BioSyn Resources Implementing Scalable Gas to Liquids GTL

Gas to liquids -- GTL -- is potentially one of the most profitable energy technologies at this time. A single GTL plant in Qatar -- the Shell Pearl GTL plant -- is expected to reap roughly $6 billion per year in profits. But a handful of companies are developing smaller, more scalable GTL installations, suitable for placing offshore or at stranded gas reserves. BioSyn Resources has recently announced its intention to jump into the scalable GTL race:

After reaching a conclusion that the likelihood of the huge price differential between natural gas and crude oil will continue for the long term, BioSyn decided to implement ahead of schedule the 4th phase of its integrated biomass-centric feedstock-flexible biorefinery project, starting with the construction of a 300-bpd fourth generation gas-to-liquids demonstration plant. The demonstration plant will provide BioSyn and its process licensors, engineering and EPC contractors with techno-economic data and operational experience to proceed with full scale commercial facilities.

A fourth generation Fischer-Tropsch technology features a much smaller plant footprint and significantly lower economies of scale. It also features a product slate characterized by more than 95% C5-C18 fraction of more than 50% isoparaffinic structure and absence of oxygenates. This obviates the need for high CAPEX hydrocracking facility that is required in 3rd generation GTL plants the Fischer-Tropsch blocks of which produce largely waxy products.

With the maturation of hydraulic fracturing and horizontal drilling technologies, the vast reserves of natural gas trapped in gas shale formations underlying vast areas of continental United States are now unlocked for long term production. With gas prices hovering south of $15.00 per barrel of oil equivalent (BOE), and crude oil prices hovering north of $100.00 per barrel, the door for technical arbitrage opportunity opened up for the conversion of natural gas to drop-in infrastructure-ready transportation fuels.

Current estimates of national inventory of gas reserves at the end of 2011 stand at about 300 trillion cubic feet (TCF). The estimated U.S. future gas supply for the year ending in 2010 was 2,170 TCF, which is equivalent to about 361 billion BOE. This is more than the proven oil reserves of Saudi Arabia, which was only 262.6 billion barrels at the end of 2011.

“Petroleum based transportation fuels are tethered to highly volatile world prices of crude oil, which we predict will continue to maintain an upward trajectory for the long term. This gives rise to an unusual local phenomenon: the unprecedented widening of the price differential between natural gas and petroleum based transportation fuels,” said Mr. Reloj, BioSyn’s CEO. _Yahoo News

While Al Fin energy analysts do not expect crude oil prices to rise as quickly as many analysts do, a significant gap between natural gas and crude oil prices is likely to continue for several years, due to improving technology in gas production.

BioSyn Resources is one of the many BTL (biomass to liquids) startups which is being forced to face the facts of cheap natural gas, and the advantages of GTL over BTL at this time. In the long run, advanced BTL is a good bet when combined with either GTL or CTL, using gen IV high temperature gas-cooled nuclear reactors as an industrial heat source.

But such sophisticated XTL technologies are still a decade or so away. Advanced scalable GTL, on the other hand, is mere years away from profitability. Expect significant profits from a number of scrappy small GTL startups, as the technology improves and shakes out in the marketplace.