Another Alternative to Crude Oil

Gas-to-liquids technology continues to advance notes Emerson’s Alan Novak, leader of the alternative energy industry team, in today’s guest post.

Emerson's Alan NovakIn previous posts we discussed the emerging technology of gas to liquids (GTL) driven by the vast shale gas reserves being unlocked through hydraulic fracturing.

A significant challenge for the GTL process is its high capital cost. Sasol has stated its planned facility in Louisiana will cost approximately $10B for 100,000 bbl/day of capacity (significantly more than a conventional oil refinery), and Shell’s first commercial scale plant, the Pearl complex in Qatar, cost approximately $19B for 140,000 bbl/day of production. This is more than double the original estimate, although this reflects the premium inherent in early stage technologies.

A new process for GTL developed by the Japan Oil, Gas and Metals Corporation (JOGMEC) could dramatically change the economics. Unlike a traditional GTL process, which requires carbon dioxide to be removed from the natural gas feedstock and pure oxygen to be used in the initial synthesis gas production, the JOGMEC process is able to use the CO2 laden gas stream directly and does not require pure oxygen as a feed.

Since both the initial CO2 removal step and the generation of pure oxygen are expensive, removal of both significantly lowers the capital cost of a GTL facility.

The JOGMEC process is still in the development phase and significant challenges likely remain before it is deployed at commercial scale. Should it prove successful it offers the potential to open up additional reserves of previously uneconomical gas to the GTL process and provides another path to a significant crude oil alternative.

Will the JOGMEC process prove to be the next big breakthrough in crude oil alternatives? Only time will tell.

Posted Friday, April 13th, 2012 under Energy.