A year ago the gas-to-liquids (GTL) industry was in bullish mood, with the first two major full-scale commercial GTL plants under development in Qatar, and a number of other countries optimistic about GTLs potential for monetizing stranded gas. Since then the Oryx GTL plant suffered technical problems after start-up, cost estimates for Pearl GTL have risen sharply, and most other proposed developments have been put on the back burner. David Knott reports from London on what the future holds for GTL, while Melanie Lovatt reports from Doha on progress in the Oryx and Pearl GTL projects.
The last 12 months have provided a reality check for the GTL industry, Gas Strategies Senior Consultant Alex Forbes told SMis Gas-To-Liquids 2007 conference in London on 30-31 October. As Oryx GTL, the worlds first commercial full-scale GTL plant, was inaugurated (MEES , 12 June 2006), the industry still thought a number of projects would go ahead. Qatar Petroleum (QP) and Shell decided to proceed with the Pearl integrated GTL/gas liquids project despite rising costs (MEES , 31 July 2006). However, subsequently QP and ExxonMobil cancelled a planned 154,000 b/d GTL project (MEES , 26 February), and Algeria put on hold the proposed 36,000 b/d Tinrhert GTL project (MEES , 16 April), with both citing rising costs. Meanwhile, plans for GTL projects in Iran and Egypt have disappeared from the agenda. Then Sasols Oryx project suffered teething problems (MEES , 28 May), which Mr Forbes said were expected to cost $50mn to fix.
The attraction of GTL projects has not disappeared, Sasol Chevron Communications Manager Malcolm Wells told the conference, since 25-30mn b/d of oil equivalent of additional transport fuel would be required by 2030, and something quite spectacular is required for the energy industry to keep pace with demand. There is still a great opportunity for GTL, since we are having to look to alternative feedstocks to crude oil for transport fuels. At present, three full-scale GTL projects were under development Oryx, Pearl and Nigerias Escravos GTL. However, in the future, the GTL industry must reduce costs aggressively to compete with gas pipeline and LNG developments. He saw the potential for cost reductions in economies of scale, reductions in scale-up risks, and the development of new ways of GTL production: The key area for reducing costs will be finding new ways to produce syngas [production of synthesis gas from methane and carbon dioxide is the first stage of the three-phase GTL process].
Despite the problems with GTL projects to date, Mr Wells expected other projects to come through strongly. Companies move in groups. First Oryx was approved, then came Pearl and Escravos GTL. Construction prices will probably continue to go up, but the next wave of GTL projects will follow through when people see how these first three plants perform. He told MEES that the GTL industrys earlier development cost target of $20,000 per b/d of capacity was no longer relevant because of rising construction costs: Now each project must be taken on its own merit. There is no longer any magic figure now its about how integration can affect project economics. This first tranche of projects is now being studied by other companies. They are seeing how the projects work and how the market will react to the first GTL products. We are creating a market others may prefer to wait and see.
Copyright MEES 2007.
