04 September 2011

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 
The 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 Liquids
The 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

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Anonymous Anonymous said...

Its all very interesting, and may even have a market long term. But I think shorter term, two other possibilities look better:

1) Petrobank of Canada has a process which has been prototyped successfully. Its production project is currently built and in startup. They pump air underground and combust a portion of the tar sands to heat up the oil and then run the oil through catalysts in the pipe for further refining.

Assuming the production system now being turned on works, tar sands will be exploitable to nearly any depth, and without use of water or natural gas. If that is the case, your chart for tar sands is much too small. Worldwide reserves are nearly 3 trillion barrels. Canada alone has 1.2 trillion.

2) Compressed natural gas in diesel trucks and eventually passenger cars is currently being turned on with some government subsidies. In the US, it is nearly 200 million gallons/year. Its is growing about 30% per year. This technology is quite a bit cheaper than electric cars and is just waiting for a distribution network to form. Once a distribution network is formed, growth in vehicles ready to burn CNG will take off.

Sunday, 04 September, 2011  
Blogger al fin said...

You are quite right about the vast potential for in situ oil sands extraction technologies.

As mentioned in the article, all quantities depicted on the chart are likely to be significantly understated.

I am not as convinced of the wisdom of packing a compressed gas bomb inside all vehicles. Every highway a chain of daisy cutters on parade..... It would be great for movie special effects, however. Hydrocarbon fuel in gaseous form is far more explosive than in liquid form, as a rule.

Sunday, 04 September, 2011  
Blogger Bruce Hall said...

One tiny problem for all of these schemes: EPA.

Monday, 05 September, 2011  
Blogger al fin said...

Very true, Bruce. Along with a few dozen other over-reaching government bureaucracies.

Something for voters to think about when choosing their next president, and legislators.

Monday, 05 September, 2011  

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