i

DEPARTMENT OF PETROLEUM ENGINEERING AND APPLIED GEOPHYSICS

TPG4140 NATURAL GAS

NATURAL GAS AS TRANSPORTATION FUEL:

CONVERSION TO LIQUID FUEL AND DIRECT UTILIZATION

Ang, Lorena Rachelle

Baig, Yasir

Kanu, Elizabeth

Pwaga, Sultan

Trondheim, November 25, 2010

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Abstract

Natural gas is classified as non-associated and associated gas. Because of economical reasons,

some of non-associated gas reserves remain remote while associated gas is being flared or

injected. Increasing focus on cleaner energy prompted the oil and gas industries to find ways on

how to utilize stranded gas.

The objective of this report is to give an overview of two Gas to Liquid (GTL) technologies that

convert natural gas to liquid fuels via syngas production. Fischer Tropsch Synthesis (F-T) and

Methanol to Gasoline (MTG) are chemical processes that convert natural gas to clean, useful

synthetic liquid fuels. Moreover, these technologies are considered to be suitable for addressing

the problems of stranded gas utilization and environmental pollution.

This report describes the basic concept of F-T and MTG processes as well as the GTL plants in

operation. It also throws some light on the challenges associated with GTL processes. The

challenges covered in this report are the energy efficiency, carbon dioxide emission and

economic aspects. In addition, the report outlines the direct utilization of natural gas as road-

transport fuel in the form of compressed natural gas (CNG) in order to have a clearer view of the

role of natural gas in the transportation sector.

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Table of Contents

1 Introduction .............................................................................................................................. 1

2 Classification of Natural Gas ................................................................................................... 2

2.1 Non-Associated Gas .......................................................................................................... 2

2.2 Associated Gas .................................................................................................................. 2

2.3 Stranded Gas ...................................................................................................................... 3

3 Conversion of Natural Gas to Liquid via Syngas Production .................................................. 4

3.1 Fischer-Tropsch Technology ............................................................................................. 4

3.2 Methanol to Gasoline Technology .................................................................................... 5

3.3 Plants in Operation ............................................................................................................ 6

4 Challenges in Gas to Liquid Technology ................................................................................. 7

4.1 Energy Efficiency and CO2 Emissions.............................................................................. 7

4.2 Economics ......................................................................................................................... 8

5 Direct Use of Natural Gas as Transportation Fuel ................................................................... 9

5.1 Natural Gas Vehicle Availability .................................................................................... 10

5.2 Natural Gas Vehicle Affordability .................................................................................. 10

5.3 Natural Gas Vehicle Emissions ....................................................................................... 11

5.4 Natural Gas Vehicle Drawback ....................................................................................... 11

6 Discussions ............................................................................................................................. 12

7 Conclusions ............................................................................................................................ 13

8 References .............................................................................................................................. 14

9 Appendices ............................................................................................................................. 24

9.1 Appendix A: Existing Gas to Liquid Plants Process Descriptions .................................. 24

9.2 Appendix B: CO2 Generation and Emissions ................................................................. 28

9.3 Appendix C: Economics of Gas to Liquid Plants ............................................................ 29

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Tables Table 1: The thermal efficiencies (Steynberg and Dry, 2004) ....................................................... 18

Table 2: CO2 emissions from the case study (Heimela and Lowea, 2009). ................................... 18

Table 3: Production cost of a barrel of GTL products (Rahman and Al-Maslamani, 2004) .......... 31

Figures

Figure 1: Pathways to natural gas utilization (Verghese, 2005) .................................................... 19

Figure 2: Natural gas transportation options (Gudmundsson, 2010) ............................................. 19

Figure 3: Gas to liquid Value Chain (Verghese, 2005) .................................................................. 20

Figure 4: Block diagram for syngas production (Moulijn et al., 2001) .......................................... 20

Figure 5: Block diagram of Mobil MTG plant ............................................................................... 21

Figure 6: Fuel Economy vs urban air benefits (Koelmel, 2002) .................................................... 21

Figure 7: Natural Gas Vehicle Growth Worldwide ...................................................................... 22

Figure 8: Natural Gas Vehicle Growth by region .......................................................................... 22

Figure 9: Natural Gas Vehicle growth since 2000 ......................................................................... 23

Figure 10: Mossgass GTL Process (Steynberg and Dry, 2004) ..................................................... 25

Figure 11: SMDS Bintulu GTL Process (Steynberg and Dry, 2004) ............................................. 26

Figure 12: Left: simplified Oryx GTL process, right: refinery part. (Sasol group corporate affairs,

2006) & (Davis and Occeli, 2009) ................................................................................................. 27

Figure 13: GTL plant CO2 sources (Heimela and Lowea, 2009). ................................................. 28

Figure 14: GTL plant CO2 emissions locations (Heimela and Lowea, 2009). .............................. 28

Figure 15: Refining by product ...................................................................................................... 30

Figure 16: GTL FPSO (Van Loenhout et al., 2006) ....................................................................... 33

Figure 17: Energy production and consumption of GTL-FPSO (Suehiro and Osawa, 2008) ...... 33

Figure 18: Japan-GTL process (Suehiro and Osawa, 2008) ......................................................... 34

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1 Introduction

The lack of means to distribute gas to market leads to the increase of remotely located gas

reserves, flaring and re-injection of gas associated with the production of oil from offshore fields

(K. Behnam 2003). Flaring of associated gas has become an environmental issue with high

degree of focus among approving authorities and oil companies. Handling of associated gas for

oil developments has become a more critical issue than before. Therefore, this has led the oil and

gas industry to seek solutions that can handle the associated gas in an acceptable manner both

economically and environmentally.

Stranded gas comprises 36% of the natural gas reserves (Eni’s World Oil & Gas Review, 2006).

Due to growing demand for cleaner energy, the pressure to bring the stranded gas to market is

also increasing. Compared to coal and oil, natural gas produces less carbon dioxide during its

utilization. Moreover, it produces less sulfur dioxides, nitrogen oxides and toxic pollutants

(Verghese, 2003).

From the given situations, environment is the main driving factor for the technological

improvements to monetize remote gas reserves and associated gas. In addition to the efforts done

by the oil and gas industry, there had been implementations of national or regional policies by

some concerned governments to reduce greenhouse emissions. These policies may therefore

increase the use of natural gas as a replacement for the other fossil fuels. (International Energy

Outlook 2010)

One option to exploit stranded gas is by means of natural gas to liquid (GTL). The objective of

this report is to give an overview of the current situation of two available technologies of GTL

process namely: fischer tropsch (F-T) and methanol to gasoline (MTG). Diesel is one of the main

products of GTL and it is utilized as a road- transport fuel. Therefore, to have a wider perception

of the role of natural gas in the transportation sector, direct utilization of natural gas via

compressed natural gas (CNG) is also taken into consideration.

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2 Classification of Natural Gas

Natural gas is a hydrocarbon mixture which is mainly composed of Methane (C1). It is classified

as wet or dry natural gas. At ambient temperature, wet natural gas contains significant amount of

condensable hydrocarbons such as ethane (C2), propane (C3), butane (C4) and other higher

hydrocarbons (C5+) which can be liquefied during compression. While, dry natural gas contains

small amount of condensable hydrocarbons at ambient temperature. Natural gas is found in

porous reservoir as a remote gas or associated with crude oil. The absence and presence of H2S

and CO2

2.1 Non-Associated Gas

denotes the terms sweet and sour gas. (Moulijn et al.,2001)

Non-associated gas is usually considered as dry natural gas. (Moulijn et al., 2001. Some of these

reserves are easily accessible while others remain stranded/remote. The factors hindering the

production are as follows: (Verghese, 2003)

• Uneconomical pipeline transport due to large distances to gas markets.

• Large amounts of H2S and CO2

• Political and geographical risks where tax incentives are needed to promote the

development.

which requires large capital cost (CAPEX) and operating

costs (OPEX) for treating

2.2 Associated Gas

Associated gas is considered as wet natural gas. It is a co-product of crude oil and its production

is dependent on the rate of crude oil production. For many years, it has been considered as waste

product and for safety reasons, it was often flared. (Moulijn et al.,2001). The following reasons

for not exploiting associated gas are given as follows: (Verghese, 2003)

• Production rate is sub-economic for pipeline transport to the market.

• For offshore fields, high CAPEX for treatment and gas capture and high export costs.

• The rates of gas production can vary since it is dependent on crude oil production. This

can be considered as too unstable to meet the needs of the contracts.

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As energy demand increases, the interest for utilizing this energy source with great value also

increases. Moreover, with stricter environment protection agreements, utilizing associated gas

complies better than flaring it. (Moulijn et al.,2001).

2.3 Stranded Gas

Stranded gas can be either non-associated or associated. Therefore, it represents the fields that are

remote from the markets, gas from crude oil production but the quantities are less to overcome

the investments and associated gas that is flared from mature oil productions. The stranded gas

reserves are scattered around the world and delivering stranded gas relies on suitable technologies

and transportation options. (Verghese, 2003 & 2005)

There are several technologies available to exploit stranded gas as shown in Figure 1. These

technologies have the potential to deliver natural gas to market. (Verghese, 2003 & 2005).

However, they also have their limitations in terms of transport capacity and possible transport

distance which is shown in Figure 2. Among the technologies that can exploit stranded gas and

handle long distance transport is Gas to liquid (GTL) process. (Gudmundsson, 2010)

Growing worldwide diesel demand, stringent diesel exhaust emission standards, and fuel

specifications are driving the petroleum industry to revisit the gas to liquid fuel process for

producing higher quality diesel fuels. Moreover, the focus is set on utilization of remote and

associate natural gas. Since the late 1990s, major oil companies including ARCO, BP, Conoco

Phillips, ExxonMobil, Statoil, Sasol, Sasol Chevron, Shell, and Texaco have announced plans to

build GTL plants to produce fuel. 1

1 www.consumerenergycenter.org

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3 Conversion of Natural Gas to Liquid via Syngas Production

The process of converting natural gas into liquid fuels consists of two steps: synthesis gas

production and conversion of synthesis gas to liquid fuel via F-T technology or MTG. A simple

block diagram describing the GTL value chain is shown in Figure 3.

In a typical FT process, more than 50% of the capital cost relates to the production of synthesis

gas. (Indria Doria Arianto, 2000) The syngas step converts the natural gas to hydrogen and

carbon monoxide by partial oxidation, steam reforming or a combination of the two processes. A

simple block diagram for the syngas production is shown in Figure 4. The key variable is the

hydrogen to carbon monoxide ratio with a 2:1 ratio recommended for F-T synthesis. Steam

reforming is carried out in a fired heater with catalyst-filled tubes that produces a syngas with at

least 5:1 hydrogen to carbon monoxide ratio. To adjust the ratio, hydrogen can be removed by a

membrane or pressure swing adsorption system. Utilizing the surplus hydrogen in a petroleum

refinery or for the manufacture of ammonia in an adjoining plant is considered to be a helping

economics. The partial oxidation route provides the desired 2:1 ratio and is the preferred route in

isolation of other needs.

(Moulijn et al.,2001)

CH4 + H2O = CO + 3H2; ΔH0298K

205.92kJ/mol ………………… (1)

CH4 + CO2 = 2CO + 2H2 ; ΔH0298K

247.32kJ/mol ………………… (2)

CH4 + 1/2O2 = CO + 2H2; ΔH0 298K

3.1 Fischer-Tropsch Technology

; −35.25kJ/mol …………………..(3)

The FT process has been known since 1923, founded by the Germans Franz Fischer and Hans

Tropsch in which synthesis gas is polymerized into hydrocarbon chains of varying lengths.

Synthetic hydrocarbon derived F-T process are superior in many ways to products derived from

conventional crude and essentially free of contaminants such as heavy metals commonly found in

natural crude (Indria Doria Arianto, 2000).

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The conversion of the syngas to liquid hydrocarbon is a chain growth reaction of carbon

monoxide and hydrogen on the surface of a heterogeneous catalyst. The catalyst is either iron- or

cobalt-based and the reaction is highly exothermic. The temperature, pressure and catalyst

determine whether a light or heavy syncrude is produced. For example at 330°C, the products are

mostly gasoline and olefins. The major overall reactions in F-T process are given below:

(Moulijn et al.,2001)

Alkanes: nCO + (2n+1)H

Reactions:

2 = CnH2n+2 +nH2

Alkenes: nCO + 2nH

O ……………. .(4)

2 = C2H2n+nH2

Water-gas shift: CO + H

O ……………….. (5)

2O = CO2+H2

……………………...(6)

Alcohols: nCO+2nH

Side Reactions:

2 = H(-CH2-)nOH + (n-1)H2

Boudourd Reaction: 2CO = C+CO

O

……(7)

2

3.2 Methanol to Gasoline Technology

…………………………..(8)

The MTG Process is based on the conversion of methanol to light alkenes, which are then

converted to gasoline. It provides the alternative way for production of gasoline with higher

octane number from coal, natural gas or biomass in which syngas for production of methanol is

produced. (Moulijn et al.,2001)

The main reactions for the formation methanol from syngas are:

2CH3OH ↔ H3C-O-CH3 + H2O (ΔH0298

H

= -23.6 k/mol) ……………….. .(9)

3C-O-CH3 → Light alkenes+H2

Light alkenes + H

O ……………………………………….(10)

3C-O-CH3 → Heavy alkenes+H2

Heavy alkenes → Aromatics+Alkanes ………………………………….. (12)

O …………………….(11)

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Aromatics+ H3C-O-CH3→Higher aromatics+H2

3.3 Plants in Operation

O ………………………(14)

Presently, there exists one MTG plant in New Zealand, the Mobil plant. The methanol production

of this plant is still ongoing. However, the production of gasoline had been ceased in the early

1990s due to low oil price. (Olah et al., 2009). There are three commercial-scale F-T process

plants that use natural gas as feedstock: Mossgas (PetroSA) plant in South Africa, which has been

operating since 1992, Shell’s Bintulu plant in Malaysia which started its operation in 1993 and

Sasol’s Oryx in Qatar began its operation in 2006. (IEA, World Energy Outlook 2008). Appendix

A describes the process of these F-T process plants.

Mobil MTG plant

In 1985, Mobil developed methanol to gasoline (MTG) process in New Zealand to convert

natural gas into methanol and then into gasoline. A plant was built at Motunui with a production

of about 14,000 bbl/day of unleaded gasoline, having an octane rating of 92 to 94. The methanol

requirement for this process comes from the two methanol plants with production capacity of

2,200 tonnes (water free basis) per day respectively. 2

Figure 5

The prototype plant was sold to Fletcher

Challenge Ltd., Auckland, New Zealand in 1993. The block diagram of the Mobil MTG plant is

shown in .

PetroSA/Mossgas plant

Mossgas (now PetroSA) was been funded by the South African government and the natural gas

feedstock of this plant is obtained from offshore rigs. The plant has three circulating fluidized bed

(CFB) and each reactor has a capacity of 8,000 bbl/day. However, the plant design has the ability

to produce 80% of the total throughput with two reactors on-line. Therefore, the total capacity of

the plant is 20,000 bbl/day (Steynberg and Dry, 2004). Gasoline and diesel fuel are the main

products of the plant (IEA, World Energy Outlook 2008).

Shell middle distillate synthesis plant (SMDS)

2 http://nzic.org.nz/ChemProcesses/energy/7D.pdf

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Shell together with its partners Petronas, Sarawak State Government and Mitsubishi Corporation,

are the shareholders in the first SMDS plant which has been commercialized in 1993. (Tijm,

1994). To exploit small or remote gas is the design objective of SMDS. The SMDS plant has

been the first F-T plant that is based on remote natural gas and served as a blueprint for the GTL

plants that are constructed in the later years. (Davis and Occeli, 2009). The plant initially used

four fixed bed reactors to produce 12 500 bbl/day of product. (Steynberg and Dry, 2004). Due to

technical improvements Shell now claims that the production rate is 14,700 bbl/day. The initial

capital investment for the plant is US $850 million (Hoek, 2006). The plant produces a range of

high-quality middle distillates (gasoil and kerosene), chemical feedstock, solvents, detergent

feedstock, drilling fluids, base oil feedstock and finished paraffinic waxes (Overtoom et al.,

2009).

Sasol’s Oryx Gas to Liquid Plant

In partnership with Qatar Petroleum, Sasol opened its first Gas to Liquid project, the Oryx gas to

liquid plant at Ras laffan, Qatar in June 2006. The investment cost of the plant is about

US$1billion with a production capacity of the 34,000 bbl/day. The plant is the first commercial-

scale slurry phase Fischer-tropsch gas to liquid plant outside South Africa and it uses the Sasol

Slurry phase Distillate™ (Sasol SPD™) (Sasol group corporate affairs, 2006).The plant is

designed to produce 24,000 bbl/day of GTL diesel, 9,000 bbl/day of GTL naphtha and 1,000

bbl/day of LPG (Fleisch, 2007).

4 Challenges in Gas to Liquid Technology

GTL has the potential to convert a significant percentage of associated and stranded gases into

several hundred billion barrels of liquid fuels, which have the unique characteristics of

contaminate free and environmentally friendly. However, there are certain barriers that must be

overcome in order for this technology to gain more success.

4.1 Energy Efficiency and CO2

The current technology and cost effective facilities will have a thermal efficiency closer to 60%

for the natural gas conversion processes. The assumption of the overall thermal efficiency is 60%

implies that 10 mmscf of 1000Btu/scf gas are required to produce 1barrel of GTL product. ( F.T.

Emissions

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Al-Saadoon, 2005) The thermal efficiencies for the processes that produce liquid fuels from

methane are shown in Table 1, MTG has an energy efficiency of 58% while FT process has 60-

66%. These numbers show that substantial amount of energy in needed in both processes.

(Steynberg and Dry, 2004)

GTL plants generate between 0.2 and 0.25 tonnes of CO2 per barrel produced (IEA, World

Energy Outlook 2008). A staged evaluation methodology was been developed by Heimela &

Lowea both from Chevron, to characterize the impact of mitigating carbon emissions in the plant.

Without a carbon dioxide capture plant, a plant which produces 34,300 bbl/day liquid products

will emit 1.6 MM tonnes CO2/ year. The plant is assumed to have an on-stream factor of 90%

and the natural gas feed is assumed to contain 1.6 mol% of CO2. Whereas, the results of the case

with CO2 capture plants show that around 0.32-0.67 MM tonnes CO2/ year will be emitted. This

accounts for 20-40% of the CO2

Table 2

generated from the plant. The results of this methodology are

shown in shows. Figure 13 and Figure 14 in the Appendix B show the sources of CO2

and the locations of the CO2

4.2 Economics

emissions in a GTL plant (Heimela and Lowea, 2009).

The few plants in operation today are colossal facilities that cover large areas (Journal of NGSE

2009). Capital investment for installation of a new gas to liquid plant is also a limiting factor. The

capital costs for Sasol’s 34,000 bbl/day Qatar plant were estimated to cost between $20,000 and

$25,000 per B/d (Thacheray,2003). Salomon Brothers (Salomon Brothers, 1998) suggested the

possibility of GTL plant with capital costs as low as $13,000 per bbl/day. With more research and

development in GTL technology, it is very likely to see a downtrend in the overall capital

expenditure in the future.

While the cost of producing GTL has been declining as a result of better catalysts, scale up and

plant design, the transport and distribution costs to market are slightly higher than for locally

produced refinery fuels. Research and development is focused on reducing the cost further as

well as economies of scale from the new generation of world scale plants in Qatar. There are a

number of factors that need to be considered for choosing GTL as an alternative technology: (K.

Behnam 2003).

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• Crude Oil price

• Refined product price premium

• Gas to liquid product price premium

• Location

GTL could be economically viable at crude prices above US$20/bbl and gas prices of

US$0.50/MMBtu (Chendid et.al, 2007). The price of GTL fuels highly depends on the price of

the natural gas feedstock. Current GTL production costs per barrel ranges from $40 to $90. The

production costs would increased by $10.00 to $12.50 per barrel if a CO2

5 Direct Use of Natural Gas as Transportation Fuel

penalty of $50 per

tonne is enforced (IEA, World Energy Outlook 2008). Appendix C explains the economics of

GTL in more details.

Presently, about 1% of the total gas consumption worldwide accounts for the use of natural gas as

a road-transport fuel. Although this portion is small, there exists a potential for its growth due to

government policies and cleaner energy demand. Stronger policies in regards with the

environment and utilization of natural gas will promote investments for distribution

infrastructures of natural gas as a road-transport fuel. (IEA, World Energy Outlook 2009).

Natural gas has long been considered as an alternative fuel for the transportation sector. Natural

gas can be used either as compressed natural gas (CNG) or liquefied natural gas (LNG). CNG

and (LNG) are both stored forms of natural gas, the key difference is that CNG is gas compressed

and stored (as a gas) at high pressure, while LNG is an uncompressed liquid form of natural gas

involving liquefaction and sub-cooling process. CNG has a lower cost of production and storage

compared to LNG as it does not require an expensive cooling process and cryogenic tanks. CNG

requires a much larger volume to store the same mass of gasoline/petrol and the use of very high

pressures (3000 to 4000 psi, or 205 to 275 bar).

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Worldwide, there were 11.2 million natural gas vehicles by 2009, led by Pakistan with 2.4

million, Argentina (1.8 million), Iran (1.7 million), Brazil (1.6 million), and India (725 thousand)

although more than 80 countries worldwide have natural gas vehicles. Figure 7 shows natural

gas vehicle growing worldwide since 1991 to 2009 also figure 8 and figure 9 shows natural gas

vehicle growing by region termed as Asian-Pacific, Europe, North America, Latin America and

Africa. Figure 8 shows dramatic increase in natural gas vehicle in Asia-Pacific, Latin America

and worldwide the growth rate is approximately 20.8% per annum. [IANGV,

http://www.iangv.org/].

5.1 Natural Gas Vehicle Availability

Two types of CNG fuel systems are on the market: dedicated vehicles, which operate exclusively

on natural gas, and dual-fuel vehicles, which can use both natural gas and gasoline. Auto

manufacturers offer a variety of both dedicated and dual-fuel CNG vehicles, including compacts,

trucks, vans and buses.

Existing gasoline vehicle can be converted to a bi-fuel (gasoline/CNG) vehicle. Authorized shops

can do the retrofitting; this involves installing a CNG cylinder in the trunk, installing the

plumbing, CNG injection system and electronics.

CNG cars available in many countries are bi-fuel vehicles burning one fuel at a time. Their

engines are standard gasoline internal combustion engine (ICE). This means that they can

indifferently run on either gasoline from a gasoline tank or CNG from a separate cylinder in the

trunk. The driver can select what fuel to burn by simply flipping a switch on the dashboard

[EPA420-F-00-033, March 2002, www.epa.gov].

5.2 Natural Gas Vehicle Affordability

CNG generally costs 15 to 40 percent less than gasoline or diesel. CNG requires more frequent

refueling, because it contains only about a quarter of the energy by volume of gasoline. In

addition, CNG vehicles cost between $3,500 to $6,000 more than their gasoline-powered

counterparts. This is primarily due to the higher cost of the fuel cylinders. As the popularity and

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production of CNG vehicles increases, vehicle costs are expected to decrease [EPA420-F-00-033,

March 2002, www.epa.gov]

5.3 Natural Gas Vehicle Emissions

Compared with vehicles fueled with conventional diesel and gasoline, natural gas vehicles can

produce significantly lower amounts of harmful emissions such as nitrogen oxides, particulate

matter, and toxic and carcinogenic pollutants as well as the greenhouse gas carbon dioxide.

Eg . Light-Duty Vehicle Emissions: CNG vs. Gasoline

• Reduces carbon monoxide emissions 90%-97%, carbon dioxide 25%, nitrogen oxide

35%-60% and potentially reduces non-methane hydrocarbon emissions 50%-75%

• Emits fewer toxic and carcinogenic pollutants, little or no particulate matter and

eliminates evaporative emissions

[AFAVDC, http://www.afdc.energy.gov/afdc/vehicles/natural_gas_emissions.html]

5.4 Natural Gas Vehicle Drawback

One of the biggest complaints about NGVs is that they aren't as roomy as gasoline cars. This is

because NGVs have to give up space to accommodate the fuel storage cylinders. The cylinders

are expensive to design and build and this is a key contributing factor to the higher overall costs

of natural-gas vehicle compared to a gasoline-powered car. Another drawback is the limited

driving range of NGVs, which is typically about half that of a gasoline-powered vehicle. If a

dedicated NGV ran out of fuel on the road, it would have to be towed to the owner's home or to a

local natural gas refueling station, which might be harder to find than a "regular" gas station.

Finally, it should be noted that natural gas, like gasoline, is a fossil fuel and cannot be considered

as renewable resource.

[Natural Gas Global News http://www.ngvglobal.com/category/vehicles-fuels/compressed-

natural-gas-cng]

12

6 Discussions

High energy demand has undoubtedly received great attention and exploration/production of

natural gas reserves which includes remotely located reserves has come handy as solution.

Greenhouse emission alongside increasing energy demand contributes as a factor for the

monetization of the stranded/ flared gas. It has been noted that gas price, oil price, CAPEX,

OPEX are some of the factors affecting the implementation of the available technologies for the

exploitation of the increasing stranded non-associated and associated gas reserves.

As explained in the report, low gas price and high oil price favors demand of diesel from natural

gas compared to crude oil produced diesel due to low sulphur, aromatic content and high cetane

number of diesel from natural gas.

Major issues in the implementation and wide acceptance of GTL technologies are mainly related

to economic and energy efficiency. Different methods of syngas production which contributes to

the bulk cost has been adopted by different companies based on economic and energy efficiency.

As shown in the report, production of liquid fuel from natural gas via F-T and MTG process has

proved to be reliable technologically but have drawbacks due to economic (CAPEX, OPEX, gas

price and dependence on crude oil price) and energy efficiencies thereby affecting the cost of the

end product- diesel(and naphtha).

CNG which is another means of natural gas utilization that is gaining popularity is also limited by

a number of factors which includes; frequent refueling due to its energy volume and size/cost of

the fuel storage tank.

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7 Conclusions

Gas to liquid (GTL) is considered to be an option to exploit remote gas and associated gas.

Natural gas is converted via Fischer-Tropsch and Methanol to gasoline processes into a clean fuel

which is free of sulfur. However, challenges such as high capital costs, dependence on the oil

price and low plant efficiencies are hindering the widespread of these technologies.

Natural gas as a road-transport fuel accounts for a small portion in the total natural gas

consumption. Stronger policies on environmental protection give the potential to improve the

distribution infrastructure and the technology of utilizing natural gas in the transport sector.

14

8 References

Conference Papers

[1] Adegoke, A., Barnufet, M. and Ehlig-Economides, C. “ GTL Plus Power Generation: The

Optimal Alternative for Natural Gas Exploitation in Nigeria” ( IPT Conference, Doha,

Qatar); 21-23 November 2005

[2] Al-Saadoon, F.T. “Economics of GTL Plants”; (SPE 94380-PA, Dallas, Texas, U.S.A);

3-5 April 2005

[3] Arianto, I. D (SPE), and. Siallagan C., Pertamina ,“Gas-to-Liquids Technology for Bunyu

Field, East Kalimantan, Indonesia”, SPE 59762-MS, Gas Technology Symposium

Calgary, Alberta Canada, 3-5 April 2000.

[4] Behnam, K. “GTL as a Potential Source of Future Clean Transportation Fuels”

University of Technology; Calgary, Alberta,Canada, June 10 – 12, 2003

[5] Chedid, R., Kobrosly, M., Ghajar, R. (2007) “The potential of gas-to-liquid technology in

the energy market: The case of Qatar”. Elsevier Ltd., Lebanon

[6] Garrouch,A.A. “Economic viability of Gas-to-Liquid Technology”; (SPE 107274-MS,

Dallas, Texas, USA); 1-3 April 2007

[7] Heimela, S. and Lowea, C. (2009) “Technology Comparison of CO2 Capture for a Gas-

to-Liquids Plant” Chevron Energy Technology Company, USA.

[8] Hoek, A. “The Shell GTL Process: Towards a World Scale Project in Qatar: the Pearl

Project”, Shell Global Solutions International, Amsterdam GMK-Conference “Synthesis

Gas Chemistry” October 4-6, 2006

15

[9] Koelmel, M.H., (2002) “Transformation of global energy markets: The future roles of

GTL and LNG”. WPC 32334, Sasol Chevron Consulting Ltd, United Kingdom.

[10] Overtoom, R. Fabricius, N. Leenhouts, W. (2009). “Shell GTL, from Bench scale to

World scale” Elsevier B.V., Qatar.

[11] Rahman, O.A and Al- Maslamani, M. “ GTL: Is it an attractive route for monetization”;

(SPE, Abu Dhabi, UAE); 10-13 October 2004

[12] Rodvelt, S., Schanke, D. and Fosen, P.E. “Offshore Gas to Liquids” (Offshore

Technology Conference, Houston, Texas, USA); 3-6 May 1999.

[13] Senden, M. and McEwan, M. (2000) “THE SHELL MIDDLE DISTILLATE SYNTHESIS

(SMDS) EXPERIENCE”, Shell Global Solutions International.

[14] Suehiro, Y. and Osawa, N. “ Technical Challenge of GTL Technology” (IPT conference, Kuala Lumpur, Malaysia); 3-5 December 2008

[15] Van Loenhout, A., Zeelenberg, L., Geritse, A., Roth, G., Sheehan, E. and Jannasch, N. “ Commercialization of Stranded Gas with a Combined Oil and GTL FPSO” (Offshore Technology Conference, Houston, Texas, USA); 1-4 May 2006

[16] Verghese, J.T. “ Options for exploiting stranded gas – An overview of issues,

opportunities and solutions”( SPE 84250-MS, Denver, Colorado, USA): 5-8 October

2003

[17] Verghese, J.T. (2005) “Transforming stranded gas resources to profitable assets –

Enabling technologies and the status of their commercialization” SPE 108810-DL.

16

Books

[18] Davis, B.H., Occelli, M.L. (2009) “Advances in Fischer-Tropsch Synthesis, Catalysts,

and Catalysis”, CRC Press, Kentucky, USA, pp- 332-360

[19] Moulijn, J.A, Makkee, M.,Van diepen, A. (2001) “Chemical Process Technology”. John

& Wiley Sons Ltd, England, pp. 16-17, 131-143,193-198.

[20] International Energy Agency (IEA); “World Energy Oulook 2008”. Paris, France,

pp. 114-115, 263, 299, 543

[21] International Energy Agency (IEA); “World Energy Oulook 2009”. Paris, France,

pp. 369-372

[22] Olah, G.A.,Goeppert A., Surya Prakash, G.K, (2009). “Beyond Oil and Gas: The

Methanol Economy” Wiley-VCH Verlaf GmbH & Co. KGaA, Weinheim, Germany,

pp. 285-287

[23] Steynberg, A. Dry, M. (Editors) (2004); “Fischer-Tropsch Techology”. Elsevier Science

& Technology Books, pp. 406-419

[24] U.S Energy information Administration. “International Energy Outlook 2010” U.S

Department of Energy, Washington, DC. (July 2010), page 41

Lectures

[25] Fleisch, T.H. (2007) “SPE DISTINGUISHED LECTURE: The End of Stranded Gas: The

Emergence of the Gas to Products Option”, BP America Houston, US.

[26] Gudmundsson, J.S. “TPG4140 Natural gas Lecture:

Non-pipeline transport of natural gas”, NTNU, Norway. 16-Sept 2010

17

Journals

[27] Journal of Natural Gas Science and Engineering 1 (2009); “Gas-to-Liquid technology:

Prospect for natural gas utilization in Nigeria”, pp. 190-194

Internet References

[28] http://www.consumerenergycenter.org/transportation/afvs/gtl.html

[29] IANGV, http://www.iangv.org/

[30]

http://www.iea.org/Textbase/nppdf/free/2009/key_stats_2009.pdf page 20

[31] Eni’s World Oil & Gas Review, 2006

http://www.eni-irl.com/downloads/wogr2006.pdf

[32] Packer, J., Kooy, P., Kirk, C.M., ”The Production of methanol and gasoline”. Clare

Wrinkes of Methanex New Zealand Ltd. Date: 25.09.2010

http://nzic.org.nz/ChemProcesses/energy/7D.pdf

[33] Tijm, P. (1994) “Shell Middle Distillate Synthesis: The process, the plant, the products”,

Shell International Gas Ltd. London, UK. Date: 08.10.2010

http://www.anl.gov/PCS/acsfuel/preprint%20archive/Files/39_4_WASHINGTON%20DC_08

-94_1146.pdf

[34] Sasol group corporate affairs. (June 2006) “Reaching new energy frontiers through

competitive GTL technology” Sasol limited, South Africa; Date: 05.10.2010

http://www.sasol.com/sasol_internet/downloads/GTL_brochure12_6_1150180264478.pdf

Title page figure References

18

[35] “ Oil rig black and white” Date: 30.10.10 http://www.clker.com/clipart-9806.html

[36] “Car” Date 13.11.10

http://www.clker.com/clipart-11163.html

[37] “Gas Station Black” Date 30.10.10

http://www.clker.com/clipart-gas-station-black.html

Table 1: The thermal efficiencies (Steynberg and Dry, 2004)

Liquid Fuel Thermal Efficiency

Gasoline from the MTG process 58%

FT diesel fuel 60-66%

Methanol 66-72%

Table 2: CO2 emissions from the case study (Heimela and Lowea, 2009).

19

Figure 1: Pathways to natural gas utilization (Verghese, 2005)

Figure 2: Natural gas transportation options (Gudmundsson, 2010)

20

Figure 3: Gas to liquid Value Chain (Verghese, 2005)

Figure 4: Block diagram for syngas production (Moulijn et al., 2001)

21

Figure 5: Block diagram of Mobil MTG plant3

Figure 6: Fuel Economy vs urban air benefits (Koelmel, 2002)

3 http://nzic.org.nz/ChemProcesses/energy/7D.pdf

22

Figure 7: Natural Gas Vehicle Growth Worldwide4

Figure 8: Natural Gas Vehicle Growth by region

4 International association For Natural Gas Vehicles, http://www.iangv.org

23

Figure 9: Natural Gas Vehicle growth since 20005

5 International association For Natural Gas Vehicles,

http://www.iangv.org

24

9 Appendices

9.1 Appendix A: Existing Gas to Liquid Plants Process Descriptions

Petro As/ Mossgas Plant

The simplified process diagram for the Mossgas (PetroSA) plant is shown in Figure 10. Syngas

production is done catalytically by multi-tubular steam reformers followed by autothermal

reformers. The syngas is then fed to the circulating fluidized bed (CFB) /Fischer tropsch (FT)

reactors. These reactors are filled with fused iron based catalysts (Steynberg and Dry, 2004).

The alcohols, ketones and aldehydes from the water phase of the FT product are extracted. The

ketones and aldehydes are converted to alcohols by hydrogenation. The heavy hydrocarbons from

the gas phase of the FT product are condensed. C4 are isomerized to iso-butane by Butamer

process and then alkylated, C5/C6 are isomerized by UOP Penex Process and C7+ are

catalytically reformed to produce high octane gasoline. The other part of the gas phase which is

composed of CO2, CH4, C2H4 and C2H6 is recycled to the secondary reformers. All the FT

gasoline and diesel are hydrotreated to remove heteroatoms such as sulfur and nitrogen. The total

fuel production of this plant is approximately 1020 x 103 tons per year (Steynberg and Dry,

2004).

25

Figure 10: Mossgass GTL Process (Steynberg and Dry, 2004)

SMDS Plant

Figure 11 shows the simplified process diagram of SMDS plant in Bintulu, Malaysia. The SMDS

technology comprises of three Shell proprietary processes namely: (Seden & McEwan, 2000) &

(Steynberg and Dry, 2004).

1. The shell Gasification Process (SGP) which converts natural gas to syngas by a non-

catalytic partial oxidation at high pressure and about 1400°C. The carbon efficiency of

the reformer is greater than 95% and the methane slip is about 1%. The syngas H2/CO

ratio is approximately 1.7.

2. The shell heavy paraffins synthesis Process (HPS) which converts syngas into liquid

hydrocarbons (FT product). A fixed bed tubular reactor with Co-based catalyst is used to

convert almost 90% of CO into liquid hydrocarbons. A cobalt based catalyst requires a

syngas ratio of 2.1, therefore an additional H2

3. The shell heavy paraffin conversion (HPC) which converts a significant part of raw FT

product into middle distillates by hydrocraking and isomerization processes.

is required which makes this a low

efficiency process and high cost operation.

26

Figure 11: SMDS Bintulu GTL Process (Steynberg and Dry, 2004)

Oryx Plant

Figure 12 shows the process for the Oryx plant in Qatar. Like the SMDS process the Sasol Slurry

phase Distillate™ (Sasol SPD™) consists of three stages (Sasol group corporate affairs, 2006).

1. Syngas is catalytically produced from a Haldor Topsøe autothermal reforming. 2. Syngas is then fed to a fischer tropsch slurry reactor filled with Sasol’s proprietary

advance cobalt catalyst to be converted to waxy hydrocarbons. 3. After being separated from the slurry with catalysts, the waxy hydrocarbons are

transferred to a product upgrading unit which uses Chevron Isocracking™ technology The refinery of the Oryx GTL plant has a lot in common with the SMDS refinery but there are

distinct differences such as: (Davis and Occeli, 2009)

- The Oryx plant does not have a separate hydrotreater. This limits the production of

chemicals, for instance waxes

- The operating conditions of the hydrocracker in the Oryx plant are more severe than the

SMDS process.

27

Figure 12: Left: simplified Oryx GTL process, right: refinery part. (Sasol group corporate affairs, 2006) & (Davis and Occeli, 2009)

28

9.2 Appendix B: CO2

Figure 13

Generation and Emissions

describes the sources of CO2 in a natural gas to liquid fuel plant. CO2 is first

introduced at the inlet with the natural gas feed. More CO2 is formed during the syngas

generation, FT reactor synthesis, hydrogen production and more than half of the CO2 that is

produced in the plant is formed in the process heating furnaces. (Heimela and Lowea, 2009).

Figure 13: GTL plant CO2

Figure 14

sources (Heimela and Lowea, 2009).

shows the location of the CO2 emissions in a natural gas to liquid fuel plant. The tail

gases from the process are diverted to the plant fuel system. Therefore, the CO2 that is formed is

emitted via five different heater stacks: Two ATR pre-heater furnace train stacks, Steam super-

heater stack, Hydrogen plant stack and Product workup unit (PWU) stack (Heimela and Lowea,

2009).

Figure 14: GTL plant CO2 emissions locations (Heimela and Lowea, 2009).

29

9.3 Appendix C: Economics of Gas to Liquid Plants

The economic factor remains a major element in the application of GTL process. This factor is

influenced to a large extent by the price of the feed gas, price of crude oil, capex, opex as well as

the price of the refined diesel. Low natural gas price with high crude oil price will ensure the

economic viability of GTL plants. Gas to liquid could be economically viable at crude prices

above US$20/bbl and gas prices of US$0.50/MMBTU. (Chendid et.al, 2007). Therefore,

production of fuel through GTL process is uneconomic at period of high crude oil price compared

to fuel produced from crude oil.

The capex of GTL plants is estimated to be $20000 - $40000/bbl per day and it was reported that

the capex depends on many factors which includes: the type of technology used, geographical

location of the facility, product workup/slate, economies of scale, learning curve cost

improvement, and local infrastructure availability ( F.T. Al-Saadoon, 2005). The distribution of

capex among the three GTL process is estimated as follows: 60% for syngas generation, 30% for

FT synthesis, and 10% for upgrade. The opex for GTL plant excluding cost of feedstock ranges

from $3 – 8/bbl of liquid product (Garrouch, 2007). Though, presently the environmental factor

as well as stringent law on exhaust emission is among the key drivers galvanizing the preference

of GTL diesel to refinery diesel. With the stringent law enacted, Rahman and Al-Maslamani

explained that the production of refinery diesel with ultra low sulfur content will be expensive to

the extent that makes production cost of GTL diesel oil which is practically of zero sulfur content

and not more than 1% aromatics close to that of ultra low sulfur diesel recovered from crude oil.

(Rahman and Al-Maslamani, 2004)

Mossgas facilities employing Sasol Technology which has been in operation for years and Shell

middle distillate synthesis (SMDS) plant in Bintulu, Malaysia which has been in operation since

1993 are GTL plants that have been technically successful but have not proven to be

commercially successful due to high cost of gas conversion compared to prevailing crude oil,

refinery derived product prices (Verghese, 2003). From Figure 15 the middle distillate has the

highest percentage increase (from 1973 to 2007) of natural gas refined products. This may be

attributed to the SMDS Bintulu plant production among the others. The SMDS Bintulu unit

30

(Inclusive of extensive offsite and infrastructure associated with production of range of specialty

products) is reported to have cost USS 50,000 + per unit capacity (barrel per day) compared to a

large conventional refinery on a equivalent basic, has unit capacity costs in the order of USS

15,000/bpsd (Verghese, 2003).

Figure 15: Refining by product6

If the quantity of natural gas required producing one barrel of GTL products is about 10000Scf.

The investment required is in the range of $25000 – 30000/BPD of products. GTL plant

operating cost, excluding depreciation and feedstock cost is in the range of $4 – 6 Bbl. Based on

6 Source: (http://www.iea.org/Textbase/nppdf/free/2009/key_stats_2009.pdf page 20)

31

these parameters, the production cost of a barrel of GTL products is estimated as follows in Table

3 (Rahman and Al-Maslamani, 2004).

Table 3: Production cost of a barrel of GTL products (Rahman and Al-Maslamani, 2004)

Feedstock cost $5 (at gas price of $1.5/MMBTU)

$10 (at $1MMBTU gas price)

Capital cost (@15% ROI) $11 -$14

Operating cost $4 -6

Total production cost $20 - $30 per barrel of product

The average GTL product price $20/bbl for petrochemical naphtha

$23/bbl for diesel oil

These cost of GTL products have to compete with the cost of refined crude oil products. Several

research works, pilot plant and demonstration units are carried out with the aim of reducing

capital and operating cost of GTL process in the events of high crude oil price to make GTL

technology still economically viable. Oxygen generation is a significant portion of syngas

generation, and thereby of capex, and is important to explore ways of cost reduction ( F.T. Al-

Saadoon, 2005).

On the strength of technology developments, current claims/expectation by principal technology

players, the cost of a GTL unit appears to converge to USS 20,000/bpsd (for a unit of 70,000bpsd

capacity) compared to USS 50,000/bpsd for the SMDS Bintulu unit. A couple of long range

technology developments are significant in rendering a breakthrough in the synthesis gas

reforming process which contributes to the bulk of the cost. These long range technology

programs include Catalytic Direct Methanol Oxidation (DMO) and air products and Chemical

Ionic Transport (a non-porous ceramic membrane) technology programs. The ITM development,

for example is phased over an eight-years period (Verghese, 2003).

Other means of reducing capital and operating cost includes:

32

1. Use of air in for instance partial oxidation process thereby eliminating the cost of oxygen

plant.

2. The GTL produces as by-products, steam and low BTU tail gas. GTL process can be

maximized by the utilization of the by-product streams for commercial power generation

thereby generating revenue for the high capital investment since GTL has a thermal

efficiency of 60%, losing 40% as heat. (Adegoke et al., 2005)

3. Combined GTL-FPSO (shown in Figure 16) for small fields (e.g. up to50 000 b/d oil and

0.5-2 mill. Sm3/d associated gas).On the other hand, the safety implications of combining

several high pressure risers, an oil/gas separation system and a GTL process should not be

overlooked. This will require verifying GTL process selection and adaptation to offshore

conditions, compactness, low weight, robustness to motion and minimum maintenance

requirement (Rodvelt et al., 1999).

Virtually all GTL by-products; heat, steam, low-BTU gas and process water are used by

the FPSO systems, requiring only minor additional fuel gas consumption. The idea of

combining oil and GTL production is driven by the economics, as well as the synergy

between the utility systems as shown in Figure 17 The FPSO uses superheated HP steam

for the steam turbine driven electric power generator and MP steam for heating within the

oil and gas separation plant, cargo tank heating systems and fresh water generation plant

(Van Loenhout et al., 2006)

33

Figure 16: GTL FPSO (Van Loenhout et al., 2006)

Figure 17: Energy production and consumption of GTL-FPSO (Suehiro and Osawa, 2008)

4. Y. Suehiro et al, has developed JAPAN-GTL process shown in Figure 18 which uses part

of CO2 in feed at 7BPB of pilot plant. The method is aimed at reducing the capital and

operating cost by eliminating the cost of CO2 removal process by allowing natural gas

containing upto 20-30% of CO2 to be used as feed gas. The synthetic gas production

process employs the steam/CO2 reforming thereby eliminating the need of oxygen plant.

34

The GTL process enables economical development and operation of gas fields where

large quantity of CO2 exists and is therefore left undeveloped (Suehiro and Osawa, 2008).

Figure 18: Japan-GTL process (Suehiro and Osawa, 2008)