Gas to Liquids (GTL): A Growing Market; And More

Due to plentiful supplies and an attractive gas to oil price differential, the natural gas to liquid fuels (GTL) market is beginning to take off, according to a new report, The Gas-to-Liquids Market 2013 - 2023. The 182 pp report suggests that the GTL global market will already exceed $5 billion in 2013. And this market is just getting started.

Two large-scale commercial Gas-to-Liquids plants have been opened in the 21st century and both are accumulating vast revenues due to the potentially lucrative differential between the price of natural gas and the price of oil. Building on the success of these facilities and a range of other factors, the Gas-to-Liquid market is set to grow strongly over the next 10 years. Visiongain has determined that the value of the global Gas-to-Liquids market in 2013 will reach $5.29bn. _ReportLinker _ via _ SacBee

The two large scale GTL plants built by Shell appear to be generating healthy profits. And as detailed in the above report, a number of startups are planning to build smaller scale GTL plants, which are also expected to be very profitable -- given the big price differential between crude oil and natural gas.

Carbon Sciences Inc. (OTCBB: CABN), provider of a complete solution for transforming abundant and affordable natural gas into clean burning gasoline and other transportation fuels, today announced its plan to act as the project developer of a "miniGTL" plant in the United States.

Flared and stranded natural gas is abundant and available. The World Bank estimates that 134 billion cubic meters of gas was flared worldwide in 2010, equivalent to almost 5 trillion cubic feet. If all this gas were converted to liquid fuels, it would equate to around 500 million barrels each year...

..."As the world searches for the security of new energy and fuel sources, miniGTL operations have the potential to unlock a vast quantity of natural gas that is either wasted or less accessible. We believe that flared gas could generate around 3 million barrels per day of synthetic fuel, and 'problem' gas, either stranded reserves or that associated with crude oil which would currently be re-injected, a further 20 million barrels per day," concluded Elton. _Equities.com

Going beyond natural gas to liquids, we see that several other feedstocks can also be profitably converted to liquid fuels, if the price of crude oil remains inflated.

The United States could eliminate the need for crude oil by using a combination of coal, natural gas, and non-food crops to make synthetic fuel, a team of Princeton University researchers has found.

...In the Princeton research, Floudas' team found that synthetic fuel plants could produce gasoline, diesel, and aviation fuels at competitive prices, depending on the price of crude oil and the type of feedstock used to create the synthetic fuel. About two-thirds of crude oil consumed by the United States is used for transportation fuel, according to the federal Energy Information Administration (EIA). The EIA said the United States imports about 45% of its annual crude oil consumption.

"Even including the capital costs, synthetic fuels can still be profitable," says Richard Baliban, a chemical and biological engineering graduate student who graduated in 2012 and was the lead author on several of the team's papers. "As long as crude oil is between $60 and $100 per barrel, these processes are competitive depending on the feedstock," he says.

The core of the plan is a technique that uses heat and chemistry to create gasoline and other liquid fuels from high-carbon feedstock ranging from coal to switchgrass, a native North American grass common to the Great Plains. The method, called the Fischer-Tropsch process, was developed in Germany in the 1920s as a way to convert coal to liquid fuels.

The chemistry is complicated, but it basically takes the carbon and hydrogen from the feedstock and reassembles them into the complex chains that make up fuels like gasoline and diesel. Essentially, the feedstock material is heated to 1,000 to 1,300 C and converted to gas, and using the Fischer-Tropsch process, the gas is converted to chains of hydrocarbon molecules. These hydrocarbon chains are then processed over catalysts such as nickel or iron. The end products include fuels, waxes, and lubricants normally made from crude oil. _RDMag

Synthetic liquid fuels from natural gas, coal, biomass, bitumens, kerogens, gas hydrates, etc. have enormous potential to substitute for crude oil, should the price of oil remain high.

As inexpensive process heat becomes more widely available, a wide range of synthetic fuels will become more profitable to produce.

High temperature and very high temperature nuclear reactors of advanced design will begin to provide very economical high temperature process heat for multiple high value purposes, beginning in the early to middle 2020s.

The Advantages of Building Small

There is an ongoing trend in industrial design to build a smaller infrastructure. There are many reasons for this trend, but here are three possible forces at play:

First, new computing, sensor, and communication technologies make high degrees of automation possible at a very low cost, largely eliminating the labor savings from large units. Second, mass production of many small, standardized units can achieve capital cost savings comparable to or even greater than those achievable through large unit scale. And third, small-unit scale technology provides significant flexibility—a benefit that has been largely ignored in the race toward ever-increasing scale and one which can significantly reduce both investment and operating costs.

This trend—observable in nascent form in several industries ranging from small, modular nuclear reactors, chlorine plants, and biomass energy systems to data centers—is resulting in a switch from large to small optimal unit scale, the authors found. The shift mirrors a similar revolution that began thirty years ago in the supercomputer industry. _Columbia Business School

The computer analogy used in the article above is a useful one, with which most people can identify. The size of computing devices -- even supercomputing devices -- has shrunk rapidly over the past decades, and is likely to shrink even faster in the future. Likewise, much industrial infrastructure is also likely to become viable in smaller sizes, becoming more scalable.

Here is more on how small modular reactors might eventually be fitted into overall power schemes:

Are small modular reactors the wave of the future for the nuclear industry, or will we still see companies proposing full-scale plants?

I think it could be both, but I do think small modular reactors will have their place. For a company our size, the overall cost — as long as the small modular reactor folks can keep it competitive from a dollars per kilowatt-hour perspective — that’s a lot more palatable from a risk perspective. Also for our customers. They want to know what’s coming and why. That’s where I see the small modular reactors having an advantage over the bigger ones.

Is there an advantage to being the first utility to build one of these small reactors?

Not much. You’re definitely going to learn some things the hard way if you’re the first. Somebody’s got to be the first, though. I think that by the time you get to No. 3 or No. 4, you’ll get some cost benefits. The thing we’ll have to be very transparent about is what the costs are, what the expectations are to the customers. I want to make sure we do that. _Ameren's Adam Heflin

Heflin seems to be adopting a pragmatic, somewhat cautious approach to the adoption of small modular reactors -- as one would expect from the chief nuclear officer of a large utility company. But he also seems to expect that SMRs will be utilised.

Gen4Energy is one of the frontrunner designs in the US race for SMRs.

The Gen4 Module is a next generation design that uses a liquid metal cooled, uranium nitride fueled, fast-spectrum reactor that employs control rods for reactivity control. The reactor has been designed to deliver 70 MW of heat (25 MW of electricity) for a 10-year lifetime, without refueling.

Key advantages of the Gen4 Module design are:

Advanced reactor design – Use of advanced reactor concepts provides for a safer and simpler reactor, elimination of many potential accident scenarios that affect LWRs, and elimination of complex reactor systems.
Small reactor – A smaller reactor is more appropriately sized for smaller generation requirements, can directly replace existing diesel fueled generators, and requires no upgrade to existing small electricity distribution systems.
10-year power module replacement – The Gen4 Module provides 25 MWe continuously for 10 years on its initial fuel load (compared to an 18 to 24 month cycle for current light water reactors). No on-site refueling is required. After 10 years the entire reactor module is replaced.
Underground containment vault – The reactor is sited in an underground containment vault to provide isolation from the environment, prevent intrusion or tampering, and avoid harm from natural disasters.
Factory-assembled transportable power modules – Factory assembly allows for standard designs, superior quality control, and faster construction and on-site deployment. _Gen4Energy

SMRs should be better able to compete with natural gas power plants, both on a cost basis and on a scalability basis -- to better fit a particular utility or energy market.

Other types of small industrial energy design, would include small gas to liquids (GTL) plants. These scalable GTL plants could be located offshore, or near the wellhead of stranded gas resources.

Of course, big industrial plants are nowhere near to going obsolete. One example of this is Hitachi's recent purchase of Horizon Nuclear Power.

The Japanese technology giant bought up Horizon Nuclear Power for £696 million ($1.1 billion) this week from German utilities EOn and RWE, complete with 90 staff and rights to land at two current nuclear sites, Wylfa and Oldbury. The purchase will be completed by the end of this month.

...The subsidiary Hitachi-GE Nuclear Energy will manage the engineering and manufacturing of the Horizon ABWRs while three engineering firms have signed memorandums of understanding with Hitachi to explore cooperation: Rolls-Royce, Babcock International and SNC-Lavalin.

In May 2011 Hitachi won the tender to build Lithuania's Visaginas project, unusually agreeing to take a 20% stake in the project which will produce around 1350 MWe from a single ABWR. However, Hitachi's investment in Horizon stands to be many times bigger - at present the company has 100% ownership of a project that could grow to 7800 MWe from six ABWR units. The new push into overseas markets is not a reaction to Japan's moves against nuclear energy in domestic markets, said the company told WNN. _World Nuclear News

But on the contrary, Hitachi's push into overseas markets is clearly a reaction to the Japanese government's stupid actions against the domestic nuclear markets. Both Japan and Germany have behaved very stupidly -- even suicidally in an energy sense -- to the earthquake/tsunami triggered disaster at Fukushima.

But as smaller, cleaner, safer, more reliable, more affordable, and more scalable new nuclear reactors become available, we should expect many governments that once rejected nuclear power, to reconsider.

Shell's $20 Bn Pearl Qatar GTL Plant to Earn $10 Bn per Year

Gas to liquids (GTL) is becoming a very profitable enterprise. Not everyone can invest $20 billion in a GTL plant. But to reap $10 billion per year in profits from an investment of $20 billion, is very close to true alchemy.

More on Pearl Qatar GTL:

Now gradually increasing production, Pearl sucks in huge volumes of natural gas from the gargantuan North Field under the aquamarine Gulf and — in a feat of seeming alchemy — transforms the gas into jet fuel and diesel and other liquids far more valuable than natural gas these days. Eventually, Pearl could earn Shell $10 billion per year, justifying its nearly $20 billion cost. _NYT

Notice that the $10 bn figure is for "eventual profits." For now, Shell will have to settle for a mere $4 bn free cash flow per year -- at an oil price of $70 per barrel. At higher oil prices, profits will exceed $4 bn proportionately.

Shell has said that the project would generate USD 4 billion of free cash flow a year at full production in a market with crude oil prices, the main determinant of the price of diesel, at USD 70 per barrel.

Shell will say only that returns are in line with other integrated gas projects, but given that Brent crude now sells for over USD 110 per barrel while the gas going into Pearl is effectively free, it could clearly be a significant contributor to one of the world's biggest corporate capital spending budgets at some USD 30 billion this year alone.

Analysts said that crude prices would have to fall below USD 40 per barrel before the plant loses money. The Qatari government's decision to buy a stake in Shell, reported to be approaching 3% may be further evidence of Pearl's cash delivery potential. _SteelGuru

Russia's Gazprom needs to take a long hard look at Shell's GTL achievements in Qatar -- particularly at a time when global gas prices are falling, and Gazprom's customers are pulling out the long knives for the corrupt Russian national gas company:

Gazprom said Thursday its profit plunged by a quarter due top falling gas exports and billions in back payments to EU nations now probing the Russian giant for price fixing and intimidation tactics. The world's largest natural gas company attributed its 23.5 percent drop in first-quarter net income to a sharp decline in sales to both Europe and the ex-Soviet states - two of the slowest-growing regions in the world.

It also reported a one-off $2.4 billion (78.5 billion ruble) payment to European clients who managed to negotiate a lower price after threatening to take the Russian state firm to court. The profit was still a strong $11.1 billion (357.8 billion rubles) and debt was down heavily. Brussels is formally probing Gazprom for effectively trying to bully eastern and central European nations into buying its pipeline gas at elevated prices and then preventing them from trading any excess supply.

The probe comes a year after official raids on the offices of Gazprom's European partners and amid widening EU efforts to diversify its sources of energy supplies. Gazprom on Wednesday suggested that Russia's broader national interests were being threatened by the investigation and demanded respect for its "status as a strategic organisation" under federal law. _Profits Plunge at Gazprom

Al Fin energy analysts have promoted scalable GTL for years now. While a $20 billion plant is not considered small scale, several companies are competing to provide technology for small and medium scale GTL plants -- to take profitable advantage of stranded gas, offshore gas, and currently flared gas.

These small and medium scale GTL plants will not earn $10 bn a year -- or even $4 bn a year -- but they will provide a handsome profit return on investment as long as oil prices remain high.

The best long term solution for global energy involves advanced factory-built scalable nuclear technology, along with advanced development of unconventional liquid fuels from gas, coal, bitumens, kerogens, gas hydrates, and biomass.

The move to GTL, in the light of high oil prices and low gas prices, is a good place to start.

Natural Gas to Chemicals:Brasil Steps Up

The abundant naturalgas available globally can be better utilized by increasing its use as a source of chemicals in place of its predominant use as fuel today... The need to further develop these processes as well as other processes for the conversion of naturalgas to useful chemicals remains strong. _Natural Gas Conversion to Chemicals

Image Source
Due to increasing gas production as a side effect of its oil boom, Brasil has been near the forefront of implementation for advanced and scalable methods of gas to liquids and gas to chemicals. Its new gas to chemicals complex in southeast Brasil aims to accelerate the rate of this important and economical substitution of cheap gas in place of more expensive crude oil.

Foster Wheeler AG has been awarded a contract by Petróleo Brasileiro S.A. (Petrobras) for a world-scale grassroots gas-to-chemicals complex in Linhares, Espirito Santo State, southeast Brazil, called Complexo Gás-Químico UFN-IV. Foster Wheeler will provide basic engineering design (BED), front-end engineering design (FEED), and technical assistance and training during the engineering, procurement, construction (EPC) phase through to successful completion of the plant performances tests.

Foster Wheeler will act as integrator for the entire complex, managing the overall BED and FEED, including managing the process licensors and Brazilian subcontractors. The BED/FEED phase is scheduled for completion at the end of 2013.

The complex is expected to produce in excess of one million tonnes per annum (TPA) of ammonia and urea fertilizers, methanol, acetic acid, plus formic acid and melamine, helping to reduce Brazil’s imports of these products. _GCC

As can be seen in the chart above, other regions -- such as MENA, Russia, and North America could also benefit from an accelerated development of cheap natural gas to high value chemicals and fuels.

The most economical means of converting cheap unconventional hydrocarbons into higher value fuels and chemicals, would be to use inexpensive high quality process heat from scalable, factory-produced, gas cooled high temperature nuclear reactors. But we cannot expect to see such reactors coming off the assembly line for another 10 years, unless more enlightened political leadership takes the stage in the US and Europe.

In the meantime, natural gas will be used to fuel its own conversion to higher value fuels and chemicals, which reduces the efficiency and profitability of the overall process. Even so -- as Shell's Pearl plant in Qatar demonstrates -- GTL and gas to chemicals can be a very profitable enterprise.

More on Primus Green Energy's Use of Natural Gas as a Bridge Feedstock

Primus Green Energy Multi-Feedstock Synthetic Fuels
Here is another look at Primus Green Energy and its compromise use of cheap natural gas as feedstock -- in place of the original plan to use biomass feedstock. Just like Sundrop Fuels, Primus Green Energy is behaving in a pragmatic and flexible fashion, to establish proof of technology first, and to develop the essential cash flow which will allow them to proceed with their longer range plans.

The Hillsborough, New Jersey-based company has developed a process for converting biomass into gasoline, jet fuel, and other chemicals. But because its biomass technology isn't quite ready for prime time and its process works with natural gas, its first demonstration plant will use natural gas as a feedstock.

"We're using natural gas as either a bridge to biomass or a bridge to natural gas," says CEO Bob Johnsen, a biofuels veteran who joined the company in March. "We can develop our processes for biomass while concurrently producing product at larger scale."

The company broke ground on the demonstration plant last week and is seeking to raise $60 million to $70 million for a commercial-scale operation which it hopes to begin building later this year or next year. To date, it raised $40 million from conglomerate Israel Corp. in 2007.

Johnsen, a co-founder of Mascoma and the company which became Verenium, was attracted to Primus Green Energy because the flexibility of its technology and because it's at stage where it can be scaled up, he says.

The company has modified a 1970s-era process called Methanol to Gasoline (MTG) originally developed by Mobil. Its plants have multiple steps but the core technology is converting synthesis gas, or syngas, into gasoline or jet fuel. That syngas can be made either from biomass, such as wood pellets or miscanthus, or from natural gas using a steam reformer. Because it's biomass-to-syngas gasifier didn't achieve the performance needed, the company will move ahead with natural gas first.

Once the syngas is produced, the gas is treated with catalysts to produce methanol and then fed into a reactor to synthesize the gas into liquid high-octane gasoline or jet fuel. The company has modernized the MTG process and engineered a more efficient system using a combination of its own inventions and off-the-shelf products, executives say. _TechnologyReview

There is nothing wrong with biomass to liquids in principle. But BTL cannot compete with either GTL or CTL in today's marketplace. And if the price of crude oil keeps dropping, even GTL will be unable to compete with oil.

It is fine to be idealistic. But if you are in business, you will need to temper your idealism with a healthy dose of realism, based upon current and near-term future market conditions.

Sundrop's Methanol to Gasoline Plant to Use Exxon Mobil MTG

The methanol-to-gasoline (MTG) process developed by Exxon Mobil doesn't care where the methanol comes from originally. MTG turns methanol into gasoline regardless of the original source -- natural gas, coal, biomass, etc.

Exxon Mobil Methanol to Gasoline Process

Economics will dictate whether the overall process can be profitable in the current marketplace -- and business startups had best pay attention to a thorough economic analysis before the first shovelfull of dirt is dug.

Sundrop Fuels Inc. intends to fight the current economic conditions of cheap natural gas and cheap coal, in order to prove a point. Sundrop wants to prove that it can fight the markets and survive, while producing "green gasoline."

Sundrop Fuels will use a multi-phase process to convert sustainable forest waste into a bio-based drop-in gasoline for use in today’s combustion engines. A gasification process converts the forest waste combined with hydrogen from natural gas into a synthesis gas, which will then be converted into methanol and then into gasoline in a fixed bed reactor system via the MTG process.

The MTG process first dehydrates methanol to dimethylether (DME); an equilibrium mixture of methanol, DME and water is then converted to light olefins (C2-C4). A final step synthesizes higher olefins, n/iso-paraffins, aromatics and naphthenes. The shape-selective catalyst limits the synthesis reactions to 10 carbons.

MTG reactor product is separated into gas, raw gasoline and water. Raw gasoline is separated into LPG, light gasoline and heavy gasoline; heavy gasoline is hydro-treated to reduce durene content, then heavy and light gasoline are re-combined into finished MTG gasoline. The result is sulfur-free gasoline with a typical 92 Research Octane.

The gasoline yield represents 38% of the feed, and 87% of the hydrocarbon product. Water (H2O) represents 56% of the feed.

The company’s first facility will also provide an operational platform for Sundrop Fuels to begin field integration of its proprietary RP Reactor radiant particle heat transfer gasification technology. The super-efficient, ultra high-temperature process will drive Sundrop Fuels’ future massive-scale biofuels plants, planned to produce more than 300 million gallons of renewable, drop-in biofuels annually.

Plans are for Sundrop Fuels to achieve a combined production capacity of more than one billion gallons by 2020—a significant percentage of the cellulosic advanced biofuels goal set by the nation’s Renewable Fuels Standard (RFS).

Significant backing for Sundrop Fuels comes from Chesapeake Energy Corporation, the largest producer of natural gas in northern Louisiana’s Haynesville Shale Field and second-largest producer in the nation. Chesapeake invested $155 million in Sundrop Fuels in mid-2011. The company’s investors also include two of the world’s premier venture capital firms, Oak Investment Partners and Kleiner Perkins Caulfield & Byers. _GCC

As we mentioned in an earlier posting, Sundrop will prove much of its technology using natural gas as a feedstock Sundrop will use natural gas to power its gasifiers and as a hydrogen donour -- thus explaining their success at raising capital from Chesapeake Energy Corp. Chesapeake needs to prove that GTL can be profitable -- either using MTG or using Fischer Tropsch to make diesel -- and it needs to help boost as many other uses for natural gas as possible. Chesapeake doesn't care how the gas is used so long as it is profitable.

Sundrop's pragmatic move to the initial use of natural gas for its MTG plant instead of using solar powered gasifiers, demonstrates a certain flexibility that is extremely important, if a "green business" is to stay in business.

First establish a cash flow while proving and perfecting your processes. Then you can branch out.

Coal Will Thrive Long After Obama Is Gone

The National Coal Council delivered a report to the US DOE which points to increasing uses of coal -- to generate electric power, to produce large quantities of liquid fuels via CTL, and to expedite enhanced oil recovery (EOR) using CO2 recovered from coal gasification (both IGCC and CTL).

• By 2035, the combination of coal-based EOR and CTL technology could provide up to 30 percent of U.S. liquid fuel demand and ensure America's energy security for decades....
• Use of ... CTL could generate $200 billion in economic activity, more than 1 million skilled jobs and $60 billion in tax revenues.
• At least 100 gigawatts of advanced coal generating capacity could be built or retrofitted over the next two decades. These advanced plants would use an additional 300 million tons of coal annually.
• CTL plants with carbon capture could convert coal into more than 2.5 million barrels a day of additional oil. An additional 450 million tons of coal would be used annually in these operations.
• Capturing a high volume of CO2 for commercial purposes, coupled with CTL operations, would increase coal use to 1.75 billion tons annually. This production level is well within the capability of the United States, home to 30 percent of the world's coal reserves.

_Nat.Coal Council Report to US DOE

Obama's misguided war against coal -- along with his war against all other forms of viable energy -- mark him as a political activist rather than a true leader. Obama's war against energy and against the US private sector has led to a stagnant economy with very slow job creation.

Meanwhile, Primus Green Energy is pushing ahead with a shale gas - to - liquids project which hopes to produce 100 million gallons of gasoline from shale oil per year.

The allure of cheap nature gas has altered the course of a New Jersey biofuel start-up’s path to commercialization. Shale gas will serve as Primus Green Energy’s (PGE) bridge fuel until it shifts to biomass feedstocks.

PGE today held a dedication ceremony for a demo plant at its Hillsborough, NJ headquarters. Local luminaries and a swarm of politicians, including former governor Jim Florio, Representative Leonard Lance, and an Obama administration agricultural official, were in attendance.

The plant will create up to 5 barrels of fuels per day, which will be used for customer certification testing and approvals. It is also a proof of concept for technology that PGE says can scale to upwards of 100 million gallons per year at a significantly higher yield (35 percent) than the industry average.

The company is hoping to raise US$150 million to build a facility next year that would produce 20 million gallons of fuel annually. In comparison, the Pearl GTL (gas to liquids) facility in Qatar has cost over $19 billion to build. _SP

The Pearl GTL plant in Qatar expects to yield profits of $6 billion a year, for as long as the price of crude oil (Brent) remains above $80 a barrel.

Primus Green Energy had intended to be a biomass-to-liquids (BTL) company rather than a GTL company, but basic economics dictated Primus' decision to go with shale gas rather than biomass -- at least in the beginning.

Meanwhile, commodities prices remain well above 2007 levels, suggesting that without big government stimulus from the US, Europe, and China, there is still significant deleveraging and deflating of bubbles that could occur.

The Obama government has injected about $1.5 trillion per year of fiat stimulus into the US economy, with very little positive effect to show for it -- except a rapidly growing debt which could destroy the economy if interest rates should be forced upward.

The energy world does not exist apart from the political and economic worlds, but is rather inextricably enmeshed within both.

Obama has attempted to re-shape the energy worlds, the political worlds, and the economic worlds -- as a legacy to his own unique greatness. Time will tell what lasting impact Obama's policies have had on those worlds -- if any.

Worrying About a Collapse of Oil Prices

North American oil executives are becoming concerned that the same type of price collapse that occurred in the natural gas sector may also occur in the crude oil sector due to significant improvements in oil production technology.

Oil fundamentals today are showing very similar characteristics to natural gas a few years ago: A rapid increase in productive capacity; weak domestic consumption that can’t absorb the rising output; old takeaway infrastructure (for example, pipelines) that is not adapting quickly enough to match new sources of supply with shifting demand; and a fenced-in continental marketplace that inhibits exports to higher-value global markets.

Rapid production growth, the number one antagonist, continues to astound with every new data point received. From North Dakota to Alberta, Saskatchewan to Oklahoma, new light oil barrels from horizontally-fracked wells keep flowing in greater quantities every month. If there is one chart that turns this story into Technicolor, it’s Figure 1, the long-term production profile for Texas. _Globe&Mail

CAPP 2010 . . . Updated 2012 CAPP PDF

Canada is projecting sustained growth in oil production over at least the next 2 decades, largely due to growth of in situ oil sands production.

And as you can see below, Texas has reversed its long decline in oil production, and expects production to continue to grow for the near-term and intermediate-term.

Image Source

Texas is now growing its rate of oil output by 35,000 B/d, every month, for an annualized growth rate of 425,000 B/d per year! To put this in perspective, that’s the equivalent of one-third of Libya’s oil production developed and brought to market in 12 months. It’s also close to China’s incremental consumption in 2011 (505,000 B/d).

Here in Alberta, the production of light, tight oil, or LTO, is now up by 175,000 B/d relative to what would have been expected without the new technologies. Putting this in perspective, Alberta has built the equivalent capacity of a big oil sands project in less than 18 months – complete with an upgrader to light oil! _Globe&Mail

To say nothing of North Dakota and the Gulf of Mexico!

Carbon Sciences is showing progress in its unique "dry reforming catalytic technology" which makes economic use of otherwise useless high CO2 natural gas deposits. By using CO2 in the reforming of methane to syngas, Carbon Sciences opens up large deposits of otherwise stranded gas which would be impossible to make economic use of otherwise.

Carbon Sciences' technology allows for a wide range of uses for these newly available gas deposits, including GTL (gas to liquids), high value chemicals production, etc.

Widening the economic uses of natural gas -- both stranded and otherwise -- also puts downward pressure on oil prices, although few analysts or journalists up until now have taken the trouble to point out that important fact.

More: The Coming Oil Crash

Even More:The Most Dysfunctional US Energy Department in History?

Global Gas Demand Rises, GTL Likely to Grow Apace

While demand for crude oil appears to be stagnating, global demand for natural gas is expected to grow at a rate of about 3% per year.

Global demand for natural gas will rise a faster-than-expected 2.7% annually through 2017 to 3.94 trillion cubic meters, with China and the US leading growth as both countries switch from coal to gas to generate electricity, the International Energy Agency said Tuesday.

Over the five year-period, gas demand will grow 17%, or 576 billion cu m, equivalent to around 90% of Russia's current gas production, according to the IEA's new medium-term outlook for gas markets.

The new higher gas demand growth estimate is up from the 2.4% annual growth rate from 2010 to 2016 IEA predicted last year, reflecting mostly the continued surge in shale gas output from the US.

China remains the fastest-growing market and its consumption is expected to double to 273 billion cu m in 2017 from 130 billion cu m in 2011, representing an average growth rate of 13% per year. _Platts

It is natural that China would be the fastest growing market. In the ordinary scheme of things, that would be very good news for Gazprom, which supplies a large portion of China's natural gas demand. But in the light of the global growth in shale gas production -- including China's very own vast shale gas resources -- Gazprom will probably have to settle for a smaller piece of the pie than it had expected.

Canada and the US intend to capitalise on the rising demand for natural gas in Asia, by piping much of their excess gas to coastal terminals, where the gas will be liquefied to LNG and shipped to Japan, China, South Korea, and other Asian markets. For example, in Canada:

Anglo-Dutch energy giant Royal Dutch Shell Plc (RDS.A - Analyst Report) and partners have selected Calgary-based TransCanada Corp. (TRP - Snapshot Report) to build an estimated C$4 billion ($3.8 billion) natural gas pipeline across northern British Columbia.

Per the agreement between the parties, TransCanada will design, build, own and operate the proposed ‘Coastal GasLink’ project that is intended to transport natural gas from the Montney Play in northeastern British Columbia to feed Shell Canada’s recently announced massive liquefied natural gas (LNG) export terminal near Kitimat, British Columbia's northern coast. The Kitimat plant is owned by Shell (40% stake), together with other partners – Korea Gas Corp., Mitsubishi Corp. and PetroChina Co. Ltd. (PTR - Analyst Report) – who own 20% each.

The Montney formation is considered as one of North America's richest gas basins, expected to hold trillions of cubic feet of gas. However, the region is also one of the most distant from any large U.S. market, making it a top draw for LNG export. _Zacks

Similar plans are being made for converting US gas to LNG at Gulf of Mexico and Pacific Coast terminals.

Another significant Canadian gas development is the plan by Sasol to build a large gas to liquids production facility in the Candian Northwest:

According to Mike Nel, the company’s Canadian development manager, the South African giant is proceeding with front-end engineering and design (feed) on a proposed 96,000 barrel a day (b/d) facility, which would be one of the biggest in the company’s portfolio; only the 160,000 b/d Secunda facility in South Africa would be larger, but it uses coal-to-liquids.

Sasol is proposing to convert 1 billion cubic feet per day (cf/d) of unconventional gas from Canada’s Montney shale play into products like diesel and naphtha. A feasibility study into an initial 48,000 b/d first phase for the facility will be released in the second half of this year.

_Petroleum Economist

Sasol has plans for a similar GTL plant in Louisiana, as does Shell.

300,000 Barrels per Day of New Synthetic Crude from Russian Stranded Gas?

Russian gas companies are notorious for their wasteful flaring of stranded natural gas and associated gas. If all of that wasted gas were converted to liquid fuels via GTL processes, it could amount to as much as 300,000 barrels per day of new production of synthetic crude.

Rosneft is planning a pilot GTL plant in the Volga region, using Oxford Catalysts scalable microchannel Fischer Tropsch GTL technology, in an attempt to develop productive uses for this huge -- but now largely wasted -- natural gas resource.

Rosneft is partnering with technology commercialization firm Gazohim Techno to design and construct a GTL demonstration plant using Oxford Catalysts’ microchannel Fischer-Tropsch technology. This plant will have a capacity of some 10 million cubic meters per year of natural gas, equivalent to approximately 100 barrels per day of synthetic crude.

...Rosneft has a stated objective and budget to reduce flaring and make better use of associated gas. This facility is envisioned as the first of many commercial GTL plants that will make use of associated gas.

After an extensive review of alternative Fischer-Tropsch offerings we decided to move forward with Oxford Catalysts’ technology. We found it to be the most attractive in combination with our POx process for the mini-GTL market we’re targeting. The potential in Russia for processing associated gas is over 30 billion cubic metres a year. —Sergey Dolinskiy, CEO of Gazohim Techno

_GCC

We have been predicting that Russia would be forced to move to GTL technologies, to increase the value of its huge reserves of natural gas -- stranded or otherwise. This announcement by Rosneft is a simple acknowledgment that Russia cannot continue to waste its resources as it has in the past.

In the relatively near future, it is likely that Russia will be forced to look at larger scale GTL facilities similar to the Shell Pearl Qatar GTL plant, which cost about $20 billion to develop and build -- but which is expected to earn about $6 billion per year in profits.

To move up into that range of GTL production, Russia will need foreign partners. To assure foreign partners that their valuable assets will not be seized by the Russian government -- as has happened so many times in the past -- Russia will need to make some substantive changes in its way of doing business.

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.

Shell is Pushing the GTL Envelope for Massive Profits

When the price of a commodity drops in the middle of a production glut, the smart money will find a way to turn the cheap commodity into something more valuable. That is what Shell is doing globally, with natural gas.

Shell is moving ahead with plans to build plants in the U.S. that could convert dirt cheap natural gas into high-valued diesel fuel, hoping to profit from an almost tenfold mark-up in prices that many analysts say is the biggest prize in the world of energy today.

With U.S. natural gas trading at the equivalent of $12 per barrel of oil, and crude oil at over $100 a barrel, the opportunity for profit is huge, but not without its risks. Building a gas-to-liquids facility would cost billions of dollars and take most of this decade to complete. The U.S. is already littered with money-losing long-term investments that fell victim to unexpected shifts in natural gas supply and demand.

Shell is the world’s leading operator of gas-to-liquids (GTL) facilities, which chemically convert natural gas into premium diesel, lubricants and chemical feedstocks. It operates the world’s largest GTL plant in Qatar and a smaller one in Malaysia.

The profitability of these GTL plants was a major contributor to Shell’s consensus-beating first quarter profits of $7.28 billion.

Similar plants in the U.S. could be potentially very profitable, said Shell’s Chief Financial Officer, Simon Henry. The company is looking at sites in Louisiana and Texas as the possible location for a plant producing at least 70,000 barrels a day of liquids from natural gas. _WSJ

Natural gas prices will not always be this low, but the huge price gap between gas and liquid fuels is likely to remain for at least a decade, and probably longer. The smart money will find a way to take all that cheap gas and turn it into valuable liquid chemicals, polymers, fuels, lubricants, and other materials.

Global Oil Production Hits Yet Another New Peak

Peak oil prognosticators, including Ken Deffeyes and the late Matt Simmons and King Hubbert, continue running up a long string of failed predictions for the global peak in oil production. It is almost as if they all suffered from severe conceptual deficits in their thought processes.....

Source

...the peak oil theorists, if not wrong in the long term, seem to have been premature in warning that the summit for production was upon us. In 2009, for instance, one forecast for global oil production via The Oil Drum warned that output was set to fall by more than two million barrels a year. A decade ago, geologist Ken Deffeyes’ widely read book Hubbert’s Peak: The Impending World Oil Shortage opened by stating that “global oil production will probably reach a peak sometime during this decade.” The 2009 edition of the book makes the same forecast.

Deffeyes is hardly alone in warning that the end is near for raising global oil production, as a sampling of the many book titles in recent years on the peak oil subject remind: The Party’s Over, The End of Oil, and Profit from the Peak, for instance.

There is a peak out there somewhere, of course. Production for every commodity with a finite supply inevitably reaches a crest. The question, of course, is when? Estimating the date of the apex is problematic for several reasons. Technology, for instance, can change the analysis. If you can make cars more energy efficient, that’s the equivalent of finding more oil, all else equal. That leaves us with the troublesome task of predicting what technology will bring in terms of energy savings in the years ahead. _WallStreetPit

Source
Meanwhile, China is ramping up shale exploration and technology development, in preparation for the coming boom in Chinese shale oil & gas, and GTL, along with combined GTL and CTL.

Argentina is likewise gearing up to take advantage of the unconventional hydrocarbon bonanza.

The massive global supplies of unconventional hydrocarbons are waiting only for improved technologies of catalytic conversion to high quality chemicals, fuels, polymers, etc. Perhaps the coming boom in space mining of platinum and other precious metals will have a secondary effect on the eventual boom in GTL, CTL, BTL, KTL, BitTL, GHTL, and other XTL technologies? Particularly with the development of gen IV high temperature gas cooled modular nuclear reactors, which will send the myth of EROEI to the dustbin of history.

Unconventional Liquid Fuels Set to Double in 5 Years

Worldwide, natural gas reserves far exceed oil reserves. Indeed, at current consumption rates, the earth has about a 45-year supply of oil, compared with a nearly 1,000-year supply of natural gas. In many locales, though, natural gas is “stranded” and thus suppliers have limited markets. A key objective of gas suppliers is the development of processing and conversion technologies, such as gas to liquids, that would enable entry to the multitrillion-dollar market for chemicals and liquid fuels.

The gas-to-liquids (GTL) business is involved in the chemical conversion of stranded natural gas feedstocks to liquid products such as transportation fuels and chemicals. Insofar as beneficial processing of the world’s huge resource base of stranded natural gas is concerned, GTL processing is a relatively recent research and development (R&D) focus of the petrochemical industry. Development of commercial-scale GTL plants, utilizing stranded natural gas, is a relatively recent development, too. _ReportsnReports

Oxford Catalysts GTL ProcessAmong those small companies moving into competition with the giant energy enterprises for that $multi-trillion global marketplace, include Oxford Catalysts, Carbon Sciences, GasTechno, and a growing number of startups.

A significant amount of the world’s natural gas resources are stranded, far from existing markets. In the U.S. market, the recent substantial increase in natural gas reserves creates a technical and market opportunity for lower cost conversion to liquid fuels and chemicals. GTL technologies can economically convert these resources into high-quality, ultra-low sulfur diesel (ULSD) fuels that can be transported to consumers or used in remote locations.
Fischer-Tropsch (FT) processing of synthesis gas (synthesis gas) has undergone significant improvements in reactor design and product recovery and is no longer limited to large-scale commercial demonstrations. The process creates liquid fuel from synthesis gas, either gasified from hydrocarbon sources or natural gas, but not crude oil. FT processing has allowed South Africa, for instance, to reduce its dependency on foreign crude after World War II.

Technically, GTL fuel production is in a relatively advanced stage of development, with commercial production well demonstrated in, for example, Qatar, Malaysia, and South Africa. Although synthetic fuels can be produced from a range of feedstocks—biomass, coal, and natural gas—the GTL process is at the most advanced stage of commercial development. In addition, GTL utilizes gas resources that are either flared or currently unmarketable. Synfuel production via GTL processing of stranded gas is approximately 100 mbbl/d (thousand barrels per day), and it is estimated that as many as 10 large-scale GTL plants will be in operation over the next decade, producing as much as 300 mbbl/d of GTL products.

Many major oil companies have announced plans to investigate producing synthetic diesel fuel via a GTL process. However, a handful of companies, such as established GTL companies Sasol, Shell, Syntroleum and Rentech, are the dominant producers. As discussed in this report, though, there are numerous “second-tier” companies that have sizable GTL support operations in engineering, design, plant construction, ancillaries, and related activities. Generally, R&D is improving the efficiency and economics of GTL production as well as quantifying the costs and benefits of production and use of GTL fuel in vehicles. _ReportsnReports

The full report is available for $4850

The unconventional fuels industry is beginning to garner a lot more attention from investors, venture capital, and the energy and chemicals industries. When the full range of unconventionals is considered -- from CTL to BTL to GTL to KTL etc. -- the potential volume of fuels falls into the 10 trillion barrel oil equivalent range and up.

The key obstacle to greater participation in XTLs is the very high upfront capital costs for facilities. The Shell Pearl Qatar GTL plant, for example, cost $20 billion in development costs -- although it is expected to provide at least $6 billion per year in profits at full capacity production, so long as the price of oil does not crash and stay low. No wonder Shell and Sasol are considering building large plants in Louisiana to take advantage of the shale gas boom in that region of North America.


China is looking at a wide range of GTL and CTL approaches, to take advantage of its own shale gas wealth and coal resource. Once China's unconventional liquid fuels processes kick into production, Chinese demand for overseas oil imports is likely to diminish. Particularly if China is able to combine its ambitious nuclear reactor development program with unconventional hydrocarbons production. Persian Gulf states are likewise looking at expanding current GTL capacity to increase the value of the massive natural gas resource there.

Finally, Russia is likely to be forced to enter the GTL marketplace, as it sees the value of its natural gas resource slipping away, as more and more of its customers develop their own native shale gas reserves.

Gas to Liquids News

Shell is considering building a huge gas to liquids (GTL) plant in Louisiana, comparable to the size of its Pearl Qatar GTL plant. The new plant would reportedly cost in excess of $10 billion.

European oil giant Royal Dutch Shell Plc. (RDS-A, RDSA.L, RDSB.L, RDS-B) is exploring the possibility of building a plant in Louisiana that will convert natural gas into diesel fuel, the Wall Street Journal reported Wednesday, citing people familiar with the matter.

The plant, which would cost more than $10 billion, would reportedly be similar in size to Shell's Pearl gas-to-liquids or GTL facility in the Qatar. The Pearl facility turns natural gas into enough diesel to fill more than 160,000 cars per day.

According to the WSJ report, Shell initially considered locating the facility in Texas and Louisiana, but opted for the latter as the state offered better incentives. Shell may, however, take up to two years to develop construction and engineering plans to see if the project is economically viable.

The boom in natural gas production from shale formations in North America has resulted in lower natural gas prices even as oil prices are rising. This has prompted energy companies to look at turning natural gas into liquid fuels that is seen as financially appealing. _NASDAQ (WSJ)

SASOL also wants to build a large GTL plant in Louisiana, to take advantage of the region's vast gas reserves.

Carbon Sciences -- designer of scalable GTL plants -- announced a significant advance in its project to use CO2 as a feedstock in its "dry reforming GTL process."

Carbon Sciences Inc. CABN -3.45% , the developer of a breakthrough technology to make transportation fuels and other valuable products from natural gas, today announced the successful test of a new version of its natural gas dry reforming catalyst that can process high CO2 content natural gas at high efficiency, resulting in significant economic and environmental benefits. The company's management believes that this breakthrough catalyst may help accelerate the growth of the emerging natural gas to liquid fuels industry.

While all natural gas fields contain CO2, production is economically viable only when the CO2 is less than 10% of the total volume. At that level, the CO2 is removed and typically released into the atmosphere. Where the CO2 content is higher, the removal process is prohibitively expensive, making those fields economically stranded.

Byron Elton, Carbon Sciences CEO, commented, "According to the U. S. Geological Survey, there are many gas fields with CO2 concentrations ranging from 10% to 99% within the continental U.S., particular in Texas, the Rocky Mountains, and the Gulf Coast. We believe our catalyst will make these high CO2 gas fields economically viable, and encourage the pooling of multiple gas fields into much larger natural gas steams with high CO2 content. Additionally, CO2 captured from sources such as power plants can be added to low CO2 content natural gas and used to cost-effectively produce large quantities of clean and green liquid transportation fuels and industrial chemicals." _Marketwatch

We will want to watch Carbon Science's progress in developing better catalysts for its "dry reforming GTL" process. It isn't easy or cheap to reduce CO2 in order to build medium to long-chain hydrocarbons. But there would certainly be a demand for the process if it could be made affordable and capable of high volume production.

Carbon Science's small scale GTL systems should be suitable for use in the offshore environment and at stranded gas wells. Several other companies are competing for that niche as well, so expect to hear more about scalable GTL soon.

Australia's Linc Energy refers to its "syngas to diesel" process as "GTL." Linc plans to expand its operation to take advantage of opportunities in North America.

Biomass, coal, natural gas, and more can be used as starting points for F-T synthesis of diesel from syngas. But expect alternative approaches to GTL, CTL, BTL etc. as better catalysts, materials, and processes are developed.

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.

Velocys
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.

Gas-to-Liquids and Coal-to-Liquids: Bringing in a New Era of Energy?

Unconventional liquid fuels are slated to provide ever growing proportions of future demand for transportation fuels. The burgeoning success of plants such as Shell's Pearl GTL plant in Qatar herald a new era of liquid fuels production.

In terms of what GTL is, it is the process of chemically turning natural gas into cleaner-burning liquid products, including fuel, base oil for lubricants and feedstock for chemicals. To produce, the process firstly involves methane and oxygen which are converted into a mixture of hydrogen and carbon monoxide known as synthesis gas or syngas. This is then fed to a reactor with a proprietary Shell catalyst that accelerates the conversion of the mixture to long-chained waxy hydrocarbons and water.

From the GTL reactor, the long-chained hydrocarbons are then reacted with hydrogen and ‘cracked,’ into a range of smaller molecules of various sizes using another proprietary Shell catalyst. This process is referred to as ‘hydrocracking.’ The final step is distillation. Various boiling points are reached to separate out the products, which can be in the form of GTL naphtha, GTL kerosene, GTL normal paraffins, GTL gas oil, or GTL base oils. These are then eventually fed to their own storage tanks ready for use.

...One of the products, GTL gasoil (diesel-type fuel), can contribute significantly to the diversification of the diesel fuel supply. This product can reduce local emissions of nitrogen and sulfur oxides and particulate matter. Because it contains virtually no sulfur or aromatic compounds and has a high cetane number – a measure of combustion quality – GTL gasoil burns more efficiently than conventional oil-based diesel and thus produces fewer local emissions and less black smoke than conventional diesel. The high cetane of GTL gasoil can lead to noise reductions in certain engines under certain driving conditions and improve cold start performance. GTL gasoil can also be blended with conventional diesel and/or biodiesel and used in the same vehicles and infrastructure, thus offering a low investment cost compared with other alternatives.

GTL Kerosene is an alternative to conventional oil-based kerosene. Its primary use is expected for aviation. GTL kerosene can be used as a blend with traditional jet fuel without any modifications to existing aircraft and engines. Given that the aviation sector will rely on liquid hydrocarbons for decades, this fuel can help support the future energy needs of the industry, and offer customers fuel diversification. GTL kerosene has higher energy density than conventional oil-based kerosene and this reduces the required fuel payload, thus aircraft may be required to carry less fuel weight to cover the same distance. _QatarShell

When even pro-nuclear activists such as Rod Adams are speaking out in favour of a coal - nuclear partnership to produce liquid transportation fuels, you should understand that people are finally beginning to look at the possibilities.

Coal is a valuable resource that can be safely mined for centuries by well-trained and compensated miners. Instead of eliminating the use of coal, I would prefer to help coal miners and coal mine owners to recognize that they could make more money and sell a cleaner product if they upgraded their fuel at the mine rather than shipping a dirt-filled, unrefined product that sells for a huge discount in the energy market.

...My pitch to the coal industry would be to use cheap, clean nuclear heat to convert H2O and their carbon rich fuel into a refined hydrocarbon that could compete with petroleum products.

...Shipping oil instead of coal from our domestic mines would also be very beneficial to the US national security and to the prosperity of the world. Just think about the positive impact that substantially lower US demand would have on the price of diesel fuel delivered to a developing country. _RodAdams

Until more people are able to think of energy in multi-disciplinary, multi-industrial terms, societies will be forced to pay higher prices for fuels and energy than is necessary. By including cheap and unlimited nuclear reactor process heat into the fuel production mix, we can immediately bring CTL, GTL, bitumens to liquids, kerogens to liquids, and even biomass to liquids (BTL) into the feasible and profitable arena.

Fortunately, more nuclear advocates are beginning to understand the importance of cleanly integrating coal and gas into the overall energy and fuels mix. But we need more bright chemical engineers like Robert Rapier, and physicists like Tom Murphy, to crunch the numbers once again -- this time including the powerful impact of high temperature process heat from modular and mini-modular HT gas-cooled nuclear reactors.

By utilising scalable, factory produced reactors which can be sited at the point of production of gas, coal, bitumens, kerogens, methane hydrates -- and even biomass in some situations of intensive cultivation -- it should be clear to any objective observer that a new era of hydrocarbon production is quite feasible.

Government action could certainly prevent this development. The great carbon hysteria delusion -- if firmly enacted into law in the developed world -- would not only kill unconventional fuels, it would kill the economic viability of the underlying societies themselves. That is what several governments, from the UK to Obama's US to Australia to the EU are attempting to do in various ways.

A far less likely -- but still potentially effective -- way to stop the revolution in unconventional fuels, is for the national oil companies of OPEC and other oil dictatorships to route needed funds into oil field production, exploration, discovery, and development. It would be easy for existing oil fields and fields under development to ramp up production to overwhelm even the current inflated levels of global demand -- if the equipment, manpower, and funding were allotted for the purpose. But this will not be done, because governments from Russia to Venezuela to Saudi Arabia etc need oil prices to remain artificially high so that they can use oil profits to pacify unstable populations and pay off highly placed insiders.

Fischer Tropsch Syngas to Hydrocarbons: New Innovations

Dutch scientists have breathed new life into a century old chemical synthesis: Fischer Tropsch. By the clever use of nano-scale catalysts, the Utrecht University and Dow Chemical researchers have significantly expanded the list of important industrial products that can be created from syngas. Syngas can be derived from biomass, natural gas, coal, kerogens, bitumen, and any carbonaceous material.

Dutch scientists have found a way of turning plant matter into the building blocks of common plastics using a nanotechnology process that offers an alternative to oil-based production.

The team from Utrecht University and Dow Chemical Co produced ethylene and propylene - precursors of materials found in everything from CDs to carrier bags and carpets - after developing a new kind of iron catalyst made of nanoparticles. _SciAm

More from Green Car Congress:

Lower olefins are key building blocks for plastics, cosmetics, and drugs. Conventionally, light olefins are produced by steam cracking of crude oil–derived naphtha, but, as the authors note in their paper, there is a pressing need for alternative feedstocks and processes in view of supply limitations and of environmental issues.

Although Fischer-Tropsch (F-T) synthesis can convert coal-, biomass-, and natural gas-derived synthesis gas into hydrocarbon derivatives, selectivity toward lower olefins tends to be low. As a result, non-petroleum production routes for olefins usually involve at least two conversion steps, involving either cracking of FT-derived hydrocarbons or the methanol to olefins (MTO) process. _GCC

By destroying one of the key arguments behind peak oil doom -- the former need for crude oil to create a broad range of chemicals and polymers -- this new use of Fischer Tropsch has earned our appreciation.

In other F-T news, Oxford Catalysts claims to have sold five of its microchannel F-T units for converting syngas to high quality liquid fuels. The company says that its microchannel units can convert gas, coal, or biomass to hydrocarbon fuels, via syngas.

Here is a summary of the F-T based GTL process used by Shell in its $6 billion a year in profits Pearl plant in Qatar:

The GTL plant turns clean natural gas (methane) into five useful oil products through complex chemical transformation processes.

Methane is converted into these useful liquid products over three stages. First, the methane is reacted with oxygen to create a synthesis gas in reactors operating at up to 1,300ºC. The synthesis gas is then converted into liquid waxy hydrocarbons through the Fischer-Tropsch process.

Finally, the liquid waxy hydrocarbons are ‘cracked’, or broken down, into the five useful products using specially developed technology involving novel cobalt catalysts.

Gas oil is one of those useful GTL products being used to make a new cleaner car fuel. Colin Abraham, Shell’s vice-president for lubricants and commercial fuels marketing, said there are four main benefits to the new GTL fuel: reduced emissions; reduced noise emissions; ease of integration into existing fuel systems; and lack of investment needed into new infrastructures.

Abraham said Shell would not be introducing the fuel to petrol stations. ‘We will target airports and customers who have the ability to store the fuel themselves,’ he said. ‘The plan is not to make GTL fuel available widely across the network as this would put a strain on infrastructure.’

Base oil, another useful product of GTL, is being used to improve Shell’s existing premium engine lubricants to make engines more efficient by reducing friction.

Selda Gunsel, Shell’s vice-president for global commercial technology, said: ‘We plan to use our GTL base oils in developing high-performance engine oils that help conserve energy, improve engine durability and help reduce emissions.’

Recent tests of the GTL engine oils on a fleet of Volvo trucks saw a three per cent fuel economy benefit over conventional oils. _TheEngineer

The Fischer Tropsch process is far from dead. In fact, with the arrival of well designed nanotech catalysts plus the assistance of high quality process heat from gas-cooled nuclear reactors, F-T synthesis is just getting started.

The IEA chart above shows roughly 8 trillion barrels of oil equivalent remaining, by using F-T or similar methods.   The addition of gas hydrates to the mix roughly doubles the remaining hydrocarbon reserve.  Any delusions you may have had about running out of hydrocarbon fuels should probably be in the recycle bin by now.

Gas to Liquids Comes to Scotland; More GTL News

Gas2 has a well developed Syngas reactor design ready for testing and a liquid conversion (Fischer-Tropsch) reactor design at proof of concept stage. These technologies work at low pressure and high conversion rates which offer a lower cost solution through small highly efficient systems operating without the need for an expensive intermediate Syngas compression step. The process is inherently safer than other currently available GTL solutions in the market. _Gas-2.com

Scottish company Gas2 has acquired a further £5.5 million in funding to build a pilot plant to demonstrate its GTL technology.

Aberdeen-based Gas2 is working to develop the next generation of gas-to-liquids (GTL) technology, with an exclusive licence to build on research from the city’s Robert Gordon University.

The firm, which started work to commercialise the technology in 2008, will receive the funds from existing backers including the university and Lime Rock Partners, a private equity firm that initially pumped £10m into the business.

Gas2’s technology allows the conversion of natural gas to liquid more economically and cleanly than has previously been possible. Half of the world’s natural gas is contained in fields that make it either physically or economically unusable, but turning it into liquids could make much of it viable if it can be done cheaply enough. _Scotsman

Meanwhile, Carbon Sciences has filed two provisional patents on its technology to steam reform methane into syngas. The company is pursuing multiple gas to liquids (GTL) approaches, including dry reforming, which uses CO2 rather than steam.

Also, GTL pioneer and giant SASOL is progressing with its plans to enter the North American market. SASOL has plans to build a GTL plant in Louisiana. Shell Oil is also looking into building a GTL plant in the US.

In addition, the makers of "mini-GTL" plants, such as CompactGTL, GasTechno, and Oxford Catalysts/Velocys, continue to develop their technologies while also marketing their technologies to offshore producers and producers of stranded and flared gas.

A great deal depends upon the development of better and cheaper catalysts at all stages of reforming and synthesis. This is true for not only GTL, but for CTL and BTL. Of course, the higher the cost of crude oil, the more economical the substitutes become.