Tuesday, September 20, 2011

Sasol Ltd. Takes Its Fischer Tropsch GTL Technology On the Road

Sasol Ltd is based in South Africa, but is looking at building gas-to-liquid plants in Uzbekistan, Western Canada, and Louisiana. Its plans for a GTL plant in China are currently on hold pending official government approval of the project. In the meantime, Sasol is working to expand well beyond its traditional African territories.

The GTL plants being planned for Uzbekistan, Canada, and the US would cost roughly $5 billion with a capacity of almost 50,000 bpd.
South Africa’s Sasol, which has a deal with Calgary’s Talisman Energy Inc. to look at building a gas-to-liquids plant in B.C., said Monday it had signed an agreement with partners including Malaysia’s Petronas to develop a GTL project in Uzbekistan.

...Sasol also said last week it would conduct a feasibility study on a potential GTL plant in the United States which could produce transport fuels — mainly diesel — and other products.

Sparked by the Louisiana announcement, FirstEnergy Capital Corp. came out with a note Monday that gave the Talisman project a definitive thumbs-up. It figures each project will result in 96,000-barrels-per-day facilities to be built in two phases.

“At current commodity prices we see the economics of a GTL facility in Western Canada as being extremely attractive, with a calculated IRR (internal rate of return) of 17 per cent and a value net to Talisman approaching $1.50 US per share for a single phase 48,000 bpd project,” said the missive endorsed by analyst Michael Dunn.

The report noted each phase of the GTL projects would cost between $4 billion and $5 billion to build. _CalgaryHerald

Sasol –– a pioneer in the area of synthetic petroleum alternatives –– has continuously focused on the commercialization of its GTL technology by constructing plants in gas-rich regions of the world that will strengthen its position in the industry in the coming years.

With gas prices remaining at depressed levels and thereby diverging significantly from high oil prices, Sasol is looking to utilize the spread by using its GTL technology that is expected to be more profitable than the company’s traditional business of producing motor fuels from coal. _DailyMarkets

The petrochemicals group is investing heavily in growth, especially by expanding its shale gas portfolio. It recently bought two shale gas interests in Canada to boost its gas portfolio and secure feedstock.

Sasol and Canada's Talisman Energy are working on a feasibility study into a 48,000 barrels per day gas-to-liquids (GTL) plant that would eventually use the gas produced from their Farrell Creek assets.

Sasol said it had completed a feasibility study for a GTL plant in Uzbekistan and will decide in the near term whether to proceed to an engineering study on the project, depending on "certain commercial conditions".

...The company said due to a delay in China's approval for a proposed coal-to-liquids (CTL) plant the company had relocated staff and planned funding to other projects. _Reuters

As noted above, Sasols Fischer Tropsch GTL process yields a pure diesel product. The main industrial-scale alternative to F-T is Exxon Mobil's methanol-to-gasoline (MTG) process, which is said to be more efficient than the F-T process.

Full scale plants for either F-T or MTG would cost in the billions of dollars, limiting the number of companies able to participate in the potentially lucrative GTL play on current price differentials between oil and natural gas.

The third player for GTL is the microchannel Oxford Catalyst / Velocys technology, offering a scalable approach to F-T GTL, for smaller plays and smaller players.

As noted before, Sasol Ltd.'s technology can put the company in the middle of the international shale gas bonanza, as long as oil prices remain high. It is not a bad idea for the company to develop profitable operations outside of Africa, given the instability and corruption of most governments there.

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