Tuesday, March 27, 2012

Next Big Thing in Energy? Think Scalable GTL

When most people think of earth-shaking breakthroughs in energy, they tend to think of nuclear fusion, advanced nuclear fission, LENRs, or even advanced solar power. But the more likely source of important near term energy advances will likely tie in to cheap and abundant resources of natural gas and/or coal. And since the most pressing energy need besides electricity is for liquid transportation fuels, the important advance will involve the liquefaction of gas and/or coal.

It is clear that the cost of oil has ballooned so far beyond the cost of gas (and coal) per mmbtu, that GTL and CTL conversions have become very attractive economically. The big problem with GTL and CTL up to this point, has been the huge up-front costs of capitalisation for production facilities. The Shell Pearl GTL plant in Qatar, for example, required almost $20 billion in development costs alone. Granted, the Pearl plant will generate profits of roughly $6 billion per year. But few companies can afford the up front capital costs to build such a plant.

That is why the idea of a scalable GTL plant (and CTL, BTL, etc) has become so intriguing. The Velocys F-T GTL approach is not likely to be as efficient or economical as the huge Shell Pearl GTL plant, but it is far more affordable and practical for placing onboard an offshore rig, or for installing at stranded wells far from gas pipelines.
Unless green energy starvationists inside the governments of the EU and the US can completely shut down shale gas production, natural gas production is likely to stay high, and natural gas prices are likely to stay relatively low compared to crude oil, for a matter of decades.
Inside Futures

Coal prices have been driven downward at least partially due to the low costs of natural gas. This makes scalable CTL more attractive as well, although it seems clear that GTL is much more easily scaled downward than CTL will be. Biomass to liquids (BTL) is another up and coming liquefaction technology for synthetic fuels production, but it is likely to thrive only in areas which lack cheap natural gas, at least for the next two decades. Political mandates, regulations, taxes, and prohibitions can change that equation, of course.
Carpe Diem

Inside Futures

Besides Velocys, other opportunistic entrants into the scalable GTL field include Carbon Sciences, Compact GTL, GTL Solutions, Gas Techno, and more.

Basic information on large scale GTL

Within the next 10 to 15 years, large scale CTL and GTL producers will be able to take advantage of cheap nuclear process heat from high temperature gas cooled nuclear reactors -- which will shift up efficiencies and profits considerably. Once new processes are developed to take advantage of that rich, abundant new resource, most of the things you think you know about the future of liquid fuels will change.

More on how utilities choose between natural gas and coal for electric power generation here and here. Until more national governments begin promoting safe, efficient, reliable new nuclear technologies, even the most advanced societies will remain dependent upon coal and natural gas for electric power generation.

But once new nuclear technologies come on board, vast new supplies of power -- both baseload and load-following -- and industrial process heat will become available. This will shift a significant amount of coal and natural gas away from power generation, and toward liquid fuels production.

It is all up to governments, and how hard they wish to make things for their industries and their populations. Current leaders of the EU and the US apparently want to make things very hard indeed. Shame on them, and shame on the voters and supporters who allow them to stay in power.

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