Dakota and northeastern Montana has created huge demand for workers—not just in the oilfields, but also in a range of non-oil industries. But so far, the supply of labor—from within and outside the region—has responded slowly to demand. In recent years, job openings have soared and unemployment has dropped to very low levels—below 3 percent in a number of counties. _Desperately Seeking Workers

In Texas:

A freshly graduated petroleum engineer can make $80,000 a year, sometimes with a $10,000 to $20,000 signing bonus tacked on. Roughnecks and truck drivers willing to work killer hours can gross over $100,000 a year. _Chron

In Oklahoma:

Many businesses and government agencies now struggle to find enough workers. Most able-bodied people can double or triple their income in the oil patch.

“If you can walk and breathe out here, you can get a good job,” said LaVern Phillips, president of the Industrial Foundation in Woodward. The county’s unemployment rate hovered around 3 percent in June, 5 percentage points lower than the national average. In some nearby counties, the rate has dipped below 2 percent.

In towns like Woodward, which is home to dozens of oil and gas companies, housing is scarce, hotels are booked solid and vacant jobs are everywhere. _Many Jobs Go Unfilled

Don't get me wrong. There are plenty of Obama administration officials who would like to shut down the oil & gas boom. Many of these spoiled sports work at the US EPA, but some of them work in the White House itself.

But Obama and his anti-private sector activists and energy starvationists have been warned by his re-election strategists that Obama cannot afford to destroy any more private sector jobs -- at least, not until after the election. After the election, they are willing to allow Obama to do his worst.

Just in case Obama is defeated in November, real estate developers across the oil patch are making plans to build thousands of units of rental properties, to take advantage of the swollen populations of oil workers -- and consequent housing shortages -- across the oil boom towns and counties.

The US oil & gas boom has the potential to add almost 4 million new jobs to the US economy, both directly and via add-on stimulatory effects to local economies.

Imagine the state of the US economy, had Obama not gone all-out to shut down offshore oil drilling, coal mining and coal power plants, nuclear power plants, energy production on public lands, and a number of other industries which would have been key to re-building a healthy economy? Instead, Obama drove the US deeper into debt by the $trillions, to pay off crony supporters across the board from unions to trial lawyers to green ripoff lobbies and corporations.

Most people who will vote for Obama, are doing so due to dependency on government payoffs of one type or another. Certainly far more are dependent on government checks now, than when Obama first campaigned for the presidency. Imagine how many people would be dependent on the government after a second Obama term?

It is almost as if Obama is creating a nation of crack ho's, dependent upon a steady supply of government crack.

Without Obama, in 2013 the US economy would have a chance to rapidly re-build, on a more solid basis than an addiction to government handouts and corruption.

Of course, after Obama, the US government debt is so high that even very slight rises in interest rates could put catastrophic stresses on the US federal budget. And once interest rates do inevitably go up, the rate of growth of the federal debt will make it difficult for even a booming economy to pay it down.

But then, with more of Obama, the end result will necessarily be default. And you don't want to know what that would do to the world economy.

Look Ma: No Water! Non-Hydraulic Fracking Extends Energy Revolution

More:

Brian Westenhaus takes a closer look at waterless GASFRAC of Calgary

Brian Wang also takes a look at water-free fracking

New methods of fracturing deep source rock promise to change the face of the tight oil & gas energy revolution. Eliminating the need to use water should minimise concerns about earthquakes and water contamination.

Originally developed for shale oil extraction in geographic areas that were far too cold to use water due to freezing, Non-Hydraulic Extraction has recently emerged to be asserted as a cheaper and more effective extraction method that does not affect groundwater at all.

Chimera Energy Corp has put in place their procedure for engineering this new method for mass production, patenting, licensing and sales. For a description of how Non-Hydraulic Extraction works, high-speed broadband users may visit
www.zerowaterfracking.com.

All other Internet speed connections may visit www.chimeraenergyusa.com/investors.html. _FP

More from Russ Steele:

A planned shale gas drilling project in New York state has drawn global attention for its aim to make use of a waterless form of hydraulic fracking – a new technique designed to reduce the pollution associated with controversial natural gas drilling processes.

According to an industry report, the project is focused on using a technology that pumps a thick gel made from propane into the ground as opposed to using traditional methods of hydraulic fracking that make use of a mixture of water, sand, and chemicals to extract natural gas reserves from deep shale formations. Unlike traditional technologies, the gel from the new liquefied propane gas (LPG) fracking method reverts to vapor while still underground, and as a result returns to the surface in a recoverable form. _Russ Steele

As technological innovation discovers better ways to discover and recover new energy supplies, we will always be confronted with new problems and new objections.

But the answer to obstacles is not to lie down and whine, as faux environmentalists are wont to do. Rather the answer is to get busy and devise solutions and viable work-arounds.

Why Russia Hates the Global Gas Bonanza

Multiple voices out of Russia have been condemning the global shale gas movement -- deriding unconventional gas as "unsafe," "uneconomical," and "irrelevant." In other words, Russia is running scared, hoping that irrational lefty-green influences over western governments will subdue Gazprom's unconventional competition, before Russia loses all of its lucrative, high priced natural gas contracts.

Economist

Poland is just one of many countries suffering under extortionate Russian natural gas prices, which would like to develop its own cheap shale gas resource:

If geologists are right, up to 768 billion cubic meters of natural gas sits trapped in shale deposits deep beneath the surface in Poland, enough to meet the country's needs for the next 50 years and more. The estimates have tantalized Poles with visions of ending their reliance on Russian gas, which warms them through harsh winters but puts them at the mercy of their former masters far more than they would like. _LA Times

Other of Russia's customers looking to slip the Gazprom chains from around their necks include the Ukraine, China, and a number of central and western European nations.

The unconventional-gas bonanza has roughly doubled the gas resource base, a measure of the total gas in the ground rather than what might be economically recoverable. In 2009 the IEA estimated the “long-term global recoverable gas resource base” at 850 trillion cubic metres (tcm), against 400tcm only a year earlier. The main reason for the rethink was shale gas and other unconventionals. Not just America but parts of Europe, China, Argentina, Brazil, Mexico, Canada and several African countries, among others, sit atop as yet unknown quantities of gas that could transform their energy outlook.

...Historical factors have led to another anomaly: much of the gas traded across borders is sold at prices linked to those of crude oil. When gas was first brought to market as a commercial fuel in the 1960s, as an alternative to home heating oil, it made sense to price it against a substitute. But there was also a more subtle reason. Oil was used as an independent price arbiter for Dutch gas in the 1960s and then for Algerian and Norwegian gas in the 1970s because neither side could influence the supply and demand for it. The system persisted as Russian gas came to Europe in the late 1970s. But the economics have changed, and valuing one commodity in terms of another now seems bizarre.

...A more competitive market the world over would doubtless make gas cheaper by breaking the link with oil, but that will be difficult to bring about. Gazprom, Russia’s huge state-run gas producer and supplier of 25% of Europe’s gas, is strongly opposed to dropping oil indexation. A tussle is under way between it and the continent’s big buyers. Some pundits say that gas must eventually become a global fungible product like oil, with regional price differences closing as more gas is shifted in the form of LNG, draining gluts and making up shortfalls in regional production in North America, Europe and Asia......

Gas producers are naturally happy with the high prices resulting from oil indexation, arguing that without them the economics of big gas projects would never work. But Rick Smead of Navigant, a consultancy, thinks there are good reasons for all concerned to want competitive gas prices. He points out that they would reduce regional price volatility and provide gas producers with a broad and flexible market instead of having to rely on a single consumer at the end of a pipeline. That should offer an incentive to make the huge investments required.

If the “shale gale” blowing through America can be replicated worldwide, the huge surpluses it would bring could hasten the advent of a global market. Just as the 20th century was the age of oil, the 21st could prove to be the century of gas. _Economist

In early 2009, at the height of winter, Gazprom withheld gas from Ukraine in a dispute over prices and payment, a shutoff lasting for days that also affected delivery to more than a dozen other shivering European nations. On at least one day in February of this year, Poland detected a sudden 7% drop in supply from Gazprom; some suspect Russia was holding back some of its gas for itself to combat a nasty cold spell. _LATimes

Russia not only stands to lose its ability to extort high gas prices from its customers -- it is in danger of losing many of its customers altogether. Since Russia's government depends upon Gazprom profits to finance many of its "unofficial" expenditures, the crony-ocracy at the highest levels of Russia's government is extremely concerned.

Losing China and Eastern Europe would be a significant blow to Gazprom. But the loss of western Europe might be the final straw, leading to revolutionary changes inside Russia.

These are basic, earth shaking trends which should be taught to every school boy and girl. Unfortunately, almost all school boys and girls are too busy being indoctrinated into climate hysteria and politically correct multicultural mind pablum, to have time to understand what makes the world go around.

Unconventional natural gas is just the beginning. Unconventional liquid fuels are closing in on economic production when oil sells for between $100 and $120 a barrel. As technologies continue to improve, that breakeven price is slowly but surely dropping.

If Russia is to benefit from its vast resources of energy wealth, it had best open itself to foreign investment and development as quickly and cleanly as possible -- cleaning out the destructive corruption and cronyism from top to bottom to make way for a better future for Russia's people.

For if Russia continues down its current path, it is certain to lose everything East of the Urals in a matter of decades, and perhaps everything else shortly thereafter.

Truthland: The Movie

This 34 minute documentary was made by a Pennsylvania farm wife, who became concerned about the natural gas well on her farm when she and her family watched Josh Fox's propumentary "Gasland."

After talking it over with her family, the farm wife went on the road to interview a number of world-class experts on various aspects of the fracking phenomenon. You can view her odyssey in search of the truth, in Truthland.

video h/t Master Resource

You may remember that "Gasland" was nominated for an academy award in the best documentary category. After watching "Truthland," you may well wonder why.

BP Review 2012: Coal Use Expanding Faster than Crude Oil

The 2012 BP Statistical Review of World Energy is now available for download. It reveals that worldwide demand for coal is growing significantly faster than worldwide demand for crude oil. And that is just the beginning.

BP via GCC

Oil demand grew by less than 1%—the slowest rate amongst fossil fuels—while gas grew by 2.2%, and coal was the only fossil fuel with above average annual consumption growth at 5.4% globally, and 8.4% in the emerging economies.

...Emerging economies accounted for all of the net growth, with OECD demand falling for the third time in the last four years, led by a sharp decline in Japan. China alone accounted for 71% of energy consumption growth.

...Fossil fuels still dominated energy consumption with 87% market share, while renewables rose fastest but are still only 2% of the global total. The fossil fuel mix continues to change with oil, the world’s leading fuel at 33.1% of global energy use, losing share for 12 consecutive years. _GCC

In North America, natural gas is increasingly replacing coal for purposes of electrical power generation. As global natural gas prices decline, the same type of substitution should be seen in other areas which benefit from large scale tight gas deposits.

Worldwide, however, coal should continue to be in high demand for power generation and other industrial uses.

Renewables such as big wind and big solar continue to be less than impressive, as predicted. Intermittent unreliable sources of energy cannot be depended upon. No wonder a significant part of China's installed wind power capacity continues to lack connections to any power grid. I suppose the capacity looks good on paper, even if it isn't doing anything but sit and rust.

BP Statistical Review of Energy 2012 Download PDF

Your Regularly Scheduled Peak Oil Doomsday Has Been Postponed Several Decades to Allow Humans to Convert to Advanced Nuclear Power

The following article was adapted from multiple articles previously published at Al Fin Energy and Al Fin Potpourri blogs

Massive Hydrocarbon Resources Beginning to Unfold Humans have been unexpectedly handed several decades in which to convert their power infrastructure from a dependency on combustion energy to the use of advanced nuclear power. The explosion in the available natural gas resource -- from the shale gas bonanza to the coming gas hydrates boom and beyond -- should reassure us that we have time to move to advanced nuclear fission, and eventually fusion. For the next few decades, it is likely that natural gas -- particularly LNG and GTL -- will assume a rapidly growing role in the global energy trade.

New giant gas fields have been discovered in such previously unpromising places as the Mediterranean off Israel’s shores and deep Atlantic waters offshore near Brazil. There are extensive deposits of gas-bearing shales in Europe (particularly in Poland) and enormous resources in Asia. Recent reductions in the cost of gas liquefaction coupled with increased sizes of LNG tankers (they now rival the size of ships carrying crude oil) made LNG into a trade equivalent of oil: It can now be transported to consumers on any continent, bought without restrictive long-term contracts, and delivered at increasingly affordable prices. The totals speak for themselves: Global LNG trade rose roughly eightfold between 1980 and 2010, and it now accounts for 30 percent of the worldwide natural gas trade.

...Before the end of 2005, the U.S. price of natural gas rose above $15/1,000 cubic feet, nearly 12 times the all-time low reached in 1995. Production was down by about 8 percent compared to 2001, news reports speculated about supply shortages, and gas companies were gearing for expanded imports of liquefied natural gas (LNG) from overseas. Six years later, by the second week of April 2012, the market price of U.S. natural gas fell to less than $2/1,000 cubic feet (to levels not seen since January 2002), nationwide gas extraction in 2011 was nearly 12 percent above the 2009 level, and record production was expected in 2012, when all storages would be filled to capacity. No wonder that gas companies are now planning to export LNG, and that new drilling projects have been shelved in the anticipation of gas glut.

...Little has to be said about high oil prices (the price spread between liquid and gaseous hydrocarbons has reached an unprecedented level), but the conversion efficiencies achievable by furnaces and turbines burning natural gas are not sufficiently appreciated. New, super-efficient household gas furnaces convert up to 97 percent of the fuel into heat; combined-cycle generation (using the waste heat from a gas turbine to raise steam and generate more electricity in an associated steam turbine) now produces electricity with 60 percent efficiency (and 70 percent will be possible in the future).

This amazingly abrupt change of gas fortunes has been due to the rising production of shale gas. _Vaclav Smil

But an even larger resource of unconventional hydrocarbons has recently presented itself for human use: gas and methane hydrates. Methane hydrates represent the largest resource of hydrocarbons in the planetary crust. Up until now, humans had not devised a good way to tap into this immense energy wealth. But a report from the DOE today may point the way to a new era in abundant energy for human societies:

May 2 (Reuters) - The U.S. Energy Department on Wednesday announced a breakthrough in research into tapping a possibly vast fuel resource that could eventually bolster already massive U.S. natural gas reserves.

By injecting a mixture of carbon dioxide and nitrogen into a methane hydrate formation on Alaska's North Slope, the department was able to produce a steady flow of natural gas in the first field test of this method. The test was done from mid-February to about mid-April this year

"While this is just the beginning, this research could potentially yield significant new supplies of natural gas," Energy Secretary Steven Chu said in a statement.

The department, which partnered with ConocoPhillips and Japan Oil, Gas and Metals National Corp for the test, said it will offer $6.5 million this year for further research on tapping methane hydrates, and will request an additional $5 million for research next year.

Gerald Holder, dean of the engineering program at University of Pittsburgh and who has worked with the DOE's National Energy Technology Laboratory on the hydrate issue, said before this announcement he had been skeptical about what researchers would be able to accomplish. He said the main problem until now was finding a way to extract natural gas from solid hydrates without adding a whole lot of steps that made the process too expensive, so the success of this new test is significant. "It makes the possibility of recovering methane from hydrates much more likely," Holder said. _Reuters

While it is true that experts are probably understating the actual resource of gas hydrates by a significant factor, the same could be said for estimates of crude oil, coal, natural gas, bitumen, and kerogen resources.

But today's announcement should initiate renewed research in labs around the world, toward devising more efficient and economical ways of extracting gas hydrates from the enormous, "quasi-renewable" resource.

Using unconventional gas and gas hydrates as substitutes for crude oil in the production of fuels, electricity, high value chemicals, lubricants, polymers, and other important materials, will give us extra decades to convert to high energy density, safe, clean, abundant, cheap advanced nuclear power. But that is just the beginning of the energy bonanza coming our way, if we can only eject the energy starvationists who have hijacked our governments and other important institutions.

Advanced high temperature nuclear reactors give human industry the abundant power and high quality process heat to achieve clean economies of production only dreamed of in the past.

It comes down to the high quality, high temperature process heat that gas-cooled reactors provide. Here are some of the things that high quality process heat can do:

1. Unlock the trillions of barrels oil equivalent in oil sands (PDF)
2. Unlock the trillions of barrels oil equivalent in coal to liquids and gas to liquids (PDF)
3. Unlock the trillions of barrels oil equivalent in oil shale kerogens 
4. Provide abundant industrial process heat for production of fertilisers, refining fuels, making plastics, etc 
5. Split CO2 into CO to use as a hydrogen carrier 
6. Overturn conventional fears of EROEI and Peak Oil 

_Source

Brian Wang has also taken a look at this topic

One particular gas cooled modular reactor has been selected by the Next Generation Nuclear Plant Industry Alliance as the best design for the category:

The Alliance said that it had selected an unspecified Areva reactor concept, presumably based on the Antares design, "as the optimum design." It said, "The Areva HTGR technology's capability and modular design would support a broad range of market sectors, providing highly-efficient energy to industries such as electrical power generation, petrochemicals, non-conventional oil recovery and synthetic fuel production." Areva, it said, "has the technical and design capabilities to develop a HTGR for the process heat co-generation and generation markets."

It added that "additional investors are being pursued to fully capitalize a venture in order to build an initial fleet of HTGR plants for industry." The Alliance noted, "Deploying next generation nuclear technology is a critical step in solving the long-term needs for secure sources of energy, conserving fossil fuels and slowing the growth of greenhouse gas emissions. Clean, safe nuclear energy from HTGR would increase US energy independence and extend the life of domestic oil and natural gas resources." _WorldNuclearNews

More here

Perhaps a stimulus from the private sector will help to spur the revolution that the US federal government under Obama appears to be resisting with all its might. Regardless, it is critical for a wide range of intelligent people within various industries and sectors of the economy to understand the importance of this potential qualitative transition in possibilities for production of future energies and fuels.

Nuclear energy systems that utilise efficient fuel burn and recycling (with combined Gen III and Gen IV + reactor synergies) offer thousands of years of electrical power and optimised fuels production. Only rational nuclear energy possesses the energy density and massive fuel supplies to allow humans to transcend fears of energy scarcity in order to move into a future of relative abundance.

We are developing clean and cheap ways of utilising the truly massive energy resources of this planet. But that is just the beginning. The resources discussed above can take humans ahead centuries or longer. But it is likely that forms of economical fusion power will be developed before the turn of the century. Once fusion is tamed and scaled, we are looking at the opening of the resources of the entire solar system -- out to the Oort cloud.

Your regularly scheduled peak oil / resource scarcity doomsday has been cancelled. Enjoy the unexpected age of abundant energy which will be coming to you instead -- contingent upon your disposing of the energy starvationist parasites of the lefty-Luddite green dieoff.orgy persuasion, who have latched onto your institutions of government, academia, news media, and popular cultures.

Russian Energy Oligarchy's Fears of Shale Gas Rising

Now and again Russian President Putin has warned Russian gas-giant Gazprom that it must face the growing threat of abundant shale gas. Shale gas is a massive and newly accessible energy resource ranging from North America to China to South America to Europe. But it is the shale gas resources in Europe and China that Putin is most worried about, for those resources represent a huge and devastating threat to Russia's ability to finance its government. Putin's ambitious plans to make Russia into a world superpower, like the collapsed USSR, are at stake.

Could the boom in shale gas challenge the leadership of Russia in gas?

Until now, Moscow and Gazprom have seemingly been nonchalant about the threat. But as the impact of the boom in US natural gas production becomes clear, depressing prices to levels not seen in 10 years and increasing the prospect of the country becoming an exporter, the Kremlin is beginning to pay attention. The change in attitude is led by Vladimir Putin, Russia’s president-elect. He told the Duma last week that the boom in shale gas can “seriously” reshape the global energy market. “National energy companies, obviously, must respond to these challenges,” he said, in a clear reference to Gazprom. ...The biggest risk for Russia is not the US shale gas but the potential of the development of similar reserves in neighbouring Bulgaria, Romania, Poland and Ukraine.


Eastern European countries are racing to tap shale deposits using the same technology – hydraulic fracturing, known as fracking, and horizontal drilling – used in the US gas industry. Gazprom supplies Europe with about 20 per cent of its gas needs, so the development of shale deposits in its backyard is a serious long-term threat. Until now, European companies have found it difficult to renegotiate their expensive contracts with Gazprom because the lack of alternative suppliers. Over the next decade, the development of the European shale industry could give the Continent’s natural gas consumers a bit more leverage. _FP_via_GWPF

China is another Gazprom customer which will soon be in a good position to re-negotiate its contracts, based upon the development of its own native shale gas resource. All of these re-negotiations will be extremely painful for a corrupt energy oligarchy such as Russia, which depends upon high energy exports to finance its very existence -- an existence already threatened by an ongoing demographic collapse, a worsening public health disaster, an industrial infrastructure that cannot keep up with the west, and a military that is increasingly seen as a "paper tiger" by its ambitious neighbor to the southeast. Putin has green activists well in hand, in his battle to keep Russia's energy customers helpless and dependent upon their Russian energy suppliers. But governments are being pushed to the wall by energy prices and ongoing budget deficits. Most of Russia's customers are not overly fond of the aggressive bear, and do not care to pay for Russia to re-develop its nuclear and conventional threat.

...Gazprom’s European customers, tired of being ripped off by Gazprom, are avidly exploring the possibilities of undertaking fracking to develop their own sources of the “blue gold,” and nowhere is interest higher than in the Russian Federation’s neighbors Ukraine, Poland, Romania, Bulgaria and China. ...the rapid growth in U.S. shale gas production has already led Gazprom to postpone the launch of its massive Shtokman gas condensate field development in the Barents Sea, which contains an estimated 3.9 trillion cubic meters (tcm) of natural gas. In 2009 the U.S. overtook Russia as the world’s biggest producer of natural gas as expanded fracking activity to extract fuel trapped in shale rocks. Even worse, by 2016 the U.S. plans to become a net exporter of liquefied natural gas, with initial sales of 31.1 million cubic meters (mcm) a day doubling within three years.
Gazprom’s exports to Europe are already falling because of increased competition.
Moscow’s National Research University Higher School of Economics Center for evaluation of commodity assets director Valery Kryukov noted that while Gazprom previously supplied 37 percent of Europe’s natural gas needs, that had slipped to 25 percent and concluded, “Russia risks losing its main source of income - the export of natural gas.” Perhaps the weirdest aspect of Russia’s views on shale gas is that it has criticized recent interest in Rumania, Bulgaria and Poland in shale gas development as environmentally irresponsible, a somewhat surreal complaint given the USSR’s ecocide inflicted by more than seven decades of headlong industrialization. _GWPF

China's situation is even more threatening to Russia than the prospect of losing its European customers. Because China is a clear and developing threat to Russia's very possession of its vast East Siberian resources -- from timber to minerals to oil & gas to uranium. If China becomes self-sufficient in gas production, not only will Russia lose a lucrative customer, it will also be faced with a more dangerous competitor -- on many levels.

Cross-posted to

Al Fin Energy

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A New Era of Hydrocarbon Fuels: Gas to Liquids & Coal to Liquids

Unconventional liquid fuels are slated to provide ever growing proportions of future demand for transportation fuels. The burgeoning success of plants such as Shell's Pearl GTL plant in Qatar herald a new era of liquid fuels production.

In terms of what GTL is, it is the process of chemically turning natural gas into cleaner-burning liquid products, including fuel, base oil for lubricants and feedstock for chemicals. To produce, the process firstly involves methane and oxygen which are converted into a mixture of hydrogen and carbon monoxide known as synthesis gas or syngas. This is then fed to a reactor with a proprietary Shell catalyst that accelerates the conversion of the mixture to long-chained waxy hydrocarbons and water.

From the GTL reactor, the long-chained hydrocarbons are then reacted with hydrogen and ‘cracked,’ into a range of smaller molecules of various sizes using another proprietary Shell catalyst. This process is referred to as ‘hydrocracking.’ The final step is distillation. Various boiling points are reached to separate out the products, which can be in the form of GTL naphtha, GTL kerosene, GTL normal paraffins, GTL gas oil, or GTL base oils. These are then eventually fed to their own storage tanks ready for use.

...One of the products, GTL gasoil (diesel-type fuel), can contribute significantly to the diversification of the diesel fuel supply. This product can reduce local emissions of nitrogen and sulfur oxides and particulate matter. Because it contains virtually no sulfur or aromatic compounds and has a high cetane number – a measure of combustion quality – GTL gasoil burns more efficiently than conventional oil-based diesel and thus produces fewer local emissions and less black smoke than conventional diesel. The high cetane of GTL gasoil can lead to noise reductions in certain engines under certain driving conditions and improve cold start performance. GTL gasoil can also be blended with conventional diesel and/or biodiesel and used in the same vehicles and infrastructure, thus offering a low investment cost compared with other alternatives.

GTL Kerosene is an alternative to conventional oil-based kerosene. Its primary use is expected for aviation. GTL kerosene can be used as a blend with traditional jet fuel without any modifications to existing aircraft and engines. Given that the aviation sector will rely on liquid hydrocarbons for decades, this fuel can help support the future energy needs of the industry, and offer customers fuel diversification. GTL kerosene has higher energy density than conventional oil-based kerosene and this reduces the required fuel payload, thus aircraft may be required to carry less fuel weight to cover the same distance. _QatarShell

When even pro-nuclear activists such as Rod Adams are speaking out in favour of a coal - nuclear partnership to produce liquid transportation fuels, you should understand that people are finally beginning to look at the possibilities.

Coal is a valuable resource that can be safely mined for centuries by well-trained and compensated miners. Instead of eliminating the use of coal, I would prefer to help coal miners and coal mine owners to recognize that they could make more money and sell a cleaner product if they upgraded their fuel at the mine rather than shipping a dirt-filled, unrefined product that sells for a huge discount in the energy market.

...My pitch to the coal industry would be to use cheap, clean nuclear heat to convert H2O and their carbon rich fuel into a refined hydrocarbon that could compete with petroleum products.

...Shipping oil instead of coal from our domestic mines would also be very beneficial to the US national security and to the prosperity of the world. Just think about the positive impact that substantially lower US demand would have on the price of diesel fuel delivered to a developing country. _RodAdams

Until more people are able to think of energy in multi-disciplinary, multi-industrial terms, societies will be forced to pay higher prices for fuels and energy than is necessary. By including cheap and unlimited nuclear reactor process heat into the fuel production mix, we can immediately bring CTL, GTL, bitumens to liquids, kerogens to liquids, and even biomass to liquids (BTL) into the feasible and profitable arena.

Fortunately, more nuclear advocates are beginning to understand the importance of cleanly integrating coal and gas into the overall energy and fuels mix. But we need more bright chemical engineers like Robert Rapier, and physicists like Tom Murphy, to crunch the numbers once again -- this time including the powerful impact of high temperature process heat from modular and mini-modular HT gas-cooled nuclear reactors.

By utilising scalable, factory produced reactors which can be sited at the point of production of gas, coal, bitumens, kerogens, methane hydrates -- and even biomass in some situations of intensive cultivation -- it should be clear to any objective observer that a new era of hydrocarbon production is quite feasible.

Government action could certainly prevent this development. The great carbon hysteria delusion -- if firmly enacted into law in the developed world -- would not only kill unconventional fuels, it would kill the economic viability of the underlying societies themselves. That is what several governments, from the UK to Obama's US to Australia to the EU are attempting to do in various ways.

A far less likely -- but still potentially effective -- way to stop the revolution in unconventional fuels, is for the national oil companies of OPEC and other oil dictatorships to route needed funds into oil field production, exploration, discovery, and development. It would be easy for existing oil fields and fields under development to ramp up production to overwhelm even the current inflated levels of global demand -- if the equipment, manpower, and funding were allotted for the purpose. But this will not be done, because governments from Russia to Venezuela to Saudi Arabia etc need oil prices to remain artificially high so that they can use oil profits to pacify unstable populations and pay off highly placed insiders.

Previously published on Al Fin Energy

Extra bonus just for loyal Al Fin readers: China apparently has vast shale gas reserves. China is vigorously pursuing the development of these gas reserves.

In the early phases this will help the North American engineers and drilling companies who assist in China's learning curve for shale gas production. It will also help China negotiate more favourable gas prices with Russia's Gazprom.

In the long run, these huge natural gas reserves will help reduce China's oversize demand for imported crude oil. This down-shifting of global oil demand will occur due to China's increasing use of an up and coming coal -- natural gas hybrid liquefaction process. This process of synthetic fuels production should become particularly economical when using cheap nuclear process heat as the primary heat source.

Russia itself will be forced to adopt GTL technologies as it finds some of its best customers turning to their own shale gas reserves, and turning away from Gazprom.

New Research: Don't Blame Fracking for Gas Well Pollution

New research reported at the AAAS in Vancouver, shows that the pollution from gas wells is not caused by fracking. Rather it has been caused by ruptured well casings and other problems of human error in handling materials and wastewater. The process of fracking itself is safe and sound, with regard to groundwater concerns.

Don't blame fracking for environmental problems associated with extracting gas from shale. That's the message of a new report from the Energy Institute at the University of Texas at Austin, released on the opening day of the AAAS meeting in Vancouver, Canada.

The US is riding the wave of a shale gas boom driven by fracking, or hydraulic fracturing - in which the rock is injected with water, sand and chemical additives at high pressure to release trapped methane.

Other nations are keen to follow this lead, and lead author Charles "Chip" Groat hopes the report will help regulators worldwide separate "fact from fiction". Reviewing existing studies, Groat's team could find no evidence linking groundwater contamination to fracking operations many hundreds of metres below.

...The problems were not caused by the process of fracking itself, but instead related to issues like ruptured well casings that also affect conventional gas production, or surface spills of chemicals or wastewater.

"We found no direct evidence that hydraulic fracturing itself had contaminated groundwater," says Groat. "We found that most of the violations were at or near the surface." _NewScientist

Fracking in the UK Daily MailMore from the Daily Mail:

During the fracking process, the shale is drilled into horizontally, and water, gas and chemicals pumped in at high pressure, causing the rock to shatter and allowing the gas to escape.

To separate fact from fiction, researchers from the University of Texas at Austin sifted through scientific and other literature on the safety of three large shale gas sites in the US.

They concluded that there is no evidence that fracking directly contaminates groundwater and any pollution is more likely to be due to above-ground spills of water produced by the drilling process.
_DailyMail_via_GWPF

Al Fin energy analysts are sure that the green functionaries within the US Obama regime will be reassured by this report. Particularly when the oil & gas fracking revolution is one of the few things keeping the Obama economy afloat.

But don't expect the dieoff.orgy lefty-Luddite green faux environmentalists to admit their mistake. That is not in their nature. Nor is it in the nature of the thug-monkeys of the skankstream media to admit to having broadcast unfounded fears in the hope of promoting panic and political action.

But at least you will know better.

More: How the US Shale Boom Will Change the World

A New Economic Era?

And here's a scary thought: China likely has larger shale gas resources than North America. With Russia's Gazprom scurrying to China looking for customers in the face of a long-term European drop in demand, what happens to Gazprom when China's vast reserves of natural gas come on line? What happens to global commodities markets in general?

China's Huge Shale Gas Deposits Promise Global Revolution

China cannot afford the "energy starvation affectation" which certain foppish leaders of western nations are displaying. No, China is in a life or death struggle for its survival as a nation. The leaders of the middle kingdom cannot afford to fool themselves in that way. They must face reality and shape it to their advantage, or they will become history.

GWPF

The Ministry of Land and Resources said Sunday that China will strengthen the survey and appraisal of shale gas in 2012 to expedite discovery and development of China shale deposits. The move comes after the recent approval of the State Council in the capital to list shale gas as an independent mineral resource. China is slowly moving towards producing shale gas.

Currently, the country does not have any shale natural gas production, adding to the country’s overall lack of natural gas in its energy matrix. China’s rough terrain and lack of technological know-how has kept it out of the shale gas biz. The country is largely beholden to coal to keep the lights on.

China’s Ministry of Land estimates the country holds around 31 trillion cubic meters of natural gas hidden under shale, equivalent to the total amount of conventional natural gas. If developed, the country’s shale gas output could exceed 100 billion cubic meters by 2020, Land Ministry’s second in command, Wang Min, told reporters during a national geological survey conference in Beijing this weekend.

China’s reserves are almost 50% greater than those of the U.S., according to the U.S. Energy Information Administration. _GWPF

Once this massive shale gas resource hits China's economy -- particularly when transformed by GTL, ethane cracking, and other advanced technologies into far more valuable materials -- the global commodities markets will be shaken to their foundations.

Cross-posted from Al Fin Energy

It doesn't take a crystal ball to understand why Mr. Putin of Russia would find this development somewhat disconcerting. Others who will not welcome this news include Mr. Chavez of Venezuela, the mad mullahs of Iran, Persian Gulf gas magnates, suppliers of other hydrocarbons to China (including coal), and the big global green influence machine of faux environmentalism.

Massive Unconventional Hydrocarbon Resource Rising in Importance

Methane hydrate, as the substance is known, has long been regarded by oil and gas companies as a nuisance because it can block marine drilling rigs.

Now a study by Statoil, Norway's state oil firm and a leading global gas producer, suggests it should be reclassified as a major fuel resource, with enough buried in the oceans to power the world for decades or even centuries.

"The energy content of methane occurring in hydrate form is immense, possibly exceeding the combined energy content of all other known fossil fuels," said Espen Andersen, Statoil's exploration manager in unconventional hydrocarbons, who will present his study at an energy conference next week. _Australian_via_SundayTimes

Der Spiegel

Methane, trapped in an icy cage of water molecules, occurs in permafrost and, in even greater quantities, beneath the ocean floor. It forms only under specific pressure and temperature conditions. These conditions are especially prevalent in the ocean along the continental shelves, as well as in the deeper waters of semi-enclosed seas (see graphic).

World reserves of the frozen gas are enormous. Geologists estimate that significantly more hydrocarbons are bound in the form of methane hydrate than in all known reserves of coal, natural gas and oil combined. "There is simply so much of it that it cannot be ignored," says leading expert Gerhard Bohrman of the Research Center for Ocean Margins... _DerSpiegel

Researchers around the world are scrambling to find economical ways of recovering this vast hydrocarbon resource.

One intriguing idea for the simultaneous recovery of energy and sequestration of global warming gas is proposed by the transformation of methane hydrates to carbon dioxide hydrates with the injection of liquid CO2. Here we use molecular dynamics simulations to show that the replacement can take place without melting of the network of hydrogen-bonded water molecules. Depending on the distance to the interface between the liquid CO2 and solid clathrate hydrate, we find that the replacement occurs either via direct swapping of methane and CO2 or via a transient co-occupation of both methane and CO2 in one cavity. Our results suggest that, with a careful design of the operation condition, it is possible to replace methane from methane hydrates with CO2 in the solid phase without much change in the geological stability. _ACS Abstract

ACS
A team of American and Japanese researchers are in Alaska this month to test a new method of extracting methane hydrates from rich Arctic resources. They intend to inject CO2 into the hydrates in hopes that the waste gas will replace the more valuable methane in the ice cage, freeing up the methane for extraction and use.

This month, scientists will test a new way to extract methane from beneath the frozen soil of Alaska: they will use waste carbon dioxide from conventional wells to force out the desired natural gas.

...The test will use the Ignik Sikumi well, which was drilled on an ice platform in Prudhoe Bay last winter. Specialized equipment has been installed, including fibre-optic cables to measure the temperature down the well, and injection pipes for the CO2. “None of this is standard equipment; it had to be built to design,” says Boswell.

...During the test, the researchers will inject nitrogen gas into the hydrate deposit to try to push away any free water in the system, which would otherwise freeze into hydrates on exposure to CO2 and block up the well. The next phase is to pump in isotopically labelled CO2, and let it ‘soak’ for a week before seeing what comes back up. This will help to test whether the injected carbon is really swapping places with the carbon in the hydrates. Finally, the team will depressurize the well and attempt to suck up all the methane and carbon dioxide. This will also give them a chance to test extraction using depressurization — sucking liquids out of the hydrate deposits to reduce pressure in the well and coax the methane out of the water crystals. “We’ll continue to depressurize until we run out of time or money, and see how much methane we can get out that way,” says Boswell. _Nature

As humans devise more and better ways to utilise methane in place of crude oil, it makes sense to learn how to extract the richest reserves of methane in the crust.

We do not yet know how much of the methane resource originates abiotically in the mantle -- and thus can be theoretically seen as "renewable methane." It is likely to be substantial. And thanks to the giant tectonic plate mechanism, with ongoing subduction of organics-rich oceanic crusts under continental crusts, biogenic methane is, to a large extent, renewable as well -- on an extended time scale, and on a continuous basis. Where do you think most of these methane hydrates came from in the first place? No matter. There are a lot more where those came from.

Adapted from an article published on Al Fin Energy

The Americas Want to be the World's Energy Suppliers

The US is #1 in natural gas production, Canada is #4. The US is #3 in oil production, and Canada is #6. Goldman Sachs says the US will be the World's largest oil producer by 2017. More here. In fact, North America holds the largest hydrocarbon resources in the world -- and technologists are determined to find ways of getting at them cleanly and economically.

But it is not just the US and Canada which are experiencing an oil & gas resurgence. It is claimed by many observers that the oil (and gas) map of the world is shifting to the western hemisphere.

Canada ranks third in proved oil reserves behind only Saudi Arabia and Venezuela.[23] It has 175 billion barrels of proved reserves, consisting mostly of oil sands. Oil sands consist of very heavy oil mixed with clay and sand that requires separation of the impurities before capturing the oil. The process requires more energy than conventional oil production and therefore results in slightly higher carbon dioxide emissions. According to Daniel Yergin, the carbon dioxide emissions of oil sands production are only 5 to 15 percent higher than those resulting from the average barrel of oil consumed in the United States when the entire life cycle, well-to-wheel, is taken into consideration.[24]

Due in large part to oil sands production, Canada has recovered all the jobs it lost in the 2009 recession. Alberta’s oil and gas industry supports more than 271,000 direct jobs and hundreds of thousands of indirect jobs in sectors such as construction, manufacturing, and financial services. The province has an unemployment rate of 5.6 percent compared to Canada’s national rate of 7.3 percent and the 9 percent unemployment rate for the United States.[25]

...Brazil has about 15 billion barrels of proved oil reserves in its sub-salt offshore fields. They lie in a 2 kilometer deep salt layer under the seabed that is estimated to hold up to 50 billion barrels of oil.[32] These ultra-deep deposits are drilled at up to three times the normal pressure for offshore oil. Estimates have production as much as 5 million barrels a day by 2020.[33] The sub-salt’s share of total domestic oil production in Brazil is expected to increase from 2 percent in 2011 to 40.5 percent in 2020.[34] New breakthroughs in technology made possible the identification and development of these resources.

...Another find in South American unconventional oil is in the Neuquen Province of Argentina where 927 million barrels of shale oil were recently discovered. YPF, Argentina’s largest oil and gas firm, has been exploring for shale oil since 2007. The field will roughly double the company’s reserves and helps put Argentina in third place behind the United States and China in terms of having the world’s third-largest probable reserves of shale oil, according to the Energy Information Administration.[35] The discovery is part of YPF’s five-year oil and gas exploration program in Argentina. It expects to invest about $2.9 billion in exploration and production during 2011, the most it has invested in at least 20 years. The company has outlined another 502-square-kilometer area that could contain additional oil and gas resources.[36]

...Estimates of oil resources are generated by geologists based on limited physical data, expectations about prices, and existing technology. But expectations and technology change and improve over time. The estimates of the Bakken are one good example. After all, the 2008 USGS estimate of recoverable oil was 25 times larger than the estimate a mere 13 years earlier.

In oil fields, only 35 to 40 percent of oil in place is initially produced. As oil prices increase and as technology changes over time, there are increased incentives to invest in production and technology to squeeze more oil from existing fields. Advances in technology enable companies to increase recovery from existing fields and to produce oil from unconventional sources that were uneconomic at lower prices. As long as the price of alternatives is higher than the price of producing the marginal barrel, it makes economic sense to produce more and to invest in technologies for finding and producing oil.[37]

And so it is with North American and South American oil. The newer finds in Canada, the United States, Brazil, and Argentina are now economic due to technological breakthroughs in drilling and the sustained higher price of crude that make unconventional sources of crude economic. These new finds can make the United States nearly independent of crude oil from the Middle East in the future. To do that, the United States must set policies conducive to their production and consumption in this country. _InstituteEnergyResearch

And then there is the giant Venezuelan Orinoco heavy oil basin, and the huge resources of the North American outer continental shelves. Huge resources of coal, kerogens, and gas hydrates are waiting for the appropriate technologies to be developed, to allow clean and economical utilisation.

The truth is, however, that if the Obama regime of energy starvation can be removed from its chokehold over US energy production, most of these vast resources will never need to be touched. Once Obama's obstructionist Nuclear Regulatory Commission can be made to do its job and certify safe, clean,advanced nuclear reactor designs, the US (and Canada by default) will be set for producing as much of the hydrocarbon resource as needed.

Advanced nuclear technology will make it possible to produce as much hydrocarbon as we want, in a very clean way -- and the same technology will also allow us not to produce any more fossil fuel than is absolutely necessary. As time goes by, less and less fossil fuel will be necessary, hence the growing awareness of the concept of "peak demand."

Gas & Coal to Liquids: Trillions of Barrels of Fuel On the Way

There is always big money to be made in substituting a lower cost feedstock or commodity for a higher priced one. The obvious big money substitution opportunity in the energy field, is the substitution of low cost natural gas or coal for high priced oil. Natural gas is difficult to transport globally, unless it is transformed into a denser liquid form, such as LPG or GTL. Coal can likewise be made more valuable by transforming it into a liquid fuel. Observe the huge potential quantities of fuels available from coal to liquids and gas to liquids in the chart above.

Gas to Liquids 

NYTThe above chart reveals the significant price differential between oil and the equivalent energy of natural gas. Clearly there is a lot of money to be made via efficient conversion of gas to liquids (GTL), via either Fischer Tropsch (FT) or methanol-to-gasoline (MTG).

Shell's gas-to-liquids (GTL) technology is producing high value hydrocarbon fuel and chemicals in Qatar and in Malaysia. But it is very expensive to build large scale GTL plants based on this technology, which limits entry into the field. As the technology proves itself in the market, other big players are likely to step in.

Sasol and PetroSA have GTL plants in South Africa, where rich shale gas fields are coming under development. Shell is moving into those gas fields, and may be thinking about opening its own GTL plant in South Africa, if it can deal with the government corruption.

applications of excess product. Primarily, natural gas is used as feedstock for the Gas To Liquid process. The GTL process converts natural gas to synthetic fuels. This has proven to be far more profitable product for oil/energy and exploration companies to supply into the energy markets. There are currently only two plants in SA capable of refining natural gas to liquid petroleum products. Sasol has its GTL plant located in Secunda and PetroSA has its plant in Mosselbay. _CBN

Australian companies are looking at building GTL plants to take advantage of large gas deposits there, but are somewhat daunted by the high cost of entry. The uncertainty of long term oil prices also causes planners to hesitate.

"Higher oil prices provide the incentive to look at ways and means of producing synthetic fuels, other than simply refining crude oil," Mr Wendt told AAP.


However, he says a major barrier is the high price of setting up a processing plant to make a product that is a commercial alternative to oil-based fuels.


It would cost $1 billion or $2 billion to build a plant that produces synthetic diesel at $40 or $50 a barrel.


But if the price of oil drops dramatically, people won't buy the synthetic product, leaving the owner of the plant unable to get a return on the investment, Mr Wendt said. _ninemsn

There is also debate in Alaska about turning North Slope gas into more lucrative liquid fuels. One of the problems is deciding on the best chemical approach to the transformation of gas to liquid fuel.

For a number of years there has been discussion of the potential to convert North Slope gas to diesel fuel on the North Slope using a process called gas to liquids, or GTL, and then shipping the diesel fuel down the trans-Alaska oil pipeline. The core of the GTL process is the Fischer-Tropsch synthesis, a chemical process first used in Germany in 1936 to produce synthetic liquid fuel. However, a study of the relative costs of the Fischer-Tropsch process and MTG has indicated that it is significantly cheaper to produce a given volume of fuels with MTG than with Fischer-Tropsch, while the gasoline produced from MTG has a higher value and quality than the diesel from GTL, Van Wijk said. _PetroleumNews

The Oxford Catalyst microchannel Fischer Tropsch GTL approach is just getting started, commercially, but is already receiving "buy" recommendations from Charles Stanley -- assuming the investor possesses abundant intestinal fortitude and staying power.

One of the largest driving forces behind the drop in natural gas prices -- and the opportunity to take advantage of the gas-oil price differential -- is the recent advances in horizontal drilling and hydraulic fracking technologies. Gas and oil trapped within shale has existed for eons, only waiting for a species intelligent enough to go in and get it.

Summary of gas-to-liquids technologies

Coal to Liquids 

Synthetic fuels from coal will compose a larger share of the transportation fuels market over the next few decades. This will come about due to more economical processes for coal to liquids (CTL) combined with a long term trend of rising oil prices.

Ambre Coal to LiquidsThe methanol-to-gasoline (MTG) process is the prime competitor to the Fischer Tropsch (FT) process, in the conversion of carbonaceous mass to liquid fuels. Ambre Energy of Australia is involved in the clean conversion of low quality coal to high quality liquid fuels, using the Exxon-Mobil methanol-to-gasoline process (PDF).

Methanol is usually synthesised from syngas, a mixture of H2, CO, CO2, methane, etc. Syngas can be produced via gasification of coal, natural gas, biomass, or any other carbonaceous material.

Methanol is used as a feedstock to produce fuels or other chemicals. Methanol can also be used as a fuel itself, or as a fuel additive. Methanol is also finding greater use in methanol fuel cells -- a market that is expected to grow very rapidly over the next several years.

Ambre CTL process
PDF description of Ambre CTL
Ambre is involved in a technical study agreement with Synthesis Energy Systems to develop an improved coal to liquids project which will produce both synthetic gasoline and LPG from methanol.

Economical Scaling of Fischer Tropsch 

Up until now, putting together a production plant for converting coal to liquids or gas to liquids would cost you around $1 billion. But the North American subsidiary of a UK company has devised a scalable method of converting syngas to liquid hydrocarbon (diesel) in a "shoebox" sized device. The microchannel Fischer-Tropsch (FT) devices can be combined for a capacity to produce as much or as little diesel fuel from gas, biomass, or coal, as a producer wishes to pay for.

...a major exploration and production company is seriously considering the possibility of incorporating microchannel FT reactors into a planned 5,000 -15,000 barrel per day (bpd) GTL facility onshore in North America designed to convert shale gas into finished synthetic fuels...The shortlisted technologies will be subjected to further evaluation as part of a major high-budget engineering study that will last for several months. The results of the study will be used to select the project’s technology providers. _Engineer

Oxford Catalyst's microchannel F-T technology for converting gas-to-liquids (GTL) is one of the frontrunners to be intensively studied for shale gas to liquids operations onshore in North America.

The technology is already being adopted for offshore applications in Brazil.

PDF presentation on Velocys / Oxford Catalyst's microchannel F-T technology

Microchannel FT reactors developed by Velocys and using a new highly active FT catalysts developed by Oxford Catalysts exhibit conversion efficiencies in the range of 70% per pass, according to Jeff McDaniel, Oxford Catalysts director of commercialisation.


“The high efficiency and modular nature of our microchannel FT reactors makes them particularly useful for this type of application because capacity can be easily increased by simply ’numbering up’ or linking together additional FT reactor modules,” said McDaniel. _Engineer

The potential fuels available from unconventional liquids goes far beyond all known petroleum deposits. And of course, proved deposits of oil, gas, coal, kerogens, bitumens, etc. are only going to continue going up over time, as they have done since humans began using hydrocarbons.

It is time for humans to jettison pseudoscientific garbage theories such as anthropogenic climate doom and peak energy scarcity doom, and move forward into a world of abundant energy.

Nuclear energy such as advanced fission and scalable fusion are much preferred to hydrocarbon energy in general, but we need to pay as we go. Hydrocarbons will serve until we can break through to better energy strategies.

Material above taken from previous postings at Al Fin Energy blog

Trading US Gas for Canadian Oil

Energy and Capital
Canada needs US natural gas to help produce its bitumen oil sands. As oil sands production ratchets up from 1.5 million barrels per day to 5 mbpd by 2020, Canada's demand for US gas should continue to rise.

The emergence of shale gas over the last six years has fueled our hopes that we'll be able to safely transition away from our oil addiction.

Not only do we have an abundance of it trapped in the various shale formations across our country, but developing that resource is inevitable, because we're not the only ones counting on that future supply...

You see, it's not just the United States that's depending on U.S. gas production. Remember Canada's trouble with peak natural gas?

It turns out natural gas exports to Canada have doubled in just five years!

We may be relying heavily on an ever-increasing amount of Canadian crude to meet our oil fix, but Canada's natural gas troubles will only worsen as production from the oil sands grows to more than five million barrels per day in the coming decade. (Natural gas plays a vital role in the extraction process of deeply-buried bitumen.)

Remember, more than three-quarters of Alberta's oil production comes from oil sands operations.

As if that weren't enough, Canada isn't the only country crossing her fingers for more U.S. natural gas. South of the border, Mexico is also relying more on our supply.

U.S. exports to Mexico have also jumped significantly. Prior to 2000, we barely exported any natural gas to either Canada or Mexico. Today's a different story.

Just like Canada, Mexico can't get enough of it...

Last year, natural gas production from the Marcellus averaged 1.3 Bcfe/d. By the start of 2011, production was around two billion cubic feet per day. And this is only the beginning.

Within the next eight years, production is expected to jump more than 775% to 17.5 billion cubic feet per day. In the process, it'll add at least 250,000 jobs and tack on over $20 billion in revenue to Pennsylvania's economy.

We're also expecting the drillers to have a field day. Even though natural gas prices have been lackluster since crashing in 2008, drilling more than doubled in 2010. There are more rigs drilling the formation than ever before...

_EnergyandCapital

Canada has plenty of shale gas too, but for now it is more lucrative to produce oil than gas, given current price spreads. Once the nascent gas to liquids (GTL) industry revs up, prices should slowly converge, and gas will become a more lucrative product.

Cross-posted to Al Fin Energy blog