Emerson’s Douglas Morris, a member of the alternative energy team, shares his thoughts on the developments in natural gas to liquid conversion to help diversify U.S. sources of energy.
Even though I’m from New Jersey, I’m not going to discuss the daily ritual of Jersey Shore’s “The Situation” (full disclosure, I’ve never seen the show but when you search “GTL”, you’d be surprised how often Jersey Shore comes up). I do want to talk about the real GTL, that is, Gas to Liquids. Very recently, Sasol, the large South African company known for perfecting the process of making liquid fuels from coal, announced that it is beginning an 18-month feasibility study for a Gas to Liquids plant adjacent to its chemical facility in Calcasieu Parish, Louisiana. This plant would make use of natural gas and produce about 90,000 barrels per day of diesel fuel using the Fischer-Tropsch process. Why make one $10B investment when you can make two? Shortly after the Louisiana statement, the company released that it will be looking at another GTL project in Uzbekistan.
Why GTL? Why now? Quite simply, with the price spread between natural gas (trading at $3.80/MMBtu as of 9/21) and petroleum (trading at $87/barrel as of 9/21), the economics for a GTL facility are compelling. In North America, the future bodes a ready supply of natural gas from shale production and this should help keep this spread positive. The time seems right for the company to further its investments into GTL, particularly after its successes in Qatar and Nigeria.
From an environmental perspective, GTL technology has a number of advantages. First, natural gas combustion produces about half the carbon dioxide as compared to coal. Natural gas also does not release the level of particulates as other fossil fuels. Most parties view both of these benefits positively and the US is seeing a move to burn more natural gas. But there’s a benefit to the finished product in a GTL plant. Fischer-Tropsch technology produces a high cetane (70+), ultra-clean diesel fuel with no sulfur. These characteristics makes F-T diesel very desirable as it provides both a performance boost and an emissions reduction for diesel (primarily trucks) in the US.
The bottom line is that we’ll know more about the prospects of these projects within a year or two, but as the world looks to diversify its energy supply, GTL looks like a technology headed in the right direction.
